W. T. Hardison & Co. v. Yeaman

• Decision Date: 10 February 1906
• Parties: W. T. HARDISON & CO. v. YEAMAN et al. E. T. MURRAY & CO. v. SAME.
• Court: Tennessee Supreme Court

91 S.W. 1111

115 Tenn. 639

W. T. HARDISON & CO. v. YEAMAN et al.

E. T. MURRAY & CO. v. SAME.

Supreme Court of Tennessee.

February 10, 1906

Appeal from Chancery Court, Davidson County; John Allison Chancellor.

Actions by W. T. Hardison & Co. and by E. T. Murray & Co. against James H. Yeaman and others, consolidated and heard together in the trial court. From the decree, the complainants and defendants J. T. Anderson and others appeal. Affirmed.

Parks & Bell, for appellant Hardison & Co. Jno. L. Nolen, for appellant Murray & Co. B. A. Butler, for appellant Anderson and others. P. D. Madden, for appellee Fidelity & Deposit Co.

McALISTER J.

The litigation in this cause grew out of the building of a courthouse for the county of Jackson, at Gainesboro. The building was constructed under the supervision of a building committee, composed of J. T. Anderson, M. L. Gore, B. J Franklin, W. F. Saddler, and W. W. Draper, appointed by the county court for said purpose. The contract was awarded to James H. Yeaman of Nashville, and in the progress of the work Yeaman employed plaintiffs E. T. Murray & Co. to furnish the material and to put on the roof, that amounted to $1,725.10 which the contractor failed to pay. Yeaman also purchased certain materials from W. T. Hardison & Co., and became indebted to them in a balance of $353.70. The contractor, Yeaman, entered into a bond in the sum of $10,000, with the Fidelity & Deposit Company of Maryland as surety, conditioned for the faithful performance of the work. The complainants, W. T. Hardison & Co. and E. T. Murray & Co., have brought the present bills, which were consolidated and heard together in the court below, against the building committee, and also against the Fidelity & Deposit Company, to recover balances alleged to be due them for work performed and materials furnished the contractor in the course of the building.

The chancellor pronounced a decree in favor of the complainants against all of the defendants for the full amount of their respective claims. On appeal, the Court of Chancery Appeals reversed the decree of the chancellor as to the Fidelity & Deposit Company, but affirmed the decree against the building committee. Complainants, E. T. Murray & Co. and W. T. Hardison & Co., appealed to this court from so much of the decree of the Court of Chancery Appeals as adjudges the defendant Fidelity & Deposit Company not liable. The defendants J. T. Anderson, M. L. Gore, B. J. Franklin, W. F. Saddler, and W. W. Draper appealed from the entire decree.

It appears that the building committee entered into a written contract with the defendant J. H. Yeaman on January 6, 1903, to furnish the materials and build said courthouse, and that on March 20, 1903, the said Yeaman executed to the said committee a bond, with the defendant the Fidelity & Deposit Company of Maryland as security, conditioned that the said Yeaman should faithfully perform and discharge all the terms, covenants, conditions, specifications, and stipulations in said contract. The liability of the defendants was made to turn largely upon the question whether the bond executed was in compliance with chapter 182, p. 358, Acts 1899, as follows:

"Section 1. That hereafter no contract shall be let for any public work in this state by any city, county or state authority, until the contractor shall first execute a good and solvent bond to the effect that he will pay for all the materials and labor used in said contract in lawful money of the United States.

"Sec. 2. That any laborer or furnisher of material may bring an action on such bond, and make recovery in his own name, upon giving security or taking the oath prescribed for poor persons as provided by law, and in the event of such suit, the city, county or state, shall not be liable for any costs accruing thereunder.

"Sec. 3. That if any public officer whose duty it is to let or award contracts shall let or award any contract without requiring bond for the payment of labor and material, in compliance with the provisions of section 1 hereof, such officer shall be guilty of a misdemeanor.

"Sec. 4. That the laborer or furnisher of materials, to secure advantage of this act, shall file with the public officer who has charge of the letting of any contract, an itemized statement of the amount owed by the contractor for materials and labor used, within thirty days after the contract is completed."

The Court of Chancery Appeals was of opinion that the Fidelity & Deposit Company were not liable to complainants because the bond was not executed as required by chapter 182, p. 358, Acts 1899, but that the members of said building committee were individually liable for a breach of official duty in not taking a bond as required by said act.

The Court of Chancery Appeals, in adjudging liability against the members of the building committee, based its decree on the case of Rhea County v. Sneed, 105 Tenn. 581, 58 S.W. 1063, where it was held that "a public bridge is a public work within the meaning of the act of 1899 forbidding the letting of any public work for city, county, or state until the contractor shall first execute a good and solvent bond to the effect that he will pay for all materials and labor used in said contract," and county bridge commissioners letting such bridge without executing such bond are not only indictable under said act, but liable in a civil action for any damages resulting to laborers and materialmen, who would have been protected by the prescribed bond, if executed. Templeton v. Nipper, 107 Tenn. 548, 64 S.W. 889.

We shall first notice the following assignments of error on behalf of the building committee to the decree of the Court of Chancery Appeals.

"(3) The Court of Chancery Appeals erred in dismissing complainant's bill in so far as it sought a recovery against the Fidelity & Deposit Company, surety on the bond of Jas. H. Yeaman, the contractor.

"(4) The Court of Chancery Appeals erred in holding that the bond given by Jas. H. Yeaman with the Fidelity & Deposit Company, was only a common-law bond, and was not given in accordance with and in pursuance of the act of 1899.

"(5) The Court of Chancery Appeals erred in holding that the complainants could not sue on the bond given by Jas. H. Yeaman, with the Fidelity & Deposit Company as surety, dated March 20, 1903, in their own names, and enforce collection of their demands against said surety."

In comparing the stipulations of the bond herein executed by the Fidelity & Deposit Company with the requirements of the act of 1899, the following prominent differential features will be noticed: It may be remarked in the first place that the Court of Chancery Appeals finds as a fact that none of the parties to this litigation had ever heard of Acts 1899, p. 359, c. 182, until after the materials were furnished, and, of course, in executing the bond herein, did not have said act in contemplation. It is, nevertheless, strenuously insisted on behalf of the building committee that said bond is in conformity with the requirements of said act.

An analysis of the statute will show:

(1) That it requires the execution of a bond wherein the contractor obligates himself to pay for all material and labor used in said contract. No such stipulation is contained in this bond. It has been suggested, however, by counsel for appellant that this requirement is satisfied by the stipulation by the contractor in his original contract, and also in his bond "to provide good, proper, and efficient materials of all kinds whatsoever for the proper and efficient finishing and completing of all work arising under the contract, and to furnish all materials, labor, etc., of every description." It is very plain that this language does not bind the contractor to pay materialmen and laborers for the material furnished and work done by them, but is simply a stipulation that the contractor will furnish all material and labor necessary in the construction of the building without cost to the owner.

(2) A right of action on such bond is expressly given any laborer or furnisher of material who may sue and make a recovery in his own name, while the bond actually executed by the Fidelity & Deposit Company expressly provides "that it shall not be liable under this bond to anyone except the owner."

(4) It is also true, as suggested by counsel, that under the statutory bond no act of the owner could relieve the surety from liability to the furnisher, while under the present bond any breach by the owner of the thing stipulated to be done by him would absolve the surety from all liability.

There are probably other omissions in this bond which are required by the act of 1899, but it will not be necessary to further trace the points of divergence between the bond actually executed and the statutory bond. It suffices to say that the bond executed herein by the Fidelity & Deposit Company does not embody any of the main requirements of the act of 1899, and cannot, by the most latitudinarian construction, be held to have been executed in pursuance of the provisions of that act.

It is axiomatic and fundamental that the obligation of a surety is strictissimi juris, and cannot be extended beyond the limits of his engagement. Cross v. Scarboro, 6 Baxt. 136. It has been held that, where a city takes the usual form of fidelity bond from a surety company in the place of the form of official bond prescribed by statute, the statute cannot be read into it, and the state must abide by the terms and limitations of the bond as given. Mayor of Brunswick v. Harvey, 114 Ga. 733, 40 S.E. 754.

In Kingsbury v. Westfall, 61 N.Y. 356, the court said "It is now too well settled to admit of double that a guarantor, like a surety, is bound only by...