United States Fidelity & Guaranty Co. v. Yazoo County Ex Rel. Rings , 145 Miss. 378 ( 1926 )

^* Corpus Juris-Cyc. References: Highways, 29CJ, p. 613, n. 70, 71, 73. As to nature of labor or materials which will support an action upon a contractor's bond, see annotation in 43 L.R.A. (N.S.) 162; L.R.A. 1915F, 951; 22 R.C.L. 632; 3 R.C.L. Supp. 1273. Four separate suits in the name of Yazoo county, for the use and benefit of Henry Rings, Graham Hardware Company, 555 Tire Service Company, and Woodruff Furniture Company, were brought in the circuit court of Yazoo county against J.R. Parker and United States Fidelity Guaranty Company, as his surety, for the purchase price of articles sold Parker while he was building the Moores Ferry public road in Yazoo county, under contract with the county. The cases, by agreement, were consolidated and tried before the circuit judge without the intervention of a jury. The items sold to Parker were shown on itemized accounts filed with the declarations, and are admitted to be correct as to items, amounts, and credits. Judgment was rendered for each claimant against Parker for the full amount, and against the surety for practically all claimed, together with attorney's fees. Parker did not appeal, but the surety company has prosecuted an appeal from the judgments against it, and, the amounts being conceded to be correct, the only question presented for decision is the liability of the appellant.

The articles sold by appellee Rings cover wagons, leather, harness and gear, tools, automobile springs, pumps and tires, and gasoline, oil, and grease. Liability for the items of gasoline, amounting to ninety-seven dollars and seventy-seven cents, is conceded under the holding of this court in the case of StandardOil Co. v. National Surety Co., 143 Miss. 841, 107 So. 559. After allowing a credit of sixty dollars on the account as the value of the wagons and harness when the work was completed, the court gave judgment against the surety for the balance of the account.

The claim of the 555 Tire Service Company covered automobiles tires (or casings) and inner tubes. After deducting from this claim five per cent. of the value of certain tires, on account of depreciation caused by uses other than those covered by the contract, and after also deducting fifty dollars as the value of the tires remaining when the work was completed, the court allowed the balance of this account, with fifty dollars attorney's fee and interest.

The Graham Hardware Company's claim covered iron stoves, tools, such as hammers, wrenches, shovels, picks, etc., bolts, nails, brick, lumber, mattresses, cooking utensils, and dishes. The defendant Parker the only witness, testified that the stoves, dishes, and cooking utensils were used in the commissary, and some of them carried away and used on other work, the stoves being abandoned, and that all of these things were of little value when the work was completed, and that the tools were worn out on the work. The circuit judge allowed this claim in full, including interest and twenty-five dollars attorney's fee.

The claim of the Woodruff Furniture Company covered iron beds, mattresses, dishes, cooking utensils, iron stoves, anvils, blankets, bedsprings, tools, nails, wire, etc. The court disallowed the items of iron beds, as Parker testified that they were not worn out, but, credits on the account being applied to the first items, the court held that they were paid for, and the balance of the claim, including twenty-five dollars as attorney's fee, was allowed.

The defendant Parker testified, in substance, that, in order to hold his labor on the job, it was necessary for him to maintain a camp with boarding and sleeping facilities, and that a large part of the articles for which the surety was held liable was purchased for the equipment and maintenance of this camp, and in providing the usual standard equipment of contractors in road building; that it was purchased by him to supplement the equipment which he had when he went on the work; that it was used by him on this work, and such of it as was not worn out therein continued a part of his equipment when he left the work, but that most of it was worn out or of little value when the work was completed.

The statute under which the bond involved was executed as section 1, chapter 217 Laws of 1918, which reads, in part, as follows:

"That any person entering into a formal contract with this state, any county thereof, municipality therein or any political subdivision whatsoever therein, for the construction of any building or work or the doing of repairs, shall be required before commencing same to execute the usual bond, with good and sufficient sureties, with the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying labor or material therefor; and any person who has furnished labor or materials used therein and wherefor payment has not been made, shall have the right to intervene and be made a party to any action instituted on such bond, and to have their rights adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claim and judgment of the obligee."

It will be noted that the additional obligation which the surety is required by this statute to assume is that "the contractor shall promptly make payments to all persons supplying labor or material" for the work, and the persons who are given the right to assert a claim against the bond are those who have "furnished labor or material used" in the work, and it is the contention of the appellant that such of the articles here involved as formed a part of the usual and ordinary equipment of the contractor, even though worn out in the course of the work, are not covered by the words "materials used in the work," since they are not such as would necessarily be consumed, either actually or theoretically, so as to be regarded as "used in" the work or "furnished in the performance of the work."

The statute which requires the bond of a contractor for public work to be conditioned for the payment for all materials used in the work, and provides that any person furnishing materials used in such work may maintain an action on such bond, is designed for the protection of those who furnish materials which either enter into and become a permanent part of the improvement, or which are naturally and necessarily consumed in the course of the performance of the work, and it was not intended to protect those who furnish the contractor's plant and equipment or who furnish the material necessary to keep such equipment upon an efficient basis. In determining the liability of the surety for such articles or equipment, the fact that they were partially or totally worn out, or consumed, on the particular work is not the test of the liability of the surety. If the contract is sufficiently large, covering a long period, the heaviest machinery, such as steam shovels and dredging machines, costing many thousands of dollars, may be entirely worn out, but we know of no case holding that the surety would be liable for the purchase price of such equipment. If the surety should be held to be liable for the plant or equipment of the contractor because the same is worn out or rendered valueless on the work, then it necessarily follows that the surety must be held liable for the depreciation in the value of the machinery and equipment which is caused by its use on the work, for, to the extent of the depreciation caused by such use, the equipment has been consumed in that work. In such a case, the court would be required to determine, as the court below did in the case at bar, the value of such equipment when the work was finished and the amount of depreciation in such equipment caused by the use on the particular work. We do not think such is the intention or meaning of the statute requiring this bond.

In the case of Oliver Construction Company v. Crawford,107 So. 877, 142 Miss. 490, this court held that while this statute was to be given a liberal construction, it would not be extended beyond the clear meaning of the terms used, and we do not think it can be extended to cover camp equipment or tools, trucks or automobiles, and tires therefor, or other machinery and appliances constituting the outfit necessary to enable the contractor to perform the agreed service. Beals v. Fidelity Deposit Co., 76 A.D. 526, 78 N.Y.S. 584, affirmed in178 N.Y. 581, 70 N.E. 1095; Kansas City, Use of Kansas CityHydraulic Press Brick Co., v. Youmans, 213 Mo. 151, 112 S.W. 225; United States, Use of Thomas Laughlin Co. v. Morgan (C.C.), 111 F. 474; American Surety Co. v. LawrencevilleCement Co. (C.C.), 110 F. 717; Standard Boiler Works v.National Surety Co., 71 Wash. 28, 127 P. 573, 43 L.R.A. (N.S.) 162, and note; United States Rubber Co. v. American BondingCo., 86 Wash. 180, 149 P. 706, L.R.A. 1915F, 951.

The appellant concedes its liability for the items of gasoline, and it is likewise liable for the items of oil and other lubricants appearing upon the several accounts. While the proof does not show the fact, there are items of nails, lumber, and brick, and probably others which may have gone into the permanent improvement, thereby rendering the surety liable for such items. The judgment of the court below will therefore be reversed, and the cause remanded to be proceeded with in accordance with the views herein expressed.

Reversed and remanded.