McElrath & Rogers v. W. G. Kimmons & Sons , 146 Miss. 775 ( 1927 )

^* Corpus Juris-Cyc References: Appeal and Error, 4CJ, p. 1199, n. 24; Highways, 29CJ, p. 612, n. 65, 67; p. 613, n. 71. Corpus Juris-Cyc References: Payment, 30Cyc, p. 1244, n. 56; p. 1248, n. 72. This suit was brought by W.G. Kimmons Sons against McElrath Rogers, original contractors, Abernathy Lee, their subcontractors, and the United States Fidelity Guaranty Company, sureties on the bond of the original contractor, McElrath Rogers, for materials, etc., furnished the subcontractors in the construction of a certain part of a public road in Alcorn county. In September, 1923, McElrath Rogers entered into a contract with the board of supervisors of Alcorn county for the construction of a road leading east from Corinth, Miss., known as the federal aid project No. 149, and gave bond for the faithful performance of their contract with the United States Fidelity Guaranty Company, as sureties. McElrath Rogers sublet the work to Abernathy Lee, who performed the work.

The account of W.G. Kimmons Sons was principally for feed for mules used in the construction of the road. There were some items of coal, which were used in the roller, and some oil and gasoline that were used in the tractor and trucks. The other complainants intervened as petitioners, and set up their various claims for materials and supplies furnished Abernathy Lee, and their labor in the performance of the work. These accounts will be separately referred to hereafter.

When the cause came on, there was first a motion for a change of venue to Grenada county, which was overruled; then a motion to transfer to the chancery court, which was likewise overruled. Subsequently an agreement was entered into between the parties that due publication had been made under the statute, and that the cause would be heard in vacation before the circuit judge without a jury; and the cause was continued for trial before such judge, and thereafter trial before him in vacation. Judgment was rendered for W.G. Kimmons Sons for their claim in full; the Service Lumber Company, for its claim in full; the Galtney Motor Company, for its claim in full; and for Taylor Haynie, for its account less items of Coca-Cola, candy, cigarettes, and tobacco. The claim of the Corinth Furniture Company was denied in full, and W.G. Kimmons Sons were allowed ten per cent. attorney's fees, and the other petitioners fifteen per cent. McElrath Rogers having appealed from a judgment rendered against them, the Corinth Furniture Company appeals from the judgment disallowing its claims, and W.G. Kimmons Sons cross-appeal on the question of attorney's fees, contending that they should have been allowed fifteen per cent. instead of ten per cent. The cause of action arises under chapter 217, Laws of 1918.

We think the contentions of the appellants McElrath Rogers, as to the change of venue and the giving of notice in matters of that kind, are without merit, because suit was properly brought in Alcorn county where an agent of the surety company was served with process. The question of notice and rights involved in the absence of petition is waived by the agreement entered into.

Before taking up the various claims, it will be well to state the general principles governing the case. The items in the various accounts will be governed by the principles so stated, and will be hereafter taken up and considered.

In the case of the United States Fidelity Guaranty Co. v.Yazoo County, for Use of Rings et al. ___ Miss. ___,110 So. 780, the court considered the question as to what the bond involved, under chapter 217, Laws of 1918, covered, and in the course of the opinion the court said:

"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 Co. v. Crawford,142 Miss. 490, 107 So. 877, this court held that, under chapter 217, Laws of 1918, making a contractor on his bond liable to all persons supplying labor or material in the construction of work contracted for, the contractor is not liable on his bond for money so loaned to a subcontractor, which is used in paying for material or labor; that, while the statute was to be given a liberal interpretation, it would not extend beyond the clear meaning of the terms used by the legislature. It will be seen from these decisions that the law does not extend to the equipment necessary to perform the work, which the contractor is expected to have for the performance of the work under contract, nor to repairs to the equipment, nor does it extend to money loaned to a subcontractor with which to pay for labor and materials. In the case of Standard Oil Co. v. National SuretyCo. et al., 143 Miss. 841, 107 So. 559, it was held that oil and gasoline furnished a contractor for use in operating machinery used by him in digging canals and ditches for a drainage district are materials used in the prosecution of the work within the meaning of section 1, chapter 217, Laws of 1918. With these principles in mind, we shall proceed to the consideration of the several accounts.

The account of W.G. Kimmons Sons, as stated above, is made up principally of feed for mules used while working on the construction of the road under contract, and oil, coal, and gasoline used in operating the machinery to perform such contract. Under the rule announced in Standard Oil Co. v.National Surety Co. et al., 143 Miss. 841, 107 So. 559, the feed for the mules and the coal, gasoline, and oil used in operating the machinery to perform such contract were proper allowances. In the account, however, there are two charges of twenty-five dollars each, for two tires and tubes, making a total of fifty dollars, which do not come within the principles herein announced, because both of these items were for the repair of the equipment used by the contractor in the performance of his work, and are controlled by the quotation, above given in the case of the United States Fidelity Guaranty Co. v. Yazoo County, forUse of Rings et al., 145 Miss. 378, 110 So. 780. It is said by the appellants that, should these items be found to be improperly allowed, nevertheless the judgment ought to be affirmed because the court only allowed ten per cent. attorney's fees, whereas, under the proof, they should have been allowed fifteen per cent.; that, if the court had allowed the interest, which it did not allow, it would have more than offset these two items. We think the court's allowance of the attorney's fees was proper, and, in making such allowance, it is not controlled entirely by the opinion of the witnesses as to what would be a reasonable attorney's fee. The trial judge necessarily has had much experience in passing upon these propositions, and, in questions of value, the opinions of witnesses are not entirely controlling, but many things, including the amount involved, the course of litigation, the general conditions of the country, and the general financial condition in his district, are all to be considered in reaching the conclusion of value of an attorney's service in proper litigation. We do not think the interest claimed is maintainable in the present suit. The judgment in favor of W.G. Kimmons Sons will therefore be reversed as to the two items aggregating fifty dollars, and this amount will be deducted from the judgment rendered by the circuit judge, and the ten per cent. attorney's fee will be calculated upon that amount rather than the amount which the judge calculated the ten per cent. on in his judgment; and judgment will be here rendered for W.G. Kimmons Sons for the proper amount in accordance with these views.

The judgment of the court below in favor of the Service Lumber Company will be affirmed, because the forms required for making concrete bridges and concrete culverts are not shown in the proof to be of any definite value. The lumber is necessary, of course, for modelling forms to be used in concrete work. If this lumber has a value after such use — that value should be deducted from the liability of the surety. The facts in the present case show that the contractors who bought and used the lumber had no further use for it, and that it was thrown aside and abandoned as being worthless. If it had any value, that is a matter which should have been proved in the case. In many cases these forms could be used on more than one job, where such separate jobs were contiguous and such lumber could be moved from point to point with small expense. In the present case, the contractors moved for quite a distance, and the expense of moving the lumber would have been greater than its value, if it had any real value.

The claim of Taylor Haynie is a long account, and consists mainly of groceries furnished the subcontractors for a camp nearby, which they ran for the purpose of boarding their hands. The contract between the contractors and laborers was for so much per day and board. The proof showed that there were no negroes with whom the negro laborers could obtain board, and it was necessary, in order to perform the contract, to maintain a place at which they could be fed; their board being a part of their compensation for the work. Ordinarily, supplies for a camp or a commissary would not be allowed, but, under some conditions, it is proper to allow the actual cost of the board furnished the laborers as a part of their compensation. The account also includes other items such as cigarettes, Coca-Cola, money borrowed, and clothing sold to these laborers by different people. The judge deducted the cigarettes, tobacco, candy, and Coca-Cola, amounting to only about three dollars and eighty cents, and allowed the other items. Among these other items were shirts, overalls, cash to negro laborers, and personal accounts of the laborers. We have checked the items, and find that the amount which should be allowed, in addition to what the trial judge deducted, was forty-six dollars and sixty cents. The judgment of the trial judge will therefore be reversed, and a judgment rendered here for the amount rendered by him less forty-six dollars and sixty cents, and the attorney's fees allowed by him will be calculated on the new allowance.

The claim of the Galtney Motor Company was for rent for the use of a tractor in the construction of the road, and for repairs necessary to make it as good at the end of the work as it was at the beginning. The contract between the Galtney Motor Company and the subcontractors was that the tractor would be rented for five dollars per day, and would be redelivered in as good condition as it was when first received, and the claim of the company was for these two items, which the circuit judge allowed. We think this item was clearly for equipment, and that neither the rent nor repairs are properly allowable against the original contractors. It is, of course, a valid contract as to the subcontractors, as were all the other items allowed against them by the circuit judge. This judgment will therefore be reversed as to the appellants, and a judgment entered disallowing the claim.

The claim of the Corinth Furniture Company was for the equipment of the camp. It was disallowed by the circuit judge, and we think properly so. The judgment of the circuit judge, disallowing this claim against the appellants, therefore is affirmed.

The claim of J.D. Biggers Hardware Company embraces many items, a number of which are allowable and a number of which are not. A great part of the account is made up of material for the repair of the equipment, and, under the principles above stated, is not allowable. Some of the items embraced in the account will have to be determined from more proof than is contained in the record. The judgment of the circuit court will therefore be reversed as to the account of J.D. Biggers Hardware Company, and the cause remanded for further proceedings, in which the items may be properly separated, and allowed or disallowed, as they are for equipment or for the construction work in accordance with the principles above announced.

It follows from what we have said the judgment of the court below will be affirmed in part, and reversed in part.

Affirmed in part, and reversed in part.

ON SUGGESTION OF ERROR. Suggestions of error have been filed by both the appellants and the appellees to the opinion heretofore rendered in this case.

On behalf of appellants it is urged that we erred in holding the contract binding and the principal contractor liable for the feed for the mules used in the work during the performance of the work. The appellants undertook to draw a distinction between feed for animals used in the performance of work, and supplies, such as coal, gasoline, and oil for machinery used in the work. It is argued that the contractor or subcontractor would have to feed the mules at all events in order to keep them alive, and whether they were or were not at work, whereas machinery, when not in use, would not have to be supplied with fuel, etc. This distinction, we think, cannot be safely made, and whatever doubt may have existed as an original proposition we think is removed by the prior decisions of this court referred to in the main opinion.

There is conflict of authority in other states, but we think our state, in the opinions referred to, adopted the philosophy of the main opinion, and following these decisions necessarily leads to the announcement made in the main opinion.

On behalf of the appellee it is urged that payments made by the subcontractor on the accounts of the several appellees should have been credited to the first items of such accounts; that, if this was done, it would result in the granting the amounts allowed in the circuit court.

In the suggestion of error filed by J.D. Biggers Hardware Company it is stated that, if payments made were allowed and applied to the first items of the account, it would be willing to take the balance remaining, about which there is no dispute, and have judgment rendered here accordingly.

While it is true that ordinarily payments made on an account will be applied to the oldest item or items of the account, this is not true where the money paid is derived from a particular source or fund, and where a part of the account is properly payable out of such fund. In such case the payment will be applied to the payment of items payable out of the particular fund whether such items be the oldest items in the account or not. In 21 R.C.L. at page 97, section 103, it is stated that:

"Another limitation put on the power of the creditor to apply payments is that where money is derived from a particular source or fund it must be applied to the relief of the source or fund from which it was derived. Hence when money is derived from a foreclosure sale of property given to secure the payment of a particular debt it must be applied in extinguishment of that claim without any direction from the debtor. However, a mortgagor, if he sees proper, may consent to adopt or ratify an unauthorized application of payment made by his mortgagee creditor of the proceeds of mortgaged property to an unsecured debt. Whether the mortgagor has consented to either is a question of fact to be determined by the jury, and the burden is on the mortgagee, in either case, reasonably to satisfy the jury of such consent or ratification. But the rules which bind the mortgagee who sells on foreclosures, or takes possession of and sells and converts the security, have little application to a case where the payment is made from money obtained by a voluntary sale by the mortgagor. In the latter case the lien of the mortgage does not follow or attach to the money, and the mortgagee has no recourse on any other person to whom such moneys may be paid. In the hands of the mortgagor they have no character different from moneys derived from a wholly different source; and when paid over to the mortgagee in the absence of agreement or direction as to their application, the latter has the right to credit them on the unsecured debt without regard to the source from which they were obtained by the debtor."

The moneys paid upon the account were derived from moneys paid on the contract, and, we think, should be applied first to the payment of the items properly chargeable against the account where a creditor has an account made up of items furnished to the contractor for the work proper and items furnished the contractor which did not go into the work or were not directly connected therewith.

It follows from what we have said that the suggestions of error, both for the appellant and the appellee, must be overruled.

Overruled.