Million v. Metropolitan Casualty Insurance

The appellants furnished sand and gravel to the Highways Improvement Company, contractors, for the construction of a portion of State Road 30 — Valparaiso-Plymouth Road — in Starke County, Indiana. The contract for the building of said road was made by the Highways Improvement Company with the State of Indiana, acting by and through the State Highway Commission, by John D. Williams, Director. To secure the performance of its said contract, said contractor, agreeable to § 8285 Burns 1926, executed its bond with the appellee, the Metropolitan Casualty Insurance Company of New York, as surety thereon, conditioned, inter alia, that the said contractor would pay all lawful claims of materialmen, for materials furnished in the carrying forward and completing said contract, and expressly agreeing that said bond should be for the benefit of any materialmen having a just claim against said contractor. This bond was duly approved and accepted by John D. Williams as Director said Commission.

This contract was let and said bond given under and in accordance with the provisions of § 8285 Burns 1926, (§ 18 of the Highway Commission Act), in which section it is among other things provided: . . . Any person, firm or corporation to whom any money shall be due on account of having performed any labor or furnished any material in the construction of such highway, within one year after theacceptance thereof by the duly authorized board of officers shall furnish the sureties on said bond a statement of the amount due to any such person, firm or corporation. No suit shall be brought against the sureties on said bond until the expiration of sixty days after the furnishing of said statement. If said indebtedness shall not be paid in full at the expiration of said sixty days, said person, firm or corporation may bring an action in his own name upon such bond, said action to be commencedwithin one year from the date of the acceptance of saidhighway." (Our italics.)

It appears from the averments of the complaint, that the said construction contract was entered into in March, 1927, and the bond given as before noted; that the appellants furnished materials — sand and gravel — used in the construction of said road; that said road had been fully completed and had been accepted by the State, on December 15, 1928, and the final estimate thereon paid on that date. It also appears from said averments that the materials for which this suit was brought, were furnished in July and August of 1927, and that in February, 1928, the appellants filed with the State Highway Commission, in duplicate, a verified statement of their account, and that on March 20, 1928, a copy of the claim so filed was given to the said surety. The complaint, the basis of this suit, was filed February 11, 1929. A demurrer thereto for want of facts was sustained, hence this appeal. The only question to be considered is the sufficiency of the complaint.

The contention of the appellees is embodied in their memorandum filed with their said demurrer, one of the specifications of which is as follows: "Each paragraph of said complaint shows on its face that the plaintiffs herein were subcontractors who furnished materials entering into the construction of said highway, but that the plaintiffs failed to comply with the terms of the statutes in said cases made and provided, in that the plaintiffs failed, within sixty days after the last item of material had been furnished by them, to file with the State Highway Commission duplicate verified statements of the amount due and owing by the contractor to them; the said plaintiffs, in failing to file such duplicate verified statements of the amount owing them, within the time required by statute, lost the right to proceed against the surety upon said contractor's bond."

In short, it is the contention of the appellees that the remedy given by section 2 of the act of 1911 (Acts 1911, p. 437) as amended by the act of 1925 (Acts 1925, p. 130), the same being § 6122 Burns 1926, is the sole and only remedy of which a subcontractor, laborer or materialman may avail himself, as against the surety on such bond. On the other hand, it is the contention of the appellants that the remedy given by said act is optional, and that the remedy, as the same existed prior to said amendment of 1925, for a breach of such bond, still remains to such creditor, upon his compliance with § 8285, supra.

Before the amendment of said act of 1911 by the act of 1925, this court had held in the cases of Equitable Surety Co. v.Indiana Fuel Supply Co. (1919), 70 Ind. App. 75, 123 N.E. 22, and Illinois Surety Co. v. State, ex rel. (1919),69 Ind. App. 450, 122 N.E. 30, that the remedy given by said act was cumulative; that the right of action on the bond, as at common law, still remained. The question therefore, which we are now called upon to answer is — Did the amendment of 1925 take from the subcontractors, materialmen, and those performing any service in relation to or in connection with such construction, alteration, etc., as mentioned in said section as amended (§ 6122 Burns 1926), their right to bring suit upon a contractor's bond, as such right then existed, for a breach thereof by failing to pay their just claim for labor performed or materials furnished?

It will be noted that by said act of 1911, it was provided in section 1, that the disbursing officer or officers shouldwithhold full payment to the contractor, until such contractor had "paid to the subcontractor or subcontractors or laborers employed in such construction, all bills due and owing the same," and providing that if the money so retained should not be sufficient to pay claims in full, they should be prorated, and also providing that in cases where there was no dispute as to the amount of such claim the disbursing officer or officers should pay such claim, taking a receipt therefor, and that the amount so paid should be deducted from funds due the contractor. Said section also provided that said funds so held should be retained until such disputes as might arise as to amounts due were settled, when payment should be made.

By section 2 of said act it was provided that provision should be made in the construction contract for the withholding of funds to pay for labor, materials, and to subcontractors, and that the bond should be so conditioned as to render the sureties thereon liable for labor, materials, and to subcontractors, and said section then closed with a proviso, that laborers, materialmen and subcontractors should file their claims with the proper officer within 30 days after the labor was performed or materials furnished.

By section 3 of said act it was declared that said act should not be construed as repealing any other laws for the protection of laborers, subcontractors, or materialmen, but as being supplemental thereto. Said sections 1 and 2 were amended in 1925 (Acts 1925, p. 129, §§ 6121-6122 Burns 1926), but section 3 of said act of 1911 remained as at the time of its passage in 1911.

In Atz v. City of Indianapolis (1928), 87 Ind. App. 580,158 N.E. 523, 524, this court said: "The general rule is that a court in arriving at the effect of an amendment to a 1. statute must consider the amendment as a part of the original act, and the entire act as amended must be given the same construction as if the amendment had been a part of the original act," so that we have said section 3 of said original act remaining unimpaired by the act of 1925. Blair v. Chicago (1906), 201 U.S. 400, 26 S.Ct. 427, 50 L.Ed. 801; Walsh et al. v. State (1895), 142 Ind. 357, 41 N.E. 65, 33 L.R.A. 392.

The amendment of 1925 broadened said act as to the persons who might claim the benefits thereof by providing inter alia (section 2), that the bond given should be conditioned "for the payment by the contractor, his successors and assigns, whether by operation of law or otherwise, and by subcontractors, their successors and assigns whether by operation of law or otherwise, of all indebtedness which may accrue to any person, firm or corporation on account of any labor or service performed or materials furnished or service rendered as herein provided, in the construction, erection, alteration or repair of any such building, work or improvement, which shall include all road, highway, street, alley, bridge, sewer, drain, or any other public improvement of any nature or character whatsoever." Said section, as amended, then further provided that persons within said act, who had any claim against any contractor or subcontractor, should within sixty days after the completion of said work, or within sixty days after the last item of material was furnished, file with the proper officer or board, duplicate verified statements of their account, and, that a copy of such statement so filed, should be, at once, delivered to the surety on such contractor's bond. It then provided that no suit should be brought on said bond within the thirty days following the filing of said account, and that no suit should be brought after the expiration of one year.

It is the contention of the appellees, as before stated, that the remedy given by this statute, to the persons named as being within the provisions thereof — contractors, subcontractors, materialmen, etc. — is exclusive of all other remedies — that it is the only remedy such persons have — and if they fail to bring themselves within the provisions of said act, they are entirely without remedy, as against the surety, to recover any thing that may be due them. And this contention they make notwithstanding the language of said section 3 above quoted. We shall examine this contention.

In the absence of said statute it must be conceded that all persons within the protection of said bond, as written, had an action at law — the common law action of debt — upon such bond, when a breach thereof arose, and so the question arises: Did the legislature, by the enactment of this statute, act of 1925,supra, intend to take away from the party his right to proceed under the provisions of the highway act, section 8285, supra?

In Bacon's Abridgement, Vol. 9, title "Statute," it is said: "In all doubtful, and where the expression is in general terms, statutes are to receive such a construction as may be 2. agreeable to the rules of the common law in cases of that nature; for statutes are not presumed to make any alteration in the common law farther or otherwise than the act expressly declares; therefore, in all general matters, the law presumes the act did not intend to make any alteration; for, in the parliament had had that design, they would have expressed it in the act," citing 11 Mod. 150. In the same chapter, Bacon also speaks of some statutes being given an equitable construction, and says that such construction is sometimes given to remedial statutes, where the mischief sought to be remedied is within the meaning, but not within the letter of the statute because the law makers could not set down every case in express terms, but he then adds: "statute which is to take away a remedy given by the common law ought never to have an equitable construction," citing Hammond v. Webb (1795), 10 Mod. 282. This author also says, in discussing the same subject: "It is a maxim of law, that an affirmative statute does not takeaway the common law," as "If a statute, without any negative words declares that deeds shall have, in evidence a certain effect, provided particular requisites are complied with, this does not prevent their being used as evidence, though the requisites are not complied with, in the same manner as they might have been before the statute was passed." He also says: "Although an affirmative statute does not take away the common law, it is nevertheless binding; and a party may take his election to proceed upon a statute or at common law."

In Bandfield v. Bandfield (1898), 117 Mich. 80, 75 N.W. 287, 288, 40 L.R.A. 757, 72 A.S.R. 550, it was said: "The legislature should speak in no uncertain manner when it seeks to abrogate the plain and long established rules of the common law." It is a fundamental rule that statutes in derogation of common right are to be strictly construed, and this is especially so when such statute attempts to take away or deprive a person of a right existing at common law — a "common right." Webb, etc., v.Baird (1854), 6 Ind. 13. A "common right" is a right which pertains to the citizens by the common law, the investiture of which is not to be looked for on any special law, whether established by a constitution or an act of the legislature. 3 Kent Comm. 459. Lord Coke says (Coke Inst. 142a) that a common right is a right given by the common law, "because the common law is the best and most common birthright that the subject hath for the safeguard and defense not only for his goods, lands, and revenues, but for his wife and children." Under the common law, when a contractual bond was given, the obligee or beneficiary or beneficiaries therein had a right of action thereon whenever such bond was broken, and this right, so given by the common law, was a common right.

In Woollcott v. Shubert (1916), 217 N.Y. 212, 111 N.E. 829, 831, L.R.A. 1913E, 248, Ann. Cas. 1916B, 726, it was said: "In order that we should hold that the act of 1913 abrogated the common-law rights of the defendants existing at the date of its enactment, it must clearly appear that they are so repugnant to the act, or the part thereof invoked, that their survival would, in effect, deprive it of its efficacy and render its provisions nugatory." See, also, Texas P. Ry. Co. v. Abilene Cotton OilCo. (1907), 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 9 Ann. Cas. 1075; People v. Palmer (1888), 109 N.Y. 110, 16 N.E. 529, 4 Am. St. Rep. 423. When a remedy is given either by 3. statute or by common law such remedy is never to be taken away by mere implication. It must be by express enactment, or by repugnance, as above noted.

With the foregoing rules in mind we now come to the examination of said sections 6121 and 6122 Burns 1926. We find that said sections are affirmative in character; that they contain no express words denying to the beneficiary or beneficiaries in such bond an action on such bond, for a breach thereof, as such remedy then existed; that there are no express words of repeal therein, but on the contrary, an express declaration in section 3 of said act (§ 6123 Burns 1926), that said act should be supplementary to existing laws. Also, it will be noted that said contract was let and said bond given under and in accordance with the provisions of the act creating the State Highway Commission (Acts 1919, p. 119, § 8268 et seq. Burns 1926) and that in said act it is provided (§ 17, § 8284 Burns 1926) that the person or persons furnishing labor, materials, etc., should give notice to the sureties on such bondwithin one year after the acceptance of such work by the State. The above act was a special act, creating the highway commission and defining its powers, etc., and it is a fundamental 4-7. rule of construction that "special acts" are not repealed or modified by "general acts," by implication. It is held that a general act "repealing all laws inconsistent therewith," refers to general laws, and does not change or repeal "special laws." Morris E.R. Co. v. Miller (1863), 30 N.J.L. 368, 86 Am. Dec. 188; State v. South Kingstown (1893), 18 R.I. 258,27 A. 599, 22 L.R.A. 65. And we therefore conclude that under the law as it now stands, the beneficiary of such bond has a choice of remedies: He may, if he shall so desire, follow the provisions of said act of 1911, as amended in 1925, and thereby, in effect, "impound" the funds which are then or may thereafter become due the contractor, in the hands of the disbursing officer or agent or body, to thereby the better secure his claim. If he shall elect to proceed under the provisions of said act, as amended, and shall comply therewith by filing in duplicate his verified claim, as therein provided, then and in that event, having so elected and so thereby "impounded" the funds, he is limited to the provisions of said act, as to his remedy.

It is urged that the statute under consideration in this case falls within the rule that, where a statute creates a new right and prescribes the remedy for an invasion thereof, such remedy is exclusive and none other can be asserted.

While the rule above stated is well settled, yet, we think it has no application in this case. In Lang v. Scott (1825), 1 Blackf. 405, 12 Am. Dec. 257, it was said: "If a statute is introductory of new rights which did not exist before in this country, and prescribes a penalty for their violation, the persons claiming under the act must depend, for the security of the rights thus claimed, upon the provisions therein specified. When there is a pre-existing right at common law, and an affirmative statute intervenes inflicting a new penalty, the law is otherwise. The exclusive privileges of ferries were not known here until they were authorized by statute; and the statute by which they are authorized prescribes a specific penalty for their violation. Upon the provisions of the act, therefore, the owners of ferries must rely for the security of their rights, so far as the courts of common law are concerned."

Did the statute under consideration create a new right? Or did it simply create a new remedy?

The bond in question was a statutory bond — one the giving of which the statute required, and the provisions of which were fixed by statute. It had long been the law in this state, prior to the enactment of the act now under consideration, that any beneficiary within the provisions of a statutory bond had a right of action thereon, at law, for any breach thereof to his damage as such beneficiary. The books are full of cases where action had been brought, by beneficiaries, upon bonds of saloon keepers, contractors, public officials, et al. These were all actions at law. As to statutory bonds, the law requires their execution, prescribes their form, the conditions to be therein inserted, and the beneficiaries thereof. The two dominant features of the act now in question are, (1) the broadening of the class of persons who could claim thereunder as beneficiaries, and (2) providing a method whereby funds accruing to the contractor, under his contract, might be, in effect, "impounded" and subjected to the payment of the debt of such claimant. Let us suppose that the provision relating to the "impounding" of the funds had been entirely omitted from said act, and that the only legal effect thereof, upon the then existing law, was the broadening of the list of persons who might claim thereunder as being beneficiaries under said bond, would it be contended for a moment that no action could be maintained upon said bond, by any beneficiary thereunder, where there had been a breach of said bond, to the damage of said beneficiary? This especially in view of the provision of said section 3 of said act. As it seems to us, a statement of the question carries an answer. We may concede that the act in question, as the same now stands, gives to the subcontractor, laborer, and 8. materialman a new right — the right to impound the fund, and if any such of the said beneficiaries of said bond should desire to impound the fund, then, and in that event, the statute in question provides the sole remedy for attaining that end, and it must be followed, but we find nothing in the statute, especially in view of said section 3 thereof, which requires that said fund shall be impounded as therein provided for; the beneficiaries of such bond are left to their own choice of remedies.

We conclude that as appellants had complied with section 8285,supra, the court erred in sustaining said demurrer and the judgment is reversed with directions to overrule said demurrer and for further proceedings.

Nichols, J., dissents.