Sinclair Refining Co. v. Burch

I respectfully dissent. Now we have the spectacle of the defaulting contractor, able, in spite of his default, to assert a prior and paramount claim to ninety per cent of the funds still in the hands of the commission as against claimants with filed claims totaling more than all the funds earned by the defaulting contractor and still in the hands of the commission. That is exactly what the majority holds when you strip the case of the elements of subrogation of claimants' rights, and assignment of the contractor's rights about which there is no argument. This case is a companion case to Hercules Mfg. Co. v. Burch, 235 Iowa 568, involving the same contractor, surety, and bank, but here the contractor abandoned the contract before completion. There, as I pointed out in my dissenting opinion, the majority actually held that the contractor who completed his contract could take ninety per cent of the funds still in the commission's hands after completion of the contract, and the claims of laborers and materialmen who did the work and furnished material for the completion of the contract could go unpaid.

Here the defaulting contractor, under the majority holding, is given the same right as to the funds earned and unpaid up to the time of his default. The majority arrives at this conclusion in the face of a statute that in clear, unmistakable language states that all the funds due the contractor at the time of the default and still in the commission's hands shall be available for claimants. In my dissent in the Hercules case I pointed out that the majority opinion was based upon construing statutes that provided for retention duties as statutes that provided the only funds to which claimants could resort after the contract was completed. Well, here is a statute that provides what fund will be available for claimants of a defaulting contractor, and the majority says the legislature just did not mean what it said.

Section 10320 of the 1939 Code provides:

"When a contractor abandons the work * * * the improvement shall be deemed completed for the purpose of filing claims as herein provided, from the date of the official cancellation of the contract. The only fund available for the payment of theclaims of persons for labor performed or material furnished shallbe the amount then due the contractor, if any, and if said amount be insufficient to satisfy said claims, the claimants shall have a right of action on the bond given for the performance of the contract."

How could the legislature possibly have spoken plainer? But the majority opinion states the legislature did not mean that all the amount due the contractor at the time of abandonment would be available for claimants but only a percentage of the amount (not less than ten per cent) would be available for claimants and the balance must still be paid over to the defaulting contractor. In other words, the statutes of retention, sections 10310 to 10312, which apply only to contracts requiring more than thirty days for completion, will govern the interpretation to be placed upon this statute that provides in clear, unambiguous language that the fund available for the payment of claims against a defaulting contractor on any contract will "be the amount then due the contractor, if any."

I feel that the majority has left the field of judicial interpretation and entered the field of judicial legislation. I would reverse.

SMITH, J., joins in this dissent.