Standard Oil Co. v. National Surety Co.

^* Corpus Juris-Cyc References: Drains, 19CJ, p. 616, n. 78; p. 690, n. 93, 94. Limitation of Actions, 37CJ, p. 1210, n. 97. Political Subdivision of the State, 31Cyc, p. 909, n. 30 New. On governmental nature of drainage district, see 9 R.C.L., pp. 620, 644; 2 R.C.L. Supp., pp. 844, 847; 4 R.C.L. Supp., p. 618. On nature of labor and material which will support an action upon a contractor's bond, see notes in 43 L.R.A. (N.S.) 162; L.R.A. 1915F, 951. This is a suit by the appellant, under chapter 217, Laws of 1918, on the bond of Clark-Hunt Contracting Company on which the National Surety Company is surety, executed by it to the Pompey Lake Drainage District, to insure the "construction and completion," of several ditches and canals for which it had contracted with the Pompey Lake Drainage District. One of the provisions of the contract entered into by the Clark-Hunt Contracting Company with the drainage district is:

"The contractor shall discharge all claims for work done and material furnished in the prosecution of the work, and shall, upon request, furnish the board with satisfactory evidence that all persons who have done work or furnished material under this contract have been fully paid for such work or material."

The condition of the bond is that — "Clark-Hunt Contracting Company shall well and truly perform all the matters and things therein (referring to the contract) contained and set out, or therein referred to, as it is obligated and bounden so to do, and shall well and truly perform all the matters and things as it is or may become bound so to do."

The declaration alleges that the appellant sold Clark-Hunt Contracting Company oil and gasoline of the value of four hundred thirty-one dollars and seventy-nine cents all of which was used by Clark-Hunt Contracting Company "in the performance of the drainage work under the contract with the Pompey Lake Drainage District, the same being material necessary in the operation of the said work, under said contract;" that Clark-Hunt Contracting Company abandoned its contract, and notice thereof was published by the drainage district as provided by the statute.

Separate demurrers were filed by each of the defendants, and from a judgment sustaining them the appellant has brought the case to this court.

The contentions of the National Surety Company are: First, there is no privity of contract between it and the appellant; and, second, the suit cannot be maintained under chapter 217, Laws of 1918, for four reasons: (1) A drainage district is not a political subdivision of the state; (2) the bond does not contain the additional obligation required by the statute, and the contractor "shall promptly make payments to all persons supplying labor or material therefor;" (3) it does not appear from the declaration that the suit was brought within one year after Clark-Hunt Contracting Company is alleged to have abandoned its contract with the drainage district, as required by section 3, chapter 217, Laws of 1918; and (4) the material furnished the Clark-Hunt Contracting Company by the appellant was not placed in, and did not become a part of, the canals, etc., which the Clark-Hunt Contracting Company agreed to construct for the drainage district. The first of these contentions merges into, and will be dealt with, as a part of the second.

A political subdivision of a state is a subdivision thereof to which has been delegated certain functions of local government. Drainage districts are created for the purpose of draining and reclaiming wet and overflowed land, and of conserving the public health and convenience, for the accomplishment of which they are vested with the necessary governmental powers, and, consequently, they are political subdivisions of the state by which they are created. 19 C.J. 615; Houck v. Little River DrainageDistrict, 36 S.Ct. 58, 239 U.S. 254, 60 L.Ed. 266; People v.Hepler, 88 N.E. 491, 240 Ill. 196.

Section 1, chapter 217, Laws of 1918, provides:

"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. . . ."

It is true that the bond here in question does not provide on its face that the Clark-Hunt Contracting Company shall promptly make payment to all persons supplying labor or material for the work to be done by it for the drainage district, but it does expressly provide for the performance by the Clark-Hunt Contracting Company of all "the matters and things" contained, set out, or referred to in its contract with the drainage district, one of which is that it "shall discharge all claims for work done and materials furnished in the prosecution of the work," and shall furnish the drainage district with evidence that "all persons who have done work or furnished material under this contract have been fully paid for such work or material." The performance of this stipulation of the contract is, therefore, one of the obligations and of the bond executed by the Clark-Hunt Contracting Company to insure the performance by it of its contract. The statute does not require the obligation that such contractor shall promptly make payments, etc., to be written in the bond. It simply requires such payments to be one of the obligations of the bond.

Assuming, for the sake of argument, that it does not appear from the declaration that this suit was begun within one year after the Clark-Hunt Contracting Company abandoned its contract with the drainage district, and that this defect, if such it be, can be raised by demurrer (G. S.I.R. Co. v. Bradley, 69 So. 166, 110 Miss. 152, Ann. Cas. 1918D, 554), it is not assigned in the demurrer as one of the causes therefor, and consequently, cannot be considered. Section 754, Code of 1906 (Hemingway's Code, section 537).

It is true that the material furnished to Clark-Hunt Contracting Company by the appellant did not go into or become a part of any structure, but it could have been used by the contracting company "in the prosecution of the work" in other ways. It is clear from the contract that the canals were to be dug by machinery, and, if the oil and gasoline sold by the appellant to Clark-Hunt Contracting Company were used by it in operating this machinery, it was then, of course, used "in the prosecution of the work."

The contention of Clark-Hunt Contracting Company is that this suit is and must have been against it and the National Surety Company jointly, and, if the National Surety Company is not liable, that it (Clark-Hunt Contracting Company) could not be here held, but must be sued separately. If there is anything in this contention, it, of course, disappears when the surety company is held liable.

Reversed and remanded.