Indem Ins. Co. of N Amer v. Portsmouth Ice, Coal & Mat'l Co.

These cases involve the construction of the same language in the same bond, and are therefore considered together.

J.P. Hickey had a contract for the construction of a bridge, a part of the public highway, and to secure the performance of that contract gave a bond with the Indemnity Insurance Company of North America as surety thereon. One of the terms of that bond was that the contractor "shall pay all lawful claims of subcontractors, material men and laborers for labor performed and materials furnished in carrying forward, performing or completing said contract, said principal and sureties agreeing and assenting that this undertaking shall be for the benefit of any material man or laborer having a just claim."

Suit was brought on this bond by the Portsmouth Ice, Coal Building Material Company for material furnished the contractor and for services in hauling material. The plaintiff's claim for material furnished was satisfied by the defendant, and the claim for hauling was submitted to the court on an agreed statement of facts, which, in substance, was that the bond sued on was given pursuant to Section 2365-1, General Code; that the plaintiff did haul material from Portsmouth to the site where the bridge was under construction; that the amount due the plaintiff from the contractor for such hauling was $451.20; and that the material so hauled was incorporated into the bridge structure. On these facts the court entered judgment for the plaintiff in the sum mentioned.

The other suit, by the H. Leet Company, was for material furnished. In this case it was agreed that the plaintiff had furnished material to the contractor; that the contractor was indebted therefor in the sum of $1,159.36, and that said material was used by the contractor in making forms for concrete necessary for the construction of the bridge; "that none of said lumber physically remained in said work, but that when the concrete had set said form lumber was torn down and remained the property of said Hickey; and it was the duty of said Hickey under the terms of his contract so to tear down said lumber. That form lumber if reasonably cared for may when taken down be used again on other work as form lumber or put to other uses which the size of the lumber might make practicable."

On this statement the court entered judgment for the amount mentioned.

The surety here seeks to reverse both judgments.

The language of the bond above quoted would of itself seem to impose liability upon the indemnity company, for the bond follows the form prescribed by Section 2365-4, General Code. The Supreme Court has, however, in Royal Indemnity Co. v. Day Maddock Co.,114 Ohio St. 58, 150 N.E. 426, 44 A.L.R., 374, determined that it is not sufficient that the statute prescribing the form of the bond, and the bond itself, by its terms, appear to create liability against the surety. It holds that the liability of the surety is confined to those who come within the provisions of Section 2365-1, General Code, and the succeeding section, and that those sections in turn are in analogy with those sections of the statutes that create a right to a mechanic's lien against private individuals. From what is said in the Day Maddock opinion, and more especially from the authorities cited with apparent approval, the rule in this state is that recovery upon a bond of this kind for material furnished can only be had where the material either enters into and forms a part of the finished structure, or at least is capable of being so used. Such is the interpretation of that opinion given in its annotation in 44 A.L.R., 382. The many authorities collected in this note, and in 46 A.L.R., 511, and those elsewhere reported, indicate that there is a radical difference in the interpretation given bonds of this character in different states, due not wholly, nor perhaps largely, to a difference in the statutes of the different states. We have given these authorities extended consideration, reaching the conclusion that an analysis of them in this opinion would be useless in view of the attitude expressed by the Supreme Court in the Day Maddock case.

The agreed statement of facts in the case of the H. Leet Lumber Company shows that the material furnished by that company to the contractor did not enter into the completed bridge, and could not have done so; that, after the bridge had been completed, it was to be removed from the site and was still of some value to its owner. This fact under the Day Maddock case was fatal to the claim of that company, and the judgment in its behalf was consequently erroneous.

The case of the Portsmouth Ice, Coal Building Material Company is not disposed of by the Day Maddock case. The claim of that company was for hauling material that was actually incorporated into the completed structure. The Supreme Court of Wyoming has said that the rule as to the cost of transportation of building materials is not very clear. It points out that for obvious reasons what are known as freight charges by a common carrier of material used upon the job are not recoverable, but that haulage of material, as in the case at bar, is protected by the bond. Franzen v. Southern Surety Co., 35 Wyo. 15,246 P. 30, 46 A.L.R., 496. We see no difference in principle between a laborer who wheels his barrow full of gravel from one point on the job to another and the man of larger facilities who transports that same material from the points where it is purchased to the site where the bridge is being constructed. Nor can we distinguish between the rights in this behalf of the individual laborer and the corporation that is performing the labor. Section 2365-1 covers all cases of "all labor performed or materials furnished in the construction, erection, alteration or repair of such building."

Section 2365-2 provides that bonds shall protect any indebtedness that may accrue to any "person, firm or corporation, on account of any labor performed or materials furnished in the construction, erection, alteration or repair of such building."

The Portsmouth Ice, Coal Building Material Company comes within the terms of both the sections quoted. It was consequently entitled to the benefits of the bond. The judgment in its favor was sound.

The judgment of the trial court in favor of the H. Leet Lumber Company is reversed on the ground that it is contrary to law, and the petition in that case is dismissed.

The judgment in favor of the Portsmouth Ice, Coal Building Material Company is affirmed.

Judgments accordingly.

MIDDLETON, P.J., and BLOSSER, J., concur.