City of Greenville v. Goodwyn

KNIGHT, Justice. The city of Greenville undertook to have certain of its streets improved under the provisions of chapter 43, article 33 of the Code (section 2174 et seq.). To this end proper ordinances were adopted, and á contract was entered into by the city with one P. H. Tharp, contractor, to make the improvements according to the drawings, plans, and specifications adopted by the mayor and council of the city of Greenville, Ala. While we fail to find in the record any ordinance specifically providing for the execution of a bond on the part of the said contractor for the performance of the contract on his part, yét we find that the contract made with the contractor provided for a bond in the sum of $67,000, conditioned for the faithful performance of the contract on his part, and we also find ordinance or resolution authorizing the mayor to .execute the contract on the part of the city with Tharp. Tharp, pursuant to the terms of his said contract in that respect, executed the bond, with the Union Indemnity Company as his surety thereon. The contractor made default in his said undertaking with the city, and thereafter the city secured a judgment against the surety in the District Court of the United States for the sum of $34,140.26. This judgment has not been paid. The Union Indemnity Company, surety on the bond of the said Tharp, was, at the time it became such surety, a foreign corporation but duly qualified to do business in this state. After the execution of said bond, the said Union Indemnity Company went into the hands of a receiver under proceedings in the civil district court at New Orleans, La. Thereafter Hon. R. T. Goodwyn was appointed ancillary receiver by the circuit court of Montgomery county to,take charge of and liquidate the business of said company within the state of Alabama. In order to comply with the requirements, of section 2642 of the Code, the Union Indemnit}'’ Company duly deposited with the Treasurer of the State of Alabama $50,000, in trust for the benefit of the resident holders of obligations of said company. This deposit fund of $50,000 was paid over to the ancillary receiver, and is being administered in the circuit court of Montgomery county. By an order or decree of said court, all creditors of the Union Indemnity Company, resident of this state, were directed to file their claims in said court for allowance or rejection. Pursuant to this order or decree a large number of creditors duly filed their claims, including claims of creditors making claim against said special trust fund of $50,000. Among the claims filed were numerous claims by the state of Alabama based on bonds executed by various county and state officials, as principals, and the Union Indemnity Company, as surety. The city of Greenville filed its claim in the circuit court, and by an amendment thereto sought to have its claim against the Union Indemnity Company, growing out of the default of said Tharp, allowed as a charge against the said special trust fund created under the provisions of section 2642, Code. The state of Alabama filed objections to the allowance and payment of the claim of the city of Greenville out of the said ‘'special trust fund upon the grounds, inter alia, that the said trust fund was “insufficient to pay the official bond claims in full and that official bond claims will be paid only a proportionate amount, and that to allow the claims of the city of Greenville will still further reduce the amount petitioner (State of Alabama) is to receive on its various claims heretofore allowed by the court,” and further that “the bond on which said claim is based is not a bond required by law to be approved by some officer as provided by section 2657.” The court upon the hearing of said matters allowed the claim of the city of Green-ville as “a common claim to participate in the general funds being administered,” but disallowed it as proper claim against said special trust fund of $50,000, holding that the said claim of the city of Greenville “was not an official bond claim within the meaning of said section” (2657). It is from *73 this decree that the city of Greenville prosecutes this appeal. Section 2642 stands in pari materia with section 2657 of Code, and the two sections must be construed together. While section 2642 in terms provides that this special trust fund of $50,000 is- held “in trust for the benefit of the resident holders of obligations of such corporation,” yet section 2657 proceeds to limit the holders of the obligations of the corporation to a certain designated class. By this last section it is expressly provided: “Article applies only to official bonds and the like.— Nothing herein contained shall apply to any bond or undertaking which is not by law required to be approved by any state, county, municipal, precinct, township, district, or other like office, or by any judge, clerk or register, of any court of this state, or to corporations engaged merely in the business of becoming sureties on any such bond or undertaking.” In short, in order that the bond may come within the provisions of section 2657 of the Code it must be an official bond, or a bond by law required to be approved by some authority designated in the statute. Fidelity & Deposit Co. v. Goodwyn, 231 Ala. 44, 163 So. 341. In the Goodwyn Case, supra, this court had occasion to consider and construe sections 2642 and 2657 of the Code. We there held that the two sections must be construed together, and when so construed, that the specific provisions of section 2657 must prevail as the last expression of the legislative will. We there held that the article applied only to a bond to be approved by any state, county, municipal, precinct, township, district, or other like office, or by any judge, clerk, or register of any county of this state. We further held that it was the legislative intent that the $50,000 deposit required was to secure primarily official bond claims and other bond claims mentioned in section 2657 of the Code; and that other bond claims not so included are not preferred claims upon the deposit. It is to be here noted that the bond in question was executed prior to the passage of the act approved February 10, 1927. Gen.Acts 1927, p. 37. The bond in question does not fall within the class of bonds provided for in section 2657, and appellant is not entitled to have, his claim allowed as a preferred claim against the special trust fund of $50,000 to be paid either in whole or ratably out of said fund, so long as there are claims that should be paid out of said fund, and which may exhaust the same. The trial court properly so ruled, and its decree is due to be affirmed. It will be so ordered. Affirmed. All the Justices concur.