Oliver Const. Co. v. Dancy

Holden, P. J., delivered the opinion of the court. The Oliver Construction Company and the National Surety Company appeal from a decree allowing the appellees Dancy and others certain amounts of money claimed by them to be due for labor and material furnished in the construction of a public road across the southern end of Benton county, known as federal aid project No. 22; the construction of said road having been undertaken by the Oliver Construction Company under a contract with the board of supervisors, and the National Surety Company having furnished bond for the performance of the contract in compliance with chapter 217, Acts of the legislature of 1918. The case in short is this: The Oliver Construction ■Company entered into contract with the board of supervisors to constuct the public road in question, and the National Surety Company furnished bond for the faithful performance of the contract, with the provision to “pay the said agents, servants, and employees, and all [496] persons furnishing’ said principal with material and labor in the course of the performance of said work,” etc., and which obligation is also provided in chapter 217, Laws of 1918, that reads in part as follows: ‘ ‘ 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; and any person who has furnished labor or materials used therein and wherefor payment has not been made, shall have the right to intervene and be made a party to any action instituted on such bond, and to have their rights adjudicated in such action and judgement rendered thereon, subject, however, to the priority of the claim and judgment of the obligee.” Section 1. The contract was then sublet to Lansdale & Ackerman, who undertook to construct the road according to the terms of the original contract. The board of supervisors continued to recognize the Oliver Construction Company, only, as the contractors, and issued warrants' payable to it in payment for the work as it progressed. The appellees Dancy and others performed work and furnished material in the construction of the road under the said subcontractors, Lansdale & Ackerman, who issued to appellees their duebills or notes at intervals which represented or showed the accounts due to appellees for services rendered and material furnished in the construction of the road. These duebills or notes issued by the subcontractors were in the nature of stated accounts of the amounts due the appellees for their labor and material furnished, and were to be paid at intervals while the work progressed. [497] When the contract was completed and a final settlement between the board of supervisors and the Oliver Construction Company was made, the appellees were left unpaid the amounts due them for their labor and material furnished in the building* of the road, and they instituted this suit to recover the amounts due them from the Oliver Construction Company and its surety bonding company. We have omitted stating certain other features and phases of this litigation because we think it necessary to do so, since the questions raised by appellants with regard thereto do not merit discussion by lis, as they are clearly not maintainable. We think the only serious point raised by the appellants is whether or not the appellees waived or released their rights to go against the Oliver Construction Company and the Surety Company for the balance due them, on the ground that appellees accepted the duebills or notes of the subcontractors, Lansdale & Ackerman, which represented statements of the amounts due appellees for labor and material furnished in the construction of the road, and thereby waived or released (or novated, as contended by appellants) their right to hold the original construction company and the Surety Company liable for the amounts due appellees for labor and material furnished in the work, as provided by the contract and chapter 217, Laws of 1918, which is written into the bond of the Surety Company herein. It is our judgment that there was no novation or release by the appellees of their right to recover against the Oliver Construction Company and the Surety Company on the bond for the amounts due them for labor and material furnished in the construction of the public road. The duebills or notes received by appellees from the subcontractors, Lansdale & Ackerman, merely represented the amounts due appellees for labor and material furnished in the work, and was so understood, and appears to have been more in the nature- of stated accounts showing the amount of work done and material [498] furnished for which the appellees were to be paid at different times. There could be no release or waiver of the right of appellees to go against the surety bond and the Oliver Construction Company, merely by receiving these written evidences of the amounts due them for labor and material furnished in the work. There was no agreement between the parties-that the subcontractors were to be individually substituted and looked to independently for the balances due for the labor and material furnished. The subcontractors were acting for and in the place of the Oliver Construction Company, and the laborers and materialmen had the right, under the contract and the bond, to look to the Construction Company and the Surety Company for payment for the services and material furnished in the event that the subcontractors, the agents who took the shoes of the Oliver Construction Company, failed to pay appellees for the labor and material furnished. The cases of National Surety Co. v. Hall-Miller Co., 104 Miss. 626, 61 So. 700, 46 L. R. A. (N. S.) 325, and U. S. Fidelity Co. v. Marathon Lumber Co., 119 Miss. 802, 81 So. 492, are in point as showing the liability of an original contractor and his surety bond for all amounts due to subcontractors, laborers, and materialmen who furnished labor and material in the construction of a public building: or public road. If the appellees, who furnished the labor and material going into the construction of the road, had accepted an independent settlement, obligation or security from the subcontractors, Lansdale & Ackerman, and had by agreement thus substituted the subcontractors in the place of the original contractor, and its bondsmen, then a very different question would be presented in this case, for, under such a state of facts, it may be, though we do not decide because unnecessary to do so, that appellees would have waived and released by novation their right to go against the Oliver Construction Company and its bond of the Surety Company. [499] But the case before us is not one of release or novation, by the parties, and the mere fact that the appellees furnished the labor and material to the subcontractor who was carrying out the contract for the original contractor, the Oliver Construction Company, and that the subcontractors issued their duebills or notes as the work progressed, which showed and represented the amounts due appellees for their labor and material, did not constitute a waiver of the right of appellees to go against the Oliver Construction Company and its bond which undertook in the first instance to guarantee the faithful performance of the contract, and “that such contractor or contractors shall promptly make payments to all persons supplying labor or material therefor.” Appellees had a right to depend upon the contract and bond of the Oliver Construction Company to secure payment for all labor and material furnished the Oliver Construction Company, or its substitute and agents, Lansdale & Ackerman. The Olive Construction Company and its surety could not escape this obligation to pay for labor and material by subletting the work to some other contractor, or by securing some other person or firm to do the work provided for in the contract, because the subcojitractor was, under the contract and bond, acting for the original contractor in peforming the contract, and all laborers and materialmen had the right to look for payment to the original contractor, the principal in the bond, and the Surety Company on the bond. The obligation of the bond cannot thus be evaded by subletting the contract to some other person who completes it. for the. original contractor. We have considered the other questions presented by the appellants, and do not think the complaints are tenable, and therefore we have not discussed them. In view of the above conclusions the decree of the lower court is affirmed. Affirmed.