Webb v. Freng

Jones, J. The first question presented is whether the complaint states a cause of action against the sureties on the bond. It is argued by counsel for appellants that it appears from the contract and the bond that the sureties were liable to the county only; that the bond was given to protect the county in case of the failure of Lee to perform his.contract, and that it is only in this connection that the word “sureties” is used in the contract; that in case of default the bond provided that payment should be made to the county; that this view is supported by the language in the contract that if he should neglect or refuse to furnish the materials the county should have the right to do the work and furnish the materials; that the sureties were to become liable only in the event that the county should have to take over the contract and a deficiency should arise; and for that deficiency only. This contention does not give sufficient consideration to the very plain language in the bond which required the contractor not only to faithfully perform the conditions of the contract but also to “pay all bills for labor and materials incurred therein.” There is no doubt that it was competent for the sureties to make a contract for the benefit of third persons who might become interested by furnishing material for the building and that such persons could enforce the contract thus made for their benefit. This question has several times been raised and decided by this court. In R. Connor Co. v. Ætna Ind. Co. 136 Wis. 13 (115 N. W. 811), it was said (p. 20): “Since the bond secured payment by the contractors for the material used in the construction of the building, it was [43] therefore a contract between the district and the parties thereto for the benefit of those persons furnishing material to be used in the construction of the building. Under such circumstances the third party need not be ascertained or known at its inception to entitle him to the benefits thereof. The third party may adopt it when he becomes informed, and may enforce it at law as if originally made by his express authority.” U. S. G. Co. v. Gleason, 135 Wis. 539, 116 N. W. 238. The statute referred to in the statement of facts indicates the policy of the state that those furnishing materials for the class of public buildings therein mentioned shall be protected, and the bond was evidently given for that purpose. Counsel for the sureties contend that there was error in the refusal of the court to receive evidence tending to show that they were released from liability because ten per cent, of the proportionate value of the work done was not retained, as provided by the contract, until the work was completed. It was provided that the gross sum was to be paid as follows : “Ninety per cent, of the proportionate value of the work done, monthly, as the work progresses, on the estimates of the superintendent, such estimates to include value of materials delivered on the grounds for the building work, and the remaining ten per cent., together with all other, sums, if any, due on this contract, shall be paid on the completion and acceptance of the entire work as herein contracted for or as soon thereafter as the party of the second part is satisfied that said work is completed, and are assured against the existence of mechanics’ liens on said buildings; provided, however, that no material shall be estimated or paid for until wrought into the construction of the building.” It is undoubtedly true that such a clause in a contract is a material one. Overpayment may remove the incentive to the contractor to diligently press his work. The sureties may also be prejudiced by the diminution of the fund in the owner’s hands which may serve as a means of protecting [44] sureties from liability. Kunz v. Boll, 140 Wis. 69, 121 N. W. 601; Lowe v. Reddan, 123 Wis, 90, 100 N. W. 1038; Cowdery v. Hahn, 105 Wis. 455, 81 N. W. 882; Stephens v. Elver, 101 Wis. 392, 77 N. W. 737. It is also true, as argued by counsel; that sureties, especially gratuitous sureties, are favorites of the law and have a right to stand upon the strict terms of their obligation when ascertained. W. W. Kimball Co. v. Baker, 62 Wis. 526, 22 N. W. 730. These familiar rules might be quite effective if this were an action brought by the county against the sureties, but it is an action by those who furnished materials, and they rely on the statute quoted in the statement of facts. When that statute was enacted the legislature was doubtless familiar with the fact that, through the insolvency or mismanagement of contractors, materialmen had often suffered heavy losses. In view of the fact that they could not file liens against municipalities, the legislature sought by enacting this statute to afford relief in such cases. By providing that no change of the contract or in the work or extension of time should release the sureties they intended that the statute should cover such acts as are here complained of. Conn v. State, 125 Ind. 514, 25 N. E. 443; Duluth v. Heney, 43 Minn. 155, 45 N. W. 7; Steffes v. Lemke, 40 Minn. 27, 41 N. W. 302; U. S. F. & G. Co. v. American B. Co. 41 Ind. App. 620, 84 N. E. 555; U. S. v. National S. Co. 92 Fed. 549, 34 C. C. A. 526; Chaffee v. U. S. F. & G. Co. 128 Fed. 918, 63 C. C. A. 644; U. S. v. California B. & C. Co. 152 Fed. 559; Getchell & Martin L. & M. Co. v. Peterson, 124 Iowa, 599, 615, 100 N. W. 550; School District v. Livers, 147 Mo. 580, 49 S. W. 507; West Duluth v. Norton, 57 Minn. 72, 58 N. W. 829; Kaufmann v. Cooper, 46 Neb. 644, 65 N. W. 796; Des Moines B. & I. Works v. Marxen, 87 Neb. 684, 128 N. W. 31; Barritt S. King & Co. v. Murphy, 49 Neb. 670, 68 N. W. 1029; Doll v. Crume, 41 Neb. 655, 59 N. W. 806. It appeared that some of the lumber furnished by the [45] plaintiff Webb was used for shoring or forms for the concrete and for scaffolding. Counsel for defendants sought to prove that some of this lumber was removed from the premises by the contractor and sold or otherwise used by him, and all proof of this kind was rejected. In Wis. B. Co. v. National S. Co. 164 Wis. 585, 160 N. W. 1044, the statute now involved was construed, and it was held that it gives no more extensive right than that furnished by the mechanics’ lien law, and that it gives no remedy to any different persons, but that the remedy is coextensive with the remedy afforded by that law. It is well settled that, in actions to enforce liens, materials used by a contractor as mere appliances or tools or equipment, and which may be used again in the construction of other buildings or structures, are not materials for which a lien can'be enforced. The rule is different if the materials have lost their identity or fitness for future use to any material extent. Barker & Stewart L. Co. v. Marathon P. M. Co. 146 Wis. 12, 130 N. W. 866. In Moritz v. Sands L. Co. 158 Wis. 49, 146 N. W. 1120, lumber used for shoring was furnished the contractor, and it was found that seventy-five per cent, of it was consumed in the construction of the building and could not be used again; that twenty-five per cent, of the lumber furnished was not entirely consumed, but that it had become depreciated in value. The amount of this depreciation was determined and a lien was allowed for the amount of the depreciation of the twenty-five per cent., and the seventy-five per cent, actually consumed. On this point that decision seems to rule the present case. It may be that if the proof had been received it would have appeared that the lumber removed or sold was of little value. On this subject we can express no opinion since the evidence bearing on the question was excludfed. We hold that the exclusion of this evidence was prejudicial error, and that the cause should be remanded with directions to take testimony as to the value of the materials [46] used for shoring and scaffolding in the building provided for by the original contract, and the amount of the depreciation of the portion so used and not consumed. After taking such testimony the plaintiff Webb should be allowed in the judgment for the lumber so consumed as shoring and scaffolding and the percentage of depreciation of that so used and removed or sold, and not for the value of the entire amount used in shoring and scaffolding. As to the oilier plaintiffs the judgment is affirmed. By the Court. — Judgment modified as to plaintiff Webb; and as to the other plaintiffs affirmed; and cause remanded for further proceedings as indicated in this opinion.