City of Flora v. Searles

Mr. Presiding Justice Smith delivered the opinion of the court. The record presents the question whether or not a recovery can be had on the bond for the benefit of A. L. Ide & Sons and the General Electric Company, for the amount due them for the engine, génerators, machinery, etc., furnished by them to Searles which went into the electric plant of the city of Flora. It is contended on behalf of appellant that where a bond is given and conditioned that the principal obligor shall well and truly keep, do and perform each and every, all and singular, the matters and things in a certain contract at the time and in the manner specified in the contract, and the contract is attached to and made a part of the bond, both the contract and bond must be- taken and read together as one instrument in order to ascertain the liability of the obligor on the bond. To this general principle we agree. The contract by the terms of the bond is made a part of the bond as fully and completely as if copied at length in the bond. Bartlett v. Wheeler, 195 Ill. 445; Jordan v. Kavanaugh et al., 63 Ia. 152; Baker et al. v. Bryan et al., 64 Ia. 561; Brown v. Markland et al., 22 Ind. App. 652; Williams v. Markland et al., 15 Ind. App. 669. While not disputing the soundness of the above principie, the contention of the National Surety Company, appellee, is that the bond was given to appellant, the city of Flora, primarily for its benefit only, and not for the benefit of A. L. Ide & Sons or the General Electric Company, and there being no privity of contract between the surety company and the material men, no suit can be maintained on the bond for the benefit of the latter. It is to be carried in mind that by the contract between the city of Flora and Searles the latter agreed not only to furnish, but to “pay for all materials, engine, dynamos, connections, machinery',- instruments, equipment and labor for the said improvement in said electric light plant.” Under this provision of the bond, we think, all persons furnishing machinery and materials and performing labor for the said improvement are beneficiaries of the bond, though not named therein, as well as the city of Flora, and are entitled to recover thereon for labor done or materials and machinery furnished by them. Jordan v. Kavanaugh, supra; Baker et al. v. Bryan et al., supra. In Bristow et al. v. Lane et al., 21 Ill. 194, the court considered the contention made by appellee here, and after reviewing the authorities in England and in this country held that a third party might maintain an action on a promise made to another for his benefit. To the same effect is Snell et al. v. Ives, use, etc., 85 Ill. 279. In Knapp et al. v. Swaney et al., 56 Mich. 345, the contract for the construction of a court house contained the following provision among others: “Neither shall there be any legal or lawful claims against the contractor in any manner from any source whatever, for work or materials furnished on said work and building.” This provision was m ide in connection with provisions for payments on estimates. It was urged that the provision was ultra vires; that it did not concern the public whether the contractor had paid for his labor or materials, for that was a matter exclusively between the contractors and those who should deal with them. The court, by Cooley, C. J., said: “The purpose of the stipulation is very manifest. It is that a contract a county has made shall not be the means of mischief to those who, though not contractors with the county, may perform labor or furnish materials in reliance upon the moneys to be paid under it. It would seem that to prevent such mischief was a proper object to be had in view by any public board when entering into a public contract. It would seem that there was a moral obligation in O the case which the board might well recognize, even though not compelled to do so. And individuals clothed with public functions, even when constituting a corporation, are no more excused from moral obligations than when acting in a private capacity.” After commenting upon the duty of a public corporation when constructing a public building to make it safe for the public, the opinion proceeds: “But if it may do this, it would be very strange if it were found lacking in authority to stipulate in the contract for the building, that the contractors, when calling for payment, shall show that they are performing their obligations to those who supply the labor and materials, and that the county is not obtaining the building at the expense of a few of its people. We cannot think such is the case.” In City of St. Louis, use, etc., v. Von Phul et al., 133 Mo. 561, the action was on a bond similar to the bond before us in this case. Yon Phul & Grimm entered into a contract with the city of St. Louis to repair the sidewalks in a certain district. At the end of and as á part of the contract was an obligation signed by the contractors and the Municipal Trust Company and Edward Butler as sureties in the penal sum of $10,000, conditioned for the proper performance of the contract, and that as soon as the contract was completed the contractors should pay to the proper parties all amounts due for material and labor used and employed in the performance thereof. The court held that a third party, not named in the contract, and though he was not privy-to vthe consideration, might maintain an action thereon; and that it is sufficient in order to create the necessary privity that the promisee owes to the party to be benefited some obligation or duty, legal or equitable, which would give him a just claim. The court further held that the city had the implied power to require the condition of the bond upon which the plaintiff sought to recover. The sensible and eminently just and equitable treatment of the question here involved in the decisions cited appeals to us with persuasive force and compels us to give our assent to the conclusions reached by the courts named in their adjudications upon provisions of contracts and bonds of the same legal effect as the bond before us. In doing so we are not violating the rule of strictissimi juris as applied to suretyship, but rather we are applying the rule to the contract and bond in question. The provision of the contract which is a part of the bond signed by the National Surety Company that the contractor Searles “pay for all materials, engine, dynamos, connections, machinery, instruments, equipment and labor for the said improvements ” is too clear to admit of construction. It, admits of no doubt as to its meaning, or the intention of the parties. It must be given force and effect, the same as any other provision of the bond. The contract as made is the measure of the liability of the surety, and we regard the case made against the appellees as clearly within the provisions of the contract, and bond. In Lancaster v. Frescoln, 192 Penn. 452, cited by appellees, it was held that the bond before the court on which the action was based was given under the special ordinance authorizing the construction of the reservoir and awarding the contract, and the decision of the court appears to be based upon the provisions of the special ordinance with which the bond conformed. The court was careful to say that an action on a bond given under the general ordinance would present an entirely different question. We do not regard the case, therefore, as authority upon the broader question here presented. The contract involved in Electrical Appliance Company v. U. S. Fidelity & Guaranty Co., 110 Wis. 434, differed in provisions and in the intention of the parties from the contract before us. The court said: “We consider the true rule to be that there must not only be an intent to secure some benefit to the third party, but there must be a promise legally enforceable. The contract and bond in this case fail to meet these requirements. The situation presented shows a want of any intent to secure a benefit to third parties.” City of Sterling v. Wolf, 163 Ill. 467, cited by appellees, is not in point, because the contract contained no such provision as the contract here in question, and there was in it no basis or ground for finding any intent that it was made for the benefit of third persons. The holdings of law and the judgment of .the trial court were not in accord with the views expressed herein and, we think, are erroneous. The judgment is therefore reversed and judgment will be entered here in favor of the city of Flora for $4,000 debt, and for damages in the sum of $1,225, for the use of A. L. Ide & Sons, and for damages in the sum of $901 for the use of General Electric Company, and that upon payment of the damages .with interest and costs the debt be discharged. Reversed <md judgment h&re.