Title: HEALY PLUMB. & HEAT. CO. v. Mpls.-St. Paul San. Dist.

State: minnesota

Issuer: Minnesota Supreme Court

Document:

169 N.W.2d 50 (1969) HEALY PLUMBING AND HEATING COMPANY, Appellant, v. MINNEAPOLIS-SAINT PAUL SANITARY DISTRICT et al., Respondents. No. 41513. Supreme Court of Minnesota. June 13, 1969. *51 Maun, Hazel, Green, Hayes, Simon & Aretz, and James W. Brehl, St. Paul, for appellant. Thomas, King, Swenson & Collatz, St. Paul, for Travelers Ind. Co. Briggs & Morgan, St. Paul, for Steenberg Const. Co. Carlsen, Greiner & Law, Minneapolis, for Watson Const. Co. and Planet Ins. Co. Faricy & Green, St. Paul, for Minneapolis-St. Paul Sanitary Dist. Carroll, Cronan, Roth & Austin, Minneapolis, for Toltz, King, Duvall, Anderson & Assoc. KNUTSON, Chief Justice. This is an appeal by plaintiff, Healy Plumbing and Heating Company (hereinafter Healy), from the judgment entered pursuant to an order of the district court granting the motion of defendant Travelers Indemnity Company (hereinafter Travelers) for summary judgment. The Minneapolis-St. Paul Sanitary District was created and exists under and by virtue of Minn.St. c. 445. Section 445.15 provides in part: Section 574.26, so far as material, reads: In 1964 the Sanitary District let three contracts for the expansion of the St. Paul Sewage Treatment Plant. Defendant Steenberg Construction Company, Inc., (hereinafter Steenberg) contracted to construct settling tanks and related structures adjacent to a new compressor building which was to be built under contract let to defendant Watson Construction Company, Inc., (hereinafter Watson). Healy was to do the mechanical work in the compressor building. Each contract was a separate agreement between the contractor and the Sanitary District. The contracts provided that the contractors should furnish workmen's compensation insurance, comprehensive public liability and property damage insurance, and a bond pursuant to §§ 574.26 to 574.31. Travelers was the surety on the bond furnished by Steenberg pursuant to these statutory provisions. Among other things, the bond provides that it is executed for the use of the Sanitary District "and the use of all persons and corporations doing work or furnishing skill, tools, machinery, materials, insurance premiums, equipment or supplies for the purpose of the Contract hereinafter mentioned, its heirs, executors, administrators, successors or assigns." In the conditions of the obligation we find a statement that *52 the bond is issued pursuant to the contract entered into with Steenberg During the progress of the work the Mississippi River overflowed its banks and caused damage to the work being done by Healy and delay in the completion thereof. Healy brought this action against the Sanitary District, the architects, Watson, Steenberg, Travelers as surety on Steenberg's bond, and Planet Insurance Company as surety on Watson's bond to recover the expenses incurred in preparing for the 1965 flood; the cost of repairing the damage to its works and equipment; and damages due to delay and interference with the performance of the Healy contract, on the theory that it was Steenberg's duty to protect the work from the rising waters of the river. In its complaint, Healy based its claim on two counts: First, it alleged that Steenberg and Watson were required by their contracts with the Sanitary District to protect their work and that of others adjacent to them, including that of Healy, from damages due to the rising river water; and second, it alleged negligent failure on the part of Steenberg and Watson to provide such protection. The parties entered into a stipulation which reads: Based on this stipulation and upon an affidavit of Steenberg's president to the effect that it had taken out the insurance required by the contract and that Healy had furnished no materials, tools, equipment, work, or labor in the performance of Steenberg's contract, together with a deposition of an officer of Healy, the court granted summary judgment in favor of Travelers against Healy. These two issues are presented on this appeal: Whether Travelers is liable to Healy for the alleged breach of Steenberg's contract; and whether summary judgment was proper. If Healy has no cause of action under the bond, it follows that summary judgment should have been granted. Section 574.26 had its origin in L.1895, c. 354. Prior to the enactment of that act we held, in Breen v. Kelly, 45 Minn. 352, 47 N.W. 1067, that a county was powerless to take a bond for the security or benefit of a third person in the absence of express legislative authority, and that any bond so taken would be void. We followed the Breen case in Park Brothers & Co. v. Sykes, 67 Minn. 153, 69 N.W. 712 (1897). While the Park Brothers case was decided in 1897, after enactment of L. 1895, c. 354, the bond and contract were executed prior to the enactment of the statute.[1] It is quite likely that L.1895, c. 354, was enacted by the legislature to overcome the result reached in the Breen case, so that those who have contributed to the performance of the contract might have protection. However, we have consistently held that a bond given pursuant to this statutory provision must be read with the statute and that its scope is limited by the statute. In Fairmont Cement Stone Mfg. Co. v. Davison, 122 Minn. 504, 509, 142 N.W. 899, 901, which involved the construction of a judicial ditch, we said: In Fay v. Bankers Surety Co., 125 Minn. 211, 214, 146 N.W. 359, 360, Ann.Cas. 1915C, 688, 689, we said: In Ceco Steel Products Corp. v. Tapager, 208 Minn. 367, 370, 294 N.W. 210, 212, we summarized the purpose and scope of the statute in the following language: There are many similarities between the language of our mechanics lien law and the language of §§ 574.26 to 574.31. We have frequently held that only those mentioned in the mechanics lien law can take advantage of it. Section 514.01 reads, so far as material: The section then lists the purposes for which a lien may be filed. Similarly, § 574.26 specifies those for whose benefit the bond is given. An action to foreclose a mechanics lien likewise had many similarities to the rights acquired under §§ 574.26 to 574.31. Thus, a mechanics lien must be filed within 90 days after doing the last item of work or furnishing the last item of skill, material, or machinery. § 514.08. The action to foreclose a mechanics lien requires all other lienholders to be joined as defendants. § 514.11. Section 514.12 provides that all such lienholders shall intervene in the original action to foreclose. Section 514.15 provides that if the proceeds of the property sold are insufficient to pay all lienholders in full, it shall be distributed pro rata among them. Section 574.31 provides in part: Section 514.29 provides: We recently held in Anderson v. Breezy Point Estates, Minn., 168 N.W.2d 693, that our mechanics lien law, being a creature of our statutes, is to be liberally construed in favor of those for whose benefit it is enacted, but must be strictly construed so as to exclude those not within the purpose of the statute. The same is true here. Section 574.26 is not intended to include those not named within the statute as beneficiaries thereof. Thus it seems clear that in order to sue on a bond given pursuant to § 574.26 plaintiff must be one of the class for whose benefit the bond is given. In other words, plaintiff must be one of those named in the statute. There is good reason for so holding. If a party not included within the class for whose protection the bond is given is permitted to sue on a tort claim or on a claim not connected with the performance of the contract, it is conceivable that the amount of the bond might be so dissipated that those for whose protection it is given would be left without any protection at all. This thought is aptly stated by the Wisconsin court in Kniess v. American Surety Co., 239 Wis. 261, 266, 300 N.W. 913, 915, which involved an action on a bond given pursuant to a statute quite similar to ours. There the court said: We have held that "[a]ny condition contained in the bond in addition to those specified in the statute must be regarded as surplusage." County of Yellow Medicine v. Johnston, 176 Minn. 15, 17, 222 N.W. 289. Plaintiff here claims that it comes under the protection of the bond which requires faithful performance of the contract. We do not believe the bond can be so extended. It is our opinion that plaintiff does not come within the class contemplated by the statute and for whose benefit this bond was executed. As a result, the court correctly granted summary judgment. Affirmed. [1] The statute is not mentioned in our opinion, but the printed record shows that the contract and bond were executed in August 1894.