Title: Sumlin v. Hagan Storm Fence Co. of Mobile, Inc.

State: alabama

Issuer: Alabama Supreme Court

Document:

409 So. 2d 818 (1982)
Guy SUMLIN d/b/a Guy Sumlin Construction Company, and United States Fidelity and Guaranty Company
v.
HAGAN STORM FENCE COMPANY OF MOBILE, INC. a Corporation.
80-114.

Supreme Court of Alabama.
January 29, 1982.
William M. Cunningham, Jr. and Mary Elizabeth Hurm of Sintz, Pike, Campbell & Duke, Mobile, for appellants.
Mitchell G. Lattof of Diamond, Lattof & Gardner, Mobile, for appellee.
EMBRY, Justice.
This is an action on a bond, pursuant to the provisions of Code 1975, § 39-1-1(b), to recover monies, together with attorney's fees, owed on an account for materials furnished for a public works project at Gulf Shores, Alabama.
Plaintiff, Hagan Storm Fence Company of Mobile, furnished the materials, for which payment is sought, to Tennis Court Construction, a subcontractor of Guy Sumlin d/b/a Guy Sumlin Construction Company; the latter was the prime contractor for the project. Tennis Court and Sumlin were named as defendants in the action along with United States Fidelity and Guaranty Company (USF&G), the surety on the bond.
Default judgment was entered against Tennis Court. This appeal is by Sumlin and United States Fidelity and Guaranty Company against whom summary judgment was subsequently entered. The facts and principles supporting the trial court's decision are well-stated in its summary judgment, the pertinent portions of which follow:
As indicated in paragraph 10 of the summary judgment, the evidence was undisputed that Tennis Court Construction did not specify to Hagan the jobs to which payments should be credited. Where a debtor who owes more than one debt to the same creditor does not specify to which debt a payment is to be applied, the creditor may apply the payment as it chooses. Lipscomb v. Tucker, 294 Ala. 246, 314 So. 2d 840 (1975); Sherrill v. Federal Land Bank of New Orleans, La., 244 Ala. 461, 14 So. 2d 361 (1943). Once application is lawfully made by either party having that right, that application is final and conclusive. Redd Bros. v. Todd, 209 Ala. 56, 95 So. 276 (1922). Where neither party specifies an application of the payment, the law will apply it in the manner most beneficial to the creditor. Lee v. Southern Pipe and Supply Co., 283 Ala. 37, 214 So. 2d 313 (1968); Lipscomb v. Tucker, supra; Redd Bros. v. Todd, supra.
Sumlin and USF&G acknowledge that the rules stated above are the controlling law in Alabama, but assert they should apply only between the debtor and creditor and not to the detriment of innocent third parties. Limiting application of these rules in the manner urged by Sumlin and USF&G, however, would ignore the underlying purpose of the public works bond statute, Code 1975, § 39-1-1(b): to insure that a materialman receives full payment for labor or materials which he supplies to a public works project. Accordingly, "... the general rule permitting a recovery on the bond has been applied notwithstanding that the contractor had paid the subcontractor for the labor or materials in question." 92 A.L.R.2d 1250 (1963).
For the foregoing reasons, the judgment below is due to be and is hereby affirmed. Accordingly, the motion to dismiss the appeal of United States Fidelity and Guaranty Company is denied without addressing the merits of the contentions in support of that motion.
AFFIRMED.
TORBERT, C. J., and FAULKNER, ALMON and ADAMS, JJ., concur.