Court Opinion

ID: 3433851
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:02:54.145264+00
Date Added: 2024-06-11T14:03:47.737875
License: Public Domain

I respectfully dissent.
The majority opinion holds that claimants for labor and material against the unpaid funds of a contractor can only resort to a per cent of the contract price (in this case ten per cent) for the payment of their claims, and that the contractor can assert a superior and paramount claim as against labor and material claimants, to a per cent of the contract price (in this case ninety per cent). This is the force of the majority holding when the case is stripped of the elements of subrogation to the claimants' rights, and assignment of the contractor's rights, about which there is no argument in this case.
The conclusion is arrived at, in the majority opinion, by construing various statutes in chapter 452, Code of 1939, and the provisions of the contract and bond. The fallacy of the majority reasoning, as I see it, lies in the failure to distinguish between the funds that can be resorted to by claimants after a contract has been completed and the duty of the public body to retain funds until the contract has been completed.
Sections 10310, 10311, and 10312 are statutes that fix the retention duty of the public body for some contracts. The majority construe these statutes and find therein the only funds to which claimants can resort for payment of their claims. I do not think they can be so construed. I think that after a contract has been completed, any funds due the contractor can be resorted to by claimants.
How else can one construe section 10308, which provides that a claim may be filed at any time, even after the thirty-day period following completion, "if the public corporation has not paid the full contract price"? Certainly the legislature meant that all funds due the contractor after completion were subject *Page 581 
to claims. The funds might be insufficient if installments were released under section 10310 or if the claim was filed more than thirty days after completion, but that does not mean that funds that had not been released could not be resorted to for the payment of claims that remained unpaid after completion. Notice section 10304, where the legislature wrote into every bond the unqualified agreement to pay all claimants.
It is apparent that section 10310 applies only to contracts that require more than one month for completion. If the fund to be resorted to for the payment of claims is found only in this statute and section 10311, then, since the statutes are not applicable to contracts requiring less than a month for completion, no funds of the contractor would be available for claimants.
I find nothing in sections 10310 to 10312 that would give the contractor the absolute right to any agreed percentage of the contract price, after the contract has been completed, as against filed claimants. I see in these statutes a plan to allow partial payments to the contractor, upon monthly estimates, which, when applied to certain contracts will mean that the fund available for claimants at the time of completion will be less than the full contract price. The statutes deal with the size of the fund that will be available for claimants when the contract is completed. They do not deal with the right of the claimant to assert his paramount claim at any time against any funds due the contractor who has completed his contract but has not paid for the labor or material. I differ with the majority in that I would construe the retention duty after completion of the contract, provided for in section 10312, to be double the amount of the claims on file thirty days after completion. But this difference is not significant in this case. All the funds were retained by the commission. The ninety per cent of the monthly estimate had been paid. All that was due the contractor was the final paymentafter the contract was completed.
This question has not been before us in any case where the contractor or his assignee asserted a right to funds, in excess of the ten per cent fund, remaining due the contractor after the completion and final acceptance of the contract. But we have in prior decisions recognized the right of claimants to *Page 582 
any or all funds in the hands of the public body after the completion of the contract.
In Perkins Builders Supply  Fuel Co. v. Independent Sch. Dist., 206 Iowa 1144, 1148, 221 N.W. 793, 795, we denied relief to a claimant when it appeared that he did not file his claim until after thirty days following the completion of the contract and after the municipality had fully settled with the contractor except for the nominal sum of one dollar. In the course of the opinion we stated:
"However, appellants claim that, since the school district withheld $1.00 from the payment on the final estimate, they have brought themselves within the provisions of the second sentence of the aforesaid section. [Section 10308.] It is clear, however, that, under said provision, the appellants would have no rightexcept as to the unpaid portion of the contract price, to wit, $1.00. After the expiration of the 30-day period, the school district could have paid the entire amount, and neither said district nor the surety company would be liable. Therefore, in no event could the appellants prevail, except as to the amount of the $1.00 withheld." (Italics supplied.)
A study of Southern Surety Co. v. Jenner Bros., 212 Iowa 1027,1035, 1038, 237 N.W. 500, 504, reveals that we there held the balance of the contract price, in excess of the ten per cent in the hands of the highway commission after the work was completed and the project accepted, available for claimants. This action was brought at the time when section 10305 provided for the filing of claims "with the officer authorized by law to issue warrants in payment of such improvement." Since this was a state highway commission improvement, such officer was the state auditor. The contractor completed the work and it was accepted and thereafter the surety brought action to determine its liability and to fix the rights of the other defendants as claimants. It appeared that labor and material claims totaling in excess of $10,000 had been filed with the county auditor, the highway commission, and with the district court. The highway commission at the time of suit held $9,201.12 due the contractor of which sum "* * * the sub-final estimate is $3,427.15, and the final estimate is $5,773.97." In *Page 583 
passing, let us note the similarity to the situation here where the funds held by the highway commission were $1,806.59, composed of the subfinal estimate of $886.20 and the final estimate of $920.39. In the language of the highway commission, the sub-final estimate seems to be the amount due the contractor over and above the ten per cent of the full contract price and the final estimate is ten per cent of the full contract price. In the Southern Surety case we held that the claimants were not entitled to any judgments against the surety for the provision of the statute with respect to bonds absolved it from liability "unless the claims * * * shall have been established as provided by law." But the claimants asserted they established their claims under the second paragraph of section 10308 and under section 10309 giving them the right to file claims after the thirty-day period after completion and with the district court. With regard to this claim we stated:
"Unquestionably such filing, after the thirty-day period, willbe sufficient to establish appellees' claim against the fundsretained from the contractor's agreed consideration * * *."
Consequently, we there held:
"Plainly, therefore, under the facts and circumstances presented in the present controversy, appellees can have no judgment against the appellant, as surety, on the contractor's bond, but they are entitled only to the balance of the contractprice remaining after the work was completed and the jobaccepted. Paragraph two of section 10308, supra, authorizes appellees to receive such balance of the contract price. Because the district court held otherwise, the appellant is entitled to a reversal." (Italics supplied.)
Thus it will be seen that in the above case we held that both the subfinal estimate and the final estimate were available to claimants who filed after the thirty-day period following completion and acceptance of the improvement. Of course, if this fund is available for claimants who file after the thirty-day period, it is available for those who file before the expiration of that period. I feel that the majority opinion certainly overrules our holding in the above case. *Page 584 
Again, in Cities Service Oil Co. v. Longerbone, 232 Iowa 850,858, 6 N.W.2d 325, 329, the sum retained after the work under the contract was completed and accepted was in excess of ten per cent of the contract price. Claims were filed before the expiration of the thirty-day period after completion of the contract, and we there stated:
"When claims were filed herein within the 30-day period, the highway commission was required to retain `not less than double the total amount of all claims on file.' [Section 10312, Code, 1939.] To that extent there was clearly a statutory retained percentage. * * * We agree with the trial court that the funds retained by the highway commission constituted statutory retained percentages herein, which, subject to the priorities fixed by section 10315, were, available for the payment of claims filed with the court pursuant to section 10309, and, if such funds were insufficient, recovery might be had upon the bond."
The majority cites our opinion in Federal Surety Co. v. Des Moines Morris Plan Co., 213 Iowa 464, 239 N.W. 99. But the Morris Plan case was not a statutory action under this chapter. True, such a statutory action had earlier been brought in Marshall county which determined the surety's liability to claimants. All that we held was that the surety, held liable to claimants in a statutory action, could not recover from the contractor's assignee who had received the ninety per cent estimate payments from the county. The situation would be comparable if the surety here were seeking recovery for the payments already made to the bank under the assignment.
I would hold that the balance of the contract price, or $1,806.59, retained by the highway commission after the contract was completed and accepted was available for claimants. This being true, the contractor could not have asserted any right to these funds superior to claimants. His assignee, possessing only an assignment of "all moneys due or to which [contractor] may be now or hereafter entitled," has no superior right over a claimant that the contractor would not have. In Monona County v. O'Connor,205 Iowa 1119, 1126, 215 N.W. 803, 806, we stated:
"An assignee of the contractor occupies the same position *Page 585 
as his assignor. The claims of the assignee are no higher or greater than those of the contractor."
I would reverse.
SMITH, J., joins in this dissent.