Court Opinion

ID: 3988107
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:44:12.29216+00
Date Added: 2024-06-11T14:18:24.383865
License: Public Domain

I concur in part and dissent in part. By the terms of the undertaking or bond the surety company became liable only for "material" furnished and "labor" performed "in and about the construction" of the roadway. Though the surety company is a surety for hire, nevertheless, to ascertain the intention of the parties and to give effect to the contract accordingly, the surety, like every other party to a contract, is entitled to a fair and reasonable construction and interpretation of the contract as expressed by its terms. In considering the contract, the language and terms employed are to be given their ordinary and popular meaning, in the *Page 239 
absence of anything to show that they were used in a different sense. There is not anything ambiguous or technical by the terms "material furnished" or "labor performed," nor is there anything to show that such terms were used in a sense different from their ordinary and popular meaning. I thus see no occasion for the application of a broad or liberal construction or interpretation of the contract beyond the ordinary and popular meaning of the terms employed, or to so enlarge them as to include matters and things not fairly or reasonably included within such ordinary and popular meaning.
So viewing the matter, I concur in the holding that gasoline and oils furnished the contractor by merchants and dealers, and which were used by the contractor in the operation of trucks and other instrumentalities in hauling gravel and other material used in the construction of the roadway and in operating crushers, mixers, and other machinery in carrying on and prosecuting the construction work, constituted materials furnished within the meaning of the surety's contract. Such materials bore a direct relation to the construction and building of the roadway, and like labor performed in and about the construction of it became in a sense a part of it.
I dissent from the holding that gasoline and oils, furnished the contractor by merchants and dealers at Ogden and at other remote points, and which were used by the contractor in moving his trucks and equipment from Ogden and other remote points to or near Beaver, several hundred miles, where the roadway was to be constructed, constituted materials within the contract. The furnishing of such gasoline and oils bore no direct, only a collateral and remote, relation to the construction of the roadway. They related only to the equipment of the contractor. It is argued that such gasoline and oils constituted materials within the meaning of the contract, for the reason that the contractor was required to move his equipment from Ogden to the place where the road was to be constructed. That, as it *Page 240 
seems to me, but emphasizes the proposition that such supplies were furnished for equipment wholly separate and apart from the construction work itself and not as a part of it. To say that such supplies in such case constituted a part of the construction work, it may as well be said that, if the contractor had no equipment, and equipments were necessary with which to do the work, one who sold the contractor machinery or other equipment with which to prosecute the work also had a claim for materials furnished within the meaning of the contract under consideration.
I am also of the opinion that groceries, meats, foodstuffs, and supplies furnished and sold by merchants to the contractor to board and lodge his workmen and employees performing work and labor in and about the construction of the roadway are not materials within the meaning of the contract, for the reason that such supplies are too remote and wholly collateral to the construction work. I concede there are cases contrary to such view and which support the holding of the prevailing opinion in such particular. Among them is the case of Brogan v. NationalSurety Co., 246 U.S. 257, 38 S. Ct. 250, 62 L. Ed. 703, L.R.A. 1918D, 776, to which, however, three members of the court dissented. There are other cited cases to the same effect. Some of the cases cited in support of the proposition are based on statutes or contracts broader than, and different from, the terms of the contract or undertaking in hand. Some of them even deal with a different subject. In some of the cases where groceries, foodstuffs, and supplies furnished the contractor to board and lodge his men were held to be within the statute or contract, the rulings were made under statutes or contracts by which the surety guaranteed the payment, not only of materials furnished and labor performed, but also all claims against the contractor for supplies furnished him in equipment camps, or all supplies and tools furnished him, or all liabilities incurred by him in and about the construction work. Such rulings have little influence in considering terms of a contract such as *Page 241 
here involved. In the Brogan Case, and in some other cases following it, the terms of the contract in no substantial degree were broader than the terms of the contract under consideration. However, there are other courts which refused to follow the Brogan Case. Among them may be noted Watkins v. U.S. Fidelity Guaranty Co., 138 Miss. 388, 103 So. 224; Southern SuretyCo. v. Hotchkiss, 187 Wis. 227, 201 N.W. 986; Gary Hay Grain Co. v. Carlson, 79 Mont. 111, 255 P. 722; Westling v.Republic Casualty Co., 157 Minn. 198, 195 N.W. 796; RoyalIndemnity Co. v. Day  Maddock Co., 114 Ohio St. 58,150 N.E. 426, 430, 44 A.L.R. 374.
I think the better line of cases and the weight of judicial authority are against a holding that groceries, meats, foodstuffs, and other supplies furnished a contractor to board and lodge his men are materials within the language of statutes or contracts such as here employed. Such things are regarded as having only a collateral or remote, and not a direct, relation to the construction of the work or structure. National Surety Co.
v. United States (C.C.A.) 228 F. 577, L.R.A. 1917A, 336;Southern Construction Co. v. Halliburton, 149 Tenn. 319,258 S.W. 409; Lillard v. Royal Indemnity Co., 219 Mo. App. 584,282 S.W. 168; Standard Oil Co. v. Remer, 170 Minn. 298,212 N.W. 460; Westling v. Republic Casualty Co., supra; SouthernSurety Co. v. Hotchkiss, supra; Gary Hay  Grain Co. v.Carlson, supra; Watkins v. United States Fidelity  GuarantyCo., supra; Monona County v. O'Connor, 205 Iowa 1119,215 N.W. 803.
The Brogan Case and other cases following it proceed on the theory that, where board and lodging at the place of the construction work are not available or reasonably convenient for the contractor's laborers and employees performing the work, and because thereof the contractor is required to furnish such board and lodging to carry on the work, groceries, meats, foodstuffs, and supplies furnished him to board and lodge his men may be regarded as materials furnished, when the contractor is not furnishing *Page 242 
board and lodging as an enterprise or pursuit independently of the construction work and not primarily for gain and profit. In other words, according to such authorities, whether groceries, foodstuffs, and supplies furnished a contractor to board and lodge his men may or may not be regarded as materials furnished within the meaning of a contract or a statute, is made dependent upon the ability of the contractor's employees and laborers to obtain board and lodging at or near the place of the construction work; if they may obtain such accommodations at or near the vicinity of the construction work, such supplies are not materials; if they may not, and such accommodations are furnished by the contractor, then such supplies furnished him are materials; and thus there are applied two rules of construction or interpretation of a contract by taking into consideration matters foreign and extrinsic to the contract, one where the work is performed at or in the vicinity of a settlement or town where accommodations may be had, and a different rule where they may not readily or conveniently be had. I think such a test in determining what supplies may or may not be regarded materials as used in a statute or contract such as under consideration is violative of familiar rules of construction and interpretation of statutes and contracts. 25 R.C.L. 961; 13 C.J. 524, 537, § 500.
Nor do I concur in the holding that rentals agreed to be paid by the contractor for the use of an engine or other machinery used in the construction of the roadway constitute "materials" or "labor" furnished within the meaning of the contract. Such matters, I think, also relate to mere equipment of the contractor, and hence not within the terms of the contract. To the effect is the well-considered case of Royal Indemnity Co.
v. Day  Maddock Co., supra. The case reported in 44 A.L.R. 374, on page 381, is there annotated. Recent cases from Iowa, Maryland, Nebraska, Oklahoma, and Wisconsin are there cited which support the main case. Cases are there also noted and cited where claims for rentals of equipments were held to be within the *Page 243 
terms of a surety's bond or undertaking. But in some of such cited cases the statute or bond was broad enough to include, not only material and labor furnished the contractor, but also for "tools and machinery" furnished the contractor; in some, for "all labor and material and all other obligations or liabilities incurred in the doing of the said work or performance of any of the things necessary" to the work; in some, for all "labor, material and supplies" furnished the contractor. In some of such cases rental of teams furnished the contractor were regarded as "labor furnished." In some, the bond or undertaking was broad enough to cover, not only payment of all laborers and materials, but also all persons who supplied the contractor with provisions and supplies in carrying on the work, or all just debts and demands incurred by the contractor in the performance of the work. The distinction between such statutes or bonds and the contract under consideration is manifest. If under the terms "material and labor furnished" claims of rentals of tools and machinery furnished the contractor are included, then I think the further conclusion follows that claims of machinery and equipments sold to a contractor are also included, for, as stated in the case of Royal Indemnity Co. v. Day  Maddock, Co., supra, "we see no distinction between the status of one who leases an appliance to a contractor to facilitate the performance of his contract and one who sells an appliance to the same contractor for the same purpose. The ownership of the contractor in the appliance in the one case differs from the ownership of the contractor in the other only in degree." If there be no such distinction, then in the mad race of broad and liberal construction invoked by some courts of contracts of the character in hand I see not why money loaned the contractor with which to prosecute and carry on the work is not also "material" furnished the contractor or "labor performed" in the construction of the work. If, as argued by some courts — Sherman v. AmericanSurety Co., 178 Cal. 286, 173 P. 161, contrary to Wood, Curtis Co. v. El Dorado Lumber *Page 244 Co., 153 Cal. 230, 94 P. 877, 16 L.R.A. (N.S.) 585, 126 Am. St. Rep. 80, 15 Ann. Cas. 382 — rentals of tools and machinery to the contractor are within the terms of the surety's undertaking to pay for materials and labor furnished the contractor, on the stated ground that the surety is charged with notice as to whether the contractor possessed the required equipment and tools with which to do the work or would be compelled to rent or hire them, then it would seem that the surety likewise must be charged with notice as to whether the contractor had sufficient moneys or means to carry on the work or whether he would be required to borrow money for such purpose, and, if he was required to do so, then a claim for money loaned must also be regarded as "materials furnished" the contractor, all of which but leads to the conclusion that the terms "materials furnished" and "labor performed" should be so construed as to include all debts and liabilities incurred by the contractor in the performance of his contract, to which I cannot assent.
Under the stipulated facts, and as found by the court, I also do not concur in the holding that moneys advanced and goods and merchandise furnished by a merchant or dealer to laborers or employees of the contractor constituted "materials furnished" the contractor or "labor performed" within the meaning of the surety's contract. The facts as stipulated and found by the trial court are that the contractor and the merchant entered into an oral agreement or understanding that the merchant was to advance moneys and furnish goods and merchandise to laborers and employees of the contractor and charge such advances and goods to and in the name of the contractor who agreed to hold such amounts from the wages due such laborers and employees; that in pursuance thereof the merchant advanced moneys and furnished goods and merchandise to employees and laborers of the contractor who deducted such amounts from wages due such laborers and employees, and that the contractor failed to pay a balance due the merchant *Page 245 
which the contractor had deducted from wages due such laborers and employees. The laborers or employees were not parties to the agreement. The agreement was one wholly between the merchant and the contractor. The moneys advanced and goods furnished by the merchant were charged directly to the contractor. Not any of the moneys so advanced nor any of the goods so furnished was expended or used in or about the construction work. They were advanced and furnished solely for the personal use and benefit of the laborers and employees themselves and for the use and maintenance of their families, wholly separate and apart and independent of the construction of the roadway. The whole matter rested upon the mere oral promise of the contractor to pay the merchant for whatever moneys advanced and merchandise furnished by him to the laborers. No assignment of any kind was made, or agreed to be made, by any of the laborers or employees of their wages to the merchant. The holding in the prevailing opinion is that the transaction in effect constituted an equitable assignment of wages to the merchant who thus was entitled to be subrogated to the rights of the laborers to whom the money was advanced and the goods furnished; that, while the laborers and employees were not parties to the agreement, yet upon the transaction it was inferable that they knew of the arrangement between the merchant and the contractor and assented to the deduction from their wages of whatever amount of money was advanced or goods furnished them by the merchant. Cases are cited to the effect that, where the contractor, the merchant, and the laborers concerned were all parties to the agreement by the terms of which the merchant was to advance moneys or furnish goods and merchandise to the laborers and the amount thereof was to be deducted from wages due them, or where pay checks or orders by the contractor were given laborers for wages due them, and the checks or orders were, for value, negotiated by them to another, such other and the merchant in the other instance were entitled to be subrogated *Page 246 
rogated to the rights of the laborers to whom the moneys were advanced and goods furnished or who negotiated the checks or orders. I have no disagreement with that. But here an equitable assignment is invoked on the doctrine of acquiescence and estoppel. I do not concur in that as against the surety under the terms of its contract. In my opinion, the transaction in question did not involve or constitute an absolute appropriation by the laborers of a debt or fund sought to be, or claimed to have been, assigned to the use of the claimed assignee, and hence the transaction did not constitute an equitable assignment. 5 C.J. 909-912.
Though it be assumed that the merchant may hold the contractor personally liable — he having agreed that the advances and merchandise be charged to him as they were and having promsied to pay them — yet to hold the surety also liable upon an arrangement or understanding and on promises merely between the merchant and the contractor, to which the laborers were not parties, and no absolute appropriation made by them of their wages to the merchant, and no parting by them of the power of control of the thing claimed to have been assigned, presents a different proposition and not an assignment either legal or equitable entitling the merchant as against the surety to be subrogated to the rights of the laborers.
A surety, whether for hire or not, still has the legal right by his contract to fix the terms and restrict the extent of his liability which may not be enlarged to meet defaults and exigencies of a case not fairly and reasonably embraced within the terms and language employed by his contract or written undertaking. Here the surety fixed and restricted his liability to "material furnished and labor performed in and about the construction of the said road." The term "material," as used in such class of cases, has a well-defined meaning. 39 C.J. 1385; Words and Phrases, First Series, Vol. 5, page 4410; Words and Phrases, Second Series, Vol. 3, page 326; 18 R.C.L. 918. Why enlarge it so as to include "tools, machinery and equipments" or the "rentals" of *Page 247 
them? Or so as to include all kinds of "appliances" or of "supplies," including groceries, etc., furnished the contractor to board and lodge his men, or for camp equipment? That there is a distinction between "materials furnished" and tools, or machinery, or equipment, or appliances, or supplies furnished the contractor, is, I think, manifest. Had it been the intention that all such things or some of them were to be included in the terms of the surety's contract, language readily could have been employed to do so and to indicate such an intent. As no such language was employed, I think it clear that none of such things was intended to be included. And to so construe the contract as to include them is but the making of a new contract for the parties so as to bring those who otherwise are not, within the protection of the surety's obligation.