166 N.E. 361 | Ohio | 1929
The constitutional question presented relates to portions of Sections 2316 and 2365-1, General Code. The former section was enacted March 20, 1917 (107 Ohio Laws, 454), and states: "Such bond shall also be conditioned for the payment of all material and labor furnished for or used in the construction for which such contract is made. The bond may be enforced against the person, persons or company executing such bond, by any claimant for labor and material, and suit may be brought on such bond in the name of the state of Ohio on relation of the claimant within one year from the date of delivering or furnishing such labor or material, in the court of common pleas of the county wherein such labor or material was furnished or delivered," etc. That section applies only to public buildings erected by the state.
Section 2365-1 was enacted on March 21, 1917 (107 Ohio Laws, 642), one day later than the former statute, and in its pertinent parts provides: "With an additional obligation for the payment by the contractor, *382
and by all sub-contractors, for all labor performed or materials furnished in the construction, erection, alteration or repair of such building, works or improvements." That section applies to public buildings erected by the state or any political subdivision of the state. Both sections, therefore, apply to the present controversy, and they are so similar in their provisions that either statute would be sufficient for the present case without the other. It is claimed that these laws, in requiring contractors to furnish bond for the payment of claims of sub-contractors, laborers, and materialmen, impair the obligation of contracts, and therefore violate Section
Although those statutes have been in existence twelve years, their constitutional validity has never before been argued in this court. Bonds with such conditions have been employed in public construction in a multitude of instances, and they have been enforced in the courts of this state in a very large number of cases. A number of cases have been decided by this court treating those provisions in the statutes as valid, and they have been enforced on that theory without any argument to the contrary.
The first of these cases is Royal Indemnity Co. v. Day Maddock Co.,
In American Guaranty Co. v. Cliff Wood Coal Supply Co.,
In American Guaranty Co. v. Cincinnati Iron Steel Co.,
In the three cases last named the statutory conditions were read into the bonds, although not expressly recited therein, on the principle that, the statute having required such a bond to be given, the contractor and the surety company must have contracted in relation to the statutes, and will be held responsible as though the statute had been fully complied with. This court has, therefore, in seven different cases recognized the validity of these statutes without expressly so declaring.
Similar provisions are found in the statutes of other states of the 'Union, and, so far as we are able to discover, have been uniformly upheld. If there have been any cases decided in other jurisdictions declaring such provisions to be unconstitutional, they have not been brought to our attention. Certain cases from other jurisdictions have been cited in this case as authorities, placing limitations upon the right of a legislature to hold the owner of property chargeable with mechanics' liens for labor and materials furnished, where the contract was not made with the owner. It is not necessary to look to other jurisdictions for a decision upon that principle. This was so decided in Palmer Crawford v. Tingle,
The decision in the case of Palmer Crawford v. Tingle,supra, is grounded upon the inalienable right of a citizen to the freedom of contract. That decision declared the mechanics' lien law, as amended in 1894, to be unconstitutional as an unwarranted interference with the right of contract. It was held to be a violation of Section 28, Article II of the constitution, which prohibits laws impairing the obligations of contracts. Thereafter the constitution was amended in 1912, which specifically provided: "Laws may be passed to secure to mechanics, artisans, laborers, sub-contractors and materialmen, their just dues by direct lien upon the property, upon which they have bestowed labor or for which they have furnished material. No other provision of the constitution shall impair or limit this power." Section 33, Article II. *386
Even so, the amendment to Section 8310, enacted pursuant to that constitutional provision, made provision whereby the owner would be protected against payments in excess of the amount of the contract by requiring the contractor and sub-contractors to furnish affidavits of payment of labor and materials entering into the construction of the building. This was a statutory assurance against loss by complying with the conditions. It is now urged, inasmuch as no provision has been made by statute in Ohio whereby a surety company can be protected against claims for labor and materials, that Sections 2316 and 2365-1 are unconstitutional.
Even if there were no possible way of protecting surety companies against loss, it does not follow that contracts of suretyship would be invalid for that reason. The contract is entered into with full knowledge of the statutory law. The surety company, as well as the principal contractor, is also presumed to know the state of the common law. It is urged that the contract of suretyship, pursuant to the mandatory provisions of the statute, renders the surety an involuntary surety. This view is not sound. The surety is not compelled to guarantee the performance of the contract. The principal contractor is not compelled to enter into his contract. It is a contract of suretyship and of guaranty which does not materially differ from other voluntary contracts of suretyship and of guaranty.
It was decided by this court in Royal Indemnity Co. v. Day Maddock Co.,
Such conditions in the bond are for the public benefit, because they insure confidence in the contractor, and therefore encourage responsible and capable persons to furnish labor and materials, and to contract for certain portions of the work, and at the same time insure a better quality of performance. The surety cannot justly complain, because the character of the risk is fully known, and he may inquire as to the responsibility of the person or firm whose contract he agrees to insure. The principal contractor may likewise protect himself by requiring a bond of sub-contractors. It is difficult to see therefore how there can be any impairment of the obligations of a contract, or how any hardship can be inflicted if the parties will take ordinary business precautions. Similar statutes and the authorities which hold them to be constitutional are discussed in Dillon on Municipal Corporations (5th Ed.), vol. 2, Section 830, where numerous cases are cited; in Donnelly on the Law of Public Contracts, Sections 324, 325, 326 and 327; and in McQuillen on Municipal Corporations (2d Ed.), vol. 5, Section *388 2107. It is purely a question of legislative power, and we do not doubt that the legislature has the power, and that in exercising it no constitutional provisions have been violated.
Having found that the statutes are constitutional, it is not necessary to decide the question as to whether the bond was good without the statutory provision, and yet that question seems to have been disposed of by this court in its former decisions. In Cleveland Metal Roofing Co. v. Gaspard,
Upon both grounds, therefore, the motion to dismiss the petition in error in this case must be sustained.
Petition in error dismissed.
KINKADE, ROBINSON, JONES, MATTHIAS, DAY and ALLEN, JJ., concur. *390