Scheflow v. . Pierce

Sep 18, 1918

Versions:176 N.C. 91

97 S.E. 167

1918 N.C. LEXIS 190

*92 Clare, C. J.

It wоuld seem that the court overruled the demurrer as to the ground that plaintiff could not maintain this action, and the defendants are not appealing. In a case almost exactly like this it was held that “The beneficiaries of the contract, though not a party or privy thereto, may maintain an аction thereon.” Gastonia v. Engineering Co., 131 N. C., 363, citing numerous authorities. In that case, “though no mechanic’s lien could be filed against the town” (p. 365), on page 366 the Court said: “Thosе claimants (materialmen and laborers), being the beneficiaries of the contract-, could have brought their separate actions on said contract against the engineering company and its surety,” etc., citing Gorrell v. Water Co., 124 N. C., 328; Shoaf v. Ins. Co., 127 N. C., 308.

In Supply Co. v. Lumber Co., 160 N. C., 428, the rule is thus stated: “The beneficiaries of an indemnity contract ordinarily can recover, though not named therein, when it appears by express stipulation or by reasonable intendment that their rights and interests were contеmplated and being provided for.” In this case (Supply Co. v. Lumber Co.) it is stated on page 431 (about middle) : “In the case before us it appears that the contractоr had agreed to pay for all labor and material supplied for the erection of the building, and to save the trustees of the church harmless from any and all claims and liens which might arise out of contracts made by him for material furnished, laborers, etc., with the stipulation that said contractor shall faithfully perform and carry out said contract according to the true intent and meaning thereof. These provisions, in our opinion, clearly contemplate that the contractor shall pay the materialmen and laborers and constitute such claimants the beneficiaries of thе contract and bond within the principles of the authorities cited. Clark v. Bonsal, 157 N. C., 270, and Peacock v. Williams, 98 N. C., 324, are distinguished, for in those cases the contract and bond ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍did not provide or intend to benefit third parties.”

Our decision in Gorrell v. Water Co., 124 N. C., 328, that the beneficiary in a contract can maintain an action thereon has been reaffirmed in numerous cases сited in the Anno. Ed. besides Gastonia v. Engineering Co., 131 N. C., 363, and Supply Co. v. Lumber Co., 160 N. C., 428. Besides, it has now been made statutory by chapter 150, Laws 1913, amended by chapter 9, Extra Session 1913, and chapter 191, Laws 1915, which, provides that the town shall require the contractor for work on its buildings, roads and streets to give a bond conditioned for the payment of all labor done on, and material and supplies furnished for, the said work, and further provides: “Any laborer doing work on said building and materialmen furnishing material therefor and used therein shall have the right tо sue on said bond, the principal and sureties thereof in the courts of this State having jurisdiction of the amount of *93 said bond, and any number of laborers or materialmen whose claims are unpaid for work done and material furnished in said building shall have the right to join in one ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍.suit upon said bond for the recovery of the amоunt due them respectively.”

The contract of the defendant Pierce stipulates (section 17) that he will give a surety bond “conditioned to securе the faithful performance of this contract, the payment for all materials purchased and used under this contract, the payment of wages of laborers employed by said contrаctor on the works, and the liens which may arise therefrom.” Said contractor subsequently made the contract with the plaintiff as a subcontractor, and the bond of the surеty stipulates that Pierce, the contractor, “shall in all things stand to and abide by, and well and truly observe, do, keep, and perform all and singular the terms, covenants, conditions and agreements in said contract, on his part.” Eevisal, 2019, gives to all subcontractors and laborers a lien for “labor donе or material furnished, which lien shall be preferred to the mechanic’s lien now provided by law.”

As is said in Gastonia v. Engineering Co., 131 N. C., 365, 366, as-quoted supra, “Though no mechanic’s lien can be filed against the tоwn,”’ the beneficiaries, i. e., the materialmen and laborers, under Eevisal, 2016, can none the less bring their action as the beneficiaries of the ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍contract of suretyship, and for a stronger reason the subcontractors, under Ee-visal, 2019, can do the same for “such labor done or material furnished,”' since such lien “shall be preferred to the mechanic’s lien.”

Though no lien can be filed against the town of Tarboro, it would be liable, under Eev., 2016, to laborers and materialmеn, and, under Eev., 2019, for labor done and material furnished to the extent of any balance-due the contractor and unpaid at the time of the notice. The city, in its-contract with Pierce, required him to give the bond for compliance with his contract in all respects, which, of course, included laborers and material, and supplies, under Eev., 2016, and what shall be due the subcontractors for work and labor done (Eev., 2019).

The first clause in the contract with Pierce is, that hе should “furnish, at his own expense, all the material, labor, and equipment necessary to do the work.” He furnished the same, but not at his own expense, fora great part of the labor done on the job is yet unpaid for, including this, plaintiff, and the condition of the bond is broken. It would be ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍strange-if the plaintiff, who did practically all the wоrk on the job, should not have recourse to the bond for the amount due him, solely because he did. the work with a machine instead of with his own hands or by hiring-laborers to work with their hands.

The defendant surety company cites cases such as Boiler Works v. Surety Co., 43 L. R. A. (N. S.), 162, where it was held that a subcon *94 “tractor could not file a claim for the repairs on a steam shovel which had been used by him. Also, Public Works Co. v. Yonkers, 207 N. Y., 81, which held that the contraсtor could not recover against the bonding-company for the rent of a steam shovel because that was not labor or material. To thе like effect is Surety Co. v. Des Moines, 152 Iowa, 531, where the Court held that the contractor could not recover for lanterns, sledges, chisels, and. axles, and the like, used in the work.

Lohman v. Peterson, 87 Wis., 287, hеld that the rent of oxen hired to the contractor to haul ties was not a lien on the ties, and there are many other cases to like effect. The reason for this is, that these were merely instrumentalities used by the contractor or subcontractor to do the work. They were not labor, and they were not materials; but here the contract was to do so much trenching at a fixed price, and turn it over free of liens for labor done or mаterial furnished. The plaintiff is not suing for rent paid (if any) by him for the use of his machine, nor for any repairs put thereon,- nor for the use of his machine, nor is he suing for his wages in supervising the work, as in Whitaker v. Smith, 81 N. C., 340, where this Court held that an overseer could not file a lien for labor. Nor ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍could he recover for oil or fuel used by him in operating his machine.

This plaintiff’s claim is simply for the work and labor done, as subcontractor, at the stipulated rate. It is admitted by the demurrer, of course, that the balance due.him by the contractor is the amount alleged, for which the plaintiff has obtained judgment against said contractor in this action.

The contract of Pierce with the city being to do that very work, and the contract with the surety company being that he shall faithfully perform all thе provisions of his contract, which includes this very trenching which the plaintiff has done, and which said Pierce contracted to “furnish at his own expense,” it follows that the plaintiff is entitled to sue as beneficiary under the contract, and to recover of the surety company the balance due by Pierce for the execution of such work by the plaintiff. The identical point presented in this case was decided in Lester v. Houston, 101 N. C., 605, in an opinion by Smith, C. J., the third headnote of which is as follows.

“3. The constitutional provision for giving to mechanics and laborers liens for their work, and the statutes enacted in pursuance thereof j and .also giving liens for materials furnished, extend to and embrace contractors who do not themselves perform the labor or furnish the materials used, but procure it to be done through the agency of others.”

This was cited with approval by Allen, J., in Mfg. Co. v. Andrews, 165 N. C., 292, 293.

The judgment sustaining the demurrer should be

Reversed.