117 Iowa 328 | Iowa | 1902
One King entered into contracts with the city of Des Moines for the grading of certain streets and alleys therein, and gave a bond, with the defendant aa surety, whereby he undertook to pay all just claims foi labor performed in complying with his contracts. Plaintiff is the assignee of the claims for labor, and as such brought action on the aforesaid bond. King brought suit on his contracts against the city, and in his action recovered judgment for $2,187. His attorneys were allowed $552 of this fund as a paramount lien; and something like $225 in labor claims, which defendant admits were prior to the claims of plaintiff’s assignors, were also allowed against it. The remainder of the fund was used in paying other claims which defendant contends were inferior to the claims of plaintiff’s assignors, had they pursued the statute with reference to labor claims, to which statute we shall presently refer. These assignors prepared sworn demands, and filed them with the city auditor; but their claims to a preference out of'the funds due from the city-were denied by the district court for the reason that the statements were insufficient in form, and the procedure so defective that their claims to priority could not be sustained. No appeal was taken from this ruling. This action was then brought on the bond, on which defendant was surety, which provided that King would pay all claims for labor and material, and preserve the city of Des Moines harmless from any liens or claims for labor or material furnished. Defendant contends that it is released, because neither plaintiff nor his assignors preserved their liens or claims upon the fund due King for work performed by him for the city.
Section 3102 of the Code reads as follows: “Every mechanic, laborer or other person who, as sub-contractor,
Defendant relies on the following propositions in support of its defense, and for a reversal of the judgment of the trial court. “First. That plaintiff’s assignors held a lien on the fund due from the city to King, which they negligently failed and neglected to enforce. Second. The rule is that, on payment of a debt by a surety, he is subrogated to all securities and rights, not only against the principal debtor, but against third parties, which were held by the creditor to secure the payment of the debt, and that, therefore, if the creditors release property or securities out of which the surety might have been preserved from loss, he thereby releases the surety from liability on the contract of suretyship.” Considered abstractly, these propositions of law are correct, and, as usual, the difficulty lies in the application of principles, rather than with the law itself. Thus, in Mingus v. Daugherty, 87 Iowa, 59, we said: ‘ ‘ Our conclusion is that, when a creditor holds a landlord’s lien for the debt due him, it is a security; and if, through his act or neglect, that security is lost, in whole or in part, without the consent of the surety, it works a discharge of the personal surety to the extent of the security
With these rules settled, we now turn to the pivotal point in the case: Does the statute we have quoted create a lien upon the funds due the principal contractor? No lien is created on the building or improvement. Indeed, it is doubtful if one could be created thereon. Mosher v. School Dist., 44 Iowa, 122; Breneman v. Harvey, 70 Iowa, 479; Loring v. Small, 50 Iowa, 271; Baker v. Bryan, 64 Iowa, 561; Whiting v. Story County, 54 Iowa, 81. The lien, if any, must be upon the fund in the hands of the corporation. But the statute does not say that it is a lien. It says that a laborer shall have a claim against the corporation for the value of his services, and that such claims shall have priority in the order in which they are filed. This, to our minds, simply gives labor claimants a preference, and does not in any sense create a lien. Affirmative action on the part of the claimant is needed to secure this preference, and payments to the principal contractor in accord with the terms of the contract defeats the claim. Statutes providing merely for preferences do not create liens. Brent v. Bank, 10 Pet. 596 (9L. Ed. 547). While the section we have quoted is found in the chapter of the Code relating to mechanic’s liens, it is manifest that no lien is created, and that, at most, the laborer has an
As sustaining our conclusions, see Vance v. English, 78 Ind. 80; Sheldon v. Williams, 11 Neb. 272 (9 N. W. Rep. 86); Mundorff v. Singer, 5 Watts, 172; Richards v. Com., 40 Pa. 146.
The judgment of the district court is correct, and it is AEEIRMED.