180 Iowa 949 | Iowa | 1917
“Failure to Prosecute Work.
“If the second party shall fail to prosecute the work according to the work specified, or shall fail or refuse to prosecute the work after commencing the same, and damage to the ditch or district results therefrom, the second party shall be liable therefor, and the first party may recover such damage by an action on the bond of the second party; or the said party of the first part may retain from the amount otherwise due the parties of the second part, from time to time, such sum as shall reimburse the parties of the first part for such damage, or enable them to repair the same.
“Abandoning Work.
“In case the party of the second part shall abandon the work or fail to make satisfactory progress on said work, said first parties may cause said work to be completed, and the parties of the second part, and also the sureties on the bond herein referred to, shall be jointly and severally liable to the parties of the first part for any and all loss and damage resulting from such default, either from the greater expense of so completing said work, or from any other cause.
“Subletting.
“It is further agreed by the said parties of the second part that it will give its personal attention to the .faithful prosecution of said work, and will not assign or sublet the same or any part thereof, without the previous written consent of the parties of the first part, subject to such conditions for its own protection as it may see fit to impose.
*953 “Revoking Contract.
“The parties of the first part may stop the work or revoke this contract, or both, if the party of the second part or its employees shall willfully refuse to comply with any of the terms and requirements hereof, in which event the party of the second part shall forfeit to the parties of the first part all payments due or to become due on said work, as liquidated damages for such breach of contract, and shall be liable for any further damages by reason thereof, and the parties of the first part shall be in no manner liable for stopping the work or revoking the contract.
“Party of the second part will, in a good workmanlike manner, at its own expense, furnish and pay for all labor and material and perform all the work necessary for the excavation and construction of the ditches of the said district.”
The bond provides:
“Now, therefore, if the said W. L. Stewart shall well and faithfully perform and carry out all the terms, agreements, conditions and covenants contained in said contract, and shall pay, as they, become due, all just claims for work, tools, machinery, skill and material used in the completion of said contract, in accordance with its terms, and if the said W. L. Stewart will save the said county of Humboldt and state of Iowa harmless from all costs and charges that may accrue on account of the doing of the work specified in said contract, then this obligation shall be void; otherwise to remain in full force and effect.”
The specifications for the contract provide, among other things:
“All plans, specifications and reports in the possession of the engineer, and all laws enacted by the general assembly of Iowa which may apply to the legal construction of tile drains, shall be considered as part of these general specifications.”
The points relied upon by the appellant for reversal are that the court erred in holding that withholding payments of 80 per cent of the estimates, Avhich appellant says Avas unlaAvful and wrongful, did not release the surety company from liability on the bond, and in holding that the contract Avith the contractor Avas legally terminated by the district; in holding that the acts of the district in reletting the Avork Avere proper; in holding that the funds of the district had been properly accounted for; and they contend that the evidence fails to show that the Avork was relet at a reasonable price. The last three propositions are argued together. The further point is made that the court erred in holding that the distinct was entitled to -a preference.
It Avill be necessary to set out some of the evidence bearing upon these different propositions. The contractor, W. L. Stewart, testifies in part:
“Well, I Avánted to go ahead with it and tried to make an arrangement to go ahead with it, but Ave couldn’t get the payments arranged. They Avould not issue me any more*955 warrants oil what I had estimates on. I gave the county auditor orders to pay each of these liens a certain amount on my estimates, and he refused to do it. I could have, and I said the tile company wanted payment along. He said he would not pay anything until there was enough accumulated to pay all at once, and I said that the tile company wanted payments every month. There rvere claims filed with the auditor. I don’t remember the amount of them. I had estimates. I don’t remember the amount now, but I did not have the 80 per cent. There was some $2,000 or $3,000 back, if I remember right, and I wanted the auditor to distribute the amount of those unpaid estimates upon the amount of the liens, as I directed from time to time, and the county auditor insisted ou having all of these liens cleared off before he would disburse any of the money. The tile company told me that, if they could get a partial payment every mouth on the liens, that they would go ahead and fulfill the contract in shipping the tile. "When I was doing the work in the fall of 1913, I was in a position to continue the work if they would have issued the estimates to me and the warrants thereon as they were due for this work. I had an arrangement with the tile people by which they could have continued to have shipped me the tile if payments had been nyide monthly on the estimates I was entitled to.”
He claims that the failure to issue warrants on the estimates was the reason he was unable to complete the work, but there is other evidence and there are some other circumstances bearing upon this question which show that the contractor was unable to finish the work, and that he abandoned it and otherwise violated his contract, which justified the district, under the provisions of the contract, to cause the work to be completed in case of abandonment. The contractor also testified:
“T sublet various branches in the latter part of June,*956 1913. Tilings Avas such that I couldn’t see my way clear to go ahead AA'ith my avotIc. I intended to shut the work down until I could see my way out. * * * Later on, I resumed Avork after the first action by the board was set aside. I Avas out from Illinois three times after I shut the work down the last of June. I came out the latter part of August and made arrangements to go ahead with the Avork along about the first of September, and I made a contract with Mr. Wykoff to go ahead with the main line and two branches. I did not hire a foreman or gang of men at that time. I stayed about 14 days. I next came back to Iowa about October 27 and stayed 7 or 8 days. I came back the third time January 5th, and was here a little better than a Aveek. I sublet the entire work to Mr. Wykoff except those branches that went into the open ditch below where the main line emptied in at the head of the open ditch.”
June 29, 1913, SteAvart, the contractor, sent word to his foreman from Sadorus, Illinois, as follows: “Stop Avork; also subcontractors until you see me.” June 28, 1913, he wrote the foreman from Urbana, Illinois, as follows:
“I presume you think it strange when you received my message. ■ I have gone to the Avail and I am taking the bankrupt Iuav. Do not issue any more checks, return check book, and also the stub Avhich you have of the other book. Figure out the list of checks that you have issued to be paid July 10th. What checks you boys are holding, mail them to the Urbana Banking Company at Urbana, 111., and they Avill send you checks for the amount. If. you can find out who holds the check that has been sold of the last three Aveeks’ time, let me know. Also send me list. Tell George not to be scared. He Avill get' his money.' I am in bad health — a general breakdown. I presume the bond com*957 pany will finish the contract. You probably can sublet it. They will want to sublet it. '
“Yours truly,
“W. L. Stewart.
“Keep this noise clown as best you can.”
Immediately after the receipt of these letters, all parties who had anything coming to them from the contractor filed their claims. It seems that, after the district had declared the contract forfeited, it was reinstated for a time before the reletting of the work to other parties. It is contended by appellees that the surety company had knowledge of the proceedings, and were assuming charge and directing the work, at least up to about the time that the contract was finally terminated and relét. As bearing on this, the traveling adjuster of the surety company testifies that he reported to his superior at Minneapolis his various attempts to adjust the matters growing out of this Stewart bond, and that his superior went into it with him, and thought the adjuster had perhaps made a mistake in joining with the contractor in a request upon the tile company that it continue furnishing the tile; that he had authority to and did sign the company’s name; and that he employed attorneys for the surety company. He refers to notices and letters signed by these attorneys, demanding that the tile company deliver instalments of tile as the surety company should demand from time to time. These written exhibits are identified by the witness and referred to in the record, but they are not set out in 'the abstract, and no additional abstract has been filed by appellee. They are set out in appellee’s argument, and appellant makes no objection thereto. But aside from these documents themselves, we think the testimony of the traveling auditor shows their connection with the contractor in the matter.
Soon after February 13, 1914, the contractor received from defendants the following notice and demand:
*958 “Dakota City, Iowa, February 13, 1914.
“In Re Bond No. 300966, W. L. Stewart, Principal National Surety Company, Surety.
“To W. L. Stewart, Urbana, Illinois, Contractor on Drainage District No. 2, Humboldt County, Iowa, and National Surety Company of New York, Surety on the Bond of said Stewart in said re Drainage District No. 2.
“You and each of you are hereby notified that unless tile are on the ground along the line of the uncompleted ditches and drains in Drainage District No. 2, Humboldt County, Iowa, on or before the 27th day of February, 1914, that being the date of the next meeting of the board of supervisors of said county, the said board of supervisors will declare a forfeiture of said contract in the matter of Drainage District No. 2 and authorize an action sounding in damages to be instituted against the said Stewart and the said National Surety Company. Of the above you and each of you are to take notice and govern yourselves accordingly.
“J. G. Devine, County Auditor.”
Prior to this, and on July 22, 1913, the surety company was notified of the default of the contractor and of the filing of liens and of the pi-ior or first termination of the contract. The contractor testifies that, after the receipt of the notice of February 13, 1914, before set out, he did not come to Humboldt; that he did not come to look to see if the branches had an outlet; that he was trying to get the tile company to make shipments of tile; that lie then owed the tile comjjanies about $8,000; that he did not think the tile companies would, keep on shipping tile unless they got their money; that they did not keep on shipping; that, when he got the notice of the first reletting, he did not come to Humboldt to see about it.
The contract was finally relet July 2, 1914, to Berkland.
“The reason that I didn’t feel like issuing warrants for this work that was done subsequent to the time of filing of these liens, on estimates that were filed with me subsequent to the reinstatement of the contract, was I felt that I didn’t have the right under the statute in view of the liens. That is the only reason I held them up. T acted entirely upon the belief that I couldn’t legally pay them out while liens were on file against this drainage fund. When I speak of the liens, 1 mean the statements that have been filed for the purpose of creating a preference as to the funds in the hands of the drainage district, the statements filed by the materialmen, tile companies and the laborers. These are the claims that have been introduced in the progress of the trial.
“Redirect Examination. Mr. Simcock [the adjuster for the surety company] wanted me to issue warrants for all the estimates, and told me that the surety company was behind me, and he couldn’t see where I would be taking any chances in issuing the warrants, in view of the fact that the surety company was back of me. T told him that, if the surety company wanted to put that in writing, or satisfied me that they would save me safe from harm because of issuing these warrants, that T would be willing under these conditions to go ahead and issue the warrants; that the only thing I wanted was to escape liability my-. self. No writing ever came. That was in October, 1913.
“ Reoross-exa urination. Tn ihat same conversation, he said that the surely company’s position was that I was not required under the law to hold these up, and that they couldn’t file anything to make a valid lien, and that that would he their contention.”
“If I remember right, he first stopped work about June, 1913. I got my news from the foreman. The forfeiture was made because he abandoned the work. As I remember it, it was forfeited within thirty days after work ceased. I heard nothing from Mr. Stewart up to that time, except what I heard indirectly through the foreman, Mr. Dunn. At the time of the forfeiture, our information was that he was insolvent. * * No warrants have been issued in payment of any claims that were filed about the time of the first abandonment. Since June, 1913, there has been some tile put in, but no tile furnished that I. know of.”
“A materialman furnishing material to the principal contractor engaged in constructing a drainage improvement under Chapter 2-A, Title X, Supp. Code, 1913, is not entitled to a so-called mechanic’s lien under Sec. 3102 of the Code, against the county whose board of supervisors enter into a contract on behalf of the drainage district for the construction of such improvement.”
But the facts in that case are very different from the case at bar. That was a case brought against the county to recover for money due laborers and materialmen, and there was no showing that any money was due or owing by the county or by the drainage district, to Parks & Gerber. The plaintiff in that case sought to prove his case within the holding in Humboldt County v. Ward Bros., 163 Iowa 510, where laborers and materialmen whose labor and material had entered into previous estimates upon which the contractor had drawn 80 per cent of the amount of the contract, were asking that they might be adjudged to have a claim against the remaining 20 per cent. It was held that they were equitably entitled to such relief, regardless of such statute, and that the rights of the surety were no greater at this point than those of the contractor, whose performance it insured. But'in the Parks & Gerber case, it was held that the facts presented did not warrant equit
On the question as to the statute providing for liens in drainage districts’ being remedial, appellees cite Haskel v. City of Burlington, 30 Iowa 232. The question there was whether a statute conferred upon the city of Burlington authority to sell lots for taxes delinquent at the time of its passage, and it was held that the statute was remedial in its nature. To the same point, they cite Cosson v.