Opinion
No. 42790.
November 25, 1963.
1. Contracts — consideration — what constitutes a valid consideration.
All that is needed to constitute valid consideration to support contract is that there be either benefit to promisor or detriment to promisee.
2. Contractors — bonds — principal and surety — estoppel.
Where prime contractor specifically agreed in supplemental bond given to materialman of subcontractor that all prerequisites to bringing of suit had been complied with or were fully met and fulfilled, prime contractor and its surety were estopped from denying that prerequisite of ninety-day notice under earlier bond had not been met by materialman.
3. Contractors — bonds — principal and surety — materialmen.
There was sufficient consideration for execution by prime contractor of supplemental bond given to materialman of subcontractor, where materialman, whose consent was necessary, agreed that owner might release to prime contractor about $34,000 then being withheld from prime contractor by owner.
4. Contractors — bonds — principal and surety — materialmen.
Where prime contractor gave materialman of subcontractor supplemental bond providing for protection of all materialmen of subcontractor, and materialman furnished to subcontractor material, which was used on job, and which was not paid for, materialman could recover from prime contractor and its surety full amount for material furnished.
Headnotes as approved by McGehee, C.J.
APPEAL from the Circuit Court of Hinds County; M.M. McGOWAN, Judge.
Watkins Eager, Elizabeth Hulen, Jackson, for appellant.
I. Bond of prime contractor here, executed by both the contractors and the surety, was broad enough to promise payment to all persons furnishing materials consumed in the work whether furnished directly to the principal or through a subcontractor. Alabama Marble Co. v. United States Fidelity Guaranty Co., 146 Miss. 414, 111 So. 573; Continental Casualty Co. v. Crook, 157 Miss. 518, 128 So. 574; Day v. Kershaw, 185 Miss. 207, 187 So. 221; Hartford Accident Indemnity Co. v. Natchez Investment Co., 161 Miss. 198, 132 So. 535, 135 So. 497; Linde Air Products Co. v. American Surety Co., 168 Miss. 877, 152 So. 292; Seaboard Surety Co. v. Borsarge, 226 Miss. 482, 84 So.2d 517; United States Fidelity Guaranty Co. v. Maryland Casualty Co., 191 Miss. 103, 199 So. 278; Secs. 356, 357, 358, 380, Code 1942.
II. The appellees — having for a valuable consideration by the compromise settlement agreement or bond of May 9th, 1962, specifically agreed that all prerequisites to suit had been fulfilled and met — could not defend this suit on the ground that appellant did not give notice of its claim within ninety days after the furnishing of material. Allen v. Berkmier (Texas), 216 S.W. 647; Batson v. Baldwin Co. (W. Va.), 84 S.E. 887; Bennett v. Beetle (Cal.), 75 P. 843; Bourquin Co. v. Chester Construction Co. (N.Y.), 104 F.2d 648; Browne v. Merchants Co., 186 Miss. 398, 191 So. 58; Byrne v. Cummins, 41 Miss. 192; Chancellor v. Melvin, 221 Miss. 590, 52 So.2d 360; City of Irontown v. Harrison Construction Co., 212 Fed. 353; Connecticut General Life Ins. Co. v. Birzer (Ohio), 101 N.E.2d 408; Continental Casualty Co. v. Pierce, 170 Miss. 67, 154 So. 279; Cook v. Pitts, 114 Miss. 39, 74 So. 777; Copiah Hardware Co. v. Johnson, 123 Miss. 624, 86 So. 369; Cross v. Field, 244 Miss. 397, 141 So.2d 733; Crowell Lumber Grain Co. v. Ryan Co. (Neb.), 193 N.W. 609; D.L. Fair Tie Co. v. Warrell, 147 Miss. 412, 112 So. 24; Field v. Weir, 28 Miss. 56; Fidelity-Phenix Fire Ins. Co. v. Redmond, 144 Miss. 749, 111 So. 366; Fleisher Engineering v. United States, 311 U.S. 14, 85 L.Ed. 12; Fore v. United States Fire Ins. Co., 129 Miss. 497, 92 So. 628; Gammill Co. v. Guesnard, 167 Miss. 868, 150 So. 214; Hickey v. Collum (Minn.), 50 N.W. 918; Hill v. Bowers (Kansas), 26 P. 13; Houston Fire Ins. Co. v. United States, 217 F.2d 727; Hunter v. Blanchard, 18 Ill. 318; Hyak Lumber Co. v. Cissel (Wash.), 244 P.2d 253; In Re Schofield's Estate (Colo.), 73 P.2d 1381; Jack v. Craighead Rice Milling Co., 167 F.2d 96, cert. den. 92 L.Ed. 1755; Joint School District v. Bailey-Marsh Co. (Wis.), 194 N.W. 171; Lowndes Cooperative Assn. v. Lipsey, 240 Miss. 71, 126 So.2d 276; McElrath Rogers v. W.G. Kimmons Sons, 146 Miss. 775, 112 So. 164; McGehee v. McGehee, 227 Miss. 170, 85 So.2d 799; Marble v. Jones Magee Lumber Co. (Neb.), 28 N.W. 309; Maryland Casualty Co. v. Dulaney Lumber Co., 23 F.2d 378; Martin v. Dixie Planing Mill, 199 Miss. 455, 24 So.2d 332; Miller v. Bank of Holly Springs, 131 Miss. 55, 95 So. 129; Mississippi Power Light Co. v. A.E. Kusterer Co., 156 Miss. 22, 125 So. 429; Paul v. University Motor Sales Co. (Mich.), 278 N.W. 714; Pierce v. Garrett, 142 Miss. 641, 107 So. 885; Scholes v. United States, 295 F.2d 366; Shapleigh Hardware Co. v. Spiro, 141 Miss. 38, 106 So. 209; Shreveport Long Leaf Lumber Co. v. Spurlock (La.), 120 So. 126; Therrien v. Maryland Casualty Co. (N.H.), 84 A.2d 179; Texas Co. v. Wieczorek (Cal.), 98 P.2d 547; United States Fidelity Guaranty Co. v. Marathon Lumber Co., 119 Miss. 802, 81 So. 492; United States Fidelity Guaranty Co. v. Yost, 183 Miss. 65, 183 So. 260; United States v. Murdock, 99 Maine 258, 59 A. 60; United States v. Peerless Casualty Co., 255 F.2d 137; Vilm Milling Co. v. Kansas Casualty Surety Co. (Kansas), 180 P. 782; Wentworth v. Tubbs (Minn.), 55 N.W. 543; Western Assurance Co. v. White (Miss.), 25 So. 494; Whitehead v. Kentucky Sales Corp. (Ky.), 278 S.W. 105; Yazoo M.V.R. Co. v. First National Bank, 119 Miss. 59, 80 So. 382; Youngerman-Reynolds Hardwood Co. v. Hicks (Ala.), 181 So. 111; 40 U.S.C. § 270(a)(b); Secs. 372, 375, 376, Code 1942; Chap 217, Laws 1918; 11 Am. Jur., Compromise and Settlement, Sec. 4 p. 249; 31 C.J.S., Estoppel, 232.
Swarthout, Stanfield Wallace, Jackson, for appellees.
I. The bond of prime contractor was broad enough to promise payment to appellant.
II. Appellees did not enter into a compromise settlement agreement by executing bond of May 9, 1962; said bond merely retaining status quo of the parties herein, and that due to ambiguity, the May 9, 1962 bond should be strictly construed in favor of appellees. Bacon v. Karr (Fla.), 139 So.2d 166; Citizens Bank v. Frazier, 157 Miss. 298, 127 So. 716; Florida State Turnpike Authority v. Industrial Construction Co. (Fla.), 133 So.2d 115; G.F.A. Peanut Assn. v. W.F. Covington Planter Co., 238 Ala. 562, 192 So. 502; Globe Music Corp. v. Johnson, 226 Miss. 329, 84 So.2d 509; Greenfield v. Millman (Fla.), 111 So.2d 480; Hartford Accident Indemnity Co. v. Hewes, 190 Miss. 225, 199 So. 93; Home Mutual Fire Ins. Co. v. Pittman, 111 Miss. 420, 71 So. 739; Irwin v. Baggett, 231 Ala. 324, 164 So. 745; Koehley v. Standard Sanitary Manufacturing Co. (Texas), 230 S.W. 785; Lindquist v. Burklew (Fla.), 123 So.2d 261; Lowery v. May, 213 Ala. 66, 104 So. 5; Miller v. Magnolia Building Loan Assn., 160 Miss. 367, 134 So. 136; Rubel v. Rubel, 221 Miss. 848, 75 So.2d 59; Shreveport Long Leaf Lumber Co. v. Spurlock (La.), 120 So. 126; Standard Sand Gravel Co. v. McClay, 191 N.C. 313, 131 S.E. 754; State, ex rel. Guardian Credit Indemnity Corp. v. Harrison (Fla.), 74 So.2d 371; Talbott v. Caudill, 248 Ky. 146, 58 S.W.2d 385; Texas Co. v. Wieczorek (Cal.), 98 P.2d 547; Tibbetto v. Moore, 23 Cal. 208; Sec. 375, Code 1942; 17 C.J.S., Contracts, Sec. 319 p. 739; 17A C.J.S., Contracts, Secs. 309, 586 pp. 166, 1139; 31 C.J.S., Estoppel, 232; 37 C.J.S., Furnish, 1409.
This is an appeal from a judgment of the Circuit Court of Hinds County, Mississippi, rendered on November 28, 1962, awarding the appellant, American Olean Tile Company of Lansdale, Pennsylvania, the sum of only $1,500, the amount admitted by the prime contractor to be due to the subcontractor and tendered into court, instead of the amount sued for, $7,115.09, for material furnished by the appellant in the construction of a women's residence hall at Mississippi College, Clinton, Mississippi.
The judgment was against the Frazier-Morton Construction Company, a partnership composed of C.E. Frazier and A.W. Morton, the prime contractor, and the Fidelity and Deposit Company of Maryland, their surety on a private construction job on the campus of Mississippi College, for a total contract price of $253,000. The material for the tile, marble and terrazo work was sold by the appellant American Olean Tile Company to the subcontractor Stokes Interiors Inc., for the said sum of $7,115.09, and the proof is undisputed that the said material was used in the job or was reasonably required for use in the performance of the contract between the Frazier-Morton Construction Company and Mississippi College, and that no part of the said purchase price had been paid.
The appellees, Frazier-Morton Construction Company and its surety, took the position that the prime contractor and its surety were not liable for unpaid material consumed in the job, since the same was furnished by and through a subcontractor Stokes Interiors Inc., basing this defense upon the fact that Section 374, Code of 1942, providing the terms for a bond on a private job, does not provide for any liability to a materialman of a subcontractor.
However, we think that the record in this case clearly discloses that the bond sued on herein was, and was intended to be, broader than the requirements of this statute as formerly written. This statute as it now reads, provides for a bond "containing such provisions and penalties as the parties thereto may insert therein, (and that) such bond shall also be subject to the additional obligations that such contractor or subcontractor, shall promptly make payments to all persons furnishing labor or material under said contract; * *". (Italics ours).
The original bond named Mississippi College as the obligee therein and was dated March 3, 1961. A supplemental bond was entered into on May 9, 1962, between the prime contractor, Frazier-Morton Construction Company, and the appellant American Olean Tile Company, in which the said tile company was named as the obligee. This bond was for the full contract price of $253,000, as a "performance bond" and another bond of the same date, May 9, 1962, and with the same surety, is referred to in the record as the "payment bond", for 50% of the contract price.
The bond of May 9, 1962, provided for the protection of all materialmen of the subcontractor, and promised payment to all "claimants" as defined therein, and a claimant was defined therein as one "having a direct contract with the principal or with a subcontractor of the principal for * * * material * * * used or reasonably required for use in the performance of the contract." The original bond of March 3, 1961, wherein Mississippi College was named as the obligee provided that "within ninety days after such claimant * * * furnished the last of the materials" for which a claim is made, he should give written notice to the owner (of the building) of such claim, and a claimant was specifically defined in the General Construction Specifications referred to in a printed booklet separately sent up on this appeal, and being Exhibit D to the testimony of Mr. Morton, as follows: "A claimant is defined as one having a direct contract with the principal or with a subcontractor of the principal for labor, material, or both, used or reasonably required for use in the performance of the contract * * *."
All the provisions of the bond of March 3, 1961, were incorporated in the bond of May 9, 1962, by reference, and the appellees Frazier-Morton Construction Company and its surety Fidelity and Deposit Company of Maryland directly obligated themselves to the appellant American Olean Tile Company in the same terms that they had obligated themselves to Mississippi College in the former bond, and it was provided that "all rights of American Olean Tile Company thereto are preserved therein." It was in consideration of the execution of this bond of May 9, 1962, that the appellant wrote to Mississippi College on the same date that it had no objection to the College releasing any funds owing by it to Frazier-Morton Construction Company or making final payment to said company. The amount then being withheld, as shown by the record, was slightly in excess of $34,000, and the Frazier-Morton Construction Company immediately received in cash these funds theretofore retained by Mississippi College.
(Hn 1) All that is needed to constitute a valid consideration to support an agreement or contract is that there must be either a benefit to the promisor or a detriment to the promisee. If either of these requirements exist, there is a sufficient consideration.
In order to get an immediate release of this money to them, Frazier-Morton Construction Company on May 9, 1962, entered into the compromise settlement agreement in the form of a supplemental bond wherein the appellant was named as the obligee instead of Mississippi College, the obligee named in the bond of March 3, 1961, and which subsequent bond recited therein that the College "* * * is withholding final payment for said construction job from Frazier-Morton Construction Company, and said Frazier-Morton Construction Company desires the release of this money without admission on its part of any liability to American Olean Tile Company whatsoever." And Mr. Morton testified that this bond of May 9, 1962, to the American Olean Tile Company was given in order that they (Frazier-Morton Construction Company) could get their money from Mississippi College. He testified "We executed that to get all of our money due us from the college." No performance or payment bond was required by the prime contractor to be executed by the subcontractor for the protection of the appellant.
(Hn 2) In the compromise and settlement agreement, or bond, of May 9, 1962, it was specifically agreed that "all prerequisites to the bringing of a suit had been complied with or were fully met and fulfilled". Of course, the giving of the ninety day notice under the first bond was one of the prerequisites to the suit, and the appellees are now estopped from denying that this prerequisite had not been met. The compromise settlement provided: "It is specifically agreed that the American Olean Tile Company can immediately and forthwith commence suit on this bond against the principal and surety without reference to whether or not there has been a completion or final settlement or publication thereof by Mississippi College and that for the purpose of any suit on its part it is deemed by the parties to this bond that all prerequisites to suit on the contract and bond of March 3, 1961, and this bond are fulfilled and met."
(Hn 3) The trial court was of the opinion that "there is an apparent ambiguity between the original bond and the supplemental bond. At any rate, if the limitation in the original bond of ninety days has extinguished the right to sue, nothing but a new promise, for a consideration, could revive the action." The trial court evidently overlooked that the appellant, whose consent was necessary, had agreed for Mississippi College to release to the Frazier-Morton Construction Company approximately $34,000 then being withheld from them by the college, and that this constituted a sufficient consideration for the execution of the bond of May 9, 1962; and that moreover, this second bond represented a compromise settlement of the then existing controversy.
In the cases relied upon by the appellees to the effect that the statute, Section 374, Code of 1942, supra, does not require a bond for the protection of anyone except those who actually furnish material directly to the principal in the bond, were cases where the bond just happened to be in favor of the prime contractor. In this case the prime contractor specifically contracted with the owner, Mississippi College, that "the contractor shall provide and pay for all materials necessary to execute, complete, and deliver the work within the specified time."
Section 13, pages 9 and 10, of the General Conditions expressly provides that the contractor agreed that any claims of a materialman incurred in the furtherance of the performance of the contract, if left unpaid "the owner may, after having served written notice on the said contractor, either pay the unpaid bills, of which the owner had written notice, direct, or withhold from the contractor's unpaid compensation a sum of money deemed reasonably sufficient to pay any and all such unpaid bills until satisfactory evidence is furnished that all liabilities have been fully discharged."
(Hn 4) We have concluded that since the evidence shows without any dispute whatsoever that the material, the value of which is sued for in the sum of $7,115.09, was furnished by the appellant to the Stokes Interiors Inc., and was used in the job of building the women's residence hall at Mississippi College, and has not been paid for, the case should be reversed and judgment rendered here for the appellant, American Olean Tile Company, for the said amount or for the total sum of $7,366.13, including interest at the legal rate from the due date of the price of the said material.
Reversed and judgment here for the appellant.
Gillespie, McElroy, Rodgers and Brady, JJ., concur.