Fort Smith Structural Steel Co. v. Western Surety Co.

247 F. Supp. 674, 1965 U.S. Dist. LEXIS 7793
CourtDistrict Court, W.D. Arkansas
DecidedNovember 17, 1965
DocketCiv. A. No. 554
StatusPublished
Cited by5 cases

This text of 247 F. Supp. 674 (Fort Smith Structural Steel Co. v. Western Surety Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fort Smith Structural Steel Co. v. Western Surety Co., 247 F. Supp. 674, 1965 U.S. Dist. LEXIS 7793 (W.D. Ark. 1965).

Opinion

JOHN E. MILLER, Chief Judge.

Plaintiff’s motion for summary judgment filed October 7, 1965, under Rule 56, Fed.R.Civ.P., defendant’s response thereto, filed October 25, 1965, and the motion of defendant for continuance filed October 25, 1965, are before the court.

The case was duly removed on June 10, 1965, to this court from the Circuit Court within and for Washington County, Arkansas, on the grounds of diversity and amount involved. The existence of diversity of citizenship of the parties and the presence of an amount in controversy in excess of $10,000.00, exclusive of interest and costs, give the court jurisdiction. Since jurisdiction is based upon diversity the substantive law of Arkansas determines the rights of the parties.

On the day the case was removed the defendant filed its motion to strike the allegations of the complaint seeking recovery of a penalty of twelve percent and a reasonable attorney’s fee. The motion was denied on June 15, 1965. On June 22, 1965, the court, on motion of defendant, extended its time to July 3 to answer or otherwise plead. Answer was filed July 3, 1965, in which defendant did not deny that the construction contracts were entered into by Washington County and the Arkansas State Highway Commission and that the statutory bonds were executed by defendant as alleged in the complaint. Neither did the defendant deny that the material in the amounts and of the value as alleged by plaintiff was furnished.

On October 6, 1965, the defendant filed a motion to remand which was denied October 11, 1965.

In the motion for continuance the defendant, inter alia, alleged:

“That this case is set for trial on Monday, November 8, 1965, and a complete audit of the records of Washington County, Arkansas, has not been completed. That until such audit is completed the amount of moneys available for payment of the plaintiff’s claim and other claims cannot be determined. It is very probable after said audit is completed that there will be no liability on this defendant, there being sufficient moneys in the Washington County treasury to pay the claim of the plaintiff.”

In view of the conclusion of the court on the motion for summary judgment, it is unnecessary to set forth other allegations contained in the motion for continuance.

For some time prior to the filing of the motion for summary judgment the case had been set for trial on its merits. On October 26, the day after defendant filed its response to the motion for summary judgment, the court by letter requested counsel for the parties to submit briefs on certain issues, i. e., (1) whether or not payment to the Arkansas State Highway Commission is a condition precedent to the payment of other claims, (2) whether or not Amendment 10 of the Arkansas Constitution, which is the basis of the Washington County Court’s order of March 4, 1965, extends to the defend[676]*676ant, and (3) were the contracts between the Arkansas State Highway Commission and Washington County made at such a time as to be void or voidable, and, if void, is that a defense available to the defendant.

Most excellent briefs have been received covering not only the questions stated above, but other incidental contentions of the parties. Upon receipt of the briefs it became apparent that the court would be unable to thoroughly consider and dispose of the pending motions prior to the fixed trial date, and on November 5 an order was entered striking the cause from the trial calendar of November 8 “subject to a later setting.”

The court has examined the pleadings with their exhibits, the admissions contained in the answer and motions, the affidavits and the entire court file, and is of the opinion that there is no genuine issue as to any material fact.

The defendant on its brief makes three contentions which the court believes should be considered in the order made. The first contention is that payment to the Arkansas State Highway Commission is a condition precedent to the payment of other claims.

On or about March 20, 1964, Washington County, as contractor, entered into a written contract with the Arkansas State Highway Commission for the construction of a road project, Job No. C-72-47, Federal Aid Project S-1192(l). On the same date Washington County, as principal, and the defendant as surety executed and filed a statutory performance bond as required by Ark.Stat.Ann., Secs. 14-604, 14-606, (1956 Repl.). The plaintiff sold to Washington County the necessary materials for the performance of the contract and delivered the material to the job site, and they were used by the contractor in the construction of the road.

The same procedure was followed in the construction of Job No. C-72-48, Federal Aid Project S-1194(1) under contract of July 20, 1964, and Job No. C-72-49, Federal Aid Project S-1195(1) under contract of April 27, 1964. The balance due on C-72-47 is $5,194.54; on C-72-48, $4,512.97; and on C-72-49, $824.29, or a total of $10,531.80 due plaintiff on the three contracts. Each of the bonds contains the following provisions:

“Unpaid claims for material, labor and supplies entered into contingent and incident to the construction of said work or used in the course of performance of the work, shall have a right of action on this bond, but payments thereon shall be postponed until all claims of the Arkansas State Highway Commission hereon have been paid in full.
“The Surety Company hereon further agrees to pay all claims to which the said Contractor is liable under the provisions of Act 82 of the Acts of 1935, and Acts Amendatory thereof, except that nothing in this Bond shall be construed as assuming liability for the purchase price of any major equipment under what is commonly called a Sales Rental Agreement.”

The statutory provisions applicable to the first contention of defendant are:

Ark.Stat.Ann., Sec. 76-217 (1957 Repl.)
* * * Every contractor for work in excess of one thousand dollars ($1,000.00) shall be required to furnish a bond to be approved by a majority of the State Highway Commission in an amount at least equal to the amount of such contract, conditioned as the commission may require. Such bonds shall also be liable for material, labor, supplies, and expenses used in or incident to the work, including that which may become due to subcontractors, for which an action may be maintained on the bond by the parties to whom such payments may be due * *
Ark.Stat.Ann., Sec. 14-604 (1965 Supp.)
“All surety bonds required by the State of Arkansas, * * * or by any agency of any of the foregoing, for the repair, alteration, construe[677]

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247 F. Supp. 674, 1965 U.S. Dist. LEXIS 7793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fort-smith-structural-steel-co-v-western-surety-co-arwd-1965.