Hanson v. Liberty Const. Co.

134 So. 98, 172 La. 298, 1931 La. LEXIS 1685
CourtSupreme Court of Louisiana
DecidedMarch 30, 1931
DocketNo. 3821.
StatusPublished
Cited by5 cases

This text of 134 So. 98 (Hanson v. Liberty Const. Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanson v. Liberty Const. Co., 134 So. 98, 172 La. 298, 1931 La. LEXIS 1685 (La. 1931).

Opinion

OVERTON, J.

. The purpose of this suit is to recover judgment against the Liberty Construction Company, of Detroit, Mich., the town of Bunkie, and the Fidelity & Deposit Company, in solido, for the sum of $4,403.42, -with legal interest thereon from November 30, 192S, and for the further sum of $2,500, with legal interest thereon from August 20,1928, together with 10 per cent, attorney’s fees.

To this demand there were filed by the town of Bunkie and the Fidelity & Deposit Company exceptions of vagueness, prematurity, and no cause of action. The exceptions were tried on the face of the petition. The exception of prematurity was sustained, and plaintiff’s suit was dismissed. The remaining exceptions were not decided. In this court the exception of no cause of action has been filed anew.

The litigation is the outcome of a contract, entered into by the Liberty Construction Company with the town of Bunkie, on September 8, 1926, to construct a sewerage system for the town. Under'this contract, the Liberty Construction Company, as required by Act No. 224 of 1918, furnished a bond for $72,000, with the Fidelity & Deposit Company, as surety, for the faithful performance of the contract, and, for the payment by the contractor and by all subcontractors for all work done, labor performed, or material furnished in the construction of the work, called for by the contract. The bond and the contract were duly recorded in the mortgage records of the parish of Avoyelles.

On June 18, 1928, the Liberty Construction Company, after having done a part of the work, employed plaintiff, as appears from the petition, “to take charge of said work of construction of said sewerage system, manage the' same, supervise and direct the working force thereof, purchase the supplies and material therefor, and place same upon the work in accordance with the plans of the engineer of said - town, in fact to do and perform any and every act and thing necessary in the fulfillment of the contract of said Liberty Construction Com- • pany with said town of Bunkie.”

The compensation that plaintiff was to receive from the Liberty Construction Company, under his contract of employment, as appears from the petition, was one-half of the retained' percentagé on the work already completed, *302 which, at the date of the employment, was due the Liberty Construction Company by the town of Bunkie, and. was then in the hands of the town, which, after deducting certain outstanding indebtedness, amounted, it is alleged, to $9,706.85, one-half of which amount plaintiff was to receive, under his contract, in part payment of his services. ,

In addition to the foregoing one-half, .plaintiff was to receive, as appears from the petition, one-half of the profits, to be earned on the balance of the contract. Plaintiff received nothing under this provision, although it appears there was paid out of the work, on debts due. by the Liberty Construction Company, not included in the contract with plaintiff, $1,500, one-half of which plaintiff claims he is entitled to under his contract.

The two items, consisting of plaintiff’s alleged one-half of the retained percentage, and his alleged one-half of the foregoing payment, added together, make the sum of $5,603.42, claimed by plaintiff, under his contract," for services rendered, without deducting a certain credit. However, from this amount, there must be deducted $1,200, which the petition shows plaintiff received from payments made on the work by the town of Bunkie to the Liberty Construction Company, which leaves the sum of $4,403.42; this being one of the amounts for which plaintiff sues.

; At the time of plaintiff’s employment, as appears from the petition, it was agreed .by him and the Liberty Construction Company that lie would advance to the company one-half of such sum as would be found necessary to proceed with the work, the company to supply the other half. It appears that it was found necessary to raise $5,000 for that purpose, whereupon plaintiff advanced to the company $2,500, which was used by it in paying the force employed-, and- in purchasing material, for which-the company executed its 60-day note, bearing 5 per cent, .interest from maturity, and containing the usual clause of 10 per cent, attorney’s fees. This advance, -by plaintiff, constitutes the remaining amount for -which he sues.

Plaintiff, according to the petition, rendered his services to the Liberty Construction Company until the failure and refusal of the company to furnish the necessary funds to continue the work, when -he was forced to terminate his services, at which time the work was nearly completed. The work, however, it is alleged, -upon information received, in article 9 of the .petition, was completed by the town at small expense to itself, but that the town refuses to pay. plaintiff the retained'percentage on hand, because it claims that the Liberty Construction Company owes -debts upon the work sufficient in amount to absorb the percentage, which position, it alleges, is not well founded in fact.

The petition then alleges, in article 11 thereof, that the construction of the sewerage system was completed and the work accepted by the town, on January 15, 1929, and that the acceptance was duly recorded in the -mortgage records. However, on the day the exceptions were tried, the allegation of completion a^id acceptance, contained in article 11, was corrected by an amendment, showing that the allegation was made by inadvertence, and that the sewerage system was not completed on January 1-5, 1929, but was then still incomplete, and that, instead of the completion and acceptance of the work on that date, the town notified the Liberty -Construction Company, on January 16, 1929, that the company had defaulted on the contract, and that, on the same day, the town recorded evidence of the default in the mortgage records.

The exception of prematurity rests upon the *304 ground that it does not appear from plaintiff’s petition that the work had been completed and accepted, the existence of which facts, it is urged, are necessary to make plaintiff’s compensation,' under his contract, demandable.

The object in retaining a certain percentage of tbe installments, paid on a work during the course of construction, is to create a temporary fund to insure all the better the payment of claims against the work, and to enable better the owner, or the surety, in the event oL necessity, to complete the undertaking. To require the owner to pay anything out of that fund before the completion and acceptance of the improvement, or before the arrival of the time for the release of the fund’, would defeat the very object that the contracting parties had in view in creating the fund, and would impair the security of the surety and the creditors. Plaintiff and the Liberty Construction Company were aware of this when they agreed that a part of plaintiff’s compensation should be one-half of the retained percentage on hand and in the possession of the town, subject to certain deductions, at the time plaintiff and the company entered into their contract, and therefore it must he held that they contemplated, in their contract, that this part of the consideration should not be payable, until it became payable to the Liberty Construction Company, which by all reasonable inference was not before the completion and acceptance of the work.

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Bluebook (online)
134 So. 98, 172 La. 298, 1931 La. LEXIS 1685, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanson-v-liberty-const-co-la-1931.