Mid-Continent Casualty Co. v. W. S. Dickey Clay Mfg. Co.

1970 OK 160, 474 P.2d 647, 1970 Okla. LEXIS 441
CourtSupreme Court of Oklahoma
DecidedSeptember 8, 1970
DocketNo. 42349
StatusPublished
Cited by1 cases

This text of 1970 OK 160 (Mid-Continent Casualty Co. v. W. S. Dickey Clay Mfg. Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mid-Continent Casualty Co. v. W. S. Dickey Clay Mfg. Co., 1970 OK 160, 474 P.2d 647, 1970 Okla. LEXIS 441 (Okla. 1970).

Opinion

JACKSON, Justice.

This is an appeal by co-defendant, Mid-Continent Casualty, from judgment for plaintiff in an action for the recovery of money due for materials furnished by plaintiff for use in a public construction project in Tulsa. Plaintiff, W. S. Dickey Clay Manufacturing Company, furnished the materials to Southwest Construction Company, the prime contractor on a contract with the City of Tulsa for the construction of sanitary sewers. When the bill became past due and unpaid, plaintiff sued the con[649]*649struction company and the surety, Mid-Continent Casualty, on its statutory bond. The controversy arises because the City of Tulsa had also required that a surety execute the contract itself along with the construction company. The contract contained language which had the effect of making the plaintiff materialman a third-party beneficiary entitled to sue the surety company on the contract for the amount of its unpaid bill. Plaintiff’s right to sue as a third-party beneficiary is conceded and only a limitations question is presented.

Plaintiff’s petition contained three causes of action. The first was on open account against the construction company only; the second was against both defendants on the contract; and the third was against both defendants on the statutory bond. The bond had been given pursuant to the provisions of 61 O.S.1961, Sections 1 and 2. Section 2 contains a six months limitation as to actions on the bond.

The petition was filed over eleven months after the completion of the project. The construction company did not appear and defend.

The case was tried to the court upon a stipulation between the plaintiff and the defendant surety company which had the effect of resolving all issues in plaintiff’s favor except the defense of limitations, which was left for the court to determine. The court rendered a default judgment for plaintiff and against the construction company on the first cause of action on open account, and rendered judgment for both defendants and against plaintiff on the third cause of action on the statutory bond, holding that the action on the bond was barred by the six months limitation of 61 O.S.1961, Sec. 2.

On the second cause of action the court rendered judgment for plaintiff and against both defendants on the construction contract. From this portion of the judgment the surety company appeals, and the sole question presented is whether the six months limitation as to actions on the statutory bond is also applicable to actions on the construction contract.

The arguments in the surety company’s brief, as we understand them, may be summarized as follows: (1) although plaintiff’s right to recover from defendant surety company is expressed (a) in the contract and (b) in the bond, there is only one right of recovery in plaintiff; (2) since there is no inconsistency between the contract and the bond, they must be construed together as one contract because of 15 O.S.1961, Sec. 158; (3) the action on this “one contract” is barred by the six months limitation of 61 O.S.1961, Sec. 2; (4) as hereinafter stated.

The cardinal and fundamental principle in the construction of contracts is that “a contract must be interpreted as to give effect to the mutual intention of the parties, as it existed at the time of contracting, as far as the same is ascertainable and lawful.” 15 O.S.1961, Sec. 152.

For the purpose of ascertaining the intention of the parties to a contract, if otherwise doubtful, 15 O.S.1961, Sec. 153, other contracts relating to the same matters between the same parties, and made as parts of substantially one transaction are to be taken together. 15 O.S.1961, Sec. 158.

Contracting parties are presumed to contract in reference to existing law, and all applicable statutes existing at the time the contract is entered into becomes a part of the contract. Sinclair Oil & Gas Co. v. Bishop (1968), Okl., 441 P.2d 436.

When the City of Tulsa entered into the contract with Southwest Construction Company for the construction of sanitary sewers it was undoubtedly the purpose and intention of the parties in executing the bond to satisfy the requirements of 61 O.S. 1961, Secs. 1 and 2.

In Carl v. Richards (1925), 109 Okl. 210, 235 P. 599, in an action upon a statutory bond where the construction contract made no provision for guaranteeing the payment of labor and material we said that 61 O.S. 1961, Section 1, is in addition to the contract, and that it would make no difference [650]*650whether the construction contract provided for a bond or not, or provided for the indebtedness incurred for labor or material furnished or not. We further said: “This statute fixes the liability and requires the bond to be given. We do not look to the contract for the liability, but to the bond and the statute under which it is given.”

In United States Fidelity & Guaranty Co. v. Star Brick Co. (1915), 54 Okl. 103, 153 P. 1122, no statutory bond was executed. However, the contract entered into between the municipality (Nowata, Oklahoma) and a paving contractor contained a guaranty which was signed by U.S.F. & G. The action was brought by a materialman, Star Brick Company against U.S.F. & G. for breach of the guaranty contained in the contract. In that case U.S.F. & G. interposed the six months statute of limitations and contended that the guarantee in the contract was in effect “the taking of the bond provided for by section 6164, Comp. Laws 1909 (section 3881, Rev.Laws 1910)” (61 O.S.1961, Sec. 1). In the body of the opinion we said:

“Said guaranty embraced in said contract was not intended as the bond provided by said section 6164, supra (61 O.S. Sec. 1), to be taken, because said guaranty does not run to the state of Oklahoma, is not in the amount required by said section 6164, was not filed in the office of the clerk of the district court, and is in no wise in accord with said section, save and except as to the guaranty to pay for material furnished and labor performed. Consequently said section 6164 has no application; and an action on such guaranty is not barred if not commenced within six months from the completion of the work contracted to be done, and such action may be brought within five years after the cause of action accrued. Section 4657, Rev.Laws 1910” (12 O.S.1961, Sec. 95).

In the first paragraph of the syllabus in U.S.F. & G. we held:

“A city has the undoubted authority, in the absence of specific statutory authority, to require a guaranty to be given by a contractor to secure the payment of material furnished and labor performed under a contract with such city, as the taking of such guaranty is not in violation of any public policy or law of this state.”

Under the construction contract in the instant case Mid-Continent Casualty was “bound and firmly held unto said City (not to the State of Oklahoma). There is no suggestion that this construction contract was filed with the clerk of the district court. Mid-Continent, under the contract, was authorized to complete the work pursuant to the contract if the contractor defaulted, and in general assumed practically all of the obligations that the contractor assumed in relation to the City of Tulsa. Obviously this contract was not intended to be in lieu of the statutory bond, but created obligations upon Mid-Continent Casualty far in excess of those embraced in the bond as well as those included in the bond.

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Bluebook (online)
1970 OK 160, 474 P.2d 647, 1970 Okla. LEXIS 441, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mid-continent-casualty-co-v-w-s-dickey-clay-mfg-co-okla-1970.