State Ex Rel. Farmers State Bank v. Ed Cox & Son

132 N.W.2d 282, 81 S.D. 165, 1965 S.D. LEXIS 61
CourtSouth Dakota Supreme Court
DecidedJanuary 6, 1965
DocketFile 10098, 10099
StatusPublished
Cited by28 cases

This text of 132 N.W.2d 282 (State Ex Rel. Farmers State Bank v. Ed Cox & Son) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Farmers State Bank v. Ed Cox & Son, 132 N.W.2d 282, 81 S.D. 165, 1965 S.D. LEXIS 61 (S.D. 1965).

Opinions

[168]*168RENTTO, J.

The basic question posed by this litigation is whether money loaned to a contractor and used by him in payment of claims that he has incurred in carrying out the provisions of his contract with the state highway authority is within the coverage of his performance bond.

The trial court held that it was and entered judgment for the use plaintiff against Ed Cox and Son, a partnership, and William B. Cox, the surviving partner, for the full amount of its loan with interest, and against Tennefos Construction Company and the United Pacific Insurance Company, the surety, in a lesser amount, but without interest prior to the entry of judgment. The Coxes, the partnership and the surviving partner, did not contest the action nor do they take any part in these appeals. The other defendants appeal from the judgment entered against them and the use plaintiff cross appeals from the part of the judgment denying it interest before judgment.

The following findings of the trial court delineate the factual background necessary for our consideration of the basic question.

"II
"On or about August 25, 1955, the defendants Tennefos Construction Company and Ed Cox and Son entered into a contract with the Department of Highways, State of South Dakota, acting by and through its state Highway Commission, to furnish all materials, appliances, tools, food and labor of every kind, and to construct various items of work in connection with the construction and improvement of a portion of the State trunk highway in Lyman County, South Dakota, and such defendants, who are therein designated as the contractor, therein further agreed as follows:
"The said Contractor further agrees to pay all just claims for materials, supplies, food, tools, appliances, and labor, and all other just claims incurred by him or any of his sub-contractors in carrying out the provisions of this contract, and further agrees that the contract bond shall be held to cover all such claims.'
[169]*169"HI
"To secure the performance of such contract, the defendants, Tennefos Construction Company and Ed Cox and Son as Principals, and the defendant, United Pacific Insurance Company as Surety, furnished a certain performance bond running to the State of South Dakota in the sum of $408,671.84, wherein such defendants agreed:
" 'NOW THEREFORE, The condition o f the foregoing obligation is such that if the said principal shall well, truly and faithfully comply with and perform all the terms, covenants and conditions of said contract, on his part to be kept and performed according to the terms and tenor of said contract and shall protect the said State of South Dakota against and pay any excess of costs as provided in said contract, and all amounts, damages, costs, judgments which may be recovered against said State or its officers or agents, or which the said State of South Dakota may be called upon to pay to any person or corporation by reason of any damages arising or growing out of the doing of said work or the repair thereof or the manner of doing same, or the neglect of said Principal or his agent or servants, or the improper performance of the said work by the said Principal or his servants or agents or from any other cause growing out of the said contract, and if the above bounden Principal, his heirs, executors, administrators or assigns, shall and will and truly pay or cause to be paid the wages stipulated and agreed to be paid each and every laborer employed by the principal, his agent, or sub-contractor and all claims incurred for materials, supplies, food, tools, and appliances, in carrying out the provisions of said contract, then this obligation is null and void, otherwise to remain in full force and virtue.'
"IV
"In March of 1956, the defendant, Ed Cox and Son [170]*170agreed with the use plaintiff to use funds which might be loaned to such defendant by the use plaintiff for the payment of claims for, and the supplying of materials, supplies, food, tools, appliances and labor and all other just claims incurred by Ed Cox and Son in carrying out the provisions of said contract with the Department of Highways and the use plaintiff agreed to supply funds for such purpose.
"V
"Pursuant to such agreement, the use plaintiff thereafter loaned the defendant, Ed Cox and Son, prior to any dissolution thereof, and the surviving partner William B. Cox in the course of his winding up the affairs of the partnership and performing its contracts, sums remaining unpaid in excess of $108,492.42 through October 19, 1956.
"VI
"After crediting payments on the entire amounts loaned to the defendant Ed Cox and Son and William B. Cox, both prior and subsequent to March, 1956, a balance in excess of $149,113.19 has remained unpaid since February 4, 1957.
"VII
"During the period from April, 1956, through October, 1956, the defendant, Ed Cox and Son and the surviving partner, William B. Cox were engaged only in the performance of the contract described in Finding II hereof.
"VIII
"To the extent of $108,492.42 such unpaid loans were in fact used in the performance of such contract by payment of claims for and the supplying of materials, food, tools, appliances and labor and all other just claims incurred by Ed Cox and Son in carrying out the provisions of such contract.
[171]*171"IX
"To the extent of $108,492.42 use plaintiff's claim was incurred by the defendant Ed Cox and Son and the surviving partner William B. Cox in winding up the affairs of the partnership, in carrying out the provisions of such contract.
"XIII
"There is due and owing to use plaintiff from the defendants Tennefos Construction Company and United Pacific Insurance Company the sum of $108,492.42 without interest prior to the Entry of Judgment."

These conclusions of law are also pertinent to this feature of the case:

"I
"The provisions of said contract for the payment of all just claims incurred by the contractor in carrying out the provisions of the contract and that the contract bond shall be held to cover all such claims and the provisions of the bond for the performance of all the terms, covenants and conditions of said contract include the claim of the use plaintiff for money loaned to Ed Cox and Son and William B. Cox and used in carrying out the provisions of the contract.
"in
"The indebtedness incurred by Ed Cox and Son and William B. Cox the surviving partner to the use plaintiff to the extent of $108,492.42 constitutes a just claim incurred by such contractor in carrying out the provisions of said contract with the Department of Highways.
"V
"The defendants, Tennefos Construction Company and United Pacific Insurance Company are justly indebted to use plaintiff in the sum of $108,492.42 without interest prior to the Entry of Judgment.

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Cite This Page — Counsel Stack

Bluebook (online)
132 N.W.2d 282, 81 S.D. 165, 1965 S.D. LEXIS 61, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-farmers-state-bank-v-ed-cox-son-sd-1965.