Thompson Yards, Inc. v. Kingsley

208 N.W. 949, 54 N.D. 49
CourtNorth Dakota Supreme Court
DecidedApril 22, 1926
StatusPublished
Cited by3 cases

This text of 208 N.W. 949 (Thompson Yards, Inc. v. Kingsley) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thompson Yards, Inc. v. Kingsley, 208 N.W. 949, 54 N.D. 49 (N.D. 1926).

Opinion

Biedzell, J.

This is an appeal from a judgment in favor of the defendants and from an order denying a motion for a new trial. The defendants were members of the school board of Franklin district in Steele county. As such, they entered into a contract with the defendant Kingsley to erect a school house for the district. They took no bond for the protection of those who might supply the labor and materials, such as they were required to take by § 6832 of the Compiled Laws for 1913. The plaintiff and appellant sold Kingsley material which was used in the building, for which the latter became indebted and owed an unpaid balance of $553. On December 29, 1920, the plaintiff’s local agent took a note from Kingsley for the amount of the unpaid account, which note bore 10- per cent interest and was payable April 1, 1921. Upon the taking of this note the account was not credited as paid. This action is brought under the statute above cited, which makes it the duty of a board contracting for the erection, repair, alteration and betterment of a public building, before entering into any contract, to take a bond conditioned for the payment of all claims on-account of labor and materials, -and § 6833, which provides that the failure to take such a bond shall render' the members who thus fail personally liable for all such bills not paid within thirty days after the completion of the work. At the conclusion of the trial, both parties moved for a directed verdict and the court subsequently made findings of fact and conclusions of law, upon which judgment was entered for the defendants, other than Kingsley, the contractor, who made no defense.

The principal contention of the appellant is that the members of the school board are liable under the statute as for a tort and not as sureties within the statutes defining that relationship and declaring the circumstances in which sureties are discharged. On the other hand, it is contended that the members of the board are sureties and that the taking of the note in December, 192Q, operated as an extension of the [53]*53time of payment of tbe account until April 1, 1921. wbicb discharged tbem.

In considering tbe questions of law presented on tbe record, resort must first be bad to tbe statute imposing tbe liability sought to be enforced to determine its character and extent. As tbe liability is statutory, it must be measured in the light of tbe purpose to be subserved and, obviously, it should not be so defined as to defeat any purpose wbicb is expressed in tbe law with reasonable clearness and certainty. Tbe sections of tbe statute involved read as follows:

“Section 6832. It shall be tbe duty of every public officer or board authorized to enter into a contract for tbe erection, repair, alteration or betterment of any public building or any other public improvements before entering into any such contract, to take from tbe contractor a good and sufficient bond for an amount at least equal to tbe price stated in tbe contract, conditioned to be void if tbe contractor and all subcontractors shall pay all bills and claims on account of labor or materials furnished in and about tbe performance of said contract, including all demands of subcontractors, said bond to stand as security for all such bills, claims and demands until tbe same are fully paid. Tbe obligee in said bond shall be tbe state of North Dakota; but any person having any lawful claim against tbe contractor, or any subcontractor, on account of labor or materials, or both, furnished in and about tbe performance of said contract, may institute an action to recover tbe same in bis own name upon said bond, in tbe same manner and with like effect as though tbe said bond were made payable to him.
“Section 6833. Any officer and tbe members of any board who shall fail to take such a bond before entering into such a contract shall be personally liable for all such bills, claims and demands which shall not be paid within thirty days after tbe completion of tbe work.”

In our opinion tbe respondents are warranted in assuming, as they do assume, that tbe liability of tbe defendant school directors is substantially tbe same as tbe liability of tbe sureties on a contractor’s bond, where such a bond is given and filed as required, and in this opinion it will be so treated. Tbe underlying purpose of statutes of this character is too plain to admit a controversy. They are designed to.afford to laborers and materialmen a measure of security for their contribution to tbe public improvement named similar to tbe security of a mechanic’s [54]*54lien for improvements of private property. At tbe same time they minimize any public embarrassment that might result from the construction and use of an improvement, for which the contractor may have been fully paid, while laborers, materialmen and subcontractors remain uncompensated. That the former consideration was perhaps the moving cause of the original enactment of this statute (Laws 1901, chap. 133), appears from the title of the act and from the emergency clause. Therein is expressed the fact that.no protection exists for such persons and the purpose to secure them from loss. It will be noted that the bond required is conditioned only to be void if the contractor and subcontractors shall pay all bills and claims on account of labor or materials furnished and not upon the faithful completion of the contract. The bond is “to stand as security for all such bills, claims and demands until they are fully paid.” While it runs to the state as obligee, an action is authorized by any person having a claim. Such persons are in fact the sole beneficiaries. See 15 Harvard L. Kev. 783; 1 Williston, Contr. § 372. A bond given in accordance with this statute, if signed by responsible sureties, would well serve as a substitute for a mechanic’s lien, and it would seem to have been the intention of the legislature that it should so operate.

In the case of mechanics’ liens, it is expressly provided (Comp. Laws 1913, § 6831), that the taking of collateral or other security for the indebtedness shall not impair the right to the lien unless by express agreement the security is received in lieu of the lien. Hence, the taking of even a secured note without an express agreement that it shall stand in lieu of the lien would not be a waiver of a mechanic’s lien. This provision, however, applicable to mechanics’ liens, is of no significance in this connection except, perhaps, as it may serve to clarify the expression in § 6832 that the bond furnished is to stand as security for certain claims and demands until the same are fully paid. As it is the absence of a mechanic’s lien against public improvements that gives rise to the necessity for this statute, the scope of the obligation intended to serve the similar purpose may be in some degree reflected in the statutes governing the operation of such liens. See American Surety Co. v. Lawrenceville Cement Co. (C. C.) 110 Fed. 719. But however this may be, it is certain that the declaration that the bond shall stand as security until the claims are fully paid is an unmistakable expression of inten[55]*55tion that bondsmen shall remain liable as long as labor and material claims are not satisfied, and it is equally certain that any definition of the liability of a bondsman that would render him discharged of liability while such claims remain unpaid would defeat a clearly expressed legislative purpose.

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Bluebook (online)
208 N.W. 949, 54 N.D. 49, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thompson-yards-inc-v-kingsley-nd-1926.