Summary
awarding attorneys fees to materialmen suing contractor for amounts owed to them by subcontractor, on bond executed by contractor providing for "all of the expense and cost and attorney's fees that may be incurred in the enforcement of the performance of said contract, or in the enforcement of the conditions and obligations of this bond."
Summary of this case from Chain Electric Company v. National Fire Ins. Co.Opinion
No. 33622.
March 20, 1939.
1. HIGHWAYS.
Provision of bond given by state highway contractor guaranteeing payment of expense and costs and attorney's fees that might be incurred in the enforcement of contract or obligations of the bond inures to the benefit of laborers and materialmen (Code 1930, section 5971).
2. HIGHWAYS.
Where no action could be brought on bond of state highway contractor until six months after publication of notice of completion by state highway department which had neglected to publish notice, and materialmen employed attorneys to coerce or induce publication of notice, tender of amount due to materialmen prior to expiration of six-month period was insufficient to prevent recovery of attorneys' fees (Code 1930, sections 5971, 5972, 5973).
3. HIGHWAYS.
Where suit on bond of state highway contractor was prematurely brought, no attorneys' fees should be allowed materialmen in respect of such suit in a subsequent suit on the bond (Code 1930, section 5971).
APPEAL from circuit court of Monroe county; HON. THOS. H. JOHNSTON, Judge.
Leftwich Tubb, of Aberdeen, for appellants.
The trial court committed error in sustaining the demurrer to plaintiffs' replication and in awarding a judgment in behalf of defendants below. This action is brought on the contractor's bond which is given under and by virtue of the provisions of Article 6 on the subject of Public Contracts, sections 5971-5976, inclusive, of the Code of 1930, and also the provisions of chapter 47, Laws of 1930, with reference to the bonds of public contractors.
It will be observed that under section 5971 of the Code of 1930 the contractor "shall promptly make payments to all persons supplying labor or material therefor."
It is manifest that prompt payment, provided for in this statute, does not mean that the contractor and the surety on his bond shall have the right for a period of five years to deny liability and resort to every known legal device to avoid payment, and then, when he is sued, come into court and say that he is not liable for the services of an attorney employed by the persons who furnished material so as to bring him to justice and to the sense of his obligation. This is especially true in view of the fact that the condition written into the face of his bond is to the effect that if he fails to pay, he shall be liable to the persons who furnish labor or material for all the expense and costs and attorneys' fees they may have incurred in the enforcement of the performance of the contract or in the enforcement of the conditions and obligations of the bond. The bond is, of course, a part of the contract; and the contract is a part of the bond. This provision or provisions, almost in identical words, has been construed by this court and held to require the contractor and his bond to pay attorneys' fees.
McElrath Rogers v. Kimmons Son, 146 Miss. 775, 112 So. 164; Stowell v. Clark, 152 Miss. 32, 118 So. 370; Treas v. Price, 167 Miss. 121, 146 So. 630.
Suits have been brought all over the State of Mississippi by materialmen against contractors and sureties on their bonds, without regard to whether or not the State Highway Commission had made publication of notice of the completion and final settlement, as provided by section 5973 of the Code of 1930. The State Highway Commission had adopted a policy not to make publication of notice in any of these cases. They had been informed by the attorney-general that they were under no duty to do so, and they did not and would not do so except in cases where interested parties made special request for publication; and even then these parties were required to bear the expense of the publication.
Oliver Construction Co. v. Crawford, 142 Miss. 490, 107 So. 877; Marquette Cement Mfg. Co. v. Fidelity Deposit Co., 173 Miss. 164, 158 So. 924; Dixie Minerals Corp. v. Dixie Asphalt Paving Co., 172 Miss. 218, 159 So. 562.
We took the position, and we take the position now, that since the contractor in this case failed to make prompt payment of these claims for materials that entered into the construction of the work, that he individually became suable, but regardless of whether or not a cause of action had accrued against him, individually, without his bond, these materialmen were justified in placing their claims in the hands of an attorney for collection.
We think these creditors occupied the position of the payee of a promissory note containing the provision that if the note was not paid when due and was placed in the hands of an attorney for collection, the maker would pay a reasonable attorney's fee. Such a provision in a note has been construed by practically all the courts of the land as valid and binding. It does not require the actual suit to be brought in order to justify the collection of the attorney's fees. It is assumed that when the maker is sufficiently prodded and coaxed he will comply with his obligation and pay without suit. So it is in the case at bar. These materialmen were clearly justified. The necessity had arisen for placing their claims in the hands of their attorneys long before the first suit was brought, and, of course, long before the second suit was brought, in fact, approximately five years before the second suit was brought. These creditors had the right to assume that when their attorneys presented their claims to the contractor and the surety on his bond in a proper and vigorous manner, that these parties would be coaxed into payment without the necessity of actually bringing suit in court.
Furthermore, according to the conditions then existing, including the misunderstanding of the proper construction of these statutes, not only by the lawyers in the state, but by the members of the Supreme Court, itself, it seems to us that appellees here, the contractor and the surety on his bond, could not complain of having to pay an attorneys' fee when they had breached their bond, denied liability, and for a period of five years put forth every known means of defense which ingenious counsel could devise to prevent payment.
Watkins Eager, of Jackson, for appellees.
We have no fault to find with any of the three authorities cited by counsel for appellants. Counsel cite no case even remotely dealing with the right to recover costs and attorneys' fees in a suit which was reversed and dismissed by the Supreme Court of the state and which was so defective that the judgment in the lower court was absolutely void, in that there was no cause of action whatsoever in the plaintiff-appellees.
It is true that in the present suit appellants could have recovered attorney's fees and costs incurred in this suit had tender not been made prior to the bringing of the suit and by pleadings at the first available moment. That the tender here prevents any liability for attorneys' fees or costs in this suit, has been definitely settled by this court.
National Union Fire Ins. Co. v. Currie, 178 So. 104, 180 Miss. 711; Lbr. Co. v. School District, 214 P. 143; Easley v. Easley, 229 S.W. 343; Schultz v. Contracting Co., 265 N.W. 296; Aetna Ins. Co. v. Foster, 66 S.W.2d 428; Tucker v. Lowenthal, 204 P. 772; Sec. 563, Code of 1930. That a tender stops the running of interest subsequent to the tender is announced in Hoffman v. Rose Dress Co., 166 N.Y. Supp. 172; 33 C.J. 241, par. 145; Hidden v. Jordan, 39 Cal. 61; Sanders v. Mosbarger, 141 S.W. 720; Bank v. Smith, 98 S.E. 418; Easton v. Littlloy, 91 Wn. 648, 158 P. 531.
The actual production of the money is dispensed with if the party is ready and willing to pay the same, but is prevented by the party to whom it is due expressly saying that it need not be produced, as he would not accept it, or if he declares that he will not receive it, or refuses to remain until it is produced, or repulses the debtor, or makes some unjustifiable demand as a condition of accepting the tender.
62 C.J. 673; Wesling v. Noonan, 31 Miss. 599.
We respectfully submit that there was no obligation upon the part of the surety to voluntarily pay these appellants until all of the requirements of the statutes had been compiled with and a property statutory suit had been brought; that there was no "enforcement of the conditions and obligations of this bond" in the prior suit; that at the most, there was a bungled attempt, without a compliance with the statute, to enforce these obligations by means of the prior suit; that there is nothing involved in this case to take the question of attorneys' fees and costs in the prior suit out of the usual rule in regard to such fees where a suit is reversed and dismissed upon appeal.
The law in regard to costs and attorneys' fees, where the judgment below has allowed the same but where the suit is reversed and dismissed by the appellate court, is well settled. The rule is the same as in regard to costs and attorneys' fees and where attorneys' fees are allowed, they are in reality part of the costs and allowed and taxed as costs.
Aetna Life Ins. Co. v. Thomas, 166 Miss. 53, 144 So. 50, 146 So. 134; Sec. 668, Code of 1930; Boyd v. Appelwhite, 85 So. 87, 123 Miss. 185.
That where a case is reversed and finally determined by an appellate court, costs must be paid by, or can be recovered from the appellee, is the majority rule.
Railroad Co. v. Spiller, 72 L.Ed. 214, 275 U.S. 156; In re: Gallo's Estate, 235 P. 66; Bradley v. Shreveport Gas, etc., Co., 76 So. 230.
Turning to cases dealing specifically with attorneys' fees, we wish to direct Your Honors' attention to Wunderlich v. Simpkin, 5 La. App. 35; Tyler v. Walker, 47 S.W. 424.
A statutory attorneys' fee cannot be recovered by the holder of a mechanic's lien unless he is successful in his suit.
Los Angeles Coal Mine Co. v. Campbell, 56 P. 264; Stimson v. Dunham, etc., Co., 79 P. 968; Standard Accident Ins. Co. v. Simpson, 64 F.2d 583.
We respectfully submit that it is thoroughly established that neither costs nor attorneys' fees can be recovered in an unsuccessful attempt to use. Furthermore, the bond itself which is the only source of appellants' alleged rights, only provides for costs and attorneys' fees "incurred in the enforcement of the terms and obligations of this bond." The word, "enforced," means more than the mere asserting of a claim or the attempting to enforce by improper suit.
Goltra v. Inland Waterways Corp., 49 F.2d 497; Snyder v. Fidler, 101 N.W. 130.
Royce Kershaw, Inc., entered into a contract with the State Highway Department for the construction of a public highway, and executed a bond, in accordance with section 5971, Code 1930, to secure the faithful performance thereof, with the American Casualty Company as surety thereon. This bond inures to the benefit of "all persons supplying labor or material therefor [the performance of the contract]; and any person who has furnished labor or materials used therein and wherefor payment has not been made." Section 5971, Code 1930. The bond in addition to guaranteeing the performance of the contract with the State Highway Department expressly provides also for "all of the expense and cost and attorney's fees that may be incurred in the enforcement of the preformance of said contract, or in the enforcement of the conditions and obligations of this bond." This provision of the bond inures to the benefit of laborers and materialmen. Stowell v. Clark, 152 Miss. 32, 118 So. 370.
Royce Kershaw, Inc., sublet a portion of the contract to Addison Brannin and Robert Brannin, who incurred and failed to pay debts to several materialmen for material furnished and used in the performance of this subcontract. The contract of Royce Kershaw, Inc., was completed and final payment therefor was made by the State Highway Department in October, 1931. No publication of the completion of this contract was published by the State Highway Department as required by Section 5973, Code 1930, until November 20, 1936, pursuant to an order of the department therefor on November 10th of that year. Some time after the publication of this notice several of the materialmen and the two subcontractors sued on the bond hereinbefore mentioned; the materialmen for the recovery of the debts due them by the two Brannins, the subcontractors, and the two Brannins for the recovery of a balance alleged to be due them by Royce Kershaw, Inc., togther with attorneys' fees incurred by them in the enforcement of the performance of the contract of Royce Kershaw, Inc.
A plea to this declaration admitted the debts due by the two Brannins to the materialmen, set forth a tender of payment thereof to the appellants' attorneys prior to the institution of the suit, and the deposit of money to cover these amounts with the clerk of the court, and prayed that the materialmen's recovery be limited thereto. As to the two Brannins the plea admitted an indebtedness to them, but less in amount than what the defendants would have to pay these materialmen and prayed for a judgment over against the Brannins for the difference between these two amounts. A replication to this plea set forth the failure of the defendants to tender any amount to cover the claimed attorneys' fees and alleged that on the contrary they had specifically declined to pay such fees. A demurrer to this replication was sustained, and, the plaintiff declining to plead further, a judgment final was rendered awarding the materialmen a recovery for the principal of their debts, and interest thereon, to the date of the tender, and a judgment over for the defendants against the two Brannins as prayed for in the plea. From this judgment, the materialmen appeal, but Brannin does not.
This plea and replication discloses that after the completion of the contract of Royce Kershaw, Inc., for the construction of the highway, but before any notice had been published of its completion by the State Highway Department, these plaintiffs sued these defendants on the debts here in question, recovered a judgment therefor, but, on appeal to this court, that judgment was reversed, and the cause was dismissed for the reason that under sections 5972 and 5973, Code 1930, as construed in United States Fidelity Guaranty Co. v. Plumbing Wholesale Co., 175 Miss. 675, 166 So. 529, no action on the bond could be brought except by the principal obligee therein until six months after the publication of a notice by the principal obligee of the completion of the contract, and, as no such notice had then been published, the action was prematurely brought. Royce Kershaw, Inc., v. State, 176 Miss. 757, 169 So. 690. It then became necessary in order for the appellants herein to have a right of action on this bond under sections 5972 and 5973, Code of 1930, that they either induce or in some way coerce the State Highway Department into publishing this notice and their attorneys, in whose hands their claims were, succeeded in inducing the State Highway Department to publish the notice, without the institution of legal proceedings therefor, on an agreement that the expense thereof would be paid by these appellants. The appellees' tender to the appellants was made shortly after the completion of the publication of this notice. The appellants claim attorneys' fees not only for the prosecution of the action here under consideration, but also for the prosecution of the former action in which the appellants recovered nothing.
Two questions are presented: (1) Are the appellants entitled to recover any attorneys' fees at all? And if so, (2) should the services rendered by the attorneys in the prosecution of the former action on this bond be included in the attorneys' fees here allowed? The appellees' contention is that as they tendered these materialmen the principal and interest due them under this contract prior to the expiration of the six months, within which this action could not be brought, no necessity for bringing the action and thereby incurring attorneys' fees arose, and, therefore, none such should be allowed. This argument overlooks the fact that in order to recover on the bond it became necessary for the appellants to coerce or in some way induce the State Highway Department to publish a notice of the completion of the contract. This justified, probably necessitated, the employment of attorneys to do that for which the bond promised indemnification, i.e., to enforce the performance of the contract and the conditions and obligations of this bond. That the appellees may not have participated in the default of the State Highway Department in failing to publish notice of the completion of this contract is of no consequence. The bond is not so limited but covers "all of the expense and cost and attorney's fees that may be incurred in the enforcement of the performance of said contract." The bond is so written and must be enforced accordingly. The tender being ineffective, the demurrer of the appellants' to the appellees' replication to their plea should have been overruled.
The attorneys' fees incurred by the appellants in the former suit on this bond should not be allowed, that suit having been prematurely and wrongfully brought. The appellants also claim the right to recover the court costs incurred in this former suit. The adjudication of court costs is for the court rendering the judgment in the case in which the costs were incurred and, moreover, what has been said as to attorneys' fees applies here.
The judgment of the court below insofar as it affects the parties thereto, except the two Brannins who have not appealed, will be reversed and the cause remanded.
So ordered.