New Britain Lumber Co. v. American Surety Co. , 113 Conn. 1 ( 1931 )

If the bond upon which this action is brought had been given in connection with a building contract for a private owner, it is clear that it would have given rise to a direct obligation of the surety to subcontractors, and that the plaintiff would have been entitled to recover under the decision in Byram Lumber Supply Co. v. Page,109 Conn. 256, 146 A. 293. If the plaintiff is denied a right of recovery it is because this was a public building in the construction of which the statute requires that the contractor give a bond to protect those furnishing material and labor upon the building, and because of a construction of the statute requiring a conclusion that the protection thus made mandatory was less extensive than that afforded by the same bond given for a private owner. I am unable to agree that such construction of the statute is required or permissible.

Prior to the adoption of the original act on this subject (Chapter 118 of the Public Acts of 1917) we held, in accordance with the weight of authority elsewhere, that a mechanic's lien did not attach to, and could not be enforced against, the public property of a state, county or municipality. Consequently laborers and materialmen upon public buildings were, prior to this legislation, relegated to recovery from the contractor alone, and were deprived of the means of obtaining security which were available, under mechanic's lien statutes, to those furnishing labor and materials in construction work for private owners. We said in Pelton King, Inc. v. Bethlehem,109 Conn. 547, 147 A. 144, that the primary purpose of the statute was to protect and benefit those who furnish materials and labor to the contractor on public work, in that they may be assured of payment of their just claims, without defeat or undue delay. The purpose of our mechanic's lien statute is to protect those who furnish labor and material in construction work for private owners. The purpose of this statute being to furnish such protection in the case of construction work upon public buildings, a legislative intent to furnish protection as complete and extensive as in the case of private work may fairly be inferred. This statute provides that a statement of claim shall be filed with the officer or agent of the municipality within sixty days after ceasing to furnish materials or labor. Under the analogous provision of the mechanic's lien statute (General Statutes, § 5106) no such lien is valid unless a certificate stating the amount claimed is filed in the town clerk's office within sixty days after ceasing to furnish materials or labor. No mechanic's lien attaches in a greater amount than the owner of the building agreed to pay (General Statutes, § 5108), and the liability of the municipality is limited under this statute to the amount it agreed to pay the contractor. The intention of this legislation was to furnish, in the case of the construction of public buildings, substantially the same sort of protection to laborers and materialmen as had theretofore been furnished them in the case of work done for a private owner. In Byram Lumber Supply Co. v. Page, supra, the plaintiff was denied a right to foreclose its mechanic's lien but was granted an alternative right of action against the surety upon the bond of the contractor. Here the plaintiff, by his failure to follow the procedure outlined by this statute, is denied a right to enforce his claim against the owner, in this case the municipality. As we noted in that case, the tendency has been stronger to uphold a direct right of action against the surety in the case of contracts with public agencies because of the greater likelihood that in the making of such contracts regard would be paid to the interests of those furnishing labor and materials, and to the broader considerations arising out of the policy of assuring them a more secure basis for entering upon the work. Unless one who furnishes material or labor upon a public building is given a direct right of action against the surety upon a bond conditioned upon his payment for such labor or material, he receives less protection under this statute, enacted for his especial benefit, than he receives in the case of work done for a private owner. I doubt if an intention to produce such result can be imputed to the legislature in view of the apparent purpose of this legislation. No doubt the filing of a statement of claim with the officers of the municipality within sixty days after the completion of the work is a condition precedent to recovery from it, as is the filing of a certificate of lien to the perfection of the lien in the case of a private owner, and the liability of the surety upon the bond to the municipality does not arise until the latter has itself paid the claim. This limitation upon the liability of the municipality is not in terms applied to the liability of the surety to the materialman which arises upon the bond unless negatived by the terms of the statute. The statute is here defining the rights of the materialman and laborer against the municipality and the provision requiring the sixty days' notice was inserted for its protection. No reason appears for extending such protection to the surety for the contractor who is himself the principal on the bond and directly responsible in any event to his materialmen and laborers. The statute requires a bond containing two conditions, (a) the faithful execution of the contract according to its provision, and (b) the payment for all materials and labor used or employed. The first condition is one of indemnity and the bond conforms to the statutory requirement by providing that the principal "shall indemnify the obligee against any loss or damage directly arising by reason of the failure of the principal to faithfully perform said contract." The obvious purpose of this condition is to ensure the carrying out of the contract with the town and if the only remedy of the materialman is against the municipality there is no apparent reason for any further condition in the bond. The second condition adds nothing to the rights of the municipality to recover upon the bond but provides a direct obligation on the part of the contractor to pay for all material and labor used or employed. It is an instrument of guaranty rather than indemnity and liability under it is not dependent upon the existence of facts prerequisite to liability to the municipality under the first condition. The language of the statute does not require a construction confining the remedy of the plaintiff to an action against the municipality, and such construction would be contrary to the apparent purpose of the legislature to protect the rights of those furnishing labor and material upon public buildings as fully as in the case of private construction. Similar statutes in other jurisdictions have generally been given a liberal interpretation "with a view of effecting their purpose to require payment to those who have contributed by their labor or material to the erection of buildings." United States, Use of Hill, v. AmericanSurety Co., 200 U.S. 197, 203, 26 Sup. Ct. 169.

In furtherance of such construction, bonds executed under statutory authority conditioned upon the payment of claims of laborers and materialmen have generally been held to be bonds of guaranty rather than indemnity unless the language requires a contrary construction, 44 Corpus Juris, p. 357, § 2544, the purpose of the bond being to afford such claim the same measure of protection as is given by the mechanic's lien law when the building is not of a public character.St. Louis, Use of Contracting Supply Co., v.Hill O'Meara Construction Co., 175 Mo. App. 555,158 S.W. 98.

Under some statutes the filing of notice or claim with the municipal officer within a specified time after completion of the work is a condition precedent to an action on the contractor's bond by a laborer or materialman. Where the filing of such notice is required to perfect the claimant's rights against the municipality but is not by the terms of the statute made a condition precedent to an action upon the bond, it has been held that the failure to file the notice within the time specified in the statute does not bar an action against the sureties on the bond. Streator Clay Mfg.Co. v. Henning-Vineyard Co., 176 Iowa 297,155 N.W. 1001, Equitable Surety Co. v. Indiana Fuel SupplyCo., 70 Ind. App. 75, 123 N.E. 22. Two later Iowa cases cited upon defendant's brief were brought under a more recent statute making the filing of notice a condition precedent to a right of action upon the bond.

This bond, if written in connection with a contract with a private owner, would have given the plaintiff a direct right of action against the surety though, by reason of his failure to file a certificate of lien within sixty days, he had lost his right to a lien upon the property of the owner. I find nothing in this statute, enacted for the purpose of giving him the same measure of protection as in the case of private work, which deprives him of the same right of action against the surety because, by his failure to file a statement of his claim with the town authorities within the required sixty days, he has lost his right to recover from the town.

In this opinion HAINES, J., concurred.