Town of Gastonia v. McEntee-Peterson Engineering Co., 131 N.C. 359 (1902)

Nov. 25, 1902 · Supreme Court of North Carolina

131 N.C. 359

TOWN OF GASTONIA v. McENTEE-PETERSON ENGINEERING COMPANY.

(Filed November 25, 1902.)

1. GARNISHMENT — Attachments—Contracts—Liens.

Tbe creditors of a contractor acquire no lien on funds in the hands of a town applicable to the contract between the contractor and the town, by garnishments served before the completion of' the contract.

2. PRINCIPAL AND SURETY — Contracts.

A surety of a contractor is entitled to have funds in the hands of a town applicable to the contract between the contractor and the town applied in satisfaction of claims secured by the bond as against other general creditors of the contractor.

ActioN by tbe town of Gastonia and others against the McEntee-Peterson Engineering Company and the American Surety Company, heard by Judge H. B. 8tarbuclc and a jury, at February Term, 1902, of the Superior Court of Gaston County.

This was a civil action, tried at the Spring Term, 1902, of Gaston Superior Court by Judge Starbuck. A jury trial having been waived, the Court having found the facts as set out in the record, to which findings there was no exception, except to finding No. 12. The action was originally brought by the town of Gastonia to recover upon a bond in the penal sum of $3,000, executed by the McEntee-Peterson Engineering Company, as principal, and the American Surety Company as surety, to the town of Gastonia and its Mayor and Board of Aldermen, to indemnify and save harmless the obli-gees aga.inst loss or damage on account of the construction of an electric lighting plant and water works pumping station by the engineering company, and to secure the payment of all materials furnished and used, and labor performed in the con struction of said public works. The engineering company, before entering upon said work, executed a written contract with the town, by which it stipulated to' construct said works for $7,270, in accordance with the terms of said contract, and contemporaneous with, and as a part thereof, executed said .bond as principal, with the surety company as surety, for the purposes above stated.

The work was completed according to contract, and accepted by the town on 20 October, 1900, at which time there remained in the hands of the officers of the town a balance of $1,560.86 of the price agreed to be paid for said work, and the engineering company owed to the plaintiffs (other than the town and its officers) - $3,907.64, for materials furnished to and used by the engineering company in constructing said work, no part of which has ever been paid.

On the 18 October, 1900, the PoshG-lover Electric Company instituted a civil action in the Superior Court of said county against the engineering company to recover the sum of $302.88 (an indebtedness' not contracted for materials or labor used in or about said works), and caused a warrant of attachment to be issued therein, by virtue of which the Sheriff of said county, on 19 October, levied upon said water works pumping station and electric lighting plant, as the property of said engineering company, and also' served notice of garnishment upon the town and its officers of any funds in the hand? of either, belonging to or due the engineering company; and on the 20th of said month, the Illinois Insulated Wire Company also instituted a civil action against the engineering-company to recover the sum of $999.16 (for materials furnished to- and used by the engineering company in constructing said works), and likewise attached and garnisheed the same property and funds levied upon in the Post-Glover case.

The town and its officers filed answers to the notices of garnishment in both cases, in which they denied that they owed any debt or beld any funds belonging to tbe engineering company subject to garnishment, having been compelled for that purpose to employ counsel to advise and represent them in said matters, at tbe cost of $300.

Subsequently, on 8 February, 1901, tbe town of Gastonia, alone, instituted this action against tbe defendants, for tbe purpose of adjudicating tbe rights and interest of tbe several parties claiming tbe balance of tbe funds in its bands, as a part of tbe contract price for said work, and also to recover the penalty of said bond, to be discharged by tbe payment of $300, paid out by it in defending said garnishment proceedings, and the further sum of $3,907.64, tbe balance due for materials furnished as aforesaid, less the sum of $1,560.86, the balance of tbe original contract price for said work remaining in tbe hands of its officers. At June Term, 1901, of said Oourt, upon affidavit and petition, tbe Oourt permitted all tbe plaintiffs (other than tbe town of Gastonia) to become parties plaintiff in this action.

At tbe February Term, 1902, this action and tbe cases of tbe Post-Glover Electric Company and tbe Illinois Insulated Company against MeEntee-Peterson Engineering Company, were, by consent, and without prejudice, consolidated.

Upon tbe facts found, tbe Oourt gave judgment for tbe plaintiffs for tbe full penalty of the. bond, to. be discharged upon tbe payment of tbe “balance found to be due upon tbe said sum of $3,907.64, for materials furnished by tbe several plaintiffs above named, with six per cent interest from the 23d of October, 1900, until paid, after applying thereto tbe sum of $1,410.86, tbe balance remaining in tbe bands' of tbe officers of said town of tbe contract price of said work, after deducting tbe sum of $150 paid out by it for legal services rendered as aforesaid.”

Tbe Court also adjudged that, neither tbe Post-Glover Electric Company nor the Illinois Insulated Wire Company ae-quired any lien “upon the tangible property levied upon by virtue of the warrants' of attachment issued in said action, or upon the alleged indebtedness of $1,650.86 of the plaintiff municipal corporation to the McEntee-Peterson Engineering Company, by virtue of the notice of garnishment served upon the officers of said town by the Sheriff in said action.” Erom this judgment the Post-Glover Electric Company and the Illinois Insulated Wire Company appealed.

R. L. Durham, for the plaintiffs.

Burwell, Walker & Cansler, for the defendants.

Clark, J.

(after stating; the case as above). The exceptions to the judgment of the Court, holding that the attachment levied upon the water works pumping station and electric lighting plant created no lien on the property, can not be sustained. Snow v. Commissioners, 112 N. C., 335; Vaughn v. Commissioners, 118 N. C., 636.

It is true that in the case of an ordinary debt owing by a town to a third person, the debt may be garnisheed, 1 Dillon Mun. Corp. (4th Ed.), Sec. 101; but here, the engineering company itself could not have recovered the fund until it had complied with its contract with the town by furnishing it with releases of all claims for material used in constructing the work, and the garnishers can have no greater claim against the town than the garnishees through whom it is sought to make the collection. And further, as this money was not due the engineering company at the date of the garnishment (the work not having, been completed and accepted), and as the engineering company never did become entitled to demand the payment of said money, for the reasons above stated, the Several creditors who gave the town notice of their claims for material furnished the engineering company, thereby acquired a claim upon said funds, at least superior to any rights tbe garnishers acquired. Besides', the American Surety Company, having become surety to the engineering company for the faithful performance of said contract, upon any default of its principal, by which it became liable on said bond, if it did not become subrogated to the rights of its principal in this fund, it is at least entitled to have it applied to the payment of these claims for materials, in exoneration of its liability therefore. Patton v. Carr, 117 N. C., 176.

No Error.