L.A. Rock & Gravel Co. v. Coast Constr. Co.
L.A. Rock & Gravel Co. v. Coast Constr. Co.
Opinion of the Court
The plaintiff, who claims to have furnished materials used in certain street improvement work performed in the city of Los Angeles, brought suit upon the contractor’s bond to recover the purchase price of said materials. Plaintiff’s right to recover is not disputed; the controversy upon the present appeal is the result of issues raised by the cross-complaint.
Defendant Coast Construction Company, hereinafter referred to as the contractor, entered into a contract, in accordance with the provisions of the Vrooman Act (Deering’s Gen. Laws 1915, p. 1714, Act 3930), for the performance by said contractor of street work in the city of Los Angeles. Concurrently with the execution of the con *588 tract, the contractor, as principal, and the, defendant and cross-complainant, American Surety Company of New York, as surety, executed and delivered to the city of Los Angeles the bond required by section 6½ of the Yrooman Act for the benefit of those performing labor upon and furnishing materials for said street improvement work. Thereafter the plaintiff furnished certain material used in said street work and, receiving no part of the purchase price thereof, filed with the board of public works of Los Angeles a verified statement of its claim, which contained the averment that it was filed pursuant to the provisions of the Yrooman Act and also to section 1184 of the Code of Civil Procedure, and purported to require said board to withhold payment from the contractor until plaintiff’s claim was paid. Immediately after the filing of this notice, plaintiff brought suit against the contractor and the surety for the recovery of the said purchase price. In that action the defendant Surety Company filed a cross-complaint against the following, as cross-defendants: The plaintiff material-man, the contractor, the city of Los Angeles, the board of public works of said city and the Empire Securities Company, a corporation. The cross-complaint alleges that, prior to the commencement of this suit and prior to the filing of plaintiff’s claim, the contractor had assigned to the Empire Securities Company its right to the warrant, assessment, and diagram which, by the terms of the Yrooman Act, are issuable to the contractor upon the completion of the contract and make it possible for the contractor to collect the assessments levied upon the property benefited by the street improvement work. The assignee filed this assignment with the city and with the board of public works prior to the filing of plaintiff’s claim. The cross-complaint admits the validity of plaintiff’s claim and seeks an injunction restraining the city and its board of public works from delivering to the contractor, or its assignees, the warrant, assessment, and diagram and to enforce the delivery thereof to a receiver to be appointed by the court, to the end that the assessment against the property benefited by the street improvement work may be collected and applied first in payment of the claim of plaintiff and “all other claims similarly situated.” The aggregate amount due the contractor on account of said contract is $15,310. Plaintiff’s claim *589 amounts to $2,083.70, and it does not appear that any other claims remain unpaid. The trial court granted the injunction as prayed for, hut denied the motion for the appointment of a receiver, without prejudice to the right of cross-complainant to renew the same or of the court to grant such relief should equity require it. Upon the present appeal from the order granting the injunction, prosecuted by the Empire Securities Company, the city of Los Angeles and the board of public works of said city, appellants contend that the right of the Empire Securities Company, the assignee of the contractor, to the proceeds of the contract is superior to any claim of the contractor’s surety.
The decision of Adamson v. Paonessa, 180 Cal. 157, [179 Pac. 880], rendered subsequent to the granting of the injunction in the present proceedings, is determinative of the questions raised upon the appeal now before the court. The facts of that case, in so far as material to a discussion of the instant case, were as follows: A contract for street work, which was executed under the provisions of the “Improvement Act of 1911” (Stats. 1911, p. 730), was assigned by the contractor to one Lloyd, who immediately gave notice of the assignment to the proper authority. Thereafter, the contractor’s surety was compelled to pay claims amounting to approximately ten thousand dollars for material and labor furnished and rendered in completing the contract. Upon the completion of the contract, the Surety Company claimed its rights in the assessments collected from the property owners were superior to those of the assignee Lloyd,' basing its contention in part upon the theory that, by virtue of its payment of the claims against the contractor, it acquired by subrogation an equitable lien upon any moneys or bonds due under the contract in payment for the work, which lien was superior to any assignment or other disposition which the contractor may have made. The court decided against the surety’s claim to subrogation, holding that the materialmen and laborers whose claims the surety had discharged had no rights whatever in the moneys or bonds due under the contract, and that, therefore, the surety could not claim rights in the said moneys or bonds superior to those of an assignee who had first given notice of his assignment. The same is true of the rights of the plaintiff *590 materialman and the Surety Company to the funds due the contractor in the present ease.
Under sections 7, 8, and 9 of the Vrooman Act the assessments of the property benefited must be made upon the completion of the work by the contractor, and the warrant, assessment, and diagram must be recorded in the office of the superintendent of streets. Thereupon the contractor, or his assignee, is entitled to receive the said warrant, assessment, and diagram “on demand, but not until after the payment to the said superintendent of streets of the incidental expenses not previously paid by the contractor, or his assigns.” The term “incidental expenses” is defined in section 34 of the act as including the cost of printing and; advertising required by the act, expenses of making assessments authorized by the act and the compensation of the city engineer and superintendent. Upon the payment of “incidental expenses” and regardless of whether the claims of materialmen and laborers have been discharged, the contractor, or his assignee, becomes, by virtue of the express provisions of the act, entitled to the warrant and assessment, and, upon receiving the same, he is authorized to immediately demand and receive from the respective property-owners the amounts of the several assessments.
From what has been said, it is also obvious that, in the present case, as in
Adamson
v.
Paonessa, supra,
the provisions of section 1184 of the Code of Civil Procedure cannot be invoked. This section provides for the withholding of money by the owner, or person who contracted with the contractor, after receiving notice from one who has performed labor or furnished materials.
*592
The order granting the injunction is reversed.
Shaw, J., Wilbur, J., Sloane, J., Olney, J., Lawlor, J., and Angellotti, C. J., concurred.
Reference
- Full Case Name
- LOS ANGELES ROCK AND GRAVEL COMPANY (A Corporation), Plaintiff and Respondent, v. COAST CONSTRUCTION COMPANY (A Corporation), Et Al., Defendants; AMERICAN SURETY COMPANY OF NEW YORK (A Corporation), Cross-Complainant and Respondent, v. EMPIRE SECURITIES COMPANY (A Corporation), Et Al., Defendants to Cross-Complaint and Appellants; LOS ANGELES ROCK AND GRAVEL COMPANY (A Corporation), Et Al., Defendants to Cross-Complaint
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- 11 cases
- Status
- Published