Goodyear Tire & Rubber Co. v. Jones
Opinion of the Court
The Memorandum of Decision entered by the District Court, 317 F.Supp. 1285, and its subsequent rulings and judgment held: (1) that appellants Walters and Post were not entitled to a labor lien for $5,500 lump sums payable to each of them at the end of a construction project; (2) that they were not entitled to recover such sums on a payment bond covering the work of their employer; and (3) that they were not entitled to summary judgment against their employer for other wages and a lien therefor on the interpleaded fund. We affirm the rulings of the District Court on Kansas law as to issues (1) and (2), on which a final judgment was entered under Rule 54. For reasons stated below we conclude that issue (3) is not properly before us and do not reach it.
We conclude that the facts are not in material dispute and that summary judgments were proper on issues (1) and (2). The controversy turns largely on the Kansas labor lien statute, the payment bond of the employer and the surety-appellee Universal, and the written agreement for the $5,500 payments and the circumstances surrounding it, which are not in material dispute. Detailed facts concerning the controversy and the interpleader action giving rise to this appeal are stated in the District Court’s Memorandum and are not repeated. The principal facts sufficient for discussion of the contentions on appeal follow.
Appellee Jones Electric Machinery Company was awarded a contract in 1966 for work on an expansion project for Goodyear at its Topeka plant. The Jones work force included appellants Walters and Post, who were foremen and electricians and members of the International Brotherhood of Electrical Workers Union. They told Jones that there had been abuses and threats by the union and prepared to leave the job. Jones discussed terms under which they would stay on the job until the end of the project. The upshot of the discussions was a written agreement providing for a lump sum payment of $5,500 to each of them, described as “an additional wage,” provided they would continue their employment to the end of the project.
About a year later when the project was completed, the lump sum payments were not made and lien claims were filed by Walters and Post, whose procedural regularity is not challenged. The enforcement of the lien claims was sought by Walters and Post by answers and counterclaims in the interpleader action.
First, appellants Walters and Post argue that the District Court erred in rejecting their claims under the Kansas statutes providing for liens and priorities for labor and material, K.S.A. 1969 Supp. 60-1101 and 1103.
We find no Kansas decision on similar circumstances. In applying the State law to the facts, we cannot say that the ruling under the lien statute was clearly erroneous, and accept it as a reasonable interpretation of Kansas law. In such circumstances this Court does not disturb the interpretations by the District Court on the law of its State. Brunswick Corporation v. J & P, Inc., 424 F.2d 100 (10th Cir); Teague v. Grand River Dam Authority, 425 F.2d 130 (10th Cir.); Parsons v. Amerada Hess Corporation, et al., 422 F.2d 610 (10th Cir.); Fulton v. Coppco, Inc., 407 F.2d 611 (10th Cir.).
Secondly, appellants Walters and Post contend that they were entitled to recover on the payment bond of their employer and the surety, Universal. The obligation of the bond was for payment “* * * for all labor and material used or reasonably required for use in the
We again find no controlling Kansas decision. The District Court’s ruling points out that the Goodyear-Jones contract is incorporated by reference in the bond, and that the surety had a right to look to the contract as to the labor and materials used or reasonably required for use in the performance of the contract. There is a reasonable basis for the conclusion, as a matter of Kansas law, that the claims were not for labor in the sense used by the parties. We cannot say that the ruling was clearly erroneous and accept it under our rule cited above.
Lastly, appellants argue that the District Court erred in denying summary judgment on their claims against appellee Jones for wages earned by them after the project was completed,
Affirmed.
I concur. The Tenth Circuit cases cited by Judge Holloway admonish us that we are not to depart from the District Court’s construction of the Kansas statute unless it is clearly erroneous, and this cannot be said to be the situation in this ease. Even were the rule governing our review less confining where the question is one of law — which I might well conclude were I free to do so— I think we should uphold the District Court’s construction of the Kansas lien statute as applied to the facts of this case.
“NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that if the Principal shall promptly make payment to all claimants as hereinafter defined, for all labor and material used or reasonably required for use in the performance of the Contract, then this obligation shall be void; otherwise it shall remain in full force and effect, subject, however, to the following conditions: * * * 11
. The written agreement read as follows :
“TO THOSE CONCERNED:
“WHEREAS, my two first foremen on the Goodyear job, Bruce Walters and Duane Post, are experiencing a great deal of difficulty with their Union because of this foremanship, and
“WHEREAS they are under enormous pressure to desert me and find employment elsewhere, and
“WHEREAS, their presence is an absolute essential to the project’s completion and these two men by their continued loyalty to me are seriously jeopardized in future employment opportunities, I do now on this twentieth day of September, Nineteen Hundred*631 Sixty-six (Sep. 20, 1966) promise and contract to pay upon this job’s completion an additional wage in the amount of Fifty-five Hundred Dollars ($5500.00) EACH to Duane Post and Bruce Walters, PROVIDED, that they have continued in my employment to the end of the project.
“/s/ Ralph Jones”
. The Kansas statutes for labor and material provide in pertinent part for liens and priorities in K.S.A.1969 Supp. 60-1101 and 1103:
“60-1101. Liens and priorities. Any person furnishing labor, equipment, material, or supplies used or consumed for the improvement of real property, under a contract with the owner or with the trustee, agent or spouse of the owner, shall have a lien upon the property for the labor, equipment, material or supplies furnished, and for the cost of transporting the same, and the lien shall be preferred to all other liens or encumbrances which are subsequent to the commencement of the furnishing of such labor, equipment, material or supplies. When two or more such contracts are entered into applicable to the same improvement, the liens of all claimants shall be similarly preferred to the date of the earliest lien of any of them.” “60-1103. Liens of subcontractors and others, (a) Procedure. Any subcontractor or other person furnishing labor, equipment, material or supplies, used or consumed at the site of the property subject to the lien, under an agreement with the contractor, or a subcontractor of the contractor, may obtain a lien for the amount due in the. same manner and to the same extent as the original contractor * *
. The condition of the bond by Jones and appellee Universal Surety Company provided as follows:
. Appellants Walters and Post point out that Jones admitted by deposition that sucb work was done at agreed rates ana not paid for.
. In addition to the facts mentioned by Judge Holloway bearing upon the question whether the extra payments agreed to be made by Jones to appellants were wages for labor within the meaning of the lien statute, I note that the payments referred to were not part of the formula by which the contract price assumed by Goodyear was calculated, and Goodyear was not billed by Jones for these payments.
Dissenting Opinion
(dissenting).
I cannot agree with the majority that these lien claims are excluded by the provisions and purposes of the Kansas lien law “as construed and interpreted by the Kansas courts.” I find no sup
Prior to September, 1966, Goodyear had advertised for bids on the expansion project at their Topeka, Kansas plant. Mrs. E. A. Jones, d/b/a Jones Electric Machinery Company, submitted a bid on the electrical work required on the addition. The Jones bid was accepted by Goodyear on September 13, 1966, and Jones was requested to commence work immediately. Jones Electric was managed by Mr. Ralph Jones, son of Mrs. E. A. Jones, who complied with the Goodyear request and began work within a week. The labor force hired by Mr. Jones included Duane Post, a prior employee of Jones, and Bruce Walters, a new employee, both of whom were journeymen electricians and members of the International Brotherhood of Electrical Workers. Between September 13 and 20, both of these electricians were allegedly subjected to abuses by their union, all aimed at prompting their separation from the Goodyear job. Apparently the threats took their toll and on the 20th Walters and Post approached Ralph Jones, advised him of their state of affairs, and prepared to walk off the job;
Exactly what took place during the remainder of that meeting is uncertain but the parties all agree that the result was an agreement, signed by Ralph Jones as managing agent for Jones Electric Company to pay these two men an “additional wage” to remain as foremen until the completion of the job. The agreement is the heart of this lawsuit.
It is further agreed that on March 10, 1967, Universal executed and delivered a labor and materials payment bond, in which Jones was principal and Goodyear was obligee. Sometime subsequent to completion of the Goodyear job, it became apparent that Jones Electric was in financial difficulties so that Goodyear requested affidavits, as contractually required, indicating that no right to a lien existed in favor of specified persons, before the remaining $52,661.04 due was paid. Jones failed and refused to comply with this request and Goodyear promptly filed this interpleader action, depositing the amount due with the registry of the District Court to protect itself from the many claims being asserted against it by Jones’ creditors.
Subsequently Post and Walters filed an answer and cross-complaint alleging in substance the existence of their agreement with Jones; that it had not been paid when due; that they had filed a lien pursuant to Kansas law and alleged a superior claim to all others. Count II of the cross-claim alleges that wages are due them from Jones for work done after completion of the Goodyear job and prays for judgment in that amount and a lien on the interpleaded sum. »
All parties agree that the validity of appellants’ claims turn on whether the money is viewed as payment for labor and lienable under Kansas law, or, as contended by appellees, whether the money was a premium Jones paid for the right to select his own foremen and for appellants to assume the risks of their union’s reprisals.
In denying relief to cross-claimants, the trial court limited its interpretation of “labor” as used in the lien statute, to “manual labor.”
The trial court concluded that the promise to pay additional wages was not intended to be for labor, but that it was intended to be inducement to Walters and Post to endure loss of favor with their union. It is the aim of courts in interpreting a written contract to give effect to the mutual intention of the parties as it existed at the time of the execution of the contract.
The instrument recites that the presence of Walters and Post was “absolutely essential to the project’s completion,” whereupon Jones contracted to pay an
Appellants readily admit that the additional wage persuaded them to remain in the service of Jones. When they approached Mr. Jones with the threats they had received, and their conviction for quitting the Goodyear job was manifest, their services were obviously worth an increased wage to Jones. To insure meeting the contractual demands with Goodyear, Jones was willing to increase their remuneration in the amount of $5500 each. This was not a gift, but a realization on the part of Jones that because of the circumstances enumerated in the whereas clauses of the instrument, the value of the services provided by the two men was increased. With payment due under the contract with Goodyear at completion of the project, it certainly cannot be considered unusual or indicative of a bonus to postpone payment until that date. Indeed it seems that such is not an unusual practice.
By deciding that the wages due under the contract are lienable items, and in view of Universal’s admission that the bond protected against such liens, it follows that the surety would be liable on its bond for the $11,000 plus interest, pursuant to K.S.A. 16-201.
Appellants’ final argument appears to be but an attempt to appeal from a denial of a motion for summary judgment, and I would concur with the majority’s disposition of that point.
. “September 20, 1966
TO THOSE CONCERNED:
WHEREAS, my first two foremen on the Goodyear job, Bruce Walters and Duane Post, are experiencing a great deal of difficulty with their Union because of this foremanship, and
WHEREAS, their presence is an absolute essential to the project’s completion and these two men by their continued loyalty to me, are seriously jeopardized in future employment opportunities, I do now on this twentieth day of September, Nineteen Hundred Sixty-Six (Sept. 20, 1966) promise and contract to pay upon this job’s completion an additional wage in the amount of Fifty-Five Hundred Dollars ($5500) EACH to Duane Post and Bruce Walters, PROVIDED, that they have continued in my employment to the end of the project.
/s/ Ralph Jones.”
. E. g. Potter v. Conley, 83 Kan. 676, 112 P. 608, 609 (1911) ; Bridgeport Mach. Co. v. McKnab, 136 Kan. 781, 18 P.2d 186, 188 (1933).
. Clark Lumber Co. v. Passig, 184 Kan. 667, 339 P.2d 280 (1959) ; Ekstrom United Supply Co. v. Ash Grove Lime & P. C. Co., 194 Kan. 634, 400 P.2d 707 (1965).
. Bridgeport Mach. Co. v. McKnab, 136 Kan. 781, 18 P.2d 186, at 188.
. Union Traction Co. v. Kansas Cas. and Surety Co., 112 Kan. 774, 213 P. 169 (1923).
. Toler v. Satterthwaite, 200 Kan. 103, 434 P.2d 814 (1967).
. See cases cited in 60 A.L.B. Anno. 1257, 1274-78; 36 Am.Jur. Mechanics’ Liens § 55.
. 51 C.J.S. Labor, p. 544.
. General Air Conditioning Corp. v. Stuewe, 156 Kan. 182, 131 P.2d 638 (1942).
. Pacific Portland Cement Co. v. Food Mach. & Chem. Corp., 178 P.2d 541 (9th Cir. 1949).
. Weiner v. Wilshire Oil Company, 192 Kan. 490, 389 P.2d 803, 808 (1964).
. Division No. 1360, Etc. v. Topeka Transportation Co., 200 Kan. 29, 434 P.2d 850, 855-56 (1967).
. Black’s Law Dictionary, Fourth Edition, p. 1750.
. Alabama Power Co. v. Federal Power Commission, 134 F.2d 602 (5th Cir. 1943).
Reference
- Full Case Name
- The GOODYEAR TIRE & RUBBER COMPANY, a corporation v. Mrs. E. A. JONES, also known as Fern L. Jones, d/b/a Jones Electric Machinery Company, Universal Surety Company, a corporation, United States of America, the Topeka State Bank, Bruce Walters and Duane Post
- Cited By
- 15 cases
- Status
- Published