# Appellees Brief — Hartford Accident & Indemnity Co. v. Bunn > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0141%3A09 ## Record - **Collection:** Supreme Court brief - **Document type:** Appellees Brief - **Published:** January 1, 1932 - **Citation:** 285 U.S. 169 ## Text ad ox aaewen se peccereedan eieaeee. ae Commercial Bank y. Evans, 145 Miss. 643, 112 So. 482......... re Commonwealth v. Hock Age Mutual Benefit ’ Association, 31 ‘Leg, Int. 245; 10 Phila. B54... . oo. ccc cece tA CME S446 Ga sk 50 Cooley, Const Lim I nit il 6 NA eel oi a . * & Cole Manf. Co. vy. Falls (1891), 80 Tenn., 16 8. W. 1045........ 73 ‘ Concrete Steei Co. v. Ill. Surety Co., 163 Wis. 41, 47,157 N. W. _ Cae. ainsi MaaRincn bainh HA eihehh Murphy v. California, 225 U. 8. 623; 56 L.-Ed. 1229........... BB Morris v: Columbus, 102 Ga. 792, 30 S. E. 850................ 53 McGoon v. Scales, 9 Wall. 23; 19 L, Ed. 545........ Keakasaes "$l Merrick v. Halsey, 242 U. S. 568; 61 L. Ed. 498............... 51 eS rrr errr bekeane 36 Nye-Schnelder-Fowler Co. v. Roeser, 103 Neb. » 614, 173 N. W. » GF RaeubeesasncGds c4p000d00 MeCenGhee che ahakes . 2 ¥ evar LHS TRENT SEI, DEEN SARA AG TB a INDEX, Ohio Oil Co, v. Conway, 281 U. 8S. 46, 74 L. Ed. 775............ O'Gorman & Young, Inc., y. Hartford Fire Ins. Co., 282 U. S. BEE 4o0cesecesnesceeenusedseeseedl cucsevaws peseceeesccecee Ohio ex rel. Clarke v. Deckebach, 274 U. 8. 392, 397........ .O’Gorman v. Hartford Fire Ins. Co., 282 U. S. 257, 75 L. Ed. - SHAS L 6 sU Kaa akeeeRueees Cau beneebascetneeeaeuesessnseen _ Orient Ins. Co. v. Daggs, 172 U. S. 557, 48 L. Ed. 552.......... ° Ogden v. Saunders, 12 Wheat. 213, © Bh Ge Ges aw cavancees's Phil. Mech. Sy OI WA wee san cednwnceadeseeseteces co’ x larsons v. U. S. F. & G. Co,, 112 So. 469, 147 Miss. 335.;..... Provident Inst. for Savings v. Jersey City, 113 U. 8S: 506-514, Se Ph a nev dene 6oninsneDRcadskbbeannccaean’ 10045 . Parsons y. U. S. F. & G. Co., 112 So. 469, 147 Miss. 335........ ‘Palmer v. Tingle, 45 Ohio St. 423, 45 N. BE. 313....: eekuheas Philip Carey Co. v. Maryland Casualty Co., 206 N. W. 808 Ce Serer rer er eer sacndenes OSes eeseveeeseces People vy. Surety Co., 211 N. Y. 107, 105 NE. 99............. l’eoples v. Metropolitan Surety Co.,,105 N. E. 99 (1914 N. Y. iF 2 People v. Smith, 108 Mich. 527; 66 N. W. 382.......... faekene People v. pig crae 214 N. Y. 395 ; 108 N. by ee Philadelphia v. Fid. & Dep. Co., 80 Atl. 62, 63, 231 Pa. 208... People v. Traves, 154 N. W. 130, 188 Mich. 415......:........ Parsons, etc., v. Furr, 110 Miss. 795, 70 So. 895...........e000- , Pennsylvania, etc., Co. v. Gold Issue, etec., @o., 243 U_-8. - Se Se, RGA Soden aN Swe bes Obahe 460k8s eb bae bbe rnte Plyler-v. Elliott, 131 S. FE. 306, 101 ie i ks Kbene te tennnee Paul v. Virginia, 8 Wallace (U. S. 1869) 168; 19 L. Ed. 35 Roystone v. Darling, 171 Cal. 526, 154 BP. 15..........cccceeees Rio Grande Lumuber. Co. vy. Darke, 50 Utah, 114, 167 P. 241, ° | Ren i iy Bs FE in hbo ches cy nnn cca wedecncentesens é «85 Standard Oil Co. v. Marysville, 279 U. S. 582, 584 niet ce rorsve vers locos - 44 Stowell v. Clark, 152 Miss. 32,.118 So. 370.......0...2cc000. es i Standard Oil Co. v. National Surety Co., 143 Miss. 841, 107 So. PET bs dated one henbhes bats bs tar neevenes (Psi exegsus eee 17 Shaughnessy v. American Surety Co., 188 Cal. 5438, 69 P. 250, 71 P. 701 See e eee e eee e eet ee ence teen et eee eeeeseeseeesecess 22 nid ! aaeeunee INDEX, epee ix Page ‘San Francisco Lumber Co. v. Bibb, 139 Cal. 192, 72 P. 964; id., 139 Cal. 325, 78 P. 864....... ‘ccteseneedsttausnees nee 22 Spry Lumber Co. v. Murphy, 148 Pa. St. 337, 23 A. 1184..... . 30 Scott v. Mather, 14 Tex. 235............... Seeevoes Jscecccees os) Smith v. Parsons, 2 Oi, TE... cc oeee peeaneusseéesdveedere . 38 Schmidinger v. Chicago, 226 U. S. 578............600. Seskeeee 44 Stewart v. Segal, 126 So. 718, 13 La. App. 359....... rer Tr ee } 10 Standard Salt & Cement Co, v. Nat. Surety Co., 134 Minn, 121," © TTT Tee TTT ETT TUTTI TTC TTT TTT 13... Spengler v. Lumber Co., 94 Miss. 780, 48 So. 966...........2.. 15 ’ Troy, etc., R. Co. v. Kerr, 17 Barb. (N. Y. 1854) 581.......... 49 Thornton v. Duffy, 254 U. S. 361; 65 L. Ed. 304..... pieeeeress 51 Thomas Cusack v. Chicago, 242 U. S. 526, 61 L. Ed. 472....... _ 54 ’. Tagg Bros. v. United States, 280 U. S. 420, 74 LE. Ed. 524...... 67° Town of Cornelius v. Lampton, 128 S. E. 334, 189 N. C. 714.. 77 Title Guaranty & T. Co. v. Crane, 31 S. Ct. 140, 319 U S. 24, i) Oc issaueeseseNiens suede enaeey aes evevecceces 77 U. S. F. & G. Co. v. United States, 178 Fed. 692. . eek kee 58 Union Indemnity Co. v. Forgey & ies 174 Ark. 1110, 1115, PE EE nandbiedd onan den Gee see VAG beededaeeeseduss 61 U. S. v. Standard Brewery, 251 U. 8. 210, 64 L. Ba. 208...... 56 United States use of Heise v. American Bonding & T. Co., 89 | : __ +» Fed. 921, 925......... ee ye eer rT ere ree eT eer ere 57 United States use of ote: v. Hazard, 53 App: Div. 410, 65 N. Y. Supp. 1051. ..... ccc ccececcececccsccncecccccscceees 57 United States Vv. American Surety Co., 200 U. 8S. 200, 50 L. Ed. , rT EET e ee ee TE Tee Pet er eee E rT rene Fe 68 s United etetee « ex rel. Hoffman Vv. Quincy, 4 Wall. (71 U. S. 535, 18 L. Ed. 403)..... EOE OE ee eee ee TCT ETT ee TT Te 70, 71 U. S. F. & G. Co. v. Ettenheimer, 70 Neb. saheed 07 N. W. 227; We: ie Ws Es RDN GD onc nakusdwdus seo ceusesasins odnan eke 85 U.S. F. & G. Co. v. Yazoo County, 110 So. 780, 145 Miss. 378... 79 United States Gypsum Co. v. Gleason, 135 Wis. 539, 543, 116° ee A eee ee ee eT TTT eer Tee Tee eee 78 United States v. Natl. Surety Co., 92 F. 549, 34 ©. C., 526... 77, 78 U. S. Fe& G. Co. v. Citizens State Bank, 150 Miss. 386, 116 So. Se SNPh she sO0Na wdc ecb een eedhethadnn cabbesaed tebereas 8 United States, etc., Co. v. United States, 191 U: . 422, 48 L, Bt. B65. .00. Sin caeheeesiceeessennanaek Seccveeeteyssé% 8 United States Fidelity & Guranaty Co. v. Hood, 124 Miss. 548, a eS re re rmnpene 8 United States ed & Guaranty Co. v. Poetker, 180 Ind. 2s, Se Ws i Ws 66.6 664 08 kee 08000008 scbabeeeneeesceses eee 9 : " NPAC AC ASIA eRe ENON IE NEN DY AT PRAE RI INE NT STE ATR NOR IME ONE Ee en iy ite od ee ; wap oe t Pitre aid. tales Semel i ee "Act No. 298, Laws of 1926, of Louisiana : * RO ts. oS, United Fuel Gas Co. vy. Railroad Comaiaten, 278 U. S. _807, U. S. F. & Co. v. United States, 191 U. S. 416, 24. S. Ct: 142, 48 L. Ed. 242, REA SCNT EES RTS HEE NRE Do a * United States v. U. S. F. & G: Co. (C. C.), 178 Fed. 721...... Tyson v. Banton. 273 U..S. 418, 484, 71 L.-Ed. 718,-724........ Valles’ Heirs v. Fleming’s Heirs, 29 Mo. "152.....-2.0... ppatabonee Winder v. Caldwell, 14 How. 434.............4 isieans canbe » Welch v. Wodsworth, 30 Conn: 149....2.......... picclinceniate . Whitney vy, Richardson, 31 Vt. 300.%.°........ _ RR rere " Weil v. State, 46 Ohio St. 450, 21 N. E. 648...............2.. Williams v. Riley, 980 U. 8. 78,°80, 74 L. Ed: 175, 178......... ha White v, Johnson, 282 U. S. 367, 75 L. Ed. 388.......... nena Warren Webste® & Co. v. Beaumont~Hotel Co., 151 Wis. 1, 10, JE Es le dct ds Landadbendauaekanddéecsineettaadcens West v. Detroit Fid. & Surety Co., 225 N. W. 675, de Neb. MES ome ones Tiel ise sok cals sion east ae lian sc Si tk a aba cde Bama oe atlas Wall v. Parrott Silver g Copper Co., 244 B. $. 407, 61 L. ‘Ed. VEE ketievee04és¢hdeasesanadedion een tdeetbannadene nee Young Co. _y. McNeal- Eqwards Co., 283 U, 8. 398, 75 L.Ed. Ee ste cdasndogens ound seeeinesateandsantokecatdonanaucnas Yawkey-Crowley Lumber Co. ve iesnaaats 206 W., 976 (Wis. 1926) se Pere seer secseresesece’ ee ee SEER ae OTHER AUTHORITIES. _ Section 3 of Act No. 298..... Gui aiaidaedas kt daneaaianeinek: Te Be, iin eid nttonsncecccnnesenscatiic a Section 8 of Act No. 298..... Ria wings eubianie ce Oe ee ~Seetion 10 of Act No. 298............ Menon akeniegine _ 9C. J. pages 28 and 29, paragraphs 43 SN Acivadsednebeus io C. L. page 55, paragraph 15..............005- ialcererari eal laretans 2°Story, Eq. Jur., Sections 799a, ‘799, am | PA ctntdamanwe ° 2 Jones, el ea a atta nics oie ated a Heutagway's Code, 1927, Section 2617............: ehh iars Pingrey on Suretyship.& Guaranty, Sec. 112, p. 139. bsolniibte teas Section 758, Code 1930...... Sereeeer errr rere reer Tree ee Jenne Section 3074, Code of 1906...:........ se dhpiein aeeeeewnwwes Section 5131, Code of 1930 (Section 2563, Code 1906)........ Section 5129, Code of Miss., 1930 (Sections 2550, 2587, Code of te . SUPREME COURT OF THE UNITED STATES. OCTOBER TERM, 1931 7 _No. 333 _ HARTFORD CCIDENT & INDEMNITY coM ANY, Appetiant, os vs. 0. L.. BUNN, Doine Business as Bunn ELEctric . CoMPANY, ET aL.,. APPELLEES. BRIEF ON THE MERITS FOR © . Enochs —o & Manufacturing Company, Ingalls _ Iron Works, 0: L. ‘Bunn, Doing Business as Bunn Electric Co.; Coburn Trolley Track Mfg. Co., Gibbens & Gordon, Inc., Hockaday, Inc., The R. CG. Lieb Co., Natchez Drug Co., National Show Case Co., Schwartz & Stewart, Walter C. Schultz, Doing Business as Schultz Cabinet Works; Southern Cement Co.: , “Trus- con Steel Co., ‘White Stone Co., Woodward, Wight & Co., R. Lee Parker, Jr., R. Scudamore, Jr. R. Lee — Parker, Jr.4ind R. Hicks. Parker, Copartners, Doing Business as Natchez Brick Co.; C. R. Burkett, Doing Business as Burkett Sheet Metal Works; W. A. J acobie, Geisenberger Bros. Drug Co., M. P. Phelan, Mosler Safe & Lock Co., N atchez Investment Co., and = _— & Laub, Appellees. ‘i seoagiales a Express Reservation. These appellees, having filed Motions to Dismiss and/or affirm, reserve, expressly, in this Brief upon _ the merits; all of the rights therein claimed, and first : Meneny insist upon said motion. Statement of the Case. _ This case involves the liability, in equity, of the surety, appellant, on a building contractor’s bond for materials furnished to the contractor for the building “of the Eola Hotel, at Natchez, Mississippi, by the Natchez Investment Company, the owner, appellee. The questions arising are: (1) The construction of the bond and the measure of liability of-the surety thereon for materials furnished - the contractor; principal in the bond, as a common _— obligation. This proposition has been fully briefed in our Mo- ~ tions to Dismiss or affirm, whieh i is hereby adopted to save iteration. (2) Whether appellant, a wich surety, doing an in- surance business, and receiving compensation for.such suretyship admeasured by the risk assumed, can ques- tion the constitutionality of the statutes of Mississippi, Section 3674, Code 1906, as amended by Chapter 128, ~ Laws of 1918 (now Sections 2274-2281, Code 1930), even if the nd was executed under said gtatutes. (3) Said Chapter 128, Laws of Mississippi, 1918 | (Sections 2274-2281, Code of sala does not violate the Federal Constitution. Pay Pen e oene i we pele ee a a fod) i (4) The application of Atna Casualty & Surety. | Company, surety of appellant on appeal bond to the Supreme Court of Mississippi, to become an appellant herein cannot be allowed. ° The Pleadings and Evidence. The Natchez Investment Company, the owner of the hotel constructed, obligee-of the bond of the contrac- tors, Burkes, filed its original bill in equity against (a) Burkes, the contractor; (b) appellant, the surety ‘on the contractor’s bond; (c) the materialmen and laborers who furnished the labor and materials to the contractor for the construction of the hotel; (d) and New Orleans Canal Bank & Trust Company, assignee _of certain proceeds arising from the contract of con- struction, defendaats to the bill. The bill averred that the owner (Sig entitled to — , it ascertained and determined whether said Bond”’ (of appellant)- ‘‘in connectién with said contract - and specification is a bond for the faithful performance of said contract or simply a bond of indemnity’’ (Tr., 8). Reference is made specifically in the bond to concursus proceedings and the plans are made part thereof. The prayer was to adjudicate whetlier this bond was for the faithful performance and thereby superior to all liabilities provided by Section 2, Chapter 128, Laws 1918, or subject thereto (Tr., 9). The agreement, Exhibit ‘‘A’’ (Tr., 10), is. “‘the standard form of agreement between contractors and owner for construction of buildings, issued by Ameri- can Institute of Architects: for use when a stipulated “sum forms the basis of payment.’’. Johnson Electric - eniatiaitinbees sncenmanc-putete, NS AER BES Pho BE Oe te ee Oe Sa CNA TINH ED EN FEO EOIN COALITION II FE LOR SENET, ENS ey 1 ~ pact . ES esata tne ONG . ape aoe foe sil 3 Co. v. Columbia Casualty Co., 133 So. (Fla.) 851, shows it slightly modified, but the Supreme Court of Missis- sippi held its obligation the same. ‘Article 6: The Contract lilies: Nitin general conditions of the contract, the specifica- tions, the drawings, together with this agree- ment, form the contract, and they are as fully a part of the contract as if hereto or herein repeated’’ (R. 12). By the terms of the contract documents the Con- tractor obligated itself to give a bond to secure the Owner the faithful performance. of the contract ‘in strict accordance with the plans and specifications. Amongst the obligations thereby intended to be secured were.the obligations of the contractor to pay - laborers, materialmen and sub-contractors for all work, labor and material that should go into the building. It was further provided in the contract documents that the contractor’s bondsmen should obligate them- .selves to all the terms and covenants of the specifica- tions ‘and of the contracts and contract documents, and amongst these ‘obligations of the contract so to be guaranteed was the contractor’s obligation to pay for all labor and material that should go into - ~ building. . Furthermore, by the contract decuments it was pro- vided ‘that the sureties of the various contractors (which necessarily included the principal contractors, . J. V. & BR. T. Burkes) should be, and they thereby de- clared and acknowledged themselves to be, bound to the Owner as guarantors separately and in solido with - the contractors for the fulfillment of the terms of the contract documents. | 9 This, necessarily, made the sureties assume all the obligations of the contractor under the ¢ontract docu- ments and made such sureties liable for said obliga- tions separately and in solido and, therefore, to all intents‘and purposes, as principals. Amongst the obligations thereby intended to be cov- _.ered was the obligation of the-contractor to pay for labor and material (R. 3, 4). When this Appellant, Hartford Accident & Indemnity Company, execnted its bond at the solicitation of J. V. & R. T. Burkes, and - in pursuance of the contract made between Burkes and the Owner, the Hartford Accident & Indemnity Com- pany on the face of its bond referred to the plans and specifications and contract documents, and by specific reference made the same in all their parts and clauses _ a part and parcel of the bond itself (R. 18). We submit in the first instance that these obliga- tions so specifically undertaken by Hartford Accident ' & Indemnity Company were undertaken by it solely and in consideration of the premium paid to it by the contractors. ° Under local. practice, upon demurrer, exhibits con- . trol the averments of the pleading. McNeill.v. Lee, 79 Miss., 455. The specifications appear, Exhibit ‘“‘B” (Tr., 14); the bond, Exhibit ‘*C’’ (Tr., 17). The appellant demurred Gr, BW, assigning, roughly, first, the bond was not a performance bond | under Chapter 128, Laws 1918, but if the Court should hold otherwise, then, in virtue thereof, the constitu- tional rights of appellant were violated. 2 Oy ahaa ages 6 The petitions of appellees, materialmen, in said suit do not appear in the record. | The demurrer was overruled (Tr., 41), with an ap- peal allowed to the Supreme Conrt to settle principles © of the case (Tr., 41); with the judgment thereon (Tr., 57). Then, as to these materialmen appellees, noth- ing further appears as having been done in the Chan- cery Court, save the rendition, on January 10, 1930, of final decree (Tr., 57), upon a full hearing on the .- merits. | Upon appeal therefr: om to the Mississippi Simeone Court, the opinion was filed February 23, 1931 (Tr., 67) and judgment entered (Tr., 80, 81); a suggestion of error (under local practice, a petition for rehear- ing), was filed by appellant, and the opinion of the Supreme Court thereon appears (Tr., 86), with the appeal. to this Court by the appellant alone. The ‘tna Casualty & Surety Company, surety on the ‘appeal bond, did not join therein. On December 8, 1931, after-motion filed in this Court by materialmen to dismiss, Aitna Casualty & Surety Company seeks, without application to the Supreme Court of Missis- sippi, an appeal, and to join herein, the time for ap- peal having long since expired. Thereto these iil lees object. Point I. Appellant, doing an insurance business, and thereby subject to plenary State jurisdiction, having been paid @ premium for the obligation as enforced by the State Court is not, on this record, entitled to raise a Federal ° " question with this premium in its pocket. ay 2 ROLE TR LN A III ER TT PT San tit lah al aad ra eid I. Section 3, Chapter 128, Laws of 1918, does not violate the Federal Constitution, in that, Appellees, material- , men, having placed their personalty—material—in a building upon the land of the owner, for whose ‘con- struction, including both material and labor, appellant, surety company, had become responsible, the State can, in virtue thereof, impose liability upon such paid cor- porate surety, voluntarily executing @& performance bond. ;. Point III. Said Chapter 128, Laws of Mississippi, 1918 (Secs. 2274. 2281, Code en does not violate the Federal Constitution. — IV. Should the Court determine Section 3 aforesaid to be unconstitutional, yet notwithstanding, the bond exe- cuted may be sustained as a valid common law obliga- tion and the judgment of the Supreme Court of Missis- sippi cannot be reversed, as an adequate obligation ex- isted under this common law obligation for judgment rendered. Point V. The application of Aitna Casualty & Surety Com- pany, Surety of appellant on appeal bond to the Su- . preme Court of Mississippi, to join in | this appeal can- not be allowed. 8 : Point I. ineteen, doing an insurance business, and thereby subject to plenary State jurisdiction, having been paid _a@ premium for the obligation as enforced by.the State _ Court is not, on this record, entitled to raise a Federal question, with this premium in its pocket. Section 5129, Code of Miss., 1930 (Sections 2550, _ 2557, Code of 1906), makes Surety Companies trans- acting business in Mississippi, insurauce companies. Section 5131, Code 1930 (Section 2563, Code 1906), gives all such contracts a Mississippi situs. Fidelity, etc., Co. v. ffiazea, 93 Miss. 18, 46 So. 817. | As ‘said in weacrtanicel Co. v. Yates, 214 Ill. 272, 73 N. E. 423: 9 ead ¥ > (insurance) ‘‘t3 a welithe necessity that deals: in its own credit for a cash consideration from the assured, and is stamped with public interest, and must yield obedience to the neces- sary and proper regulations by the State. im - the exercise of its police power.’ In U.S. F. & G, Co. v. Citizens. State Bank, 150 Miss. 386,.116 So. 608, Mr. J ustice. Pack said: s* * * This being a fidelity bond, it is now well settled that such contracts are to be con-- strued by the same principles of laws applicable to contracts of i insurance.’ _ United States, etc., Co. v. United States, 191 U. S. ; 422, 48 L. Ed 245; Home Insuramwe Co.. of Wi: Y. Moore, 151 Miss. 189, 117 So. 524; United Siotes Fidelity € Guaranty Co. v. Hood, 124 Mise. 548, 87 So. "115; 15 A. L. R. 605; Murray v. Metropolitan Life Ins. Co., 145 Miss. 266, 110° So. 660; Hormel v. American | r inti Co., 35 L. R. A. a ‘S8.) 013 (monographic ‘note). ; The rule is thus stated in Atmerican Surety Co: v. Pangburn, 182 Ind. 116, 105 N. E. 769, 770: 6o* + * The overwhelming weight of recent American authority does notaccord such surety ' the right to javoke: the rule of .strictissimi juris, but places such contract in the insurance class and measures the right of such surety by the law applicable to insurance contracts. United States Fidelity & Guaranty Co. v. Poetker, 180° Ind. 255, 102 N. E. 372, and authorities, cited; Monographic note to Hormel & Co. v. American Bonding Co., 33 L. R. A. (N. S.) 513.” In Lackland v. Renshaw, 165 S. W. 314, 315, the Court said: a re ee suchgporporations may: call themselves ‘surety companies’, their business . is in all essential particulars that of insurance. ° . Their contracts are usually in terms prescribed by themselves. * * *”’ Therefore, being engaged in the business of insur- ance, as to appellant, the Legislative power is admeas- ured by German Alliance Ins. Co.-v. Lewis, 233 U. S. 389, .58 L. Ed. 1011; O’Gorman v. Hartford F. Ins. . Co., 282 U. S. 251, 75 L. Ed. 324; 72 A. L. R. 1163, 51 Sup. Ct. 130; Tyson v. Banton, 273 U.S. 418, 434, 71° L. Ed.-718, 724; Hardware Dealers Mut.’Fire Ins. Co. _ vy. Glidden, October Term, 193Y, U. S, Supreme Court Advance Opinions No. 3, page 65; Herbring v. Lee, 280 U.S. 111, 74 L. Ed. 217. As was said by Mr. Justice McKenna. j in the Lewis Case, supra: atid aliledl Sa alas 10 ‘‘We may venture to observe that the price of insurance is not fixed oyer the counters of the companies by what Adam Smith calls the higgling of the market, but formed in the coun- cils of the underwriters, promulgatéd in sched- ules of practically coritrolling constancy which the applicant for insurance. is powerless to op- pose, and which, therefore, has led to the asser- * tion that the business of insurance is of monopo- listie character and that ‘it is illusory to speak of a liberty of contract.’ It is in the alternative presented of accepting the rates of the com- panies or refraining from insurance, business necessity impelling, if not compelling it.’’ ~The appellant does not show what premium it ex- acted from the owner for the obligation hereunder assumed, that is to say, whether this premium received covered compensation exacted by appellant for the ‘payment to the subcontractors, as by the. Mississippi court held; or did not. The form was taken from ‘Louisiana (Opinion of Ethridge, P. J., Tr., 88). In ' Louisiana, the obligation to give a bond for payment to subcontractors is compulsory. Act 298, Laws of: 1926. Without question, recovery to subcontractors > therein have been in all instances, vouchsafed. Stewart v. Segal, 126 So. 718, 13 La. App. 359; McDonald v. H. Gas & Oil Co., 2 La. App. 241; Baton Rouge Sash, . etc., Co. v. Deceur, 2 La. App. 129; Jarbart v. U.S. F. & G. Co., 3 La. App. 525. . a ' And the surety under the Louisiana law knew that claims of materialmen against the surety on the con- tractor’s bond were not affected by a breach of con- tract by the owner. Fidelity Homestead Assn. Vv. Peaches nN RL RR AE ERAN ORAS 1 CNN eH TARR SR Eee BENNIE ST 4 ree _— 11 Kennedy, 158 dya. 1059, 105 So. 64. And further well knew when using this form that the ‘surety on a con- | tractor’s bond is limited to defenses that can ‘be made by the contractor in a suit for materials furnished to contractor. Graphic Arts Bldg. Co. v. Union Indemnity Co., 163 La. 1, 111 So. 470. ’ The appellant well knew the contrariety of judicial opinion, and being an insurance company did not dis- regard the possibility of this imposition and, with deference, exacted a prethium therefor which having been collected imposed this liability to subcontractors. Johnson Electric go. v. Columbia Casualty Co., 133 So. (Fla.) 851. Thus, so knowing, appellant computed the premium exacted. It is not herein shown that the premium ~. herein exacted for the covenant undertaken was not the full. premium requisite under the Louisiana law to make payment to all subcontractors and as enforced by the Mississippi court. If so, then, when in virtue of this payment, so thus exacted to cover this obliga- tion to subcontractors as to materialmen, precisely as in case: of Government contracts, the appellant is es- topped to raise the Federal question, when it has in its pocket the premium requisite to pay therefor ; to allow it to escape the payment would be to donate to the appellant, an insurance company, something to which it was not entitled. Having received the bene- fit in the form of this premium for the assumption, of the obligation, it may not contest it. Frost v. Corpora- tion Commission, 278.U. S. 531, 73 L. Ed. 492; United Fuel Gas Co. v. Railroad Commission, 278 U. S. 30Z, 73 L. Ed. 395; Wall v. Parrott Silver € Copper Co., - . ‘ ‘ : eat Ng ETRE Ee » Te er ee Sag ARV 4 aR amen * ’ owt song eo PMN . 5 - . . . ’ ed en et . wf 244 U. S. 407-61 L. Ed. 1229; Leonard v. Vicksburg, ete.,,.R. Co., 198 U. S. 416, 49 L. Ed. 1108. ® Being: a paid surety, engaged ji in-the insurance basi- ness, and its obligation to the materialmen being con- ditioned by its exaction of the owner for the un taking had, the right of such appellant to urge * unconstitutionality must be admeasured by the pre- mium exaction, whether, irrespective of the constitu- tionality « or unconstitutionality, it exacted of the owner the full premium covering the unconditional payment as above delineated, it may not, having so thus ex- ~ acted, complain of the act. being unconstitutional, espe- [el cially as it assumed to make the bond conditioned a& by law required, which might well be valid as a com- mon law obligation independently of ‘the statute. American Indemnity’ Co. v. Burrows Hardware Co. (Tex. Civ. App.), 191 S. W. 574. . In Byram Lumber & Supply Co. v. . Page, 109 Conn. (1929) 256, 146 A. 293, it is said: “Tt. would be to close our.eyes to the ordinary . methods of such a business as it was conduct- ing to doubt that it knew of the diverse views taken in regard to the construction of such bonds in different: states; that it did not stand ‘ready to accept a construction favorable to a ~ direct action by persons situated like the plain- ' tiff, tf we should so construe the bond, and did oi not fix its premium accordingly. In that con- struction there can be no injustice’ to the appel- lant, and we can recognize the sound policy which it will serve.’’. - U.S. F. € Co. v. United States, 191 U. 8. 416, 24 S. Ct. 142, 48 L. Ed. 242, 246; Algonite Stone Mfg. Co. v. ° * ‘> . ws - P ; : . ‘ pe A ry speenanneeas —— gyre amen . - ‘ pws 2 a 1 PD pA of 558 LOTMA ET 13 F. & Dep. Co. of Maihiad (Kans. 1917), 163 se, 1076, 100 Kans. 28.- . There is no pretense here that the amount paid by the owner for this bond was any different from what | would have been exacted for a contract in behalf of the United States Government «whereunder this precise obligation here enforced was inherent. The surety company, thus doing business for profit, must have admeasured its premium so as to cover the contingency - for satisfaction. of subcontractors, and having thus re- ceived a premium therefor, may not under Mississippi decisions pay losses.upon a differ ent basis. Insurance Company vy. Shlenker, he Miss. 667, 32 So. 198, where - it iS declared: ~ ‘It might decline the insurance if it did ani wish to rtn the moral risk in such a case, The very life of the statute:is that:the company shall fot receive premiums oi one basis, and pay losses on another,’? And it not being shown that the premium exacted did not cover the payment to ‘subcontractors, this - ‘paid surety may not be discharged because proof of damage were release generally. Compare. Guaranty Co, . Pressed Brick Co., 191 U.S. 416, 24 Sup. Ct. 142, . a L. Kd. 242; City of Philadelphia v. Fidelity € De- | posit Co., 231 Pa. 208, 80 Atl. 62; Murray City ve Baiks, * 219 Pae. 246, 248; Standard Salt & Cement Co. v. Nat. Surety Co., 134 Minn. 121, 158 N. W. 802; United States - v.U. 8. F. €.4. Co(C. C.), 178 Fed. 721. So, where appellant, as an insurance company, con- tracted, as it did, fora consideration to it paid, know- pee 1% ) Ld , ; ing the contrari¢ty of judicial decisions upon this sub- ' ject, and knowing that the form utilized from Louisi- ana required the payment specifically, it may not as a paid surety seek exculpation without a demonstration * that the premium exacted did not cover the risk in- herent to payment of the, subcontractors precisely as. was contemplated by the’ Louisiana statute whereon . _ the bond was drawn, and as held by the Mississippi ' Court. It not.appearing, therefore, that. appellant is now required to do other than that wherefore it ex- acted premium, it, as an insurance company, may not herein complain. The rights that appertain to a pri-. vate individual may not be claimed by a corporation when dealing in a business affected with a public use. Compare Blake v. McClung, 172 U. S.-239, 43 L. Ed. 432; Herbring v.’ Lee, 280 U. S. 116, 74 L. Ed.-221;. Hardware Dealers-Mut. Fire“Ins. Co. v. Glidden, : supra. ; Pot’ T IL Section 3, Chapter 128, Laws of 1918, does not violate the Federal Constitution, in that, Appellees, material- ‘men, having placed their property—material—in a _ building upon the land of the owner, for whose con- struction, including both material and labor, appellant, surety company, had become responsible, the State can, ’ in virtue thereof, impose liability upon such paid cor- porate surety, cai ted executing a performance bond, We advert to, hy illite, that appellant was in the’insurance business for a consideration pursuant to : ‘ he ON Me de eek a a a Sse eager MONET ; . Petia ee 15 3 perinission therefor granted by Mississippi under its plenary power.’ Unless appellees receive from appel- lant pay for their material integrated into a structure wherefor appellant was responsible—bound to deliver® . it as an entity' free of liens—they will go uripaid. _ In Mississippi, initially, the sole protection provided materialmen was found 4m Section 3074, Code of 1906, ‘whereunder immediately, when the contract was made the contractor might assign and defeat. all rights of the materialmen. Spengler v.. Lumber Co., 94 Miss. 780, 48 So. 966. And therein the differentiation was made between the New York theory of subcontractors’ rights and the Pennsylvania theory, and with refer- ence to said section, it was remarked: _ “This section might have provided, if the legislature had preferred the Pennsylvania sys- tem, that no assignment should be made by the. * contractor which would be good against the ma- terialmen; but it did not so provide. It might have expressly given the materialmen and the - subcontractors, as the Pennsylvania ‘system ‘does, ditect liens, equal in all respécts to the _lien of the original contractor; but it expressly ~ refused to do that.’’ In Diékson vy. U. S. F. d& G. Co., 117 So. 248, 150 - Miss. 864, Mr. Justice Anderson said: . ‘Prior to the adoption of chapter 128, Laws of 1918, Hemingway’s Code 1927, Sections 2596 to 2603, inclusive, money due a contractor under. ‘a building coritract was not impressed with any trust or equity in favor of materialmen and laborers furnishing materials and labor going’ . » into the construction of a building. Such funds, ; 16 °. under the. contract, belonged to the contractor absolutely, who had the right to assign or other- wise dispose of them as he saw fit, although to the_prejudice of such Jaborers' and material- men. * * * But that Is not true now since the adoption of that statute unless the contrac- tor gives the bond provided by section 3 of the statute (section 2598, Hemingway’s Code 1927), “quoted*above.. If the contractor does not give the bond provided by the statute, laborers. and ~ materialmen have an equity under section 1 of the statute, , Hemingway’s.Code 1927, Section 2596, in the funds due the contractor by the. owner of the building, But where the bond is given as provided by the statute, such funds are released from such Jequity or trust in favor of materialmen and laborers and go into the hands of the contractor untrammeled. The purpose of the bond section of the’ statute was to provide for the protection of materialmen and laborers, the bond being in lien of their equity in the funds arising out of the building contract. The bond provided by the statute has the same pur- pose and effect as the bond required of a ‘con- tractor doing public work by section 1, chapter 217, Laws of 1918 (Hemingway’: * Code. 1927, ° Section 2617), *’ (Ttalies ours.) This is a direct decision putting this bond upon ~ the precise basis made available by Congress and uni- formly. enforced without question by ‘this Court. | See, also, Davis Co. v. D’Lo Giiaranty Bank, 133 So. (Miss.-1931), 223. | , At the same session of the toatiieiuns: Chapter 217, . Laws 1918, was enacted imposing precisely the same obligation in favor of material on public work—the validity of which. appellant here concedes. : TEI a oN tae ee G * ya MERE VOLE OL AT OL oe La fertive toe Se Sol ‘ We Sa McElrath v. Kimmons, 146 Miss. 775, 112 So. “164; Compare Commercial Bank v. Evans, 145 Mies. 643, 112 So. 482, where the Court said: ‘‘The statute wrote into Owen’s bond the con- ‘dition it required to be in there. The statute is mandatory. The obligor and the obligee, as well as the sureties on the bond are presumed to have known what the statute requires when the bond :: was executed. The bond having been executed, and having accomplished its purpose, the law - will write into the bond what it requires should’ ‘be written. In other words, in the execution of a bond .by a @ontractor to ‘do public work, so far as the conditian of the bond: is conéerned, the law takes care of that, and makes it what it should be.’’ Stowell y. Clark, 152 Miss. - 32, 118 So. 370. In- Standard Oil Co. v. National Surety Co., 143° ~ Miss. 841, 107 So. 559, My. Chief Justice Smith oud: Tt j is true that the bond here in question does’. not provide on its face that the Clark-Hunt Con- tracting Company shall promptly make payment to all persons supplying laber or, material: for the work to be done by it for the drainage dis- ° trict, but it does expressly provide for the per- formance by. the Clark-Hunt Contraeting Com- pany of all ‘the matters and things’ contained, set out, or referred to in its contract with the drainage district, one of which is that it ‘shall discharge all anims for work done and ma. terials furnished in the prosecution of the work’,.. and shall furnish the drainage district with evi- dence that ‘all persons who have done work or re 18 furnished material under this contract have ° been fully paid for such work or material.’ The performance of this stipulation of the contraet is, therefore, one of-the obligations of the bond. . executed’ ‘by the Clark-Hunt Contracting Com- -pany to insure the performance by it of its con- tract. The statute does not require the obliga-— tion that such contractor shail promptly 7 payments, ete., to be written yn the, bond. simply requires such payments’ to be one of a obligations. of the bond.’’ (Italics ,ours.) So when the bond here sued. on was thus executed, . making reference specifically to “the obligations re- quired by the vontract, under this decision, these con- tractual obligations were integrated into the bond as definitely‘as if there placed at length. Insofar as a paid surety is eoncerned there is, with deference, by ‘*counsel’s concession of the i of such a law as to public contracts, an end of this the paid surety, the subcontractors in each case; with deference, from -a constitutional ‘viewpoint, occupy precisely the same position. , Further, this statute has been in effect nearly 15 years and has been so frequently enforced in Missis- sippi as to make-a conscious disregard there contracting insurance company an .impossibili | cially, when it came to fixing the premium ' supra. . As above pointed out, by Section 30 of Specifications (Tr., 16-17), dealing with the obligation of contractors and subcontractors, it was declared that he should igation, for quoad & , espe- Point I, ‘“pay the eeat of any required recordation of . the contract and bond and the cost of any re- _ quired cancellation of the same. He shall also 19 secure and pay for lien and privilege certificate which will be required of him before ‘final pay- ment is made under this vontract.’’ . ‘‘The bond shall also secure the Owner the faithful performance of the contract, in stri¢t accordance with plans and specifications; it shall protect the Owner. against all liens. or claims that may be filed against the building ac- cording to the Laws of the State of Mississippi, and shall provide for the payment of reason- ablé attorney’s fees for the enforcemenof the contract and the institution of eoncursus pro- ceedings, if such proceedings “ecome’ neces- sary’’ (Tr., 22). (Italies ours.) Of course tlie. Louisiana Statute, as law, had no extra-territorial effect, but privileges, as such, con- cursus proceedings, as such, and recordation, both of - the band and the contract, especially to ‘‘secure and pay for lien and privilege certificate * * * before final payment * " -under this contract,’’ im- ported, by agree ent of the surety, that obligation im- posed by law in Louisiana, which.in Mississippi be- ame a contractual obligation. Thereasto, Act No. 298, Laws of 1926, of Lotisiana, specifically provided by Section 2 that the owner was required to have a good and solvent surety and ‘‘the bond shall be at- tached to and recorded with the contract’, providing therefore, | Section 3 of said Act No, 298 provides: ) “Where the owner has required the bond herein provided, the said surety thereon shall be liable in solido with the contractor for all labor and materials used in said work of im- provements and the cost of recording valid liens . e, up to the amount of the bond, and the-cancella- tion and erasare of the inscription: of said con- tract, as hereinabove provided, shall not effect the liability of the said surety on said contract 3 ‘for such labor and materials, as to which labor. . dnd material-said surety shall be bound to the same extent as the said contractor, undertaker, master-mechanic, or engineer, or other person undertaking such work.’’ ~ Again, by Section 6, of said Act No. 298, in ease of an insvfficient bond, the owner was personally liable. Under Section 8 of*said Act No. 298— ‘*A building contract may provide for ‘partial payments asthe work progresses and any pay- ment made by the owner strictly in accordance with the contract shall absolve: him from fyr- ther liability, provided that he has exacted the hond and has recorded the contract and bond as required by this act.’’ Under Section 10 of said Act No. 298 the coneursus proceedings are provided for and thereunder. the at- - torney’s fee is fixed, but thereasto the subcontractors . are givén preference, it being provided: ‘‘Any surety so desiring may invoke the con- cursus proceedings herein authorized by proper proceeding in court andby depositing in court at the time of the filing of the proceeding the full amount of the bond, provided that after the case is at issue such surety may withdraw with the permission of the court all of the deposit made except sufficient to cover the claims made in the concursus and twenty-five per cent additional thereto. vin So, when appellant, a paid surety, had this contract executed in Mississippi, imported from Louisiana, he . So iaaiea aici adeiidiatinasicaiatelendibal erent ey a mM ow . . ’ og . , ‘ . “ { 21. ’ was well acquainted -with that thereunder required, and this Section, 30 (Tr., 17), in addition to the unan- swerable position taken by our own Supreme Court, and pointed out in our Motion to dismiss this appeal, demonstrating that appellant knew the possible lia- bility, and knowing, contr acted with reference thereto. Therefore, that here in issue is Section 3 of said Act (Code 1930, 29 76), whereunder: ‘‘TIn the event such bond does not contain any such provisions for the pay ment of the elaims of persons furnishing labor or material under said contract, such bond shall nevertheless inure to the benefit of such person furnishing labor or material under said contract, the same as if’ such stipulation had been incorporated in said bond,’’ & namely, a provision, “. ° **for tha payment of the claims af persons fur- nishing labor or material. " Pot rv III. Said Chapter 128, Laws of Mississippi, 1918 reo 2274-2281, Code 1930), does not violate the Federal Con- stitution. In ia, ‘2, S. F. & G. Co., 112°So. 469, 147 Miks. 335, MeGiow an, J.. reviewed the decisions, say- ing: } | ‘Counsel for appeHant really bases his con- tention that the statute is unconstitutional upon the theory that section 3 of the act (chapter 128, Laws of masietess of 1918), abridges liberty ¢ >. re 22 = of contract, aml cites Gibbs v. Talli ¥;. 133 Cal. 373, 635° P.-970, and the cases from that .court Ww hich follow it, to wit, Shaughnessy y. Ameri-: can Surety Co., 138 Cal. 043, 69 P. 250, 71 P. 701; Montague & Co: v. Furness, 145 Cal. 203, 78 P. 640; San Francisco Liimber Co. v. Bibb, 139 Cal? 192, 72 P.-964; id., 139 Cal. 325, 73 P. 864; Equitable. Lif Ins. Co: v. Stemmons (Tex. Civ. App.), 239 S. W. 1039; and he also relies © on Hess v. Deninan Co.. (Tex. Civ. App.); + 218 S. W. 162, from the Texas court... _ - “The Gibbs v. Tally Case, supra, is the lead- ing-case relied upon and urged by couppel for the position that the act here in question in un- constitutional. In that case there was a claim’ of materialmen against the owner. The statute applied alike to the contractor,and owner. The court said that it compelled the ovener to become - responsible for a liability he had not incurred, and whigh was not for his benefit; that it prac- tically Orbade him from improfing his prop-.. erty by letting a eontract unless he became liable therefor or furnished sureties who w ould be so liable. ‘The California statute above “cited required . that the contract, if rot filed, was. void, and the effect of the statute was to make the contractor * the agent of the owner, Counsel says this Calli- fornia statute is very similar to ours, but we are unable to trace any essential similarity save that it-requires-a bond to be taken, whereas our statute permits a bond to be taken by the owner. | ‘“‘The statute we have. under’ review does not require the owner to protect himself witli a bond. It only provides that, if- he takes bond, having put‘all the stipulations in the contract. he desjres, that the bond must-inure to the bene- - 23 | \/ _—. fit of the laborers and materialmen, not ih viola- tion ef the obligee’ s rights, but subservient thereto,. and we are ile to perceive’ that the . reqidiring of this stipulation in this bond. is ~ other than for the benefit of the.owner and _re- . quireg the contractor to do that which he was legally ‘and morally required: to do, pay his debts, and the surety, with the law staring him in the face, may or may not thus undertake the indemnity of his principal, for the surety’ 8 right to contract > not impaired nor is his liberty to contract abridged or interfered with. ‘“In the’ case of Hess v. Denman Lumber Co. (Tex. Civ. Apps, 218 S. W. 162, a Texas stat- ute providing for and requiring a bond to be taken by the ownet. from a contractor to secure performance of a building contract was declared unconstitutional, the court saying, m effect, in. that case, that the provisions of the Revised . Statute of 1911, art. 5623, as amended py Acts’: 1915, c. 143, requiring owner to contract with builder to give a bond conditioned as required by article 5623a as added by Acts of 1915, e. 143, was held void, being an inferference with con-. stitutional liberty of contract. Said statute spe- cifically. provided that the owner shall cause to: _be.executed a written contract for the erection, ete., and shall also cause to be executed and filed ‘with the county clerk, before the work is begun, a good and sufficient bond; and further provides that said bond shall inure to the bene- fit o aterialmen, laborers, and ‘the subcon- ag. regardless of whether or not they, are se@tred by | any lien. The court said: ‘« “But the law requires the owner -to contract with the contractor to give a bond. It is com- pulsory eontract purely. We think that it is ; . a ‘ - ; ; “PRIAR NE 28 TANS ty OS BCE ELLIE MINI 9 pix: Spee sone 24 beyond the power of the Legislature to require . an owner to contract with the contractor to give a bend, as done in this very act, because it is interference with the law of the liberty of con- .tract.. If the owner does contract to have the contractor give a bond, he is at liberty to do so ‘as a subject-matter of contract; but if* the owner does not so contract, a personal judgment cannot be rendered against him for not iat ao ing the bond of the contractor.’ “rt will be observed that this opinion is from the Court of Civil Appeals of Texas,.'Texarkana, and in the case of Equitable Insurance Co. v. Stemmons, 239°S. W. 1039, the Supreme Court of Texas denied a writ of error‘ to the Court of Civil Appeals, which had followed the Tex-* arkana court in Hess v. Denman in holding that the statute requiring the owner of the property to execute a bond was unconstitutional, and the declination by that court of the writ of error _ was tantamount to the approval of the decision rendered by the Court of Appeals in Fess v. Denman, supra, that the statute was void. * “The obvious distinction between‘our statute, section 3, and the. Texas statute, is that our Statute does not undertake, in any wise, to re- quire’ the owner to demand and receive-a bond for the performance of his contract, so that we -do‘not think the Texas ‘cases are authority upon which we could rely in this case. ‘‘On the other hand, the w lait of authority sustains the validity of this statute. In the case of Roystane y. Darling, 171 Cal. 526, 154 P. 15, an act, very much more similar to ours than’ the one considered in the Tally Case, was very ‘vigorously challenged and held to be constitu- _ tional by the California court, with the Tally _ Case, the Shaughnessy: Case, and the other cases _ : « RIAA REEL SRE RELL ONE EL OLDIE ELDEST ET LS ALI I EIS — - EB ~ ° 29 ° following the ‘Tally Case in mind,.and with ex- press reference thereto, and the statute of 1911, considered in the Roystone Case, contained. a provision for a bond to be furnished by the con-. tractor. to the owner. The court, speaking of this latter statute, says: aan ‘“-+) oor oa c 32 After a thorough réview of all cognate cases, Judge Lurton, later Mr. Justice Lurton, laid down the theories whereunder this legislation might ke constitu- tional thus: . ‘*Tn neither of these cases, though the amounts involved were great, was any constifutional ob- jection to the statutes giving the lien suggested, though very eminent counsel appeared in each. case. The constitutional validity of statutes giv- ing an independent lien has the support of most of the text writers. 2 Jones, Liens 286; Phil. Mech. Liens, See. 30; Boisot, Mech. Liens, Sec- tions 22, 23. Overton on Liens (section 553) has been cited as advancing a contrary. view. If we had doubt as to whether such statute was ‘due process. of law,’ or violated the funda- mental right of owning and enjoying property, or unreasonably restrained liberty of contract, we should be disposed .to yield to the current and weight of authority upholding such acts as valid and constitutional. .No court is justified in striking down an act of legislation, unless it is clearly satisfied that the act is in conflict with _ the organic law limiting the power of the legisla- . _ tive branch of governmert. Such statutes have met with the approval of. the legislative bodies of nearly’ every state in the Union, as well as of Congress, as indicated by the Act of 1833, con- strued in Winder v. Caldwell, 14 How. 434. They have survived assault whenever the ques-. tion has arisen, save in Ohio and Michigan, and ' to,a limited degree in Pennsylvania, and in a still larger number of instances have been en-. - - forced without question as to their validity. ~ “But the validity of-such statutes, need not “be rested upon mere authority. They find , ‘ PEPIN LI ae I I eI Te ee 33 sanction in the dictates of natura] justice, and ‘most often administer an equity which has recognitign under every system of law. That principle;is that every one: who, by his labor or -materials, has contributed to the’ preserva-: tion or enhancement of the property of another, thereby acquires a right to coimponsation. This strong natural justice has given rise to a va- _ riety of liens recognized by the- “common. law. Thus, without any agreement the common Taw gave to one who, by. his labor or expense, has _ made, preserved, enlarfed, or repaired a chat- tel, a lien thereon for his security,. which he may, however, lose if he surrender possession. So,. we find another illustration in “the lien given one who,-in the exercise of a quasi pub- a employment, is required to receive or per- form some service in respect te the thing upon which the lien is given. That the-owner who sells his ehattel shall not be required to part with it until the price is paid rests’ upon the justice of the matter, .and'‘not upon any agree- ‘ment. Sut the remedies prescribed by the comme. law by no means embrace the number- Jess instances i in which the inherent rigut of the matter requires that -a charge or lien should be recognized as arising out of the nature of the transaction, independently of any agree- ~ ment. That wide class of trusts arising out of the conduct of the parties, either with or without intention, but without express words of creation, which we eall constructive or im- plied trusts, rest upon the natural justice . _whjch will not permit one to retain that. which. in justice does not belong to him, and there- fore fastens upon the thing, or that into which 3l . ° y : ; ; a ——_—_ SLAM RATES PT Bn in, be ae NS aad aan iain QA PENI NA IB e ‘ ‘ 34 | oar it is traced, a. charge or lien in favor of the equitable owner. So, the vendor of realty may- ordinarily, without any express agreement, ap, ply the property sold to the payment. of the‘ os price. There are a large variety of cases where a lien has. been recognized as~arising out of the nature of the frangaction, although - there was no direct contractual relatidn be- tween the payties affected. ‘Thus, in-the mari- time law the last lien created by the master of . 9 a ship for supplies or repairs is entitled to & _ preference over prior liens; the principle being ° ‘that the common pledge has thereby been pre- served for the common benefit. So, he who rescues goods from capture or the perils of the sea has a lien thereon for his compensation. ’ . The meritorious character of“a claim often dis- . . places prior burdens, as in-the case of supplies >and labor furnished by a mortgaged railway company to keep it in operation, and preserve’ the property- for the benefit of. all interested. _ ¢©Whoever takes and holds possession of land. - - to which another has the better title is liable ner 5 ’ to the true owner for the rents and profits, and ro - no distinetion is recognizéd between a bona fide. ec : and mala fide possession. Greet v. Bidle, 8 "eee Wheat. 1, 74. But this was a harsh rule when _- applied to a case where. the rents and profits ) had been offset by lasting improvements, which had actually increased the value of. the land. ia dhe Courts of equity,’ therefore, soon applied the . ' principle that, where the owner..resorted to a - gourt:of equity: for an accgunt of rents and | ; ‘ profits, the permanent improvements should | _*. * “+ * offset the liability of the possessor if his posses- ~ | sion and improvements were in good faith, 2 Story, Eq. Jur., Sections 799a, 799b, 1237, 1239. © : 3 : 4 a ® ‘ r . : > os ‘ & - 35 , -“€In Bright v. Boyd, 1 Story, 478, Fed. Cas. No. 1,875, and same case in 2 Story, 605, Fed. Cas. No. 1,876, Justice Story laid down the broad doctrine that a bona fide purchaser, with- ‘out notice of defect in his title, who makes improvements upon the estate, has a lien upon the. estate for. the increased value, after ‘de- . ducting rents and profits; and a court of equity will enforce this,lien against the true owner who recovers the estate at law against such a . purchaser. This case has been adopted and ap- proved in Valles’ Heirs v. Pteming’s Heirs, 29 Mo.. 152, Associatton v. Morrison, 39 Md. 281; and Hatcher v. Briggs, 6 Or. 31, though it ‘can- _not be sdid to have received any very general . support, though often cited. The reason is doubtless found in the fact thatthe equities of bona fide purchasers of defective titles were so generally recognized as to result in statutes in _ most of the states, called ‘betterment’ or ‘occu- pant’ statutes, which provide that a bona fide occupant making lasting improvements in good — faith shall have a lien upon the estate recovered by the true owner to the extent that his im provements have increased the value of the\ ‘land. Though the operation of these statutes is to make the true owner pay for improve- ments made against his will, and -which he might not desire, the courts have sustained their. constitutionality, as giving remedy where before there had been none, thougk a strong equity existed. Cooley, Const. Lim. 486 et seq.; Brown v. Storm, 4 Vt. 37; Ross v: Irving, 14 IIt. 171; Griswold v. Bragg, 48 Fed. 519; Hunt’s Léssee- v. McMahan,,5 Ohio, 132;. Scott’ v.. . Mather, 14 Tex.,235; Davis v. Powell, 13 Ohio 308; McCoy v. Grandy, 3 Ohio St. 463; Bacon “oe ~ - 36 v. Cailender, 6 Mass. 303; Welch v. Wodsworth, 30 Conn. 149; Whitney .v. Richardson, 31: Vt. 300. The constitutionality of a similar Tennes- see act was denied in Nelson v. Allen, 1 Yerg. 376, but Chief Justice Catron, in a note says the question did not arise. ‘‘Not only was the equity so broadly dedlaved | and enforced by the civil law, but in that sys- tem of law very‘high consideration was given to all who had, by their contributions, benefited, - preserved, or enlarged the estate or property of anothe”; and, among creditors secured by a ~ common pledge or mortgage, those whose con- tributions were given and uséd for the benefit of the thing hypothecated were privileged, and, among this class, those whose contribu- . tions were last given and used had .the prefer- _ ence. Mackeldy, Rom. Law, 280, 281. ‘ 52 i In the instant case the Legislature of Mississippi has seen fit to enact the legislation ‘here under attack, and it was more familiar with the facts and circumstances: which surround the subject of bonds and building con-. tracts and with the necessities and océasion of the enactment of the. laws in question than can one be who is a stranger to the circumstances and facts surround. © - ing building operations in this State under the law previous to the enactment of the legislation in 1918. As held in Falbrook Irrigation District v. Bradley, 164 U. S. 112 at 160; 41 L. Ed. 369, this legislative de- termination of issues in question concerning legitimacy of the legislative object will not be disturbed by the» Court unless there has been a great abuse, and such’ determination goes beyond all reason. ‘“‘The people of California and the members of her Legislature must, in the nature of things, be more familiar with the facts and circum- stances which surround the subject, and with _ the necessities and occasion for the irrigation of the lands, than can anyone be who is a stranger to her soil. This knowledge and familiarity | must have their due weight with the State — _Courts which are to pass upon the question of public use in the light of the facts which sur- round the subject in their own State. ‘‘Mor these reasons, while not regarding the matter as coneluded by these various decisions, we yet, in the consideration of the stibject, ac- cord to and treat them with very great respect, and we regard the decisions as embodying the deliberate judgment and matured thoughts of the Court of that State on this question.”’ Falbrook Irrigation District v. Bradley, supra. | j ts 53 - So too, it has been held that the Legislature, in de- termining upon the passage of a law, may make in- vestigations which the Court: cannot. (People v. Smith, 108 Mich. 527; 66 N. W. 382 ; Morris v. Colum- bus, 102 Ga. 792, 30 S. E. 850; State v. Main, 69 Conn. 123, 37 Atl. 86. ) .A reading of the cases as pointed out by Mott in his work, supra, is to the effect that, during the second decade of the Nineteenth Century, the Courts concluded that if they were to properly judge the validity of the legislative object they must have some means of knowing the facts in the situation. Fre- quently these facts were local, and for the Courts to have an understanding of local situations was almost impossible. For that reason this Court refused to go behind the legislative determination of pool hall regulations in the year 1912 in the case of Murphy v. California, 225 U.S. 623; 56 L. Ed. 1229, the Court holding that where the statute prohibited pool halls this Court would re- . fuse to take up the question of whether pool halls were ‘detrimental to public morals and that that was for the Legislature to decide and that this Court cannot go behind their findings and inquire into local conditions. And, again, this Court refused to go into the ques- tion of regulation of competition to prevent unfair practices where the statute had prohibited sales at one place at a lower figure than at another where the pur- pose was to drive out competitors. (Superior Lum- ber Co. v. South Dakota, 226 U. S. 157; 57 L: Ed. 164.) | Shortly thereafter this Court laid down the doctrine that the burden of proof rests. upon those who attack the validity of the object of a statute, declaring that, a : ‘*The burden is on him who ateiies the legis- lation and it is not sustained. by declaring a liberty of contract. It can only be sustained’ by demonstrating that it conflicts with some con: _ stitutional restraint or that public welfare is .not subserved by the legislation.’’ ‘(Erie v. Wiliams, 233 U.S. (1914) 685 at 699, 58 L. Ed. 1155.) : Zo ) ‘‘Where the legislation has usage to support _ its position it is much stronger’’ (People ex rel. v. Murry, 149 N. Y. 367 at 376; 44 N. K. 3 —. v. Schweiner, 214 N. Y. 395; 108 N. E. 639). . | In Mississippi the Legislature had knowledge as to the abuses which had gone on in the building trade. and in the matter of the deprivation of rights of la- borers and materialmen in the assigning of the con- tract price by the chief contractor. These abuses were ,corrected by the Legislature in the legislation here under attack and the public need will be presumed by this Court, and the frauds which heretofore ran rampant throughout the State were blocked by the legislation now being sought. to be over- hrown. . _ Mr. Justice Clark :afftrmed the doctrine in the Chi- cago Billboard case when he declared that the Courts were disposed to favor the validity of laws relating to matters completely within the territory of the State enacting them, and it so reluctantly disagrees with the | local legislative authority, primarily the judge of the public welfare, especially when its action is approved by the high court of the State (Thomas Cusack v. Chicago, 242 U.S. 526, 61 L. Ed. 472). ah) ‘> | The doctrine was again affirmed in Hutchinson Ice Cream Company v. State, 242 U. 8. 153, 61 L. Ed. 217. And again in the Queens Gas: Company case, wherein the Court refused to review the facts, or even the reasonableness of an administrative order (N. Y. ex rel McCall, 245 U. S. 345, 62 L. Ed. 337). The same principle was reaffirmed by this Court by ' Mr. Justice Day in the municipal fuel yard case, _ Jones v. Portland, 245 U. S. 217 at 221, 62 L. Ed. 252, wherein he as the organ of the Court said: ‘‘While the ultimate authority to determine the validity of legislation under the 14th Amend- ment is rested in this Court, local conditions are of such varying character that what is or is not a public use in a particular-state is mani- festly a matter respecting which local author- ity, legislative and judicial, has peculiar facili- fies for securing accurate information.’’ Mr. Justice McKenna rested the case of Bunting v. Oregon in no-small degree on the same _ principles (242 U.S. 426, 61-L. Ed. 830). Mr. Justice Holmes in the case of Hebe Co. v.- Shaw, 248 U.S. 297, 63 L. ia. 256, said: ‘‘Tf the character or effect of the article so intended to be used be debatable, the Legis- lature is entitled to its own judgment and that judgment.is not to be superseded by the verdict of a jury, or, we may add, by the personal opin- _ ion of the: judges, upon the issue which the Legislature has decided.”’ The same proposition formed the chief justification given by Mr. Justice Day in upholding the non-parti- ‘san legislation of North Dakota, wherein the Court: | says: | 56 ‘*What was’ or was not a public use was a question concerning which local authorities, leg- islative and judicial, had special means of secur- ing information to enable them to form a judg- ment; and particularly that the judgment of -the highest court of the State, declaring a given use to be public in its nature, would be accepted ! by this Court unless clearly unfounded’’ (Green v. Frazier, 253 U. S. 233 at 242; 64 L, Ed. 878). It, therefore, must be concluded, that if presumption is to be engaged in to support the law and only clear and undemonstrated usurpation of power will author- ize’ police interference with legislative action (Green v. Frazier, 253 U. S. 233; 64 L. Kd. 878). Other cases in which the Courts have defetred to the Legislature are: Dominion Hotel Co. v. Ontario, 249 U. S. 266; 62 L. Ed. 597 (Mr. Justice Holmes déclared the 14th Amend- ment is not a pedagogical requirement of the imprac- ticable) page 268; U. S. v. Standard Brewery, 251 U. 8. 210, 64°L. Ed. 209; State v. Cantwell, 179 Mo. 245; 78 S. W. 569 affirming Cantwell v. Mo. 199 U. S. 602, 50 L. Ed. 329; N. Y. ex rel. v. Hesterberg, 211 U.S. 31; 53 L. Ed. 75; Parrott v. Benson, 114 Wash. 116, 194 Pac. 986; State v. Pitney, 79 Wash. 608 at 612; 140 Pac. 918; Securities Savings Bank v. California, 263 U. S. 982: 68 L. Ed. 301. : InU.8.F. 4G. Co. v. Celie States, 191 U.S: 246, 45 L. Ed. 246, it is said: . ‘*We find no difficulty whatever in answering this question in the negative. The rule of strictissimi juris is a stringent one, and is liable at times to work a practical injustice. “It is one which ought not to be extended to contracts not. ; — RESET ee ee 57. within the reason of the rule, particularly when the bond-is underwrittén by a corporation which has undertaken for a profit,to insure the obligee against a failure of performance on the ‘part of the principal obligor. Such a contract.should be interpreted liberally in favor of the sub- contractor, with a view of furthering the benefi- cent object of the statute. Of course, this rule would not extend to cases of fraud or unfair. dealing on the part: of a subcontractor, as was the case in United States use of Heise v. Ameri-’ can Bonding & T. Co., 89 Fed. 921, 925, or tos cases not otherwise within the scope of the undertaking. ‘*Bonds containing the covenant in question - are not common, though they have sometimes appeared in the state courts, and the construc- tion here given them has been getierally adopted (United States use of Snyder v. Hazard, 53 App. Div. 410, 65 N. Y. Supp. 1051), although these cases have generally turned upon the question whether the rights of the materialmen were affected by a change made in the contract by the ° principals. Dewey v. State, 91 Ind. 173; Conn v. State,'125 Ind. 514, 25. N. E. 443; Steffes v. Lemke, 40 Minn. 27, 41 N. W. 302; Doll. Crume, ‘41 Neb. 695, 09 N. W. 806; Kaufmann v. Cooper, _ 46 Neb. 644, 65 N. W. 796; Griffith v: Rundle, 23 ~ Wash. 453,55 L. R. A. 381, 63 Pae. 199.” Compare Pingrey on Suretyship & Guaranty, Sec. 112, p. 189; Doll v. Crume, 59 N. W. 806, 41 Neb. 635 ; Federal Union Surety Co. v. Commonwealth, 129-S. W. 335, 139 Ky. 92; Forburger Stone Co. v. Lion Bonding € Surety Co., 170 N. W."897, 103 Neb. 202; Standard ole 58 2 Salt & Cement Co. v. dies Surety Co., +158 N. W. . 802, 134 Minn. mi Further, ‘the Courts have been at pains’ rn hold that, ; _with a corporate surety, being thus paid, there must be proof of damage before discharge. Herein hereof” ‘there is none. Atlantic Trust & Dep. Co. v. Laurin- burg, 163 Fed. 690,695; City of Topeka v. Federal Union’ Surety Co., 213 Fed..958, 963; Maryland Casu- alty Co. v. Fowler, 31 F. (2d) 881, 884; Atlas Assurance Co: v. Lawrence, 34 Fed. (2d) 401, 404; West v. Detroit Fid. & Surety Co., 225 N. W. 675, 118 Neb. 554 ; Phila- delphia v. Fid..& Dep. Co., 80 Atl. 62, 63, 231 Pa. 208; | U.S. F. & G. Co. v. United States, 178 Fed. 692 ; City of Montpelier v. National Surety Co., 97 Vt..111, 122 Atl. * _ 488; People v. Traves, 154 N. W. 130, 188 Mich. 415; - .. American Surety Co. v. Smith, 130 So: (Fla.) 442; Johnson v. Casualty Co., 1383 So. .(Fla.) 850. Note that this foreign Company was at pains, directly in the teeth of our statutes, to stipulate that ‘‘no ac- tion, suit or proceedings shall be had or maintained against a surety under this bond ‘unless it shall be — brought or instituted and process served ‘upon the surety within six months, after. the contract and i in no event after six months subsequent to the date, time or . period fixed in the contract for the completion of the work specified, therein’’ (Ty. 20, Par. 9). 7 Section 2294, Code 1930; Lasky v. Southern Express: » Co.492 Miss. 268, 45'So. 869; Standard, etc., v. Broom, 111 * Misa. 409, 71 So. 653 ; Sovereign Camp, etc., V. - Miller, 125 Miss. 502, 87 So. 892; Sifiyvesant v. Smith, 135 Miss. 585, 99 So. 575. a % + 59 , * Counsel’ s declaration that ‘‘the parties were stadi- : ously attempting ‘to draw.a special contract which would not impose upon the surety the liability imposed under Section 3 of the Statute’’ is not accurate, for - this bond, as is, with this contract, as is, eomes from Louisiana where the obligation to pay is as.above i in-, dicated. ‘If, for the purposes of this argument, we should ad- mit that the bond here is such a bond as was contem- plated by the statute, the fallacy in the argument for appellant is that it fails to note that, quoad the. land- ‘owner, the obligation to pay the materialmen could not de by the landowner defegted, nor could it be defeated by the contractor; there Were two independent obliga- tions, the one to the materialmen that ‘‘such bond shall also be ‘subject ’ the additional obligation that the .contractor *** “*- shall promptly make payments to all persons’ furnishing: labor ‘or. material under said. contract ; the other, in thé event such.bond does not contain any such provision for the payment of the . claims of persons furnishing’ labor or material under - such contraét, such bond shall nevertheless i inure to the benefit of such persons furnishing labor. or materials under said contract, the same as if such stipulation had been incorporated in said bond,’’ namely, the stipula- tion to make payment, which stipulation as an inde- pendent covenant has here been established to. exist_ under the law of the State of Mississippi. . This statute, as written, was construed in this case and all herein held was that this particular bond, with the particular and express provision there inserted did constitute such a bond as was contemplated whereon 60 the materialmen might recover. The court has not as yet denied the right to the landowner to take a bond, but this particular landowner did take this bond, and in taking, thought, as his bill averred, that he had that specifically which the Supreme Court held he had re-’ ceived. The only attempt at denial is as to a surety, who signed the bond, giving. the wight assumed by the landowner to be given: , * Counsel is beside the mark in claiming that the land- owner here did not understand that under this bond ‘the obligation to pay existed. Complainant further averred and charged that the parties herein named as furnishing material. in con- nection with said project No. 640 to said contractors ‘chave not been paid and are entitled to recover ‘the amount owing to them by said contractor and to have judgment for. said amount\on said bond,’’ but in the alternative, if the ybond be not such.a performance bond, then to have the assignments: to the. New Orleans Bank vacated. The ajfspellant is in serious error when it seeks to assert that the landowner here did not intend to contract and did not believe that it - had contracted for a performance bond for the pay- ment of the materialmen. The original bill here filed . so shows. x : | The amount of the bond in this case is, $316,822.00, the precise amount of the contract, and counsel is in ©, error in asserting that more than the amoynt of this bord might be recovered. Compare Section 758, Code 1930; Parsons, etc., v. Furr, 110 Miss. 795, 70 So. 895; National Surety Co. v. Lee, 125 Mé@ss. 517, 88 So. 7. 61 Counsel's ‘contention that there was an express con- dition that it should not inure to the Lenefit of mate- -rialmen, the statute was unconstitutional for its abridgment of the liberty of contract (Brief 19), is answered by the observation of Leslie Lumber & Sup- ply: Co. v. Lawrence (Ark. 1928), 11 8S. W. (2d), 458 : “This provision is plainly in conflict with the condition in the bond just discussed and with the law applicable thereto as stated. By the first condition the: bond company has provided - protection for. a class of persons who, under the law, may sue; yet by the last provision it is pro- vided they may not sue. Both cannot stand. Surety contracts of this character, with a paid | surety, are regarded as in the nature of insur- ance contracts, and will be most/ strongly: con- strued against the surety. Union Indemnity Co. v. Forgey & Hanson, 174 Ark./1110, 1115, 298 . S. W. 1032, and cases cited. Applying this rule to the contract in question, the third clase in - the bond must give way to the first and bel even no force or effect.’’ It is further answered by a correct bikenpsiutiaiiiins of the bond. The facts presented to the . Supreme Court of Mississippi are not presented to this Court insofar as these appellees are concerned; the record, as now presented, nowhere shows that the owner paid the contractor in notes instead. of in é¢ash, and that question cannot ‘be here argued, especially, as no dam- age was shown to haye therefrom resulted. , Counsel is in error in stating the extent to which the Supreme Court’ of Mississippi has limited the rights of the respective parties to this litigation. It has gone P + Rete. Rec Beste ‘ey, 1%) NS 62 no further than to determine this particular case un- ‘der this particular bond, and thereby there has been no ruthless disregard of private rights. Counsel’s. dissertation as to who can give these bonds, and the number of contractors, With deference, , has no foundation in fact, for that wherein Mississippi was interested was, when the material of its citizens was placed upon land, and thereby the value of such land was enhanced, that the surety for the performance ~ of the eontractor should be responsible to the mate- rialmen. Being obligated to perform the contract; should the principal therein fail, each contribution of material made was an advance to the surety whereby that for value by the surety guaranteed, was in part done, and that now herein Sought is the ungracious contention that, when the materialmen have by, their - contributions aided the performance of that guaran- teed by the surety and wherefor the surety was uncon- ditionally bound, there will be to them no compensa- . ‘tion for that from them thus taken by the surety. As demonstrated by Mr. Justice Lurton in the Great “Southern Hotel Company case, supra, approved by this Court in 193 U. S. 532, 48 L. ed. 778; responsibility is unquestioned and imposed upon this surety. who thus used for its exoneration, the material contributed by these appellees. Had they not. contributed this mate- rial—this labor, then to perform appellant would of necessity have been compelled to go elsewhere thus to -> obtain that so thus requisite, and when under the agreement appellees had so thus to it furnished value, it was competent for the Mississippi Legislature un- der the precise ruling approved by this Court to im- on 63 - pose therefor an obligation on that surety which had undertaken to do that which was thus aided, abetted— rendered possible, by the material belonging to — lees. ‘The statutory requirement existed aren the ay lant executed this bond and the law of Mississippi, as thus existent, was thereby thereinto written and not ‘ oly written, but agreed to, and having been agreed to, no complaint may be thereof made. Farmers & Merchants Bank v. Federal Reserve Bank, 262 U. S: - 660, 67. L. ed. 1182; Pennsylvania, etc.; Co. v. Gold Issue, etc., Co., 248 U. S. 93, 61 L. ed. 610. Counsel idatun truly: ‘‘The surety had the right to come in and complete the work.’’? (Brief page 20.) This was its obligation. When.in order to fulfill that _ obligation the appellees contributed their material, | they thereby, quoad the surety furnished value for the obligation now exacted, and if.it be that at a subse- quent time, without fault upon the part of these ma- terialmen, there was a failure by the contractor to do that which he should quoad the surety, therefore these appellees are not in any way therefor responsible. Asheville Supply & Foundry Co. v. Catawba Const. Co, (N. C. 1930), 151 S. E. 93; Graphic Arts Bldg. Co. v. Union Indemnity Co., 163 La. 1, 111 So. 470. When one of two innocent persons must suffer, the law may direct which will bear the burden, and this election so thus made in this cause by the Statute of Mississippi is reasonable. -These appellees are not interested in anything other or further than that under and with. the consent of owner, contractor, and appellant, they furnished material to the extent wherefor a decree - 64 was rendered. That’ material was integrated‘into a bnilding -which the surety was bound to see completed and to save harmless the landowner. Therefore, to the surety that thus done by appellees inured, and the - point here at issue is may Mississippi exact of the appellant, thus receiving, value for that thus received. As said in Lockland Lumber Co. v. Robinson, 157 ‘N. E. (Ohio) 376, mechanics lien statutes do not cre- ate rights but merely afford additional remedies for - ‘rights in equity theretofore existing. ‘‘Natural equi- ties in favor of materialman as creditor of the con- : tractor give reason, and. constitutional validity to such a provision.”? _ ~ This ‘Court cannot consider the cunstitationsl right of the landowner; he does not complain, but avers the obligation of the surety to do that by the Supreme Court. of Mississippi to him adjudged to have been. done. The surety lias our goods towards the fulfll- ment:of his contract, rendered immovable and impos- , . sible of being again restored, and it is’ just, having © ~ agreed as he here did to pay, that the statute make him’ do that which he has covenanted. ' he liberty of contract is not here sought to be taken away. We subscribe to every decision cited _, by appellant from this Court; but that which appellant overlooks is that, while there is a liberty of contract, _ when a statute, as heré, deals with the doing of jus- tice, and only vouchsafes, as -against one bound to construct a building, a decree for that contributed without fault by the appellees, that thereasto the . surety so thus giving bond has no cause to complain. = “y a ee _ 65 As pointed out in Williams v. Riley, 280 U. S. 78, 80, | 74 L. ed. 175, 178: | . «The Federal courts have no power per se to review and annul acts of state legislatures -upon the ground that-they conflict with the Fed- eral or state Constitution. ‘That question may be considered only when the justification for , some direct, injury suffered or threatened, pre- ' genting a justiciable issue, is made to rest upon such an act.’ ”’ Ohio Oil Co. v. Conway, 281 U. S. 46, 74 L. ed, 775; ‘ White v. Johnson, 282 U. 8S. 367, 75 L. ed. 388; -Ameri- can Bond & Mortgage Co. v. United States, 282 U. S. 374, 75 L..ed. 395; and as. pointed out, constitutional objections to a statute, which may exist, if given a wider application than it is necessary to give in the decision of this particular case, is not open to consid- eration herein. Young Co. v. McNeal-Edwards Co., 283 U. S. 398, 75 L. ed. 1140. .As pointed out in State Board of Tax Comrs. v. Jackson, 283 U. S. 527, 75 L. ed, 1248, tlie fact that a statute discriminates in favor of a certain class does not make it arbitrary if the discrimination is founded upon a reasonable distine- : tion or if any state. of facts reasonably can be con- ceived to sustain it. - Here, with the receipt by the appellant of appellee’s property, donated to perform its contract, appellant may not, having that property now’ in its possession, refuse to pay the reasonable value thereof. The fact that the statute may work a pe- -culiar personal hardship does not render it unconsti- dl \ Fe simp Dest MAINES ITO ENR BIN ASD ENO A GEL ILE TANT RS ALLEL SLE AEDT ERI 66 tutional. Bain Peanut Co. v. Pinson, 282 U. S. 499, 75 L. ed. 482. That the State, in the matter of protect- ing materialmen, has a broad discretion in the exercise of its power of regulation must be admitted. Smith v. Cahoon, 283 U. S. 553, 75.L. ed. 1264... — , In O’Gorman v. Hartford Fire Ins. Co., 282 U.S. 257, 75 L. ed. 327, the Court declared: ‘‘The business of insurance is so far affected ~ with a public interest that the state may regu- — late the rates (German Alliance Ins. Co. v. Lewis, 233 U. S, 389, 58 L. ed. 1011, L. R. A. 1915, 1189, 34 S. Ct. 612), and likewise the _relations.of those engaged in the ‘business (La _ Tourette v. McMaster,’ 248 U. S. 465, 63 L. ed. 362, 39 S. Ct. 160; Stipcich v. Metropolitan Le Ins. Co., 277 U. S. 311, 320, 72 L. ed. 895, 899, 48 S. Ct. 512). Compare McCarter v. Firemen’s Ins. Co., 74 N. J. Eq. 372, 382, 29 L. R. A. (N. S.). 1194, 135 Am. St. Rep. 708, 73 Atl. 80, 414, 18 Ann. Cas, oe. ** ”* ‘‘The statute here questioned deals = a subject ¢learly within the scope of the police . power. We are asked to declare it void on the ground that the specific method of regulation prescribed is unreasonable and hence deprives the plaintiff of due process of law. As under- lying questions of fact may condition the con- stitutionality “of legislation of this character, the presumption of constitutionality must pre- ‘vail in the absence of some factual foundation of record for overthrowing the statute: It does not-appear upon the face of the statute, or from any facts of which the court must take ‘judicial . ° notice, that in New Jersey. evils did not exist . % , ee eR GT a GL Ig Sela Rae eg Wp IRE Fly mL he . hose eu aie : ? ’ x . 67 in the business of fire insurance for which this _ statutory provision was an appropriate remedy. The action of the legislature and of the highest court of the state indicates that such evils. did exist. The record is barren of any allegation of facts tending to show, unreasonableness.’’. The principle here involved, namely, the obligation of the surety to pay when the property of the appellees was devoted to that wherefor the surety was bound, _ was recognized. and held constitutional in Staten Island Rapid, etc., v. Phenix L, Co., 74 L. ed. 126, 281 U. S. 28. ‘The business of appellant being affected with a public ‘usg, even under the 5th Amendment, the regu-. lation of charges did not deprive it of liberty or prop- erty without due process. Tagg Bros. v. United States, 280 U.S. 420, 74 L. ed, 524. The landowner may well object to living in a house which was byilt.with materials that were not paid \.. for. This was recognized by this Court in the Great Southern Case, and furnishes an additional reason why this act is constitutional. - Appellant, having in possession the materials of appellees in virtue of installation in that wherefor ap- ‘ pellant was normally bound, is estopped, by this ‘con- structive reeeipt, which in the normal travel advan- . taged it, to deny therefor responsibility when the ap- pellees are without fault. Compare Hightower vy. +’ Bailey, 108 Ky. 198, 56 S. W. 147, 22 Ky. Law Rep. 88, . 49 L. R. A. 255, 94 Am. St. Rep. 350. Under Section 2, Chapter 128, Laws 1918, if the principal contraetor desires to ‘‘assign, transfer, or otherWise dispose * * * of the contract or pro- 68 cee ese thereof, to the detringint or en of: the subcontractor, materialmen or laborer,’’ then he may not do so, unless the bond ‘provided is given. If the master workman or contractor does not assign, transfer or otherwise dispose of either the contract or its proceeds to the detriment or prejudice of the subcontractor, materialman or laborer, he may xon- tract as often as he pleases, without bond; that is to say, if he forthwith applies the total proceeds of the * contract to the liquidation of his individual liability to subcontractor, laborers, materialmen, the statute does not affect him in any way. It is when he desires to exercise a right, viz., to. assign, transfer, or otherwise dispose of these amounts to the prejudice or detriment of those justly entitled thereunto, that the statute says, in order to obtain this right, he must execute a bond to ‘protect those justly entitled. The United States has adopted precisely this same protection. United States v. American. Surety Co., 200 U. S. 200, 50 L. ed. 441. The Supreme Court of Mississippi gives the same effect to our statute. Ala- bama Marble Co. v. U.S. F. € G.Co., 111 So. 573, 146 Miss, 414. _ In Mankw v. United States,-215 U. 8. 536, 54 L. ed. 317, it was held, specifically, to be constitutional to im- pose this. liability in favor of subcontractors, even. though the full amount due had been paid. ~ In Hlinois Surety Co. v. Davis Co. .. 244 U.S. 380, 61 L. ed. 1211, the Court said: ‘‘As the basis of recovery is supplying labor and material for work, he who has supplied , . es ee ee Sere Co kaa ¥ . - 5 , hs sh: sdenie dkeiemeddcns Wile aati PPP EMT DS . , { Ma 69 these to a subcontractor may claim under the bond, even if the subcontractor has been fully paid. Mankin v. United States, 215 U. S. 533, 54 L. ed. 315, 30 Sup. Ct. Rep. 174..? ‘Counsel ‘seeks to distinguish ihese cases on,--the ground that the United States, or the state, has plen- ary power to prescribe conditions of contract when * the sovereign is contracting; but, insofar as the con- *tractee is concerned, furnishing materials for the building where the land is owned by other than the con- tractor, the right, quoad contractee, is precisely sim- ilar to.that here involved and here sustained. Dickson: _v.U. 8S. F. & G. Co., 117 So. 248, 150 Miss. 864, supra. Compare A’tna Casualty & Surety’ Co. v. U. 8. } Gypsum Co., 39 8. W. (Ky.) (2d) (1931) 234 (a com- panion case which was followed in Rafhsey v. Vin- cennes Bridge Co., 283 U. S. 796, 75 L. ed. 1420), wher@ it was said: ° - “Tt is argued that the distinction in the de- cisions depends upon.the character of the sub- ject-matter of the contract, and, when the con- . tract concerns a public improvement, as here, it will be presumed that the bond was intended for the benefit of laborers and materialmen. It is said that they are unable to assert a lien on public property, and for that reason the bond is provided to supply the rights ordinarily given - by lien laws. In amplification of the argu- ment, it is insisted that, when the subject-matter of a contract is a private structure, the lie laws of the state afford ample remedy, and it is unnecessary to resort to a bond for their pro- tection. But such distinction is artificial and > ie Ata tremha accidental etanee of the ‘Cases. ” * ry _ * . “The same motive that gitinptn’- the pas- sage of material and labor lien laws is sufficient ‘to suggest the expediency of’a surety contract ~~ for the benefit of those who perform laboror furnish material. A private owner may well de- - sire to be free from the vexation of claims or suits, and to that end may require a bond to _ protect him against vexation as well as liability. It is conceivable that. a private owner. might wish not to have upon his property a structure composed of materials or erected by labor not - paid for by the contractor. So, if the contract is sufficient in its terms to manifest: an intention that the contractor shall pay for the labor and material, it is a valid obligation and enforce- able in favor of any pérson “for whose benefit at +. may have been executed. as The rule is ‘that if it were constitutional: to insert the name of thése appellees as payees, then it would be constitutional to insert ‘the’ provisions under which the obligation was to them payable, when, ‘voluntarily, this corporation made.the obligation for a valuable . consideration. “Philip Carey Co. v. Maryland Casualty Co ., 206 N. W. 808 (Iowa, 1926), where the court said: (3) Where a statutory bond is given, the ’ provisions of the statute will be read into the “ bond. Asberg v. Ass’n, 143 Minn, 354, -173 N. .W. 708; People v. Surety Co., 211 N. Y. 107, 105 N. E. 99; School District v. Construction -Co., 87 Or. 132, 169 P. 507, 788; Nye-Schneider- Fowler.Co. v. Roeser, 103 Neb. 614, 173 N. W. 605; United States ex rel. Hoffman.v. Quincy, ee 4 Wall (71 U. S. 535, 18 L. ed. 403) ; Northern Pacific R. Co. v. Wall, 241 U. 8. 87, 36 S. Ct. 493, 60 L. ed. 905; Gill. v. Paysee (Nev.) 266 P. - 302; Forgarty v. Davis, supra; Faurote v. State, » 110 Ind. 463, 11.N. E. 472; Lowe v. City, 4 Okla. 287, 44 P. 198; Iddings Co, v. Construction Co., 104 Neb. 124, 175 N, W. 643, again, and aside: from this well recognized rule, it is the plain requirements of the statuté itself that the pro-— visions and requirements of the act shall not sions in the bond.”’ Compare Peoples v. Metropolitan Surety Co., 105 be modified and annulled by statutory provi- NE. 99 (1914, Nu Y.); American Surety Co. v. Small. Quarries, 120 S. E. 617 (1923 Ga.). Consider Section 2888 of Code Mississippi 1930, pro- . . viding : “ one nePEDE AAI WL EER LDR APY — . 85 the original figure of $316,822 to a figure of ap- proximately $60,000, the aggr egate of all claims filed against the surety. The law as announced in the Nalle case, supra, is in line with the holdings of this Court in Daniels v. Tierny, 102 U.S. 415, 26 L. Ed. 187, which action was on a bond authorized under the Virginia Secession Ordinance, which provided that by giving a bond the © debtor might prevent the enforcement of execution against him. The Court in the case cited pronounced the statute void, but held that inasmuch as the obligor had enjoyed its benefits by obtaining a stay of execu- tion he was estopped‘ to question its validity. The language therein used is peculiarly applicable here: ‘‘It is well settled _as a general proposition, ~ subject to certain exceptions not necessary to be here noted, that where a party, has availed himself, for his benefit, of a constitutional law, - he cannot in a subsequent litigation with others not in that position aver its unconstitutionality _ as a defense, although such unconstitutionality © may: have been pronounced by a competent judicial tribunal in another suit. In such case the principle of estoppel applies with full force and conclusive effect’’ (Daniels v: Hierny, supra). ‘ See also Stevenson v. Morgan, 67 Neb. 207; 93 N. W. 180; 108 A. S. R. 629. | See also U..S. F. & G..Co: v. Ettenheimer; 70 Neb. , 144; 97 N. W. 227; 113 A.S. R. 783. To the same effect it was held in Douglass v. Un- »mark, 77 Conn. 181, 107 A. S. R. 25, that an unsuccess- ‘ 86 ful plaintiff in replevin who has seized goods belonging _to the defendant is estopped, together with his bonds- men in an-action upon recognizance, from alleging, or being benefited bv, the fact ‘that it was entered into. before a magistr ite other than the one who signed the writ of replevin. The bond in question here was a 1 voluntary bond and is good at common law for the reason that there was a valid considerafion therefor and that there is noth- ing repugnant.to the letter og the policy of the law ° - of Mississippi or of the Constitution of the = States in the giving of this bond. ; a Moses v. U. S. 166 U. S. 571, 586; 17 itn, Ct. . ; 41 L. Ed. 1119 we decision of the Supreme Court & ‘Miniinsiael in this. cause here can, therefore, be upheld on the grounds that the bond in question is a common law bond, regardless of the constitutionality or unconsti- tutionality of. the statute, and the question of the legality. of the statute need not be decided in order to ~ reach the conclusion already arrived at in this case. In conclusion, on this proposition, we have to say that counsel for appellant state in their brief that the record in this case shows that the appellant, surety company, sought studiously to avoid giving the statu- tors bond under Chapter 128 of the Laws of Missis- sippi of 1918. _ We submit, on the contrary, that the record in this case shows that such was not the intention of the owner of the building, the contractors, Burkes, or of Hart- ford.Accident & Indemnity Company, the surety, but, the contract documents controlling the recitations in ~ the bond, it is shown clearly that it was the intention aN ——— - a 5 — ee a7 | Wi eae ok F of the partiés, the owner, the gontractor, Burkes, and the surety, Hartford Accident & Indemnity Company, to’give the kind of bond provided for under the laws of the State of Mississippi.. Furthermore, with deference to this Court, these are questions of fact with which this- Court will not con- cern itself. The faets-were submitted to the Chancery \ Court of Adams County, Mississippi and by it adjudi- “\cated adversely to Hartford Accident & Indemnity | ‘Company, and this finding of fact by the Chancery Court of Adams County, Mississippi has been upheld by the Supreme Court of the State of Mississippi. ~ No testimony taken on the trial of this cause is before this Court in the Record whereby the decision - of the lower court can be gainsaid. Point V. As to the application by the tna Casualty & Surety Company to become a joint appellant, a motion to dis- - miss on this specific ground was made by appellees and served upon appellant November 30, 1931. After this motion was so thus made, the tna Casualty & Surety Company seeks to become a joint appellant. It may not do so, iterating the grounds of the maesen, because: (A) The Supreme Court of the State of Mississippi, wherefrom this appeal was taken, has not granted to this Company an appeal from the decision there made. (B) The time for taking such appeal has now long since expir ed, and the statute has barred the right so thus to appeal; and having been barred, if the appel- lant is allowed to join in the appeal, the appellees de- _ sire when and if it is so thus allowed to interpose a ? . ce PMRILTI TED er gO Sappintato 88 ples. sf the Statute of Limitations in this Court in vir- tue of the expiration of the time; the judgment of the Supreme Court of Mississippi having been rendered against the Avtna Casualty. & Surety Company on Feb- ruary 2% 1931 (Tr., 74), and the suggestion of error having been overruled on June 15, 1931. The sugges-« tion of error the tna Casualty & Surety Company . did not join, it being the suggestion of error only of the Hartford Accident & Indemnity Company, filed March 21, 1931 (Tr., 83). Therefore, insofar as the _Etna Casualty & Surety Company is concerned, this _ judgment became final gt the date first mentioned, and with reference thereto naught has been done from that time ‘until now, and it is now too late to appeal to this Court therefrom. : WhHeErerore we respectfully submit this cause should be affirmed. ‘ Respectfully, L. T. KENNEDY,: _-W. A. GEISENBERGER, GERARD BRANDON, G. H. BRANDON, . C. F. ENGLE, . ‘S. B. LAUB, E. H. RATCLIFFE, JOSEPH FE. BROWN, W. C. MARTIN, -MARCELLUS GREEN, GARNER W, GREEN, Attorneys for Appeliees. By GARNER W. GREEN. Of Counsel : ; age, , BRADLEY BALDWIN, ALL & WHITE. . 89 Service of the foregoing is hereby acknowledged this December 21, 1931. . , . ARTHUR G. POWELL, W. CULON WELLS, L. BARRETT JONES, Counsel for Appellant. (1495) | \ 4 . ’ s ef « ; SEER P RITA MRR OCD SYREN RRR LARS TT IE PR PAINTER Sys NTT ~ ee . i ret anon = \ --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_0141%3A09. Public record. Not legal advice.