Salt Lake Electric Supply Co. v. West, 54 Utah 564.

SALT LAKE ELECTRIC SUPPLY CO. v. WEST et al. (BOARD OF EDUCATION OF SALT LAKE CITY, Garnishee).

No. 3346. Decided June 30, 1919. (182 Pac. 215.)

The

1. MUNICIPAL CORPORATIONS-PUBLIC IMPROVEMENTS-CONTRACTSREMEDIES OF SUBCONTRACTORS-POWER OF LEGISLATURE. Legislature having authority to create or grant remedies against public corporations in favor of subcontractors engaged in public contracts, it likewse has power to repeal or take away such remedies, provided that in so doing it does not violate an existing contract or change the substantial rights of the parties.1 (Page 571.) CONSTITUTIONAL

2.

3.

PEAL.

LAW-MUNICIPAL

CORPORATIONS-PUBLIC IMPROVEMENT CONTRACTS-SUBSTITUTED REMEDIES-EFFECT OF REThe repeal of Comp. Laws 1907, section 1400x, authorizing subcontractors to jointly sue the contractor and the public corporation for labor and material used in construction of a public building and amendments and additions thereto made by Laws 1917, chapter 36, operative March 5, 1917, does not deprive a materialman of his rights under his contract made prior to the repeal, the amendments and substituted remedies provided by chapter 36 not diminishing such rights, but protecting him therein and at the same time saving the public corporation from loss or inconvenience in being made a party defendant in actions against the contractor. (Page 572.) SCHOOLS AND SCHOOL DISTRICTS-PUBLIC IMPROVEMENT CONTRACTS-RIGHTS OF SURETIES-ASSIGNMENTS. A contractor, re constructing a public school building, who has given the public corporation a bond covering payment of labor and materials. may, after Laws 1917, chapter 36, repealing Comp. Laws 1907, section 1400x, became effective, assign to the surety any amount due from the public corporation under an agreement with such surety providing therefor, and on a suit by a materialman against the contractor wherein the public corporation was garnished, the surety had a right to intervene under its claim that no liability attached to the assigned funds, chapter 36 having substituted substantial remedies for the enforcement of the materialman's right under the former statute. (Page 572.)

1 Kirkman v. Bird, 22 Utah, 100, 61 Pac. 338, 58 L. R. A. 669, 83 Am. St. Rep. 774.

Appeal from Third District.

Appeal from District Court, Third District, Salt Lake County; P. C. Evans, Judge.

Action by the Salt Lake Electric Supply Company against Con West and the Board of Education of Salt Lake City, wherein the United States Fidelity & Guaranty Company intervened. From a judgment sustaining a demurrer to the complaint in intervention and dismissing the complaint, intervener appeals.

REVERSED and REMANDED, with directions.

Booth, Lee, Badger & Rich of Salt Lake City, for appellant.

Hutchinson & Hutchinson of Salt Lake City, for respondent.

APPELLANT'S POINTS.

Where the legislature substitutes a new method of substantially equal efficacy for enforcing a right or leaves standing one good method out of two theretofore existing, such substitution or elimination of an alternative remedy is constitutional. Bangor v. Goding, 35 Me. 73.

Our own court has held that a remedy may be changed within the legislative discretion. Kirkman v. Bird, 22 Utah, 100. 58 L. R. A. 669; approved, Folsom v. Asper, 25 Utah, 299, 308.

RESPONDENT'S POINTS.

There seems to be no question as to the validity of respondent's form of procedure in this case as appears on page 3 of the Abstract of Record. Investment Co. v. Hechler, 44 Utah 64; Dayton v. Free, 44 Utah, 221.

The lien upon the moneys in the hands of the Board of Education of Salt Lake City which we are entitled to under Section 1400x was a vested right and cannot be annulled by

Salt Lake Electric Supply Co. v. West, 54 Utah 564.

legislation subsequent to the date that such right accrued. Garneau et al v. Port Blakely Mill Company, 36 Pac. 463.

GIDEON, J.

On July 19, 1918, plaintiff instituted this action against the defendant West to recover judgment for certain material and labor furnished the defendant on or about January 1, 1917. The material was used in installing an electrical system in a public school building belonging to the garnishee, Salt Lake City school board. At that time West had a contract with the school board to repair or reconstruct the building in question.

At the date of filing the complaint the necessary affidavit and undertaking were filed to entitle plaintiff to a writ of attachment. The writ was issued, and thereafter a writ of garnishment was served on the board of education of Salt Lake City, garnishee. That board filed an answer. The appellant, United States Fidelity & Guaranty Company, petitioned for and was granted permission to intervene in the garnishment proceedings. To its complaint in intervention the plaintiff demurred. The demurrer was sustained. The intervener refused to plead further, and judgment dismissing its complaint was entered. From that judgment the intervener appeals, and assigns as error the sustaining of the demurrer.

It is necessary to state briefly the contents of the complaint in intervention.

It is alleged that on November 28, 1916, the garnishee school board entered into a contract with the defendant West by which West undertook to reconstruct one of the public school buildings of Salt Lake City; that at the same time, and as a part of the agreement, the defendant executed a bond to the said board of education in the sum of $10,500, with the appellant as sole surety, with the obligation, among others, that said West would "promptly make payment to all persons supplying labor and material used in the prosecution of the work provided for in said contract." Copy of the

Appeal from Third District.

bond is set out in the complaint. It is further alleged that as a part of the agreement for the execution of the bond West made a written agreement of indemnity by which he assigned and transferred to the guaranty company all his right, interest, etc., in the tools, plant, and equipment used in the reconstruction of the building, and also transferred and conveyed to the guaranty company all deferred payments in the hands of the board of education. The assignment of such deferred payments should be in full force and effect as of the date of its execution if West failed or was unable to complete the work in accordance with the contract, or in the event he made default in carrying out the terms of the contract. It is also alleged that, on or about May 1, 1917, West defaulted in the completion of the contract, abandoned the same, and failed to pay certain materialmen and laborers who performed work and furnished material used in the reconstruction of said building; that one of the materialmen on or about December 1, 1917, instituted an action in the district court of Salt Lake county against defendant West and against the appellant as surety, in which action other materialmen and laborers intervened. Thereafter the intervener, appellant herein, paid claims to laborers and materialmen amounting in the aggregate to $6,943.66. It is further stated that on or about June 7, 1918, as part consideration for the payment of the claims aforesaid, the defendant West executed and delivered to the guaranty company an additional assignment of all moneys due him from the garnishee, board of education, and authorized and empowered the appellant to compromise and settle all disputes against the said defendant West and the board of education. Copy of that assignment is set out in the complaint in intervention. Thereafter, it is alleged, about June 17, 1918, the appellant as such assignee entered into an agreement with the garnishee board of education, in which it was ascertained and agreed that there was then due and owing from said board of education to the guaranty company the sum of $1,433.65. It is further claimed by reason of the payments made by the intervener and by reason of the agreement of indemnity and the assignments afore

Salt Lake Electric Supply Co. v. West, 54 Utah 564.

said that the moneys remaining in the hands of the school board at the date of the institution of this action was the property of and belonged to the interveners. The additional allegation is made upon information and belief that all the goods furnished by the plaintiff to the defendant West were furnished subsequent to the 7th day of March, 1917. The dates are material, as will appear further on in this opinion.

It is the contention of the appellant that by reason of the assignments made by West, as herein set out, the money could not be reached by garnishment proceedings instituted by materialmen.

By the provisions of section 1400x, Comp. Laws Utah 1907, subcontractors were authorized to jointly sue the contractor and the public corporation for labor and material used in the construction of a public building, and judgment could be entered against such public corporation for any amount owing and unpaid to the contractor at the date of service of summons upon such public corporation. It was also provided in that section that the contractor in such action could file a bond in the court in which the action was commenced, in such sum and with such sureties as the judge of the court should approve, conditioned for the payment of any judgment that might be recovered, and thereafter the liability of the public corporation should cease and the action against it be discontinued. By Laws Utah 1909, chapter 68, public corporations were required, before entering upon any contract for the construction or repair of any building, to take from the principal contractor a bond conditioned that the contractor would pay all materialmen and laborers, and providing further that in the event of failure upon the part of such contractor to make the payment an action might be brought by the public corporation on the bond, or if such corporation failed to bring such action the action could be instituted by any subcontractor. It is also provided in that chapter that suits should not be instituted until after the expiration of six months from the completion of the building, but must be brought within one year thereafter; that where suit was instituted by creditors only one action should be brought.