Opinion
March 11, 1943. —
April 13, 1943.
APPEAL from a judgment of the circuit court for Milwaukee county: CHARLES L. AARONS, Circuit Judge. Reversed.
For the appellant there was a brief by Tierney, Waddleton, Dela Hunt Tierney of Milwaukee, and oral argument by Joseph E. Tierney.
For the defendant city of Milwaukee there was a brief by Walter J. Mattison, city attorney, and Chas. W. Babcock, first assistant city attorney, and oral argument by Mr. Babcock.
For the respondent Ozaukee Sand Gravel Company there was a brief by Houghton, Neelen Bullinger of Milwaukee, and oral argument by Albert B. Houghton.
For the respondent truckers there was a brief by Tietelbaum, Chudnow Polland, attorneys, and H. L. Kastrul of counsel, all of Milwaukee, and oral argument by A. M. Chudnow.
Action commenced February 4, 1941, by Ozaukee Sand Gravel Company against the city of Milwaukee, Druecker-Kaestner Company, Inc., a corporation, John P. Druecker, Louis W. Sanders, B.A. Froemming, the Froemming Corporation, Arnold C. Damerow, Joseph D. Rodosta, Reinhold Polzin, Charles C. Damerow, and Hoy B. Clayton, and William Last who was permitted to intervene. The defendant B.A. Froemming appeals from the judgment of the circuit court.
The Druecker-Kaestner Company entered into a contract with the city of Milwaukee to furnish specified types of sand and gravel to be by it used and consumed. The contract was made with the central board of purchases. The amount of material needed could not be determined at the time because it depended on the amount of repair work which the city would do. The plaintiff furnished sand and gravel to the defendant Druecker-Kaestner Company to be used in performing this contract, for which it still has a claim against the Druecker-Kaestner Company for $4,721.73. Defendants Damerow, Rodosta, Polzin, Clayton, and Last were truckers who were employed by the defendant company to haul the sand and gravel from the plaintiff's pit. Deliveries were made by the Druecker-Kaestner Company pursuant to the contract and the company assigned the money due it from the city to B.A. Froemming, a creditor, for money loaned to the company. Froemming collected $3,933.47 on January 14, 1941, from the city on these assignments and he still holds a claim against the city.
The defendant Froemming filed a notice of his claim under the assignment with the city on January 10 and 13, 1941. Plaintiff's notice of lien was filed January 15th. The defendant truckers' claims for liens were filed with the city January 20, 1941.
The contract between the city and the defendant company stated that it was subject to the terms of ch. 261, Laws of 1882, which law gives liens to laborers and materialmen but which by its terms applies only to contracts made with the board of public works of the city of Milwaukee.
The trial court found that neither the plaintiff nor the truckers were entitled to liens under the rule of Worden-Allen Co. v. Milwaukee, 171 Wis. 124, 176 N.W. 877, but that they were entitled to have the money owing from the city held as a trust fund for them under the provisions of sec. 289.53(4), Stats. It was stipulated that ninety per cent of the gravel from plaintiff's pit was used on the city jobs. The trial court found that:
"The material furnished by the plaintiff, and carried by the defendant truckers to the Druecker-Kaestner Co., Inc., was furnished for repair, maintenance and construction work, and is within the definition of `improvement' under sec. 289.01 (1) (b), Wisconsin Statutes."'
The judgment provided that the claims of the plaintiff and of the truckers take precedence over that of B.A. Froemming. It was further found that Mr. Froemming received the money he collected on the assignments impressed with the trust. He was ordered to repay it in order to satisfy the claims of the other parties. B.A. Froemming appeals from the judgment. There is no motion for review.
The issue brought here on this appeal is the single question of whether sub. (4) of sec. 289.53, Stats., gives the claims of respondents an advantage over the claim of the appellant.
The statute relied on by respondents provides that all money or warrants paid to or to become due to any principal contractor or subcontractor for "public improvements" shall constitute a trust fund for the benefit of materialmen and laborers for the payment of all claims on such public improvement. This statute was considered in Murphy v. National Paving Co. 229 Wis. 100, 281 N.W. 705. In reviewing the history of its enactment it was shown to be applicable to all cities including those of the first class.
Appellant's contention is that the claims of respondents are not under that section (sub. (4)) because they do not arise out of a protected relation based on a "public-improvement" contract, that therefore there can be no trust-fund benefit for them under the statute. By this action he seeks to vindicate his right to the moneys already collected by him and to the balance in the city's hands assigned to him by his debtor.
If the purchase of the material can be held to be a contract of the protected class, then under the doctrine of Morris F. Fox Co. v. State, 229 Wis. 44, 281 N.W. 666, the respondents' claims, although not carrying the right of lien, would be entitled to precedence over appellant's general "unrelated" claim because they would then arise under the contract, out of the job for which the fund is payment.
It has frequently been stated that this protection to laborers and materialmen dealing with contractors was to be accomplished by writing into the laws governing contracts for public works the terms of certain statutes which in the first instance were particularly made applicable to contracts between private builders and contractors. Similarity of the commercial relation between lien claimants on such private jobs and the men and concerns situated in a like manner with relation to construction jobs described as public improvements made it desirable to create some method under law which would protect the interests and give security for the undertaking of the latter equal to that provided for the former. The first subsections of sec. 289.53, Stats., exclude cities of the first class because in that class a lien right was provided by ch. 261, Laws of 1882 (sec. 26.11, Milwaukee city charter of 1934), which gives that protection to those dealing with a city of the first class under contracts made with the board of public works (now a commissioner). See Worden-Allen Co. v. Milwaukee, 171 Wis. 124, 176 N.W. 877. It seems apparent that the purpose of including cities of the first class in sub. (4) was to cover or supplement the rights of those dealing with the board of public works. We now, therefore, consider the characteristics of the relationship to be thus provided for.
The trial court concluded that the repair and maintenance work in which the sand and gravel was used was a public improvement and was brought within the sphere of sub. (4). But we do not find any reference in the statutes referred to dealing with public contracts to anything so indicating, especially when the work is done by the city itself through its various departments and other than by contract with the commissioner of public works. The contract as entered into was to purchase material to be used by the city in what may be called incidental maintenance and repairs. There is no suggestion of an intent to put the transaction of the board of purchases on the same basis as are the contracts with the commissioner of public works for public improvements. That the contracts of the two boards are different is shown by the limitation on the authority of the board of purchases in sec. 17.06, Milwaukee city charter of 1934, where it is stated the board has power to purchase "materials, supplies and equipment for the use of all departments, boards or commissions comprising the city government. . . . This power and authority of the central board of purchases to make all purchases shall not be construed to include contracts for public works where materials, supplies or equipment are furnished by the contractor as part of the requirements of his contract."
While the protection extended by sub. (4) reaches, so far as cities of the first class are concerned, those contracts and resulting relations under which lien rights exist in favor of laborers and materialmen, it is supplemental thereto and makes provision for some items not lienable but requires that those items be related to the particular construction or public work. It does not provide for the creation of a trust fund for those who may deal with a city in a capacity other than laborer or materialman working under contracts for public works. A well-grounded plan appears if the statute is so read. This interpretation gives to each provision of the statute its proper place and relation to the other. It preserves the distinction pointed out in Standard Oil Co. v. Clintonville, 240 Wis. 411, 3 N.W.2d 701, between mere sales and contracts for public improvements requiring both labor and material.
The trust benefit is added to the more or less complex system of contracting where the contractor uses credit as capital, and it is intended, as already suggested, to carry to the laborer and materialman under the contractor on public works some adequate protection against loss, at least to the extent the same interest would find protection under contractors for private jobs.
In the case at bar both the nature of the contract and the type of job called for indicate that this is not a contract for a public improvement within the meaning of sec. 289.53(4), Stats. The Druecker-Kaestner contract is simply one for the sale of material to the city, although the sand and gravel furnished were used for repair and maintenance work. Purchases by the central board of purchases for general city use are not the same as contracts made by and with the commissioner of public works, even though as here the agreement is to make purchases for a fixed price during a particular season. We are, therefore, of the opinion that the trial court erred in holding that the respondents are entitled to the protection of the trust-fund statute and in ordering that their claims be given precedence over the claim of appellant.
By the Court. — Judgment reversed, and cause remanded with directions to enter judgment in accordance with this opinion.