Opinion
No. 216.
Argued April 28, 1970. —
Decided June 2, 1970.
APPEAL from a judgment of the county court of Milwaukee county: ELLIOT N. WALSTEAD, Judge. Affirmed.
For the appellant there were briefs by La France, Thompson, Greenquist, Evans Dye, and oral argument by Kenneth F. Hostak, all of Racine.
For the respondent there was a brief by Grodin Strnad of Milwaukee, and oral argument by Burton A. Strnad.
This is an appeal from a judgment in favor of the plaintiff, Kramer Heating Manufacturing, Inc., and against the defendant, United Bonding Insurance Company. The action was brought to recover on a performance bond. The Pure Oil Company proposed to erect a service station at Watertown, Wisconsin. It entered into a contract with the ROS Construction Corporation as the principal contractor to construct the station. On March 20, 1967, ROS and the defendant, United Bonding Insurance Company, hereinafter referred to as United, entered into a contract wherein ROS and United were jointly and severally bound to the Pure Oil Company in respect to the December 21, 1966, construction contract between ROS and Pure Oil. This bonding agreement provided:
". . . this undertaking shall be for the benefit of any person, firm or corporation which may furnish material or perform labor or services in pursuance of the foregoing contract . . . ."
In December of 1966 Kramer submitted a bid to ROS, offering to furnish and erect various heating and ventilation equipment at the Pure Oil premises at Watertown, Wisconsin. On May 11, 1967, ROS sent a purchase order to Kramer for the equipment and services offered in the plaintiff's quotations.
Shortly after Kramer commenced work, ROS, for reasons not explicitly set forth in the record, ceased its operations. The plaintiff nevertheless continued with the construction work in accordance with its quotation to ROS and the subsequent purchase order. There was testimony that Pure Oil requested that Kramer complete the ROS contract.
In October of 1968, Kramer, not having been paid by the apparently insolvent ROS company and being refused payment by United, commenced an action alleging that $1,950 was due and owing it for work and materials performed "in accordance with plans and specifications furnished by ROS Construction Corporation, who is the general contractor for Pure Oil Company." It alleged further that United had issued and delivered to Pure Oil a bond (a copy of which was attached to the complaint) guaranteeing payment for all labor and materials furnished in connection with the construction of a structure on the southeast corner of Main and Fifth Streets, Watertown, Wisconsin, and that said bond was issued for the benefit of Pure Oil and the various labor and materialmen working on said job.
The defendant answered and admitted that the plaintiff had performed certain work for ROS on a certain building located on Main and Fifth Streets, Watertown, Wisconsin. It denied that there was due and owing the sum of $1, 950 and denied "any and all allegations otherwise contained in paragraph 4 inconsistent with any of the provisions of said surety bond or the laws applicable thereto."
Plaintiff's motion to compel defendant to make the denial in paragraph 4 of its answer more definite and certain was denied by the court on the theory that the bond spoke for itself and that its applicability was a matter of legal construction for the court. The defendant's answer was construed by the trial judge to mean:
". . . on the present record he is simply refusing to admit in toto that the bond in question makes the guarantee set forth in paragraph 4 of the complaint."
The plaintiff moved for summary judgment and appended thereto affidavits of its contract with ROS, its work log, and affidavits that the work had been done pursuant to the contract with ROS. The affidavits of the defendant in opposition to the summary judgment were directed to the point that, although Kramer had contracted with ROS to do certain work on the Pure Oil premises, the work was not completed.
The summary judgment was denied by the trial judge because it appeared that a factual dispute existed as to the degree of the work completed. The trial judge stated that the only issue for trial was the extent to which the work had been completed and the right of the bonding company to offset its liability under the bond because of the alleged failure of Kramer to complete the work. Trial was had on this basis. Defendant's motion for dismissal on the ground that Kramer had failed to introduce evidence that the work was done pursuant to the contract with ROS and, hence, not covered by the contract of surety entered into by United, was denied. After a trial on the merits, the court found that the work was performed pursuant to the plans and specifications furnished by ROS, the general contractor for Pure Oil, that the bond in question guaranteed the payment for labor and materials for work done at the Pure Oil structure in Watertown, and that such work was performed by the plaintiff, Kramer. Accordingly, judgment was entered for Kramer. From this judgment the defendant, United Bonding Insurance Company, appeals.
The basic question is whether the judge's findings are supported by the evidence. Unless the findings are contrary to the great weight and clear preponderance of the evidence, the findings must be sustained and the judgment affirmed. Trible v. Tower Ins. Co. (1969), 43 Wis.2d 172, 179, 180, 168 N.W.2d 148. The defendant contends, however, that its pleadings put the plaintiff to its proof and the plaintiff failed to show either that the work was performed pursuant to the contract with ROS or that the contract under which it performed was the contract contemplated by the surety agreement between Pure Oil and United. In light of the pleadings and the evidence, we consider the defendant's position untenable.
We are satisfied that the defendant's answer did not put in issue the questions which it now seeks to raise. A fair reading of the complaint and answer indicates that the only question raised by the answer was the legal question of the construction of the bond. This was the interpretation of the trial judge when confronted with the effect of the pleadings, and this is the interpretation which we now place upon them. We therefore are of the opinion that the points now urged by the defendant were conceded by default in the pleadings. It is elementary law that allegations not denied may properly be accepted by the court as a verity. Sec. 263.26, Stats. Moreover, a complete reading of the record leaves no doubt in the mind of this court, as there was no doubt in the mind of the trial judge, that the work was done pursuant to the contract entered into with ROS, that the participation of ROS was the result of its prime contract with Pure Oil, and that this contract and the obligation to this subcontractor was specifically covered by the bonding agreement. The fact that the ROS-Pure Oil contract was not introduced into evidence is immaterial when the pleadings did not contest its existence and the evidence adduced at trial reasonably leads to the conclusion that such contract existed and in fact triggered the whole performance of the plaintiff.
We, of course, agree with defendant's counsel, assuming his defense were pleaded, that the existence of a bonding obligation would be a matter of proof for the plaintiff and not an affirmative defense to be pleaded and proved by the bonding company. However, such proof sufficiently appears in the record, and the findings of the trial judge that the work was pursuant to the ROS contract is supported by the evidence. Without determining that the bond would not apply if the work were done pursuant to a separate request by Pure Oil, we conclude that the work of Kramer was done pursuant to the proposal and purchase order (the contract with ROS).
See 10 Appleman, Insurance Law and Practice, p. 86, sec. 5859, regarding materialman's right to recover from surety for work completed upon default of general contractor, and p. 28, sec. 5804, regarding obligee's right to recover from surety for completion of work abandoned by principal.
The trial judge also found that the work had been completed. This finding is not contrary to the great weight and clear preponderance of the evidence, and on the basis of the evidence adduced at trial, there was no incompleted work under the contract which would have entitled United to offset any of the liability incurred under its bond.
We share the trial judge's opinion that the pleadings failed to raise the defenses urged by the defendant on the motion to dismiss. The trial judge stated, in pointing out that the only issue raised by the pleadings was the legal construction of the bond and the state of completion of the work:
"You have to apprise him as to the issue raised. You haven't raised it as far as this court is concerned. I don't think you have raised it as far as plaintiff's counsel. The plaintiff was concerned about it, as you knew. You can't lie back. Pleadings are supposed to apprise parties of the cause of action and what defense is to be raised. This isn't a game we are playing."
By the Court. — Judgment affirmed.