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State v. Employers Mutual Casualty Co.

March 24, 1999

THE STATE OF ILLINOIS FOR THE USE AND BENEFIT OF CHEMCO INDUSTRIES, INC., AND CHEMCO INDUSTRIES, INC., A CALIFORNIA CORPORATION, PLAINTIFFS-APPELLANTS,
v.
EMPLOYERS MUTUAL CASUALTY COMPANY,A FOREIGN CORPORATION; KIRK BROWN, SECRETARY, DEPARTMENT OF TRANSPORTATION; STEPHEN B. SCHNORF, DIRECTOR, DEPARTMENT OF CENTRAL MANAGEMENT SERVICES; FRANK SELVAGGIO, DEPARTMENT OF CENTRAL MANAGE- MENT SERVICES; A. THOMAS MURARO, CHIEF, BUREAU OF CLAIMS, DEPARTMENT OF TRANS- PORTATION; AND TED CURTIS, MANAGER, PROCUREMENT SERVICES DIVISION, DEPART- MENT OF TRANSPORTATION, DEFENDANTS-APPELLEES.



Appeal from Circuit Court of Sangamon County No. 95L31 Honorable Jeanne E. Scott, Judge Presiding.

The opinion of the court was delivered by: Justice McCULLOUGH

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Plaintiffs, State of Illinois for the use and benefit of Chemco Industries, Inc., and Chemco Industries, Inc. (Chemco), appeal from a summary judgment entered in the circuit court of Sangamon County in favor of defendants, Employers Mutual Casualty Company (Employers Mutual); Kirk Brown, Secretary of the Illinois Department of Transportation (IDOT); Stephen B. Schnorf, Director of the Illinois Department of Central Management Services (CMS); Frank Selvaggio, a buyer with the procurement services division of CMS; A. Thomas Muraro, chief of the bureau of claims of IDOT; and Ted Curtis, manager, procurement services division, IDOT. Plaintiffs sought recovery on a bond executed by Employers Mutual and for negligence of the other defendants in releasing funds to Coatings Corporation International, Inc. (Coatings), without honoring Chemco's lien on those funds. The issues are whether (1) the contract between Coatings and the State of Illinois (State) was for "public work" within the meaning of the Public Construction Bond Act (Bond Act) (30 ILCS 550/0.01 et seq. (West 1994)) and (2) the contract between Coatings and the State was for "public improvement" within the meaning of section 23 of the Mechanics Lien Act (Lien Act) (770 ILCS 60/23 (West 1994)). Only those facts necessary for this court's Disposition will be discussed.

Summary judgment is properly granted only if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. This court considers the propriety of granting or denying the motion for summary judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 607 N.E.2d 1204, 1209 (1992). In addition, the resolution of the issues in this case turn on the construction of two statutes. Statutory construction is a question of law (Vrombaut v. Norcross Safety Products, L.L.C., 298 Ill. App. 3d 560, 562, 699 N.E.2d 155, 156 (1998)) that is also considered de novo by this court (R.L. Polk & Co. v. Ryan, 296 Ill. App. 3d 132, 139, 694 N.E.2d 1027, 1033 (1998)).

"The cardinal rule of statutory construction is to ascertain and give effect to the intent of the legislature. Solich v. George & Anna Portes Cancer Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 81, 630 N.E.2d 820, 822 (1994); Kraft, Inc. v. Edgar, 138 Ill. 2d 178, 189, 561 N.E.2d 656, 661 (1990). The words of a statute are given their plain and commonly understood meanings. Forest City Erectors v. Industrial Comm'n, 264 Ill. App. 3d 436, 439, 636 N.E.2d 969, 972 (1994). Only when the meaning of the enactment is unclear from the statutory language will the court look beyond the language and resort to aids for construc- tion. Solich, 158 Ill. 2d at 81, 630 N.E.2d at 822." R.L. Polk, 296 Ill. App. 3d at 139-40, 694 N.E.2d at 1033.

Section 1 of the Bond Act provides, in relevant part, as follows:

"All officials, boards, commissions or agents of this State, or of any political subdivision thereof in making contracts for public work of any kind to be performed for the State, or a political subdivision thereof shall require every contractor for such work to furnish, supply and deliver a bond to the State, or to the political subdivision thereof entering into such contract, as the case may be, with good and sufficient sureties." 30 ILCS 550/1 (West 1994). Section 2 of the Bond Act provides, in relevant part:

"Every person furnishing material or performing labor, either as an individual or as a sub-contractor for any contractor, with the State, or a political subdivision thereof where bond or letter of credit shall be executed as provided in this Act, shall have the right to sue on such bond or letter of credit in the name of the State, or the political subdivision thereof entering into such contract, as the case may be, for his use and benefit ***." 30 ILCS 550/2 (West 1994).

The bond in this case was to secure the performance of Coatings in supplying paint to the State and its political subdivisions and to indemnify those governmental entities if there was a need to procure paint from some other source in the event of nonperformance by Coatings. The bond was for 10% of the contract price with an obligation to furnish traffic marking paint to IDOT "and authorized Local Governmental Units." The bond did not expressly secure payments to subcontractors or materialmen and, as a result, was not set at 100% or more of the contract price. The underlying contract was entered into pursuant to the Governmental Joint Purchasing Act (Purchasing Act) (30 ILCS 525/0.01 et seq. (West 1994)), authorizing competitive bidding on purchases of all personal property, supplies, and services.

The contract in this case was to supply the State with a commodity, not "for public work." "Public work" includes the building of a jail (County of Mercer v. Wolff, 237 Ill. 74, 78, 86 N.E. 708, 710 (1908)) or another prison facility (Brown v. City of Greenville, 203 Ill. App. 3d 1035, 1037, 561 N.E.2d 446, 447 (1990)). In this case, we need not decide whether painting lines on roadway surfaces falls within the dictionary definition of "public work."

The parties agree the Lien Act and Bond Act should be construed together. Neither party asks this court to construe "public work" and the Bond Act in pari materia with the definitions contained in other statutes, including the Prevailing Wage Act (820 ILCS 130/2 (West 1994)).

In Pete Lien & Sons, Inc. v. City of Pierre, 577 N.W.2d 330 (S.D. 1998), summary judgment was granted for the city. Fessnell Transport and the city entered into a contract to supply gravel to the city stockpile for general road maintenance. Fessnell purchased the gravel from Lien. When Fessnell defaulted on the contract with the city and failed to pay Lien for gravel already delivered to the city, Lien attempted to recover against the city. The court determined the gravel was not furnished for the construction or repair of a "public improve- ment," even though paid for with public funds. The court defined "improvement" as "'a permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs.'" Pete Lien, 577 N.W.2d at 331, quoting Webster's Third New International Dictionary 1138 (1976) (part 2(b)(1)). A pile of gravel did not fall into that definition. See also Rogers v. County of Nez Perce, 83 Idaho 467, 470, 364 P.2d 1049, 1050 (1961) (no bond was required because a contract for crushing and stockpiling gravel for some future use did not constitute "construction, alteration or repair" of a public work); Ozaukee Sand & Gravel Co. v. City of Milwaukee, 243 Wis. 38, 43, 9 N.W.2d 99, 101-02 (1943) (a contract for furnishing sand and gravel to the city was not a contract for "public improvement" within the meaning of the statute creating a trust fund for or on behalf of materialmen and laborers for the payment of claims, and the fact that sand and gravel was used for repairs and maintenance work did not require a contrary result).

Plaintiffs argue that the materialman is afforded protection under the Bond Act for materials supplied and incorporated into a public work. However, the cases they rely on involved suppliers of materials to contractors who constructed projects that fit within the definition of "public work."

Plaintiffs want this court to interpret the term "public work" so broadly as to virtually encompass any State contract. We decline to do so. The facts of this case indicate the State was merely acquiring supplies by purchasing commodities. The supplies may or may not be used in a public work, but certainly Coatings was not engaged to apply the paint and was not a contractor who entered into a contract for public work to be performed for the ...


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