Simpson Logging Co. v. American Bonding Co.

137 P. 127, 76 Wash. 533, 1913 Wash. LEXIS 1855
CourtWashington Supreme Court
DecidedDecember 5, 1913
DocketNo. 11339
StatusPublished
Cited by5 cases

This text of 137 P. 127 (Simpson Logging Co. v. American Bonding Co.) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Simpson Logging Co. v. American Bonding Co., 137 P. 127, 76 Wash. 533, 1913 Wash. LEXIS 1855 (Wash. 1913).

Opinion

Chadwick, J.

This action was begun by plaintiff against the defendant to recover the sum of $2,606.11. Judgment was entered against the Northwest Bridge Company, and in favor of the American Bonding Company. On January 23d, 1911, the bridge company entered into a contract with the plaintiff to furnish all material and labor necessary to construct a bridge over the Satsop river, in Chehalis county, for the sum of $31,000. Payments were to be made as follows: $7,000 on March 10, 1911; $7,000 on April 10, 1911; $10,-000 on May 10, 1911; and the balance of $7,000 as soon as the work was completed and accepted. The bridge was to be completed on or before June 15, 1911. The contract provided, among other things, that, in the event that the bridge company did not make a profit of ten per cent on the cost of the bridge, the plaintiff would make the ten per cent good [535]*535up to a maximum.' sum of $32,500. The engagement of the bonding company was as follows:

“If the said principal shall faithfully perform said contract on its part, according to the terms, specifications, covenants, and conditions thereof (except as hereinafter provided), then this obligation shall be null and void, otherwise to remain in full force and effect.”

It was further provided:

“The said owner shall notify the surety in writing before the last payment, or any reserve due the principal under" said contract shall be paid.”

The bridge company began the construction of the bridge and completed it about August 1st, 1911. The contract was completed according to the specifications and no hens have been filed against it. The bridge covered by the contract is referred to in the evidence as “bridge No. 2.” It also appears that, at the time the contract was made,, the bridge company was under contract to furnish the labor and material to construct another bridge, which is referred to as “bridge No. 1.” Bridge No. 1 was about three-fourths completed at the time work was begun on bridge No. 2, and was entirely completed in March, 1911. The testimony does not show that the bridge company failed to make a profit-of ten per cent on bridge No. 2. It shows a substantial loss on bridge No. 1, and probably shows that no loss was incurred by the bridge company on bridge No. 2.

At the time the first bridge was finished, the bridge company was indebted to the Lumberman’s Mercantile Company in a large sum of money, approximately $6,000. Payments on bridge No. 2 were made as follows: $7,000 on March 9th, 1911; $7,000 on April 8th, 1911; $7,000 on May 8th, 1911, and $3,000 on June 13th, 1911. The logging company furnished to the bridge company tools, appliances, provisions and board for its workmen. It also paid to one H. E. Ford, on the bridge company’s order, the sum of $1,500 for lumber. All of these sums were charged against the bridge company. [536]*536On June 30th, 1911, the account shows that the plaintiff had paid the bridge company $26,638.90, or $4,538.90 more than was then due under the contract. On July 14th, the bridge company notified plaintiff that it would not have enough money to meet its obligations, whereupon, plaintiff wired the bonding company as follows :

“The contractor informs us that the bridge will be ready for acceptance within a few days and that there are outstanding claims and bills to the amount of approximately ten thousand dollars, with a credit still due him as a final payment on the contract of seven thousand dollars, leaving approximately three thousand deficiency which he is unable to meet at this time and which we look to you to protect. Shall we apply the final payment of seven thousand dollars in liquidation of pressing claims and await final settlement of the remaining claims through your office.”

The bonding company replied as follows:

“We consent to your applying balance of contract price in settlement of such lienable claims as may be approved for payment by the Northwest Bridge Company. . This wire will not be construed as an admission of liability or waiver of any defenses under bond.”

At the time the bonding company was notified, there was an actual balance due the bridge company of $4,461.10. Upon receipt of the last telegram quoted, plaintiff paid the following claims:

1911.
July 28 W. S. Lumber Co................ $1,137.48
Aug. 10 J. E. Connolly.................. 439.38
Aug. 21 H. E. Ford..................... 1,981.48 .
July 20 Jos. Lazerous ................... 33.35
Nov. 14 Pen. Ry. Co..................... 101.95
Nov. 14 Lumbermans Merch. Co............ 3,748.49

The difference between the amount owing and the amount paid is the sum sued for in this action. From a judgment dismissing the complaint, the plaintiff has appealed. We will refer to the bonding company as the defendant.

[537]*537We agree with the conclusions of the trial judge that the evidence and the bill of particulars rendered by plaintiff is so confusing that a court cannot determine with any degree of certainty which items are lienable and which are not. Many legal propositions are advanced by the respondent to sustain the judgment. We will not discuss all of them, but content ourselves with inquiring whether plaintiff made overpayments in violation of its contract, and whether there were any misapplications of payments.

It will be remembered that, at the time plaintiff notified defendant that the bridge company had defaulted, it told it that there was due the final award of $7,000. If this had been so, no liability would have come to the defendant. In this, however, the plaintiff was mistaken. The notification, nevertheless, must have indicated to the defendant that there had been no overpayment. It accordingly directed that that sum be applied in payment of lienable items. By the terms of the contract, defendant was entitled to have two things concur : notice of the last payment, and that the whole of the reserved payment be at hand at the time notice was given to it. It was the duty of the plaintiff to keep available the remedy that defendant had reserved unto itself. Peters v. Mackay, 20 Wash. 172, 54 Pac. 1122; Liendecker v. Aetna Indemnity Co., 52 Wash. 609, 101 Pac. 219; Black Masonry & Contracting Co. v. National Surety Co., 61 Wash. 471, 112 Pac. 517. And this is in accord with the great weight of authority. 32 Cyc. 223; First Nat. Bank v. Fidelity & Deposit Co., 145 Ala. 335, 40 South. 415, 117 Am. St. 45, 5 L. R. A. (N. S.) 418.

The theory upon which the right of a surety to insist upon the retention of the reserve is based is that he is entitled to have the sum agreed upon held as indemnity and until his rights and liabilities are determined, and this, says the supreme court of the United States, is a “superior equity.” Prairie State Bank v. United States, 164 U. S. 227. In United States v. American Bonding Co., 89 Fed. 930, the [538]*538case of Rees v. Berrington, 2 Ves. Jr. 540, is quoted with approval. It says:

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Bluebook (online)
137 P. 127, 76 Wash. 533, 1913 Wash. LEXIS 1855, Counsel Stack Legal Research, https://law.counselstack.com/opinion/simpson-logging-co-v-american-bonding-co-wash-1913.