State Ex Rel. Konen Construction Co. v. United States Fidelity & Guaranty Co.

380 P.2d 795, 234 Or. 554
CourtOregon Supreme Court
DecidedApril 17, 1963
StatusPublished
Cited by6 cases

This text of 380 P.2d 795 (State Ex Rel. Konen Construction Co. v. United States Fidelity & Guaranty Co.) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Konen Construction Co. v. United States Fidelity & Guaranty Co., 380 P.2d 795, 234 Or. 554 (Or. 1963).

Opinions

DENECKE, J.

The plaintiff, J. F. Konen Construction Co., contracted to supply crushed rock to the intervening defendants, hereinafter called Braden, in furtherance of Braden’s road contract with the Oregon State Highway Department. The defendant United States Fidelity & Guaranty Company, hereinafter called USF & G-, was surety on Braden’s construction bond. The primary [556]*556questions concern the notice of claim required by ORS 279.526.

Plaintiff brought its action against TJ'SF & Gr, only. Braden petitioned to intervene, alleging he would have to pay any judgment against TJSF & Gr because of an indemnity agreement. The petition was granted and this action was not assigned as error. Braden filed an answer denying plaintiff’s claim and counterclaiming for damages because of plaintiff’s allegedly breaching its contract to furnish rook to Braden.

The action was tried before the court without a jury. The plaintiff was awarded damages in the amount of its prayer against TJSF & Gr. The court made a conclusion of law that Braden was liable over to TJSF & Gr for the amount of the judgment.

The first assignment of error is directed to the court’s permitting the plaintiff to reopen its case to introduce evidence of the filing of notice and then to amend its complaint by adding an allegation that notice was filed. ORS 279.526 makes the filing of notice of claim a condition to maintaining an action on the bond. No such notice was alleged or proved at the initial trial. After the court indicated that it was finding for the plaintiff, the plaintiff tendered proposed findings of fact. To these defendants objected on the ground, among others, that there was no proof that a notice of claim was filed. The plaintiff moved to reopen the case to present such proof. The court allowed the motion and two months after the initial trial, received evidence of the filing of notice of claim and permitted plaintiff to amend its complaint accordingly.

The parties agree that the reopening of the case to admit additional evidence is a matter of discretion. The defendants contend here that there was an abuse [557]*557of discretion. The trial court should be the controller of proceedings in its court and only on rare occasions should its orders in this regard be overturned. We hold that the trial court did not abuse its discretion in reopening the case. Arbogast et al v. Pilot Rock Lbr. Co., 215 Or 579, 336 P2d 329, 72 ALR2d 712, and cases cited at 595.

ORS 16.390 permits amending of a pleading “when the amendment does not substantially change the cause of action or defense, by conforming the pleading or proceeding to the facts proved.” Contrary to defendant’s contention, the amendment, while vital, did not “substantially change the cause of action.” Therefore, it was properly allowed.

The defendants urge that, even if properly allowed, the amendment alleging giving of notice was defective in form. The amendment is not an accurate statement of the notice given or prescribed but on appeal the complaint, as amended, does state a cause of action.

The defendants contend that the notice of claim filed was ineffective in that it was filed before the acceptance of Braden’s contract by the State Highway Department.

ORS 279.526 provides that the notice of claim must be filed, “prior to the expiration of six months immediately following the acceptance of the work by the affirmative action of the public body which let the contract.” The initial claim was filed July 22, 1960. Braden’s work was accepted (September 29, 1960. Is a notice of claim effective which was filed before the “acceptance of the work”?

The defendant relies upon mechanic’s lien and other statutory lien precedents. Those cases have held the lien must be filed after completion of the contract. For example, Birkemeier v. Knobel, 149 Or 292, 308, [558]*55840 P2d 694 (1935). Those cases involved an original contractor and such a person has no right to a lien until his contract is substantially complete. See Mechanics’ Liens in Oregon, 29 Or L Rev 308, 338 (1949-1950). Here, the claimant is a subcontractor and his claim might mature long before all of the general contractor’s work is completed and accepted by the governmental body. Hnder the mechanic’s lien statute a subcontractor can file his claim of lien within 45 days after he has ceased working, regardless of whether or not the general contractor has completed his entire contract. ORS 87.035.

The statutory language fixing the extent of the period of time within which the notice of claim must be filed does not state or infer that the notice cannot be filed before acceptance. It states acceptance of the work is the time from which the six months is to be determined. The purpose of the time limitation, as stated in School Dist. No. 1 v. A. G. Rushlight & Co., 232 Or 341, 375 P2d 411 (1962), would not lead to the conclusion that the notice must be filed after acceptance to be effective. It is held that the notice of claim, filed before acceptance of the general contractor’s work by the governmental body, is in compliance with the statute.

The first notice of claim, filed before acceptance, was filed on July 22, 1960. It was in the amount of $11,798.83. On September 29, 1960, the job was accepted. On April 13,1961, more than six months after acceptance, plaintiff filed an “Amended Supplemental Claim” in the total sum of $23,488.05. The judgment was for $20,977.02. Defendants contend judgment cannot be entered for more than the amount claimed in the initial notice as the second notice was ineffective having been filed too late.

[559]*559No decisions on this issue under the Oregon statute or similar statutes of other jurisdictions have been found by counsel or the court. Parker v. Everetts, 196 Okla 408, 165 P2d 630 (1946), held that the amount claimed in a mechanic’s lien foreclosure could not be raised at trial over that claimed in the notice of claim of lien.

In School Dist. No. 1 v. A. G. Rushlight S Co., supra, it was stated that the purpose of requiring a notice of claim in public contracts is to enable the public body or the contractor to withhold payment from the one owing the claim in the amount stated in the notice. This is for the protection of the surety and in some instances, the contractor, if the claim is for a bill owed by a subcontractor. At the end of the filing period, six months after acceptance, all the parties can examine the claims, total up the amounts and determine whether payment of the claims will require a larger amount than that retained by the public body or the contractor, and, if so, how much.

When a claim is filed all persons who might be secondarily liable for the claim are very interested in knowing whether the amounts retained from the person primarily liable for the claim, or those secondarily liable but in an inferior position, are sufficient to cover the amount of the claim.

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Related

Taylor v. Nielsen
571 P.2d 176 (Court of Appeals of Oregon, 1977)
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505 P.2d 1162 (Oregon Supreme Court, 1973)
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380 P.2d 977 (Oregon Supreme Court, 1963)

Cite This Page — Counsel Stack

Bluebook (online)
380 P.2d 795, 234 Or. 554, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-konen-construction-co-v-united-states-fidelity-guaranty-or-1963.