120 Wash. 351 | Wash. | 1922
— The plaintiff brought this action to recover damages against the defendant county because it had paid out money on a road contract which the plaintiff claimed was to its prejudice. There are other defendants, but the principal controversy was between the plaintiff and the county. The trial resulted in a judgment adverse to the contention of the plaintiff, and it appeals.
The facts necessary to present the questions for determination may be summarized as follows: On August 27,1917, the respondent, Skagit county, entered into a contract with T. L. Grant and L. P. Ervig, copartners under the firm name of Grant and Ervig, for the construction of a certain road in that county known as the Cook road. The contract price was approximately $60,000. The contract provided that, upon the request of the contractor, partial payments should -be made as set forth therein each month, which payments were not to exceed eighty per cent of the estimated value of the work done, which estimate was to
The appellant was surety for the faithful performance of the contract. Thereafter the appellant brought this action, claiming that the county had wrongfully paid out the $9,000 and sought recovery against it to the extent to which it would be liable upon its bond for the claims filed. ■ The claimants were parties to the action and the claims of the Seiffert Company and the Mt. Baker Contracting Company were adjudged to be valid. The court apportioned the balance in the
The first question is whether a payment of the $9,000 to the hank, which was an assignee of the contractors, was with the knowledge and consent of the appellant; A careful examination of the record discloses that there is no evidence from which it can be found that such payment was made with the knowledge or consent of the surety company. The representative of the surety company who had charge of the matter of issuing the bond and who at one time visited the county for the purpose of looking over the situation expressly denied any knowledge or consent. There was no affirmative evidence from which such knowledge or consent could be inferred. It is true that the representative of the company testified that, when he visited the county, he called at the hank and had a conversation with one of the officers with reference to the contract. This was while the work was in progress, and the conversation was only to the effect that the representative of the company thought that the hank, after having advanced some money to the contractors, should in fairness to them make further advance, for the reason that the hank having undertaken to finance the contractors, it was too late for them to call upon any other bank for that purpose. The officer of the hank with whom the conversation took place had no memory of the conversation or of the person with whom he talked. . This evidence has no tendency whatever to show that the $9,000 was subsequently paid out to the hank with the knowledge or consent of the appellant.
The next question is, assuming that the money borrowed from the hank went into labor and material for the contract, whether the bonding company is in a position to question the payment, since upon the bond it would have been liable for such labor and material
“That the provisions of this act shall not apply to any money loaned or advanced to any such contractor,D subcontractor, or other person in the performance of any such work.” Rem. Comp. Stat., §1159.
By this amendment the legislature, in effect, abrogated the rule of the Gallucci case. The bank that drew the $9,000 as assignee of the contractors had no claim which it could enforce against the surety company for the moneys which it had loaned or advanced to the contractors. The twenty per cent which was to be held for thirty days was a trust fund for the benefit of creditors and collectible claims, and was also a fund to which the bonding company had a right to look for indemnity. In Denham v. Pioneer Sand & Gravel Co., 104 Wash. 357, 176 Pac. 333, it was said:
“The fact that this twenty per cent is also, and, it may be, principally was, held for the benefit of the laborers and materialmen furnishing work and material for public work, as we have held in the following cases: State ex rel. Bartelt v. Liebes, 19 Wash. 589, 54 Pac. 26; First National Bank v. Seattle, 71 Wash. 122, 127 Pac. 837; Maryland Casualty Co. v. Washington National Bank, 92 Wash. 497, 159 Pac. 689; North*356 western National Bank of Bellingham v. Guardian Casualty & Guaranty Co., 93 Wash. 635, 161 Pac. 473, yet this fund is a trust fund for creditors and for collectible claims, and is also the bondsmen’s security, as indicated.”
The county, in paying out the $9,000 to the bank within the thirty days fixed by the contract, failed in the performance of its duty, to the prejudice of the rights of the appellant, and for this the county is liable. Maryland Casualty Co. v. Washington Nat. Bank, 92 Wash. 497, 159 Pac. 689. The appellant is entitled to a judgment against the county to the extent to which it has been required to pay valid claims which would have been paid out of the twenty per cent reserve fund had the $9,000 warrant not been given to the bank-, •unless the county should prevail upon the next question to be discussed.
The next question is whether the county performed its duty in requiring a showing on the part of the contractors that all valid claims had been paid prior to the time of the release of the $9,000. Under the provision of the contract above quoted, it will be observed that the contractor was required to “show to the satisfaction” of the county that all just debts due for labor and material had been paid. This presents the question as to whether a showing of payment of the debts was sufficient to justify the county in its action. The two claims upon which the bonding company was held liable were filed in the office of the county auditor. When T. L. Grant, one of the contractors, made demand upon the county for the balance due under the contract, he stated to the county engineer,, and also to the chairman of the board of county commissioners, that all debts had been paid. Neither the county commissioners nor the engineer had any actual knowledge that the claims had been filed in the auditor’s office. They
The judgment will be reversed, and the cause remanded with directions to the superior court to enter a judgment in accordance with the views herein expressed.
Parker, O. J., Mackintosh;, Holcomb, and Hovey, JJ., concur.