Beymer v. Monarch

113 P. 739 | Idaho | 1911

AILSHIE, J.

This action was brought against John W. Monarch and William S. Porter, as copartners, and also against the Title Guaranty & Surety Co., to recover the sum of $4,433.22, alleged to be due for labor and merchandise furnished the defendants Monarch & Porter by plaintiff and his assignors while Monarch & Porter were engaged in the construction of an irrigation system for the United States government near Rupert in this state. Monarch & Porter were contractors under the government for the construction of an irrigation system on what is commonly known as the Minidoka Reclamation Project. Prior to entering upon the work, the ’defendant, the Title Guaranty & Surety Co., became surety for the contractors to the effect that they would faithfully perform the work stipulated in the contract. Early in 1906, defendants Monarch & Porter notified the government and also the defendant surety company that they were unable to proceed further with their contract, and the surety company immediately took possession of all the property on the works belonging to Monarch & Porter, and notified the. government that it was completing the contract and would proceed in accordance with the contract had between Monarch & Porter and the United-States government.

At the time the surety company took over the contract ana undertook to carry out and discharge its terms, there was a large sum due from the government to Monarch & Porter., and there was at that time a disagreement between the contractors and the government as to the true amount due, on account of a diversity of opinion as to the proper estimates to which the contractors were entitled. The government apparently conceded, however, that there was about $35,000' then due the contractors. The contractors were largely in debt for material, supplies -and labor, and, among other things, were indebted to the plaintiff herein and his assignors in the sum sued upon. The company retained Monarch and Porter each at $100 per month to carry on the work, and the- company sent its agents to supervise the matter of purchases and expenditures -and to pay the bills as the same were incurred and to generally superintend the work. During this time the disbursing agent for the company paid some of the debts which had been contracted prior to the time the company took over the works, and it is claimed by the plaintiff in this case that the surety company’s agents promised and’ agreed that the company should pay the claims, involved in this action. The trial court found against the plaintiff on this contention, and there is a conflict of the evidence on that point, and if that were the only question in the ease, it would' determine this appeal in favor of the judgment of the lower court.

There is, however, one state of facts shown by the plaintiff and not contradicted or disputed by the defendant surety company which, in our judgment, is sufficient to hold, the defendant company and to consequently require a reversal of the judgment in this case.

John Porter, who, it appears, was acting as attorney for-Monarch & Porter, went to Washington, D. C., in. February, 1907, for the purpose of securing an adjustment, if'possible, of the claim of Monarch & Porter against the government,, and to get the matter settled and secure payment of the balance due. He testifies that at that time he had an interview with the officers of the government and the president and attorney of the surety company with reference to the adjustment and settlement of this claim. Among other things, he testified as follows: “We were there to try and obtain a settlement from the government of all matters between Monarch & Porter and the government; failing in that we were about to return to our homes, but before doing so on that occasion, I don’t recall who introduced the subject, but Mr. •King (attorney for the company) I think had something to say about it, and I very distinctly remember that I said something in substance to this: ‘Now, gentlemen, inasmuch as we could not obtain a final settlement’ — they offered to pay us about $35,000 to sign a final voucher. ‘There are existing creditors out in Idaho for labor and other materials furnished to Monarch & Porter in the prosecution of their contract covering the work near Rupert. Now, what objections have yOu, if any, to ordering or recommending the issuance of a warrant ’ — we called it a warrant, the United States warrant— ‘for a part of the amount you confess to be due and are willing to pay, without prejudice to the right of the parties to go home and obtain a final settlement as best .they can. ’ That was the substance of what was said, and Mr. Davise and Mr. Newman said they could see no, objection to that and no one made any objection. Mr. King also agreed in the matter or concurred in it. When Mr. King went to his office that afternoon he wrote the service through the Secretary of the Reclamation Service a letter, of which I have a copy, in which he concurred in it, and it was simply a confirmation of what was said at the conversation. Mr. L. A. Watress, the president of the company, was there also, and he concurred in that arrangement, but said: ‘I want the payments to be made, as other payments have been made since March, 1906, viz., checks. ’ The government thereafter in pursuance of the conversation I have just related issued its warrant or cheek, that is, they said that they had issued it. ’ ’ He further stated that he remained at Washington until after this government warrant was issued and turned over to the surety company. The warrant was for the sum of $19,482.67. He says that he thereafter wrote to the surety company, requesting them to bring forward the warrant or the amount of money it represented, and to use it “where it would do the best good,” but that they never replied; that he thereafter learned through their agent, Mr. Neal of Boise City, that they had received the money on the warrant.

This evidence, uncontradicted and undisputed as it is in the record, is sufficient to charge the surety company with the debt sued upon. It shows unmistakably that the company received the sum of $19,482.67 from the government, which sum had been earned by Monarch & Porter and was due to Monarch & Porter at the time that the surety company took over the contract and undertook to complete the works. It also shows that they received this money for the use and benefit of the creditors of Monarch & Porter, and with the understanding on the part of Monarch & Porter, who were speaking through their attorney John Porter, that this sum was to be paid over pending a final settlement of the differences between Monarch & Porter and the government for the purpose of meeting the debts of the contractors to laborers and others who had previously furnished material and supplies in the construction of the works. The company could not receive this money which it had not earned and which was due to Monarch & Porter, and was therefore their money, and appropriate it to its own use, and then when sued by one of the creditors for whose use it was paid, plead that there was no consideration or no original promise or contract whereby the company had obligated itself to pay the debt.

It is strenuously argued by counsel for respondent that there was no consideration for either an express or implied promise to pay appellant Beymer his claim out of the money thus received from the government. We answer that contention by saying that the receipt of the money itself is sufficient consideration.

It has also been urged that the action is against the surety company as a surety for Monarch & Porter and not as an original promisor or contractor, and that therefore this action could only be maintained in the federal court. That contention is not borne out by the record in the case. The action is against the surety company as an original promisor. The obligation sued upon does not arise out of the contract of surety, but rather out of the independent contract, express or implied as it may be, whereby the surety company received the money to be used and applied for the payment of the creditors of Monarch & Porter. This clearly appears from the evidence of John Porter heretofore referred to. It is urged, however, by counsel for respondent that this particular claim was not mentioned, and the appellant Beymer was not named as a creditor of Monarch & Porter to whom a part of this money should be paid. That appears to be true. It seems that at the time this conversation was had in Washington and the agreement was reached whereby the government was to pay over the $19,000 on its indebtedness to Monarch & Porter, no specific creditor was mentioned, but it was rather paid over for the benefit of the creditors generally. This being the case and it appearing that the surety company received the money and that Beymer and his assignors were in fact creditors of Monarch & Porter at that time and that they have not been paid, the burden is upon the surety company to show that it has in fact paid out and expended the money in the payment of creditors in accordance with the understanding had at the time this agreement was reached when the money was paid by the government.

For the reasons above set forth, the judgment must be reversed, and it is so ordered and a new trial is granted. Costs awarded in favor of appellants.

Stewart, C. J., and Sullivan, J., concur.

Petition for rehearing denied.