Eureka Sandstone Co. v. Long

11 Wash. 161 | Wash. | 1895

Lead Opinion

The opinion of the court was delivered by

Dunbar, J.

Respondent Long built a court house for Pierce county; which building was accepted June 21, 1893. The county took from Long and his co-defendants a bond under § 2415 of the General Statutes. The bond was not signed by Long, hut was signed by all the other defendants, and was delivered to the county by Long and by the county accepted. Appellant, the Eureka Sandstone Company, furnished Long something over $16,000 worth of material, which was used in the construction of this courthouse, and only a part of which has been paid for, and brought this action against Long and his sureties to recover the balance due. Defendants demurred, and the demurrers were sustained. Plaintiff stood upon its complaint, and judgment for defendants was entered on the demurrers. This appeal is taken from the orders sustaining the demurrers, and from the judgment entered.

The main fact upon which the demurrers were based and upon which the court decided the case below, and which is argued here by both respondents and appellant, is that the name of the defendant John T. Long, the contractor, was not signed to the bond. From this fact it was contended that the complaint did not state a cause of action, and that there was a misjoinder of causes and a defect of parties defendant.

After a somewhat extended investigation of the authorities governing the principles involved in this case, we are of the opinion that the court committed error in sustaining the demurrers to this complaint. After stating all the facts, the complaint alleges that said bond was delivered to the county commisioners of said county with the knowledge and consent of the sureties. It also alleges that Long procured and caused it to be executed, and at the time of the execution of the bond provided for by the statute, it was delivered by the defendants herein to said board of county commissioners as part and parcel of said contract. It is also alleged in the complaint that the bond was duly filed by the board of county commissioners on the 19th day of September, 1890, and that on the 7th day of January, 1892, before the sale and delivery of the stone mentioned in the complaint, for the payment of which this action is brought, the defendants and each of them, together with the county commissioners of Pierce county, for the purpose of modifying and changing the terms and conditions of the original contract and said bond, entered into and delivered to the said county commissioners a certain other contract in writing, a copy of which is attached to and made a part of the complaint; and that thereafter, with the knowledge and consent of the commissioners and these sureties, Long proceeded to complete and carry out his contract with the said county as modified by this second contract.

There is a direct conflict of authority on this question, as indeed there is on almost every question concerning the liability of sureties on a bond. The older cases, it seems, have held closely to the rule that bonds are to be construed strictly in favor of the sureties; while this rule has been modified by later decisions. This modification, it seems to us, is in accordance with common sense and the spirit of the age. A bond is nothing more nor less than a contract, and the sureties to a bond are simply parties to a contract; and we know of no reason why the same rules of construction should not be applied to a bond as to any other contract. It is true that the sureties may not be beneficiaries in any respect, and that it may be purely a matter of accommodation with them; but the bond was made to effect a certain purpose; that purpose was to secure the obligees from loss in case of its violation; and there is no reason why the law should make it more difficult for the obligee to obtain redress in case of a violation of a bond than a party to any other contract.

The true inquiry should be, what was the meaning and intent of the contract; and when that meaning and intent can be ascertained, the contract ought to be enforced. While, as insisted by respondents, courts should not presume to make contracts for individuals, neither should they allow them to escape responsibilities which they have voluntarily assumed, by too strained a construction of technical law.

The allegation in this complaint is a broad one, viz., that this bond was delivered with the knowledge and consent of the sureties. If this be true, and for the purposes of this case it must be taken to be true, then the sureties waived any formal or other objection that there might be to this bond; for, under the plain terms of the allegation, they must have had knowledge of the bond as it was delivered,»and consented to its delivery in that condition.

It seems to us that the principle embodied in this case was decided by this court in the case of Ihrig v. Scott, 5 Wash. 584 (32 Pac. 466), where it was held that where a bond, executed by a contractor for the erection of a school house, by mistake named the board of school directors instead of the State of Washington as obligee, such defect was not fatal, if from the terms of the bond it appeared that its object was to secure laborers and material inen as provided for by the law making provision for such bond. In that case this court said:

“The simple fact, then, of the want of the proper obligee in this bond is not fatal to it, if from its terms the object for which it is executed appears. Even a superficial examination will show such to be the fact. No one can read the bond in the light of the statute above referred to without at once coming to the conclusion that in executing it by the principal and sureties and the acceptance thereof by the proper officers of the school district, there was an intention on the part of all to provide the security required by said statute, in the interests of such as might thereafter by virtue thereof become entitled to protection. This would be the rule without the aid of any curative statute. For while it is true that under the old rules existing at common law much technical accuracy was required in regard to instruments of this nature, yet even in the absence of any statute, such rule has been by the decisions of the courts very much modified, and at this time courts look more to the substance than to the form in determining as to whether or not such instruments shall have force.”

And the court then proceeds to cite our statute (Code Proc., §800) which provides that —

“No bond required bylaw, and intended as such bond, shall be void *for want of form or substance, recital, or condition; nor shall the principal or surety on such account be discharged, but all the parties thereto shall be held and bound to the full extent contemplated by the law requiring the same, to the amount specified in such bond.”

Certainly the reasoning of the court in this case is applicable to the one at bar. In the case discussed there was no obligee mentioned, for the naming of Ihe board of school directors, who could not under the law be obligees to the bond, amounted to no mention at all. In the case at bar there is no signing by one of the obligors. Certainly there can be no more reason why a bond should be declared void and illegal by reason of its non-execution by the obligor than by reason of its omission of the name of the obligee; and as with the case discussed, it takes but a superficial examination of the case at bar to lead one to the conclusion that in the execution of the bond in question by the sureties, and the acceptance thereof by the county commissioners, there was an intention on the part of all to provide the security required by the statute in the interests of such as might thereafter, by virtue thereof, become entitled to protection. The appellant in this case, relying upon this bond, furnished this material to the contractor under the rule laid down in Ihrig v. Scott, supra, and certainly ought to be protected.

State of Ohio v. Bowman, 10 Ohio, 445, is a well reasoned case, and, in spite of the ingenious attempt by counsel for respondent to distinguish it from the case at bar, we think is exactly in point. The court in that case, in a very learned opinion, after the citation by counsel of many of the cases which are cited by respondents in support of their contention here, squarely decided that where in a county treasurer’s bond the name of the treasurer is recited in the body of it, hut where he neither signs nor seals it, his sureties who do execute it are liable. The statute in that case provided that the county treasurer, previous to his entering upon the office, should give bond, with four or more freehold sureties, etc.; and it also provided that in case of default, suit should be instituted against the treasurer and his sureties.

“From which,” says the court, “it is argued that the statute contemplates an execution by the principal as well as his sureties. I admit that it is the duty of the treasurer to execute the bond, and that the statute even supposes that he will do so. But I deny the proposition, that if it is not done the bond will be therefore void. The bond may be procured; may, in the words of the act, be given by the principal, although he did not sign or seal it. . . . The completeness of the bond, stricti juris, depends simply upon the fact whether it was given by him. And that it was thus given the indorsement on the back of the bond, on the very day on which the term of office commenced, on the very day when the bond should be given, of the oath of office by the principal, affords, in the absence of any countervailing testimony, the strongest possible presumption.”

The fact that the bond was given by the contractor in this case plainly appears from the allegations of the complaint; and if the completeness of the bond, stricti juris, depends upon that fact, the demurrers were certainly wrongfully sustained. Again, the court, in answer to the argument used in the case above mentioned, viz., that the sureties would be deprived of their rights against the principal if judgment should he obtained on this bond, says:

“ Great reliance is placed upon the fact, that if the instrument is not executed by the principal it will affect the remedy over against him by the securities. There would be great force in this argument if the remedy were destroyed; but it is not; the force and the extent of this liability to them are unimpaired. Whether they could use the bond, per se, as evidence of his liability, presents a question merely of convenience in the use of the right, but does not affect the right itself any more than would the loss or destruction of the bond.”

And so with the case at bar. Unquestionably the sureties would have a right of action against the contractor for any damages which they sustained by reason of the violation of his contract. The court in the case above cited quoted from the case of United States v. Linn, 15 Pet. 290, where it was held that the instrument on which the suit was brought was a writing not sealed by either the principal or his sureties, and that although it was not a bond it was a good contract between the parties.

Another case which is exactly parallel with the case at bar is Cockrill v. Davie, 14 Mont. 131 (35 Pac. 958). There it was held that where the liability of the principal in a bond is fixed by contract, or by operation of law, his failure to sign the bond does not affect the liability of his sureties thereon. This case involved the liability of a contractor who gave bonds for the' faithful performance of his contract. There the court, among other things, said:

“Appellant insists that the bond in question is wholly void because Davie, named therein as principal, did not sign it along with the sureties. But, after much consideration of this subject and the authorities, we cannot sustain that view. The same obligation was fixed upon Davie by another contract, and Renner and Cornelius [who were the sureties] undertook and promised, in writing, to answer for the default of Davie in respect to his engagements by virtue of that contract, which the sureties described in their bond. This bond was a collateral engraftment on the contract, whereby those sureties took upon themselves the burden of answering for ■ any default which Davie might make in respect to his obligation thereunder. As to such obligations, where the liability of the principal is fixed by contract or by operation of law, the sureties who guarantee the fulfillment of that obligation cannot avoid their obligation because the principal did not sign the bond with them.”

In this case the same obligation was imposed upon Long by his direct contract with the county commissioners, and the sureties in this case undertook and promised to answer for the faithful performance on his part of that contract; and the obligation and liabilities of the principal, Long, were fixed by the contract which he had before made with the county commissioners. It would require more genius than the writer of this opinion possesses to distinguish this case, either in fact or principle, from the case at bar.

As somewhat bearing on this proposition, it was decided by this court in Tingley v. Bellingham Bay Boom Co., 5 Wash. 644 (32 Pac. 737), that a contract is signed within the meaning of the statute of frauds, when the name of the party to be charged is written by him or an authorized agent anywhere in the con- - tract. “It is a well established rule of law,” says the court, “ that a contract is signed, within the meaning of the statute, whether the name of the party to he charged appears at the bottom, top, middle- or side of the paper;” citing authorities. A review of the whole opinion in this case will show that the principle involved there is applicable here, and that the instrument was held good because it was ratified by the parties who signed it and by the parties who received it. It is true that the court proceeded to state that under the statute the party who raised objection to the validity of the contract would have been held responsible 'anyway for a portion of the damages, but a portion, it will be seen, depended strictly upon the contract. And in the case at bar, this bond was not only ratified by the commissioners, but it was ratified and acknowledged, and its force and efficacy and purpose especially acknowledged two years afterwards when the sureties agreed to a change of the contract upon which the bond was based.

Nor do we think with the respondents that it should necessarily appear from the complaint that the sureties were aware that the principal had not signed the bond at the time of its ratification. Having given a bond to comply with the provisions of the statute, and that bond having been delivered by their agent, they must be presumed to have known its conditions.

It is conceded by the appellant that, if this bond had anything on its face to challenge the attention of the obligees, it would fall within the rule announced by this court in King County v. Ferry, 5 Wash. 536 (32 Pac. 538; 34 Am. St. Rep. 880); but it is asserted that under the rule announced there the scope of the agency only went to the extent of the delivery of the bond as agreed upon between the sureties and the principal. In that case, in laying down the rule as to the liability of the sureties, which was a discussion really with reference to instruments which had been changed after their execution, this court said:

“Of course, if there is anything on the face of the bond when it is delivered to excite the suspicion of the obligee that the bond has been tampered with, or sufficient to put a prudent person on his guard, he ought to be held bound to make an investigation before accepting the bond. But to hold the obligee responsible where the bond is good on its face, and where he has no notice until after the defalcation has occurred, is, in our judgment, not only wi’ong in principle, but is also opposed to the great weight of authority.”

It seems to us that the bond in this case does not fall within the rule laid down by the court in that case, or. of any of the cases cited by the court therein. Here there have been no erasures or alterations of this bond which on its face would tend to put the obligees on their guard. It is true that the name of the principal appears in the body of the bond and does not appear among the signatures; but that is altogether a different kind of a case from where one signature had been erased and another inserted in such a way that it was easily discernible, or when a blue mark had been drawn across the name of a signer, and instances of that kind, which would by casual observation attract the attention of the obligees. We think, even considering the case from a standpoint of agency alone, that the sureties would have no defense to this bond.

We are aware that on the main proposition, viz., the validity of the bond where the principal has not signed, there is conflict of authority, and we think it would be unprofitable to go into a review or a discussion of the cases holding such bonds illegal. But the cases we have cited appeal to our judgment as being consistent and based upon fairness and right reasoning, and therefore we are inclined to follow them.

We do not think there is any merit in the contention of the respondents, that there is a misjoinder of parties to this action. As was said by the Montana court in Cockrill v. Davie, supra, the bond here was a collateral engraftment upon the contract which respondent Long had already given; and while the evidence which would tend to sustain this case against Long would differ from that which would sustain it against the sureties, it being in one case the contract and in the other the bond, the obligations of the parties and the rights of the plaintiff are identical. Under the bond and the contract it is the primary duty of the defendants to pay for this material. The bond and the contract are provided by statute for the express purpose of securing persons who furnish material or labor; and the right of the plaintiff in this case is the same as to all the defendants, and the testimony can be as logically and consistently brought out in one case as in two.

It will be necessary, of course, for the plaintiff, appellant here, tc establish the fact that he furnished the goods to Long, the contractor, and under what terms or conditions or contract they were furnished. After this is done, all that is necessary to effect the sureties’ ’ liability is to prove that they signed the bond which the law provides for the enforcement or security of the contract entered into by the contractor.

The judgment will therefore be reversed, with instructions to the lower court to overrule the demurrers to the complaint.

Scott, Anders and Gordon, JJ., concur.

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Dissenting Opinion

Hoyt, C. J.

(dissenting).—I am unable to agree with all that is said in the foregoing opinion. I fully indorse what is said therein as to the duty of courts to conform their rulings to the condition of things existing at the time the decisions are made, even although such rulings conflict in some degree with the weight of authority upon the subject. I also fully concur in what is said about the duty of courts to look at substance rather than form in the construction of contracts of all kinds, including those of sureties in bonds and other written instruments. But I cannot agree with what is said as to the force to be given the allegations in the complaint to the effect that the bond in question was delivered to the officers of the county by the defendants. All that could reasonably be inferred therefrom is that the instrument came into the possession of the county, and that defendants had knowledge of that fact. It should not be inferred from such allegations that there was any consent on the part of the sureties that the bond should be delivered before it had been made complete by the signature of the person named therein as principal.

If only such inference can be drawn from the allegations in the complaint, no question of estoppel as against the sureties or waiver by them of the right to have the bond signed by the principal, can be invoked to aid in determining the rights of the parties. It follows that the rights of the sureties must be adjudicated in the light of the presumption that they signed the instrument with the understanding that it should be signed by the principal before it should be of force against them; and also of the further fact that there was no privity between the sureties and the plaintiff in the action. At the time the sureties signed the instrument, the plaintiff was an entire stranger to the transaction, and for that reason no contract relation was created with it by such signing. It follows that the rights of the pláintiff were dependent entirely upon the statute; and it can maintain no action upon the instrument unless it is such as the statute required.

Did the instrument in question so conform to the requirements of the statute that it should be held to be the bond thereby required ? Such statute provides that the contractor should execute the bond with two or moré sureties, and it would seem plain that a bond executed by sureties alone would not come within its terms. But even if a bond executed by another than the contractor as principal with sureties would be in compliance with the statute, it does not follow that an instrument without any principal at all would come within its provisions. The distinctions between bonds and other forms of contracts are so well established that it is not proper for courts to disregard them until authorized so to do by proper legislation. The statute requires that a bond should be given. It follows that an instrument which does not possess the substantial features of a bond does not come within its provisions. One of such essential features is a principal. There can be no bond without a principal to be bound thereby. The instrument under consideration was executed by sureties alone; hence it lacked one of the essential qualities of a bond. It follows that even though the sureties be held to have waived the want of the signature of the principal, the instrument was so lacking in the essentials of a bond that the statute could not be invoked to aid in the assertion of rights thereunder.

But in my opinion no such waiver was shown. There could be no waiver or estoppel by the sureties which could have force in favor of the plaintiff unless the acts or omissions upon which such waiver or estoppel was founded occurred after the plaintiff had furnished the material, and by so doing put itself in privity with the parties to the bond, if one had been given.

In my opinion, the demurrer was also rightfully sustained, because of the misjoinder of causes of action. Long, one of the defendants, was not liable upon the bond. If he was liable to the plaintiff at all, it was upon a contract entered into between it and himself, to which the other defendants were strangers. The right of action as against him could only have been upon the contract under which the materials were furnished, and it is clear that the other defendants were strangers to that contract. The claim of appellant in this regard is, that by the execution of the instrument in question the sureties became parties to the contract for the erection of the building. I am unable to see any reason for sustaining this claim. If the county itself was attempting to enforce rights against Long, there might be some reason-for holding that a bond given by him and sureties for the performance of the contract would establish a privity as between the sureties and the county in relation thereto. But in my opinion the claim could not be sustained even in an action of that kind; much less can it be when the action is sought to be maintained by strangers to such contract. The contract between the county and .the one who was to erect the building was distinct and complete before the execution of the instrument in question. With such contract the plaintiff had no connection. The instrument in question was given to the county for the purposes contemplated by the statute, and if an action could be maintained thereon at all, it could only be against those who were parties to it. If the sureties were liable at all they were liable upon the instrument which they signed. The defendant Long not having signed such instrument, could not be made liable thereon. If liable to plaintiff at all, his liability arose out of an entirely different contract. Hence the contention of the defendants that two causes of action had been improperly joined was warranted by the facts.

In my opinion the judgment should be affirmed.