102 Wash. 651 | Wash. | 1918
The evidence in this case shows that respondents, plaintiffs, are partners, and on June 1, 1916, were already under contract with the board of regents of the University of Washington to construct a building, known as the Home Economics Building, and complete it by September 12, 1916, with a penalty of $100 for each day’s delay thereafter that would interfere with the use of the class rooms and entrances. On June 1,1916, respondents, by written contract, sublet the lathing and plastering of the building to defendant, Tom Hogart, who was to furnish material and labor, his work to start upon notice from respondents and continue in harmony with the other work on the building, and complete it without delay. Respondents agreed to pay defendant $5,774, as follows: On the 10th of the month, eighty-five per cent of the value of material and labor actually put in the building during the preceding month, according to approved estimates. On June 17, 1916, appellant, Maryland Casualty Company, delivered to respondents a bond assuring performance of the Hogart contract without loss or dam
“Provided, however, that this bond is executed upon the following express conditions, the performance of each of which shall be a condition precedent to any right of recovery thereon:
“First: That in the event of any default on the part of the principal, a written statement of the particular facts showing such default and the date thereof shall be delivered to the surety by registered mail, at its office in the city of Baltimore, Maryland, promptly and in any event within ten days after the obligee or his representative, or the architect, if any, shall learn of such default; the surety shall have the right within thirty days after the receipt of such statement to proceed, or procure others to proceed, with the performance of such contract.”
Tom Hogart signed the bond as principal. Hogart proceeded with the lathing and plastering (subletting the lathing to one L. E. Nelson) until Saturday, August 19, 1916, when Hogart’s bank account was garnisheed, by reason of which the pay checks given his craftsmen on that day were dishonored. Plasterers could not be had for this work until the checks were paid. Hogart failed to take up the checks, and on August 23,1916, respondents had a conference with the soliciting agent of appellant for Seattle, at that time explaining the situation; and on that same day, by registered mail, sent written notice to appellant at its home office in Baltimore, stating therein financial delinquencies of Hogart with respect to "this contract; that his bank account had been garnisheed; that he was unable to pay or take care of his pay-roll of the last week. The notice further says as follows:
“Mr. Hogart’s men have refused to continue on the job until, they are paid for their last week’s work, and in order to have the job completed it has become necessary for us to take up the checks issued by Mr. Hogart*654 last Week, and it appears that we will-have to take care of the pay roll from now on. We are charging these items to the account of Tom Hogart and are looking to your company as surety of his bond to see that we ¿re' reimbursed. ”
At this time, August 23, 1916, the work remaining undone under the Hogart contract included the two entrances to the building. Hogart did not return to work after August 19, 1916, and the work was at a standstill until August 24,1916, when respondents, took up the dishonored cheeks of Hogart and proceeded faithfully with the job, completing it about October 6; 1917, at prices for labor and material as low as pos7 sible. Seattle lawyers for appellant, on August 22, 1916, had notice of the situation, and on .that day nofiT fied the home office by wire that Hogart had probably defaulted, and on August 28, 1916, according to reply instructions, the lawyers requested respondents to furnish a statement of the Hogart account and condition of the contract, which was done on August 29, 1916. Appellant never signified any wish to complete the work, and in no way objected to respondents completing it. Finne and Gjarde, respondents, then brought this action, declaring on the lathing and plastering contract of June 1,1916, as to defendant Hogart, and on the bond as to both Hogart and the Maryland Casualty Company, demanding judgment in the sum of $3,573.25 and interest, alleging that amount to be the cost to appellant in excess of the contract price of $5,774, and some extras amounting to $161.25. Defendant Hogart, in his answer, counterclaimed for extra labor and material in the sum of $3,873.785 while the answer of appellant, Maryland Casualty Company, in addition to substantial denials, alleged affirmative matter (now most strongly relied on) that respondents, without appellant’s consent, failed; to perform
The facts above stated are supported by a preponderance of the evidence and so found by the trial court, as' well as the following additional facts: Tom Hogart’s' counterclaim was established to the extent of $318.07 and no more; there were extras in the amount of $161.25; there was a balance of $481.72 due L. E. Nelson for lathing under his subcontract with Hogart, for which claim had been filed with the board of regents; there was a claim of $1,060.95 due Sam Hunter & Company for material furnished before default of Hogart, for which notice of delivery was given and claims filed with the board of regents; and the totail cost to respondents was $9,472.50, which included $1,-125.50, consisting of expenditures after Hogart’s default or because of failure to file claims for work or material furnished Hogart, and hence no liability against respondents. The judgment of $2,093.68 against the company is arrived at by taking from the whole cost of $9,472.50 the sum of $1,125.50, made up of claims for which respondents are not liable and cost of construction to them after Hogart’s default, which leaves $8,347, from which last amount take the Hogart
Appellant alleges a large number of errors, but for the sake of clearness and order reduces them to five, as follows:
(1) “The failure of respondents to permit appellant to complete the job after Hogart’s default is a breach of a condition precedent; it goes to the essence of the contract and defeats respondents’ cause of action.”
Appellant calls attention to the provision of the bond, above referred to, with reference to the performance of each express condition thereof as a condition precedent to any right of recovery and reciting that, in case of default, written statement of facts showing default and date thereof shall be delivered to the surety by registered mail, etc., and “the surety shall have the right within thirty days after the receipt of such statement to proceed, or procure others to proceed, with the performance of such contract.” As already seen, the notice and statement were promptly given by registered mail to the company at its home
(2) “The failure of the respondents to retain the 15 per cent reserve balance released the appellant.”
The bond says:
“and shall also retain that portion if any, which such contract specifies the obligees shall or may retain of the value of all work performed or materials furnished in the prosecution of such contract . . . until the complete performance by the principal of all the terms. ’ ’
Now, remembering appellant’s obligation is to assure the performance of Hogart’s contract with respondents, notice must he kept of the terms of that contract, among which is the following: A payment of eighty-five per cent to he made to the party of the first part (Hogart) of the value of labor and materials actually incorporated into said work, on approved estimates on the 10th day of each month during the preceding month. The contract does not provide for payment to the contractor, as the work progressed, of
In the case of Northwestern Nat. Bank v. Guardian Casualty & Guaranty Co., 93 Wash. 635, 161 Pac. 473, we held, in line with earlier decisions of this court therein referred to, that this contractor’s reserve constitutes a trust fund for creditors, and that the surety has the right of subrogation to that balance should he be compelled to pay creditors, and also that he has the right to prevent its dissipation; and, continuing, we said in-that case, quoting from Maryland Casualty Co. v. Washington Nat. Bank, 92 Wash. 497, 159 Pac. 689:
“His expectation when he goes on the bond is plain; the principal may squander eighty per cent, leaving the surety at the mercy of the creditors, but there is at least twenty that loitt be applied to the creditors in spite of him. This amount, originally reserved to protect merely the creditors, is a collateral security of the principal available to the paying surety.”
It is plain that fifteen per cent of this contract price has not been squandered; but more than that amount, indeed, more than the contract price with extras added, has been used to pay creditors, every dollar of which diminished the bonding company’s liability by just that much. Appellant insists on the rule “of strict right of law,” but in the case of Manhattan Co. v. United
• (3) “The surety was released by increasing the contract price more than 10 per cent without its consent.”
As to this, appellant, is in error. Extras'were added only to the extent of $161.25, which is quite another matter from that of the work costing largely in excess of $5,774, which the surety company agreed should be the cost to respondents.
(4) “Respondents cannot recover for claims not already paid by them.”
This refers to the claim of L. E. Nelson on the lathing subcontract filed with the board of regents for $481.72, and the claim of Hunter & Company for ma
(5) “ The surety should be credited with the amount of Hogart’s counterclaim.”
This refers to the counterclaim of $3,873.78, alleged in Hogart’s answer, and involves a question of fact, upon which a lot of testimony was submitted. An examination of it convinces us that it is not established by a preponderance of the evidence, other than the $318.07 allowed by the trial court, to which extent the judgment is less than it otherwise would be.
Judgment affirmed.
Main, C. J., Fullerton, Parker, and Tolman, JJ., concur.