708 P.2d 623 | Or. Ct. App. | 1985
This is an action by North Coast Electric Company (plaintiff), both in its own name and in the name of the contracting agency, on a public contract bond to recover the value of materials which plaintiff sold to Martt Electric Company, Inc. Martt was a subcontractor on a school construction project for which defendant Peterson and Jones Commercial Construction, Inc. (defendant), was the general contractor. Defendant Travelers Indemnity is the surety on defendant’s performance bond. Martt has since gone through bankruptcy and has been dismissed from the case; plaintiff took default judgments against its principals. The trial court held that plaintiffs receipt of checks which defendant issued to plaintiff and Martt jointly in amounts whose total was greater than the value of the goods plaintiff supplied to Martt constituted payment in full to plaintiff for those goods. Plaintiff appeals; we reverse.
There are no significant factual disputes. Plaintiff had been Martt’s supplier for some time before this project and knew that Martt was in financial difficulties. Before agreeing to furnish supplies which Martt needed to fulfill its subcontract with defendant, plaintiff required Martt to request defendant to pay the contractual monthly progress payments by checks made out to plaintiff and Martt jointly. In its normal course of business, Martt submitted statements to defendant around the 25th of each month; defendant then paid the amount due around the middle of the next month. Plaintiff cashed the checks and, pursuant to its agreement with Martt, retained the full amount due it as of the latest date each check covered. It then paid Martt the balance. That was a customary practice in the business, but defendant did not specifically know the arrangement between plaintiff and Martt. Defendant made its last progress payment on March 14, 1983, covering work through February 25, 1983. Plaintiff has not been fully paid for materials furnished Martt after the latter date. It seeks the amount due, together with interest at the contractual rate, less a partial payment which defendant made from the retainage on the subcontract.
The trial court noted that there is no controlling Oregon law and, relying on Post Bros. Constr. Co. v. Yoder, 20 Cal 3d 1, 141 Cal Rptr 28, 569 P2d 133 (1977), held that
Defendant’s argument misunderstands the California cases and makes little practical sense. It would require materialmen to hold out the entire amount received by joint checks until the total equaled the expected sales to the subcontractor over the life of the contract. In the meantime, the subcontractor would still have to pay its employes and other expenses but would have no income to do so. The California rule does not, in fact, produce that result. “[T]he money due him” refers, not to all money which may ultimately be due, but only to the money due as of the date the check covers. In this case, each check constituted payment for materials supplied through approximately the 25th of the previous month, which was when Martt submitted its statements to defendant. There was no reason for defendant to expect those progress payments to cover future advances to Martt from plaintiff or from anyone else.
In J.S. Schirm Co. v. Rollingwood Homes Co., 56 Cal 2d 789, 17 Cal Rptr 1, 366 P2d 444 (1961), the defendant was a general contractor who was building homes on 127 lots. It arranged with a subcontractor to install wallboard in the houses, paying for each lot separately; the plaintiff was the
Post Bros. Constr. Co. v. Yoder, supra, on which defendant and the trial court relied, is not inconsistent with J.S. Shirm. The plaintiff, the materialman, kept a running account with the subcontractor for a number of jobs. It credited each payment to the earliest unpaid invoices without regard to the source of the funds. Thus, the plaintiff did not determine what share of the joint check issued for the job in question covered materials on that job, and it did not credit all amounts received on that job to supplies furnished for the job to which the check related. Rather, it credited some of the amounts received on one job to supplies furnished for others. The court held that the plaintiff could not recover from a general contractor when it failed to determine how much of each joint check was intended to pay for materials it had supplied for the job to which the check related. That determination was essential to deciding how much of each check actually belonged to the materialman rather than to another joint payee. The plaintiff lost, because it had comingled money from several jobs and thus could not show that it had been underpaid on the one in question.
The Oregon case closest to this one is Portland Elec. and Plum. v. Simpson, 59 Or App 486, 651 P2d 172 (1982), former opinion adhered to, 61 Or App 266, 656 P2d 394, rev den 294 Or 682 (1983). We construed a lien release made contemporaneously with a progress payment made by a joint check to
Reversed and remanded.