Ausplund v. Aetna Indemnity Co.

• Decision Date: 17 July 1905
• Parties: AUSPLUND v. AETNA INDEMNITY CO.
• Court: Oregon Supreme Court

81 P. 577

47 Or. 10

AUSPLUND v. AETNA INDEMNITY CO.

Supreme Court of Oregon

July 17, 1905

Appeal from Circuit Court, Multnomah County; Arthur L. Frazer Judge.

Action by Octavia Ausplund against the Aetna Indemnity Company. From a judgment for plaintiff, defendant appeals. Affirmed.

This action was instituted August 28, 1903, by Octavia Ausplund against J.W. Higgins and the Aetna Indemnity Company to recover damages for the breach of an agreement. The complaint states, in effect: That the defendant, the Aetna Indemnity Company, is a corporation engaged in this state in the indemnity business. That the defendant, Higgins, on June 21 1902, entered into a written contract with plaintiff, whereby he stipulated to erect for her on or before November 1st of that year a dwelling house, and to secure the performance of the terms of such agreement the defendants duly executed to her an undertaking, of which the following is a copy:

"The Aetna Indemnity Company, Hartford, Conn. Know all men by these presents, that we J.W. Higgins, of Portland, Or., as principal, and The Aetna Indemnity Company, a corporation created and existing under the laws of the State of Connecticut, and whose principal office is located in Hartford, Conn., as surety, are held and firmly bound unto Octavia Ausplund, of Portland, Or., in the full and just sum of twenty-three hundred and forty-six dollars, good and lawful money of the United States of America, to the payment of which sum, well and truly to be made, the said principal binds himself, his heirs, executors, and administrators, and the said surety binds itself, its successors, and assigns jointly and severally, firmly by these presents. Signed sealed, and dated this 26th day of June, A.D.1902. Whereas the said principal has entered into a certain written agreement with Octavia Ausplund, bearing date of June 21, 1902, being in substance practically as follows: To faithfully erect and finish for and in consideration of the sum of twenty-three hundred and forty-six ($2.346.00) dollars a two-story and basement frame residence, situate on the west half of lots 3 and 4, block 289, in Hawthorne Park, in the City of Portland, Or., conformable to the drawings and specifications made by the owner; said work to be completed on or before the 1st day of November, 1902. Now, therefore, the condition of the foregoing obligation is such that if the said principal shall well, truly, and faithfully comply with all the terms, covenants, and conditions of said contract on his part to be kept and performed according to its tenor, then this obligation shall be void; otherwise to remain in full force and effect. This bond is issued subject to the following provisions: Provided, that the said surety shall be notified in writing of any act on the part of the said principal, his agents, or employés, which may involve a loss for which the said surety is responsible hereunder, immediately after the occurrence of such act shall have come to the knowledge of the fully authorized representative or representatives of Octavia Ausplund, who shall have the supervision of the completion of said contract, and a registered letter mailed to the office of Clemens & O'Bryan, managers of the Aetna Indemnity Company, at Portland, Or., shall be deemed sufficient notice within the meaning of this bond. Provided, that if the said principal shall fail to comply with all the terms of said contract to such an extent that same shall be forfeited, then said surety shall have the right and privilege to assume said contract and to sublet or complete the same, whichever said surety may elect to do, provided it is done in accordance with said contract. Provided further, that in the event of any breach of the conditions of this bond, said surety shall be subrogated to all the rights and properties of said principal arising out of said contract, and all payments deferred, and any and all moneys at that time due said principal under and by virtue of said contract shall be credited upon any claim the said Octavia Ausplund may make upon said surety because of said breach. And provided further, that any suits at law or proceedings in equity brought against this bond to recover any claim thereunder must be instituted within six months after the first breach of said contract. And provided further, that the said surety shall not be liable for a greater sum than twenty-three hundred and forty-six ($2,346.00) dollars because of or on account of this bond. And provided lastly, that the assured or superintendent of the work must give to said surety due notice before the last payment under the contract herein referred to is made to the principal; otherwise, this obligation shall be void as to any liability of the surety hereunder. In witness whereof, the said principal has hereunto set his hand and seal, and the said surety has caused these presents to be signed and executed by its attorney in fact at Portland, Or., the day and year first written above."

That Higgins commenced the erection of the building, but failed to pay for the materials used in the construction thereof when the several claims therefor matured, and about October 20, 1902, plaintiff notified the indemnity company of his neglect in this respect, whereupon the company informed her that it would assume Higgins' contract, and requested her to make to it all payments of money due or accruing to him under the agreement. That in pursuance of such demand plaintiff thereafter made all payments of money due Higgins under the contract to the corporation, which assumed full control of the building and completed it. That the contract entered into with Higgins provided that the last payment due him thereunder was to be made when the house was completed and the possession thereof delivered to plaintiff free of liens. That after the indemnity company assumed such control and received the money due under the contract it permitted certain liens for materials furnished to be used in the erection of the house to be filed in the office of the county clerk of Multnomah county, setting out a list thereof, and stating the several sums demanded by the respective lien claimants. That suits were duly instituted to foreclose such liens, and before the day for answering the several complaints therein had expired plaintiff notified the indemnity company of the pendency of such suits, and requested it to settle or defend the same. That such proceedings were had in the several suits that on April 19, 1903, decrees were rendered therein for the sums demanded by each lien claimant. That in pursuance of such decrees plaintiff's real property was offered for sale to prevent which she, on May 19, 1903, was compelled to pay $624.50, the sum due, no part of which has ever been repaid to her; and "that plaintiff had no means of ascertaining what claims for material furnished and used in the erection of said residence defendants had failed to pay until she was served with the summons in said suit, and thereafter the attorneys' fees and costs to which said lienors became entitled could only be determined by the decrees in said foreclosure suit."

The defendant, the Aetna Indemnity Company, alone answering denied the material allegations of the complaint, and for a further defense averred that the undertaking in question was executed without consideration. For a second defense it is alleged that such undertaking provided that suits at law to recover any sum due under the bond should be commenced within six months after the first breach of the contract in question; that under such agreement Higgins was to complete plaintiff's building on or before November 1, 1902; that he failed to comply therewith, whereupon a breach occurred on that day; and that this action was not commenced until after the expiration of more than six months from November 1, 1902. As a third defense it is averred that the undertaking, setting out the preamble and condition clauses, describes the only contract to which the indemnity company ever became a party; that...