B.F. Sturtevant Co. v. Fidelity & Deposit Co. of Maryland

• Decision Date: 07 July 1916
• Docket Number: 13194.
• Court: Washington Supreme Court
• Parties: B. F. STURTEVANT CO. v. FIDELITY & DEPOSIT CO. OF MARYLAND.

158 P. 740

92 Wash. 52

B. F. STURTEVANT CO. v. FIDELITY & DEPOSIT CO. OF MARYLAND.

No. 13194.

Supreme Court of Washington, En Banc.

July 7, 1916

Appeal from Superior Court, King County; King Dykeman, Judge.

Action by the B. F. Sturtevant Company against the Fidelity &amp Deposit Company of Maryland. Judgment for defendant and from an order granting a motion for new trial, defendant appeals. Order affirmed.

Trefethen Grinstead & Laube, of Seattle, for appellant.

Aust &amp Terhune, of Seattle, for respondent.

PARKER J.

The plaintiff, the B. F. Sturtevant Company, seeks recovery upon a bond executed by the defendant, Fidelity & Deposit Company of Maryland, as surety, to secure payment of claims of materialmen furnishing material for the construction of the heating plant for a school building belonging to consolidated school district No. 305 of Snohomish county. Trial was had in the superior court sitting with a jury, and resulted in a verdict in favor of the defendant. A motion for new trial was made by counsel for the plaintiff upon the grounds, among others:

'First, insufficiency of the evidence to justify the verdict; second, that said verdict is against the weight of the evidence.'

The motion was granted by the court upon these grounds. The order entered by the court expressly so stated. From the order granting the motion for a new trial, the defendant has appealed.

The granting of a motion for new trial upon the ground that the evidence is insufficient to support the verdict or upon the ground that the verdict is against the weight of the evidence is a matter within the discretion of the trial court, which will be reversed upon appeal only for the plainest abuse of such discretion, and, when the evidence is in substantial conflict upon a controlling issue in the case, it cannot be said that there is any abuse of discretion by the trial court in granting a new trial upon either or these grounds. See Independent Brewing Co. v. McCrimmon, 85 Wash. 610, 148 P. 787, and our decisions there cited. Counsel for appellant, as we understand them, concede this to be the law, but contend that there is no conflict in the evidence touching any controlling issue in this case such as would warrant the jury finding other than for appellant, as it did find by its verdict. In other words, it is insisted that appellant is entitled to verdict and judgment in its favor as a matter of law, leaving no room for the exercise of discretion by the trial court upon the question of new trial. Our inquiry then is: Is the evidence introduced in this case in substantial conflict upon any controlling issue in the case?

In May, 1914, Adams Moffat Heating Company entered into a contract with consolidated school district No. 305 of Snohomish county agreeing to furnish the material for and construct the heating plant for a school building belonging to the district. Thereupon the heating company executed a bond with appellant, Fidelity & Deposit Company of Maryland, as surety thereon, in pursuance of the provisions of section 1159, Rem. & Ba. Code, relating to security for materialmen and others on public works. This bond is conditioned that the heating company 'shall pay all laborers, mechanics, subcontractors, and materialmen, and all persons furnishing provisions or supplies for the carrying on of said work, and all just debts, dues and demands incurred in the performance of said work.' This is, in substance, the condition of such bonds required by section 1159, Rem. & Bal. Code. Respondent furnished to the heating company material to be used and which was used in the construction of the heating plant, and claims a balance due thereon of $948, for the recovery of which it commenced this action against appellant as surety upon the bond. Appellant admits that there is a balance due to respondent for material so furnished of $248, which sum appellant tendered and deposited in court for the benefit of respondent. Appellant denies that any greater sum is due to respondent in so far as its liability upon the bond is concerned. The real controversy is over the proper application of a payment of $700 made by the heating company to respondent. When this payment was made the heating company was indebted to respondent upon another and older account not secured by this bond. This payment was made by the heating company sending its check to respondent, evidently through the mail. According to the testimony introduced in respondent's behalf, the heating company gave no direction whatever relative to the application of the $700 so paid by it to respondent. According to the testimony introduced in respondent's behalf, it also appears that the source from which the heating company acquired the $700 was unknown to respondent, its officers and agents. We do not say that the evidence was conclusive in respondent's favor upon the questions of the heating company failing to direct application of the $700 payment and respondent's knowledge of the source from which the heating company acquired the $700. For present purposes it is sufficient for us to state that there is testimony strongly tending to show these facts, and which was ample to support findings to that effect. In other words, viewing the evidence most favorably to appellant's contentions, it is at least conflicting upon these questions. It is not pretended that appellant at the time of the payment made any claim of its right as surety to have the $700 applied upon the debt due respondent which was secured by the bond. Upon receipt of the $700 respondent immediately applied the same upon the older debt owing to it by the heating company, and immediately so notified that company by letter. The evidence introduced in appellant's behalf shows that this $700 was acquired by the heating company from the school district in part payment for the construction of the heating plant; so that, as insisted by counsel for appellant, respondent was receiving money which appellant was entitled to have applied in payment of debts secured by the bond, respondent's claim for material furnished to the heating company being one of such debts. We may concede for present purposes that the evidence conclusively shows that the $700 paid by the heating company to respondent was acquired by the heating company from the school district as a payment upon the construction of the heating plant.

Counsel for appellant proceed upon the theory that its equity in the funds payable from the school district to the heating company upon its contract is such as to entitle appellant, as surety upon the bond, to have all such funds as can be traced into the hands of respondent as payments to it by the heating company applied upon debts due from the heating company to respondent for the furnishing of material for the construction of the heating plant, regardless of the application of such payments by the heating company or respondent as between themselves, and regardless of want of knowledge on the part of respondent as to the source from which the heating company acquired the money which it paid to respondent. As we proceed we shall regard our problem as being reduced to this: Assuming that the $700 was paid by the heating company to respondent without any direction as to its application, and that it was thereupon applied in good faith by respondent upon an older unsecured debt due to it from the heating company, and that respondent had then no knowledge as to the source from which the heating company acquired the $700, is the equity of appellant as surety upon the bond such as to entitle it to thereafter have the payment applied upon the debt due from the heating company to respondent which the bond was given to secure, and which is here sued upon? The evidence being sufficient to support these assumptions of fact, the trial court did not abuse its discretion in granting a new trial if they, as a matter of law, entitle respondent to have its application of the payment of the $700 remain undisturbed.

It is elementary law that:

'A creditor may apply a payment voluntarily made by a debtor without any specific appropriation, where there are two or more debts, to whichever debt he pleases.' 30 Cyc. 1233; Frazer v. Miller, 7 Wash. 521, 35 P. 427; Post-Intelligencer Pub. Co. v. Harris, 11 Wash. 500, 39 P. 965; Crane Co. v. United States Fid. & Guaranty Co., 74 Wash. 91, 95, 132 P. 872.

The rule is not without its exceptions; one of which is stated in the text of 30 Cyc. 1237, as follows:

'Another exception to the rule that the creditor has the right to apply the payment obtains when the money with which the payment is made is known to the creditor to have been derived from a particular source of fund, in which case he cannot, without the consent of the debtor, apply it otherwise than to the exoneration of the source or fund from which it was derived.'

This however, seems to recognize that want of knowledge of the source of the money on the part of the creditor receiving it renders this exception as not restricting the right of such creditor to make his election as to the debt upon which he will apply the payment. We think as we proceed it will be found that the weight of authority supports the view that such want of knowledge also secures to the creditor, even as against the claims of sureties, the right to have his application of the payment which he has made in the absence of such knowledge and in good faith remain undisturbed. But, before noticing the authorities holding to this view, let us review our own decisions touching the question of the right of a surety to invoke its equity in a given fund after the application of a payment made therefrom as between the original debtor and creditor, having in view respondent's want of knowledge of the source of...