City of Portland v. New England Cas. Co.

• Decision Date: 22 October 1915
• Citation: City of Portland v. New England Cas. Co., 152 P. 253, 78 Or. 195 (Or. 1915)
• Parties: CITY OF PORTLAND v. NEW ENGLAND CASUALTY CO. ET AL. [a1]
• Court: Oregon Supreme Court

152 P. 253

78 Or. 195

CITY OF PORTLAND v. NEW ENGLAND CASUALTY CO. ET AL. ^[a1]

Supreme Court of Oregon

October 22, 1915

Department 2.

Appeal from Circuit Court, Multnomah County; J. P. Kavanaugh, Judge.

Action by the City of Portland, for the use and benefit of W. W Swan, against the New England Casualty Company and others. Judgment for plaintiff, and defendant named and another appeal. Affirmed.

This action is brought to recover $78.75 upon a bond executed by virtue of the terms of section 6266, L. O. L. (Laws of 1903 p. 256). That section requires that all persons, firms, or corporations entering into a contract with the state of Oregon or any municipality, county, or school district within the state, for the construction of any public buildings, or the prosecution and completion of any work, shall execute the usual penal bond, with the additional obligation:

"That such contractor or contractors shall promptly make payments to all persons supplying him or them labor or materials for any prosecution of the work provided for in such contracts."

The law of 1903 was amended by the act of February 3, 1913 (Laws of 1913, p. 59). The amendment did not change the liability of the principal or surety upon the bond, but merely added a provision that in the event of the failure of the proper officers to require the bond thus directed the state municipality, county, or school district, as the case may be and the officers authorizing such contract, shall be jointly liable for such labor and materials.

On October 30, 1912, the defendant Oregon Hassam Paving Company stipulated with the city of Portland for the improvement of East Sixtieth street from the south line of Division street to the south line of Hawthorne avenue extended easterly pursuant to the charter and ordinances of the city. According to the plans and specifications described in the contract the Oregon Hassam Paving Company was to furnish all the material and perform all the labor necessary in the prosecution of the work. This company, hereinafter referred to as the contractor, entered into a subcontract with Miller & Bauer to lay certain cement sidewalks called for in the original contract. This latter firm engaged R. J. Rowen and Harry Ewing, partners doing business as the Auto Truck Company, to haul cement from certain warehouses in the city to the place of improvement for use in the construction of the sidewalks. The truck company, in turn, hired the relator, W. W. Swan, to do this hauling in auto trucks owned and operated by him. Neither the contractor nor Miller & Bauer had any direct dealing with Swan. It appears from the findings of fact that the Auto Truck Company was paid in full by Miller & Bauer for the material hauled to the work, but that the former failed to pay Swan. The contractor executed and delivered to the city of Portland a penal bond in statutory form, with the defendant New England Casualty Company as surety thereon, dated October 30, 1912, for the sum of $20,316.28, conditioned that the contractor would pay all claims for labor, work, and material on account of all subcontractors, materialmen, and laborers employed under said contract as required by section 162 of the charter of the city of Portland and the laws of the state of Oregon. The obligation contained the following provision:

"It being understood that any laborer, materialman, or subcontractor whose just claims may not be satisfied shall have and is hereby granted a right of action upon this bond in the name of the city of Portland, and said action shall have the same force and effect as if said city was enforcing the covenants of this bond as provided in section 162 of the charter of said city of Portland."

The labor of Swan in hauling material to the work was essential in the prosecution of the improvement, and was furnished to the original contractor to enable him to fulfill his agreement with the city.

The action is based upon the failure of the Auto Truck Company to pay its employé, Swan, the relator herein, and upon his allegation that he is one of the parties for whose benefit the bond was required. The facts of the case were stipulated by the respective counsel, and the trial court made findings substantially as above stated. Judgment was thereupon rendered in favor of plaintiff. The defendants New England Casualty Company and the Oregon Hassam Paving Company prosecute this appeal.

Robert J. O'Neil and J. K. Kollock, both of Portland (Kollock, Zollinger & McDowall, of Portland, on the brief), for appellants. Arthur H. Lewis, of Portland (Lewis & Lewis, of Portland, on the brief), for respondent.

BEAN, J. (after stating the facts as above).

While the amount in issue is not large, there are other cases depending upon the result. The matter to be considered is important as well to contractors and surety companies as to laborers and materialmen. The form of the question presented is whether or not the findings support the judgment. The rights of the plaintiffs and the defendants are measured in accordance with the statutory bond required. In the execution of such an instrument the parties thereto are presumed to have had notice of and taken into consideration and understood the statute authorizing the same. The provisions of the act are practically made a part of the bond, just as though they were incorporated therein. State v. Manhattan Rubber Co., 149 Mo. 181, 50 S.W. 321; Board v. U.

S. Fidelity & Guaranty Co., 155 Mo.App. 109, 134 S.W. 18-20. It is not incumbent upon us to notice the exact phraseology of the bond, because it was stated at the argument and it appears in the briefs that the writing was executed according to the statute. The rights of the parties depend upon the construction to be given to the legislative enactment in question. The title of the law reads thus:

"An act to protect subcontractors, materialmen, and laborers furnishing material for doing work upon public buildings, structures, superstructures, or other public works." The act provides as follows:

"Hereafter any person or persons, firm or corporation entering into a formal contract with the state of Oregon, or any municipality, county, or school district within said state, for the construction of any buildings, or the prosecution and

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