City of Portland v. Bituminous Paving & Imp. Co.

• Decision Date: 07 February 1898
• Parties: CITY OF PORTLAND v. BITUMINOUS PAVING & IMPROVEMENT CO. et al.
• Court: Oregon Supreme Court

52 P. 28

33 Or. 307

CITY OF PORTLAND v. BITUMINOUS PAVING & IMPROVEMENT CO. et al.

Supreme Court of Oregon

February 7, 1898

Appeal from circuit court, Multnomah county; H.E. McGinn, Judge.

Action by the city of Portland against the Bituminous Paving &amp Improvement Company and others. From a judgment in favor of plaintiff, defendants appeal. Reversed.

The complaint herein, after setting forth the corporate character of the plaintiff and the defendant company, alleges, in substance: That said paving and improvement company entered into a contract with the city, a copy of which is attached to the complaint, and marked "Exhibit A." That on June 29 and 30, 1891, Ordinance No. 6,718, providing for the improvement of Washington street from the west line of Second street to its intersection with B street, was passed and approved, section 3 of which treats of the general character of the work. Section 4 provides that the grading, sidewalks and gutters shall conform, as nearly as practicable, to the requirements of sections 6, 7, and 9 of Ordinance No. 2,839 and the paving, as nearly as practicable, to the provisions of Ordinance No. 6,715, relating to the manner of laying bituminous rock pavement, except as provided in section 3; and section 5, that the provisions of section 11 of said Ordinance No. 2,839 shall apply to lumber and all other material used in the improvement. Section 30 of said Ordinance No. 6,715 provides as follows: "The contractor shall give a good and sufficient bond to the city of Portland in an amount equal to the contract price of said improvement conditioned that he will commence and complete the proposed improvement according to the specifications herein mentioned, and that in addition to the foregoing, he will give a good and sufficient bond to the city of Portland, in amount equal to 25 per cent. of the contract price of said improvement, conditioned that for the period of five years from the date of its completion, he will keep the pavement in repair by immediately, upon proper notice, repairing at his own cost and expense any injuries or worn out places or other defects due to traffic, or on account of disintegration, or decay, or in any manner attributable to defective materials or workmanship. The sureties upon this bond shall justify to double the amount of such bond. Payment in full of the contract price shall not release the sureties until said period of five years shall have expired, said bonds to be approved as required by the city charter." That pursuant to the terms of said contract and the provisions of the ordinance therein referred to, and in consideration thereof, the said paving and improvement company, as principal, and the defendants A.N. King and D.P. Thompson as sureties, made, executed, and delivered their bond to the said city of Portland, a copy of which is attached, marked "Exhibit B," and made a part of the complaint. That the said company, pursuant to the terms of its agreement, completed said improvement on the 18th day of November, 1891. "That for a long time prior to the commencement of this action, and at the present time, the said pavement, within the limits of said improvement, was injured and defective, and has been, and now is, completely worn out, and the said pavement is full of deep and dangerous holes, and is almost impassable; all of which is due to traffic, disintegration, decay, defective material used in the construction thereof, and the workmanship of the same. That on or about the 10th day of September, 1894, and prior thereto, and before the commencement of this action, the said plaintiff duly notified the said Portland Bituminous Paving & Improvement Company of the condition of the said street as aforesaid, and duly requested the said company to repair the same, but the said defendant has failed and refused, and now fails and refuses, to repair the same, or any part thereof; that by reason of said failure and refusal of the said company to comply with the terms of said bond to keep the street in repair as aforesaid, the city is and will be compelled to repair the same, so as to make it safe and passable, and suitable for the travel over the same, and to expend large sums of money therefor; whereby the city is and has been damaged in the sum of $9,000."

The terms of the contract, marked "Exhibit A," are that the paving and improvement company shall, among other things, furnish the material and perform the labor necessary or required under the provisions of Ordinance No. 6,718 for the improvement of said Washington street, and complete said improvement on or before November 6, 1891, to the satisfaction of the city council, and do and perform all of said work in a good and workmanlike manner, and according to the provisions and requirements of said ordinance and other ordinances and parts of ordinances therein referred to. The consideration to be paid for such improvement is specifically stated, but it is further stipulated that the paving and improvement company shall be paid by warrants drawn upon a fund derived from local assessments upon the property adjoining and benefited, and it is expressly agreed that the said company shall look for payment only to such fund, and will not require the city to pay for the same out of any other fund by any process whatever. Exhibit B is in form a bond whereby the Portland Bituminous Paving & Improvement Company, as principal, and A.N. King and D.P. Thompson, as sureties, have bound themselves unto the city of Portland in the sum of $9,000, conditioned as follows: "Now, if said contractor shall, for the period of five years next following the date of completion of the work of improvement hereinabove referred to, keep the said street and pavement in repair from the said west line of Second street to the intersection of Washington and B streets, in said city, by immediately, upon proper notice, repairing, at its own cost and expense, any injuries or worn-out places, or other defects due to traffic, or on account of disintegration or decay, or in any manner attributable to defective materials or workmanship, then this obligation to be void; otherwise to remain in full force and virtue." A demurrer to the complaint was overruled, and judgment entered for plaintiff after trial before the court.

J.C. Moreland and Richard Williams, for appellants.

W.M. Cake, City Atty., for respondent.

WOLVERTON, J. (after stating the facts).

It is important at the outset to ascertain and determine the proper interpretation to be given the language of the condition of the bond relating to repairs. The respondent contends that the condition is effective only as a guaranty that the work and materials will be done and furnished according to the stipulations of the contract, and hence that the bond stands as security for the faithful performance thereof. The language of the ordinance and the condition are very nearly identical, so that the consideration of the purpose of the former must necessarily aid us in arriving at the true construction of the latter. By the ordinance the contractor is required, in the first place, to give a good and sufficient bond, in amount equal to the contract price conditioned, among other things, that he will commence and complete the proposed improvement according to the specifications. In addition to this, another bond, in a sum equal to 25 per cent. of the contract price, is required to be given, conditioned as is the one in suit. Now, the evident purpose of the common council in requiring the larger bond was to secure a faithful performance of the contract in all its details, as by its terms it is equivalent to a requirement that the improvement shall be completed according to specifications, and this, we assume, comprehends the quality of the materials stipulated for, as well as the manner of the workmanship. So there would appear to be no need of the lesser one, except to subserve some other purpose; and it is not reasonable to suppose that the two bonds were intended to afford to the city cumulative remedies for the accomplishment of one and the same end. The language and grammatical arrangement of the ordinance and condition are in harmony with this thought. The obligation is to repair injuries arising from several causes, among which are such as may arise from defective materials and workmanship. A guaranty against injuries for a reasonable time after completion, which may be attributable to these specific causes, might be regarded as a suitable, and perhaps proper, test of substantial compliance on the part of the contractor, and therefore might be held to operate as a guaranty of faithful performance, for it is sometimes argued that, if the work is well done, it would need no repairs within such time. Still it is not a felicitous way of stating the guaranty for sound and good work. City of Covington v. Boyle, 6 Bush, 204. However that may be, such could not be the purpose of the bond in suit, because the city took another looking to that end. The causes assigned are so broad and comprehensive in their scope as to include injuries arising from every substantial source, and, in effect subjoins an independent condition, not covered by the contract. So that the undertaking is simply to keep and maintain the street and pavement in repair for a designated period of time, regardless of the quality of the material stipulated to be furnished or supplied, or the workmanship to be employed. Upon the other hand, it is urged that the bond is invalid, because it was given as a guaranty that the contractor shall make and keep up the repairs upon the street and pavement, the expenses for which the city has, without power or rightful authority, assessed against the adjoining property. The city is empowered by charter...