Clatsop County v. Feldschau

• Decision Date: 30 July 1921
• Citation: Clatsop County v. Feldschau, 101 Or. 369, 199 P. 953 (Or. 1921)
• Parties: CLATSOP COUNTY EX REL. HILDEBRAND v. FELDSCHAU ET AL. [a1]
• Court: Oregon Supreme Court

199 P. 953

101 Or. 369

CLATSOP COUNTY EX REL. HILDEBRAND v. FELDSCHAU ET AL. ^[a1]

Supreme Court of Oregon

July 30, 1921

Department 2.

Appeal from Circuit Court, Clatsop County; J. A. Eakin, Judge.

Proceeding by Clatsop County, a municipal corporation, on the relation of August Hildebrand, doing business under the firm name and style of Hildebrand & Co., against F. C. Feldschau and the United States Fidelity & Guaranty Company, a corporation. From a judgment for plaintiff, defendant last named appeals. Affirmed.

See also, 196 P. 378.

This is an action brought on a public improvement bond, for materials furnished in the performance of road work for Clatsop county. The cause was tried by the court without the intervention of a jury. Findings of fact were made, and a judgment rendered in favor of plaintiff. The defendant United States Fidelity &amp Guaranty Company prosecuted an appeal directed against the judgment on two of the several causes of action included in the complaint. The claimants whose judgments are contested are August Hildebrand and Judd Bros.

The defendant F. C. Feldschau, on February 13, 1917, entered into a written contract with Clatsop county to improve a portion of the Lewis and Clark county road. This contract contained among other things, provisions for a bond, which was exacted as part of the contract from the contractor by Clatsop county. The bond was executed by F. C. Feldschau, as principal, and the United States Fidelity & Guaranty Company as surety, in the penal sum of $10,311. The bond, in addition to provisions for performance of the contract by the principal, contained the stipulation that the principal--

"shall pay all laborers, mechanics, subcontractors, and materialmen and all persons who shall supply such laborers, mechanics, or subcontractors with materials, supplies, or provisions for carrying on such work, and all just debts, dues, and demands incurred in the performance of such work, and shall in all respects faithfully perform said contract according to law, then this obligation shall be void; otherwise, to remain in full force and effect."

C. J. Young, of Portland (Dey, Hampson & Nelson, of Portland, on the brief), for appellant.

Edw. C. Judd, of Astoria, for respondent.

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

Section 2991, Or. L., requires a contractor on public work, entering into a formal contract with a county, to execute the usual penal bond with good and sufficient sureties, with the additional obligations "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," and provides that persons furnishing such labor and materials shall have a right of action against the contractor and his sureties. It will be noticed that, in addition to the requirements of the statute prescribing the conditions of the bond, the instrument in question contains the provision for the payment of "all just debts, dues, and demands incurred in the performance of such work." Pursuant to the contract, Feldschau, about March 15, 1917, entered into the performance of the work, and conducted the same until the latter part of September, 1917. The road, which by the terms of the contract was to be improved, was not situated near any town or village, and in order that he could carry on the work it was necessary to maintain suitable living quarters and accommodations for a large number of laborers who were employed on the work. In order to furnish the necessary quarters and provisions, the contractor was required to establish and maintain a camp, where the necessities of life for the employés could be obtained and the men could be housed.

The question involved is stated in the brief of counsel for appellant as follows:

"The bond has a dual aspect--i. e., for the faithful performance of the work and the payment for labor and material; but there is involved here only the statutory provision that the contractor '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 bond is broad in its terms, but is, of course, to be construed in the light of the statute, pursuant to which it was exacted. * * * The surety company, which

is appellant here, does not question the correctness of any of the charges, or that these mercantile houses made the sales claimed. It rests its case solely upon the fact that the articles for which claim is asserted are not in any proper sense comprehended under the term 'materials' used in the statute."

In other words, the contention of the appellant is that the part of the bond which is in addition to the one compelled by the statute is of no force, and that the county was not authorized to require such an additional stipulation in the bond. We are not aware that this question, under our present statute, has been passed upon by this court.

The materials and supplies which were furnished by Hildebrand & Co. consisted of camp equipment and utensils, such as were used in a camp in construction work of this kind, which were only meant to be used and to last during the period of improvement. The material and supplies furnished by Judd Bros. consisted of men's wearing apparel, bedding, overalls, underwear, and socks, which were purchased by Feldschau and furnished to his employés, and the price for the same deducted from their daily wages.

The trial court found that a number of items furnished by the relator to Feldschau consisted of knives, forks, cooking utensils. and dishes, amounting to $85.75, which were not used up in the prosecution of the work, should be deducted from the claim. The trial court, among other things, found: "That during the prosecution of said work, and between the 1st day of March, A. D. 1917, and the 1st day of June, A. D. 1917, the relator, August Hildebrand, at the request of F. C. Feldschau, sold and delivered to such defendant a large quantity of supplies and camp equipment, which were reasonably worth the sum of $428.92, and for which the said defendant, F. C. Feldschau, agreed to pay to the relator, August Hildebrand, the sum of $428.92. * * *

"Regarding relator's further and second cause of action against defendants the court finds that during the prosecution of said work, and between the 12th day of March, A. D. 1917, and the 4th day of July, A. D. 1917, that Edw. C. Judd and Geo. F. Judd, copartners doing business under the firm name and style of Judd Bros., bargained, sold, and delivered to defendant F. C. Feldschau goods, wares, and merchandise, consisting of men's wearing apparel, overalls, gloves, mittens, blankets, comforters, and other things necessary for workingmen, at the agreed and stipulated price of $179.45, and that said goods, wares, and merchandise so sold and delivered by the said Judd Bros. to the said F. C. Feldschau were used by the said F. C. Feldschau in carrying on the work of said contract, and were exchanged by the said F. C. Feldschau with his laborers for wages."

As we understand the record, it is not questioned but that the amounts in controversy were just debts and demands incurred in the performance of the work. Many of the supplies would not be considered as "labor or materials," within the strict letter of the statute. If the additional provision referred to contained in the bond is invalid, plaintiff cannot recover for the same in this action.

It is unquestioned that Feldschau voluntarily entered into a contract with Clatsop county. The county was authorized to make such contract. The surety company in the ordinary course of business, and it may be fairly assumed for compensation, voluntarily obligated itself as sponsor for Feldschau in the faithful performance of the contract, and the performance of all of the conditions incorporated in the bond. The parties were competent to enter into the undertaking. The bond was not repugnant to the letter or policy of the law, but was strictly in accordance with the policy of the law in this state to provide for the payment of labor and supplies and expenses in the construction of public works. Although the statute did not require all of the conditions to be enumerated in the bond, the county authorities were under a moral duty to protect persons with whom the contractor incurred such indebtedness in the performance of the work. The award of the contract for the improvement was a sufficient consideration for the promise of the contractor and his surety to pay such indebtedness. It is generally held that those furnishing supplies or extending credit, for whose benefit such a bond is given, may sue upon the bond, on the principle that the third person for whose benefit a contract is made by another may maintain an action thereon, although the consideration does not directly move from such third person. See 1 Elliott on Roads and Streets (3d. Ed.) § 646.

As in regard to most questions the authorities are not all one way. It is stated in 9 C.J. p. 29, § 45, thus:

"A bond, whether required by statute or order of court or not, is good at common law, if it is entered into voluntarily by competent parties for a valid consideration, and is not repugnant to the letter or policy of the law; and such a bond, other than an official bond, is enforceable according to its conditions, although they are more onerous than would have been required if a statutory bond had been given for the same purpose. This rule has been applied to bonds given to the United States."

In observing the precedents in other states we find that the case of Puget Sound State Bank v. Gallucci, 82 Wash 445, 144 P. 698, Ann. Cas. 1916A, 767, was an action upon contracts and bonds similar to ...