Haddock Const. Co. v. Wilber et al.

• Decision Date: 28 May 1946
• Citation: Haddock Const. Co. v. Wilber et al., 178 Or. 659, 169 P.2d 599 (Or. 1946)
• Parties: HADDOCK CONSTRUCTION CO. <I>v.</I> WILBER ET AL.
• Court: Oregon Supreme Court

178 Or. 659

169 P.2d 599

HADDOCK CONSTRUCTION CO.

v. WILBER ET AL.

Supreme Court of Oregon.

Argued May 8, 1946.

Affirmed May 28, 1946.

Principal and surety — Notice — Reasonable time

1. Provision in subcontractor's faithful performance bond requiring immediate written notice to surety of any act or omission that might involve a loss would be construed as requiring that written notice should be given within a reasonable time after discovery of such act or omission.

Principal and surety — Notice — Reasonable time

2. What constitutes a reasonable time for giving written notice to surety of any act or omission that might involve loss pursuant to provision in subcontractor's faithful performance bond would ordinarily be a question for jury, but whether a reasonable time has elapsed before the required notice was given is for court to decide as matter of law, where there is no conflict of testimony, and different conclusions cannot be drawn from the testimony.

Principal and surety — Notice — Reasonable time

3. Contractor was precluded as matter of law from recovering from surety on subcontractor's faithful performance bond for damages caused by subcontractor's breach of subcontract to place roofing upon dwellings being constructed by contractor on ground that contractor failed to give reasonable written notice of subcontractor's acts or omissions resulting in loss within reasonable time after discovery of such acts or omissions as required by bond, where undisputed testimony showed that more than six months had elapsed from time of contractor's discovery of subcontractor's breaches until it notified surety, and that surety's rights had been injuriously affected by contractor's delay.

  See 9 Am. Jur. 71; reasonableness of notice as a question for
                the jury, note, 7 A.L.R. 187
                  50 C.J., Principal and surety, § 276
                

Appeal from the Circuit Court for Multnomah County.

HON. LOUIS P. HEWITT, Judge.

Robert F. Maguire and James G. Smith, of Portland (Maguire, Shields & Morrison, of Portland, on brief) for appellant.

John Lichty, of Portland, for respondent.

Before BELT, Chief Justice, and ROSSMAN, KELLY, BAILEY, BRAND and HAY, Justices.

AFFIRMED.

Action by plainitff Haddock Construction Company, a corporation, to recover damages from defendant Fred S. Wilber, as principal, and from defendant Saint Paul-Mercury Indemnity Company, as surety, which damages were caused by Wilber's breach and default in a subcontract wherein said Wilber agreed to lay mineral surfaced roll roofing upon 978 dwellings being constructed by plaintiff as principal contractor, under a contract with the United States of America acting through its National Housing Agency, The Federal Public Housing Administration and the Housing Authority of the City of Vancouver, Washington. On motion of defendant Saint Paul-Mercury Indemnity Company, the trial court directed a verdict for said company against plaintiff, and against defendant Wilber in favor of plaintiff. From the judgment entered upon said verdict in favor of defendant Saint Paul-Mercury Indemnity Company, plaintiff appeals. No appeal has been prosecuted by defendant Wilber.

KELLY, J.

For the purpose of securing the plaintiff from any loss or damage by reason of the failure of the defendant Fred S. Wilber, to carry out the terms of his subcontract, the defendant Fred S. Wilber, and the defendant Saint Paul-Mercury Indemnity Company made, executed and delivered to plaintiff their bond and undertaking by which they bound themselves jointly and severally unto the plaintiff in the sum of $32,763.00.

This bond contains the following provisions:

"The foregoing obligation, however, is limited by the following express conditions, the performance of each of which shall be a condition precedent to any right of claim or recovery hereunder.

1. Upon the discovery by the Obligee or by the Obligee's agent or representative, of any act or omission that shall or might involve a loss hereunder, the Obligee shall give immediate written notice thereof with the fullest information obtainable at the time to the Surety at its home office." The bond in suit was executed on July 2, 1942.

Plaintiff contends that it did not discover any act or omission on the part of Wilber which should or might involve a loss under the contract in suit until after February 27, 1943.

We do not so construe the record. We quote from the testimony of Mr. Thomas Holmberg, chief inspector for the government of the work involved herein:

Q Did you observe the manner in which Mr. Wilber, who is sitting here at my left, was applying the roofing materials to the roofs he was covering between July 31 and about the 20th of August?

A I did.

Q What was he doing to those roofs?

A He was not properly spot mopping. He was using the mop almost dry, the man who was putting the roof on, and there was not enough pitch to stick to the roof.

Q When you say `pitch', you mean what we call cement or tar?

A No asphalt, or tar, or pitch.

Q Did you call this to Mr. Wilber's attention?

A I did.

Q What else did you do concerning it?

A I took Mr. Wilber over to Sites 5 and 4, to show him how the other roofers were doing the work, and I asked him to follow their way if he did not know any better than the way he was doing, and then I brought him back to this Area Six where he was roofing at the time.

Q Did you tell anybody in the Haddock Construction Company office about your discovery, that he was not putting enough pitch on?

A Yes, several times. Mr. Weber was supposed to be superintendent over all the crews.

Mr. Maguire: Is that Weaver or Weber?

A Weaver.

Mr. Lichty: Q Did you talk to Mr. McCaslin about it?

A I did, yes.

Q Did you ever talk to Mr. Blanchard about it?

A No, but I gave Mr. McCaslin a letter stating my objections to what I found down there.

Q Did you notice Mr. Wilber's cooperation after you showed him how it should be done?

A I noticed it, and when I was on the job they were doing better, and when I walked off they were back at the same thing, because I used to come back and watch them.

Q Did you further advise any one in the Haddock Construction Company immediately after you watched them and saw they were not complying with your instructions?

A Every day when I contacted them I mentioned they were not following out the specifications on the roofing.

Q I believe the evidence shows the last roofs were completed about the last of September, the 29th of September, or some such date; were you inspecting the work all during the month of September?

A Yes, sir.

Q Did Mr. Blanchard or Mr. McCaslin ever discuss with you why Mr. Wilber was not made to correct his work?

A Not that I recall. Not that I remember of.

Mr. Maguire: Just a minute. You mean while this work was going on or after?

A Yes, sir.

Mr. Lichty. Q What did you tell these men?

A That the work would not be acceptable the way it was being done. Shortly after I had those contacts with Mr. Wilber there were fifteen roofs were off one night. Some portions off, and some partly torn off.

Q Was that while he was still working there?

A Yes, while he was still there."

Neither Mr. McCaslin nor Mr. Weaver was called as a witness.

Clearly the facts to which witness Holmberg called the attention to both Mr. McCaslin and Mr. Weaver, who were at that time the representatives of plaintiff, required written notice to defendant indemnity company by the plaintiff obligee in the bond in suit.

Mr. R.A. Blanchard was employed by plaintiff upon the project in suit, known to this record as the McLaughlin Heights project. He was in charge of all the subcontractors. The project was divided into site areas.

The subcontract with defendant Wilber applied to "978 dwelling units at site area number 6."

On August 24, 1942, plaintiff, through its Manager of Housing Construction Mr. H.R. Ketell, sent a letter to defendant Wilber as follows:

               "Haddock Construction Co
                          Engineering and Building Contractors
                    P.O. Box 649                                Phone
                    Vancouver, Wash.                       Vancouver 3200
                                    August 24, 1942
                    Mr. Fred S. Wilber          Re: Wah — (D-Wash. 45122)
                    2111 N.E. Union Ave.            cph — 110
                    Portland, Oregon                      Site Area No. 6
                

Dear Mr. Wilber:

You have a bonded contract with us to deliver roofs as per plans and specifications, and it has come to our attention that you are not putting sufficient tar under the paper to hold it down. In fact, some of the roofing seems to be blowing loose at the present time.

We herewith request that you put more tar under the roofing paper. We want you to be more careful in this regard.

Of course, we realize that you are bonded and have to repair the defects, but we are making this suggestion for your own best interests as well as ours.

                    Very truly yours
                                          Haddock Construction Co
                                          By H.R. Ketell
                    HRK:vb                Manager Housing Construction."
                

In his testimony, Mr. Blanchard made the following statement of the circumstances that brought about that letter:

"This letter arose by having brought to our attention that the roofing was defective, or, at least, was blowing loose on some of the houses and telephone calls to Mr. Wilber were not always successful because he was not always in his office and this letter was written to him by Mr. Ketell, which speaks for itself, and calling his attention to that fact."

Mr. Blanchard further testified that after the above letter was written, defendant Wilber "came out to the job and in those instances was apologetic over the situation and offered to correct it immediately, or as quickly as he could, and he expressed himself as very cooperative in attempting to rectify the situation."

According to Mr. Blanchard's testimony, the reason or excuse defendant Wilber gave for the defective work was the inexperience of the...