Kirkpatrick v. Aetna Casualty & Surety Co.

• Court: Montana Supreme Court
• Writing for the Court: ANGSTMAN, Justice.
• Citation: Kirkpatrick v. Aetna Casualty & Surety Co., 65 P.2d 1169, 104 Mont. 212 (Mont. 1937)
• Decision Date: 02 March 1937
• Docket Number: 7639.
• Parties: KIRKPATRICK et al. v. AETNA CASUALTY & SURETY CO.

65 P.2d 1169

104 Mont. 212

KIRKPATRICK et al. v. AETNA CASUALTY & SURETY CO.

No. 7639.

Supreme Court of Montana

March 2, 1937

Appeal from District Court, Flathead County; Asa L. Duncan, Judge.

Action by R. H. Kirkpatrick and others, as copartners, doing business under the name of Kirkpatrick Bros., against Aetna Casualty & Surety Company and A. R. Douglas. From a judgment for plaintiffs on trial by the court, first named defendant appeals.

Affirmed.

Clift & Glover, of Great Falls, and Walchli & Korn, of Kalispell, for appellants.

F. C Rockwood, of Kalispell, for respondents.

ANGSTMAN Justice.

The complaint in this action contains two causes of action, each relating to a separate highway project. Under the first cause of action it was shown that on October 11, 1932, defendant A R. Douglas was awarded and entered into a contract with the state of Montana through the state highway commission for the construction of a designated highway. Defendant surety company became surety on the bond furnished under section 5668.41, Revised Codes. In May, 1933, defendant Douglas made a contract subletting the work to the plaintiffs, who agreed to assume all the duties and obligations of Douglas under his contract with the state. Plaintiffs completed the work prior to August 2, 1933, and there is owing from defendants the sum of $3,813.46. On November 8 plaintiffs filed with the highway commission a notice of claim. The point of difference between the parties is whether there had been an acceptance of the work by the affirmative action of the board, council commission, trustees, officer, or body acting for the state, within the meaning of section 5668.44 more than fifteen days prior to November 8, so as to bar the claim. The second cause of action is practically identical with the first, except that it related to a different highway project, the amount remaining due on it being the sum of $335.78.

Plaintiffs filed their notice of this latter claim on February 15, 1934, and the question arising on this cause of action is whether there had been an acceptance of the work by the affirmative action of the proper tribunal within the meaning of section 5668.44 more than fifteen days before February 15.

Defendant Douglas, on December 13, 1933, was adjudged a bankrupt and in April, 1934, was discharged by order of court from all provable claims, including those here involved, and hence we eliminate him from further consideration.

The cause was tried to the court sitting without a jury, Hon. Asa L. Duncan judge presiding. The judgment went for plaintiffs and against the surety company, and the appeal is from the judgment.

The defendant company contends that neither claim was filed within fifteen days after the acceptance of the work within the meaning of section 5668.44. Its contention is that the acceptance by the engineer of the commission constitutes an acceptance within the meaning of that statute.

Both contracts between the state and Douglas contain these provisions: "Engineer" means "the State Highway Engineer, acting directly or through an assistant or other representative duly authorized by the state highway engineer, such assistant or representative acting within the scope of the particular duties assigned to him, or of the authority given him. 7.13. Until its acceptance by the Engineer, improvements shall be under the care and charge of the contractor. 8.9.

The contract shall be considered to have been completely fulfilled when all work has been completed and accepted by the Engineer and the final estimate has been accepted by the contractor and paid. 9.8. Acceptance and Final Payment. Whenever the contractor shall have completed the work in accordance with the terms of the contract, the Engineer will make a final inspection of the work. *** He will transmit to the contractor a claim embodying said final estimate, and will notify the contractor and his surety of the acceptance of the contract. *** Upon return by the contractor of the accomplished final estimate claim, same shall be certified by the commission to the State Board of Examiners for payment, and payment thereof shall constitute, together with previous partial payments, full satisfaction for the total amount due under the contract."

Section 1.17 of the contract reads as follows: "In order to avoid cumbersome and confusing repetitions of expressions in these specifications, whenever it is provided that anything is, or is to be, or to be done, if, or as, or when, or where 'contemplated,' 'required,' 'directed,' 'specified,' 'authorized,' 'ordered,' 'given,' 'designated,' 'indicated,' 'considered necessary,' 'deemed necessary,' 'permitted,' 'suspended,' 'approved,' 'acceptable,' 'unacceptable,' 'suitable,' 'unsuitable,' 'satisfactory,' 'unsatisfactory,' or 'sufficient,' it shall be understood as if the expression were followed by the words 'by or to the Engineer with the approval of the Commission."'

Section 5.1 provides: "All work shall be done under the direct supervision of the Engineer and his authorized assistants. To prevent misunderstanding and litigation, the Engineer shall decide any and all questions which may arise as to the quality and acceptability of materials furnished and work performed and as to the manner of performance and rate of progress of said work, and shall decide all questions which may arise as to the interpretation of any or all plans relating to the work and of the specifications, and all questions as to the acceptable fulfillment of the contract on the part of the contractor; and such decision shall be final and conclusive, except that the contractor shall not be estopped from resorting to legal process in the event that the decision of the Engineer with respect to the matters above enumerated is not acceptable."

It was shown, with reference to the claim contained in the first cause of action, that Mr. H. C. Tilzey, the division engineer, inspected the work and notified the highway commission by letter that it was "completed and accepted on August 2, 1933." Thereupon the state highway commission, through Mr. O. E. Cutting, the assistant office engineer, notified the United States Department of Agriculture, Bureau of Public Roads, at Missoula, by letter dated August 3, 1933, that the project "has been completed and was accepted by division engineer H. C. Tilzey for the state, August 2, 1933." By letter of August 30, 1933, the United States Department of Agriculture, Bureau of Public Roads, notified the highway commission that their own inspection was made on August 25th, "and we are recommending acceptance of this project and payment of final voucher when presented in proper form." On September 8, 1933, the highway commission, through its accountant J. L. Maloney, sent a letter to contractor Douglas, relating to the work on this project, reading as follows:

"Attached you will find your final estimate on E. C. H. P. 260, Unit 2, in the amount of $4,731.83. As this estimate represents the final quantities and amounts due you, your signing and having acknowledged before a notary public signifies your acceptance of this amount due you in final settlement. Kindly execute same and return in order that we may be able to make final payment when Federal Funds are received and your bondsmen have approved the making of final payment."

On the same date Mr. Maloney sent a letter to the surety company, reading "We are preparing estimate for final settlement with A. R. Douglas, contractor on Emergency Construction Highway Project No. 260, Unit 2, the total earnings amounting to $18,674.72. Promptly advise this department if our action meets with your approval."

The same procedure took place with reference to the claim contained in the second cause of action. That claim, as above noted, was filed on February 15, 1934. The division engineer accepted the work on September 7th and sent a telegram to the highway commission on September 8th to the effect that it had been accepted on September 7th. He confirmed this by letter of September 9th addressed to the highway commission. On September 11th the highway commission, through assistant office engineer Mr. Cutting, notified the United States Department of Agriculture, Bureau of Public Roads, that the project "has been completed and accepted by division engineer H. C. Tilzey, on September 7, 1933." On September 30, 1933, the United States Department of Agriculture, Bureau of Public Roads, notified the highway commission by letter that their own inspection had been made, "and we are recommending acceptance of this project and payment of final voucher when presented in final form." On October 10, 1933, Mr. Maloney, acting for the highway commission, notified the contractor and the surety company by letters identical in form, except as to the amount stated, as those that he had sent relating to the work under the first cause of action. This was the practice pursued by that department on all of its highway construction contracts. Hence the legal question presented is whether the acceptance by the engineer constituted an acceptance within the meaning of section 5668.44, supra, so as to prevent the maintenance of this action, for concededly the claims were not filed within fifteen days after the acceptance by the engineers.

The plaintiffs take the position that, to start the running of the statute, there must have been an acceptance by the highway commission as a board or body, and that its acceptance must be manifested by some affirmative action on the part of that body, and they contend that there never has been such an acceptance, and for that reason they are not prevented from maintaining this action. If there never has been an acceptance of the work within the meaning of section 5668.44, then plaint...