National Market Co. v. Maryland Cas. Co.

• Citation: 170 P. 1009,100 Wash. 370
• Decision Date: 21 February 1918
• Docket Number: 14284.
• Court: United States State Supreme Court of Washington
• Parties: NATIONAL MARKET CO. v. MARYLAND CASUALTY CO.

170 P. 1009

100 Wash. 370

NATIONAL MARKET CO. v. MARYLAND CASUALTY CO.

No. 14284.

Supreme Court of Washington

February 21, 1918

Department 1. Appeal from Superior Court, Superior Court; A. W. Frater Judge.

Action by the National Market Company against the Maryland Casualty Company. Judgment of dismissal, and plaintiff appeals. Reversed, with instructions.

Howard O. Durk, of Seattle, for appellant.

Grinstead & Laube, of Seattle, for respondent.

PARKER J.

The plaintiff, National Market Company, claiming to be the assignee of certain claims for labor performed upon public work of the city of Seattle, secured by bond executed by the defendant, Maryland Casualty Company, as surety, under section 1159, Rem. Code, seeks recovery against the defendant upon such bond. The defendant demurred to the plaintiff's complaint upon the sole ground that it 'does not state facts sufficient to constitute a cause of action.' This demurrer was sustained by the superior court, and the plaintiff electing not to plead further judgment of dismissal, with prejudice, was rendered against it, from which it has appealed to this court.

The facts as alleged in the complaint may be summarized as follows: Prior to June, 1916, the city of Seattle entered into a contract with C. W. Coit by the terms of which he agreed to construct for the city a certain public improvement. In compliance with his contract Coit executed and delivered to the city a bond as prescribed by section 1159, Rem. Code, conditioned that he would pay all laborers performing work upon the contract, which bond was also executed by respondent casualty company as surety. Coit entered upon the performance of his contract, and thereafter in June, 1916, had in his employ upon the work seven laborers to whom he became indebted for such work during that month in sums aggregating $221.50. On July 1, 1916, Coit issued to each of these laborers, for the amount due each, his check drawn upon the Guardian Savings Bank. Shortly thereafter each of these laborers transferred his check to appellant National Market Company, and received therefor, either in money or merchandise, the full face value thereof. These transfers were each made only by delivery of the check and indorsement in blank of the payee's name on the back thereof. Shortly thereafter the appellant presented all of these checks to the Guardian Savings Bank for payment, when payment was refused because Coit had no funds on deposit in that bank with which to pay them. The checks all remain unpaid, and are still held by appellant. Thereafter, in due time, the appellant filed with the proper city authorities notice of its claim against the bond executed by Coit with the respondent as surety, making claim for the aggregate amount of $221.50, as assignee of these several laborers. Thereupon appellant commenced this action, seeking recovery against respondent casualty company as surety upon the bond.

The real problem here for solution is: Did the assignment of these checks to appellant by mere delivery and indorsement in blank constitute an assignment of the debts owing by Coit to the laborers for which the checks were given? And, if so, did such assignments carry with them the claims of the laborers which they had the right to assert against respondent as security upon the bond?

Our recent decision in Northwestern National Bank v. Guardian Cas., etc., Co., 93 Wash. 635, 161 P. 473, goes a long way towards answering these questions in the affirmative, though that case differs from this in some respects which we shall presently notice. That case involved the assignment of time checks issued to laborers for labor performed upon public work, the payment for which labor was secured by a bond such as we have in this case. The time checks were simple certificates evidencing that the laborers had worked each a certain time upon the public work and were entitled to a certain amount in payment therefor from the contractor. The time checks were assigned by the laborers to the plaintiff bank, it paying to them the face value thereof. The assignments were indorsed on the back of each time check in this form:

'For value received, I hereby assign to the Northwestern National Bank all my right, title and interest to the within time check.'

Thereafter the bank filed its claim with the proper public officers and sued the surety, claiming recovery upon the bond as assignee of the laborers. In holding that the claims and security represented by the bond were both assignable, and that the assignments so made were effectual to enable the bank to file its claim as such assignee and recover upon the bond, Chief Justice Ellis, speaking for the court (93 Wash. at page 646, 161 P. 477), said:

'It is next urged that the assignment of these labor and material claims, in any event, carried no right to assert them against the bond. It is argued that the right of the laborer or materialman is merely a right to receive his pay under the express or implied contract with the contractors, and that this is all the right he has by virtue of his contract; that therefore the assignment of the time checks was only an assignment of a right of action against the contractors. This view is too narrow. It is only by virtue of his right to receive his pay from the

...