State ex rel. Bayer v. Funk

• Decision Date: 27 June 1922
• Parties: STATE EX REL. BAYER v. FUNK, CITY AUDITOR.
• Court: Oregon Supreme Court

209 P. 113

105 Or. 134

STATE EX REL. BAYER v. FUNK, CITY AUDITOR.

Supreme Court of Oregon

June 27, 1922

In Banc.

Proceeding in mandamus by the State, on the relation of J. C. Bayer Trustee, against George H. Funk, as Auditor of the City of Portland, to issue a warrant. Demurrer to answer overruled.

Martin L. Pipes, of Portland (John M. Pipes and George A. Pipes, both of Portland, on the brief), for plaintiff.

Frank S. Grant and L. E. Latourette, both of Portland, for defendant.

RAND J.

As heretofore stated in State ex rel. Bayer v. Funk, City Auditor (Or.) 199 P. 592, these proceedings were brought on the relation of J. C. Bayer, trustee, against the defendant, as auditor of the city of Portland, to compel defendant, as auditor, to issue to the relator a warrant for $36,702.84.

This controversy grows out of a contract for the construction of the Auditorium Building, in the city of Portland, entered into by the city with Hans Pederson on March 22, 1916. Pederson, after commencing the construction of the building becoming involved, on May 3, 1917, joined with his creditors and the sureties upon his bond to the city in entering into a contract with J. C. Bayer, the relator, as trustee, wherein with the consent of the city, it was agreed that the relator, as trustee for Pederson and for his bondsmen and creditors, should carry out Pederson's contract with the city, and should receive and disburse all moneys to be paid by the city upon the Pederson contract.

It now appears that the contract between Pederson and the city has been completely performed by Pederson and the relator on the one side, and by the city on the other; that the city took no part in the construction of the building, other than to completely perform the contract on its part; that the city has paid all sums it contracted to pay; that, in addition thereto, it has already paid to the relator, as trustee, the sum of $21,525, which sum was paid to reimburse Pederson for an error which he claimed to have made in computing the bid upon which he was awarded the contract; that the city has also allowed and paid, over and above the contract price, $11 per thousand for the brick entering into the construction of the building; and that other considerations of value, which the city was not required to make, were made by the city in favor of relator and Pederson. It also appears that a final settlement was made by the city with Pederson and the relator, and that a final receipt was given, and that a full and complete release to the city was executed and delivered by the relator and by Pederson, discharging the city from all liability to the relator or to Pederson upon or in connection with said contract.

In our former opinion we overruled a demurrer to the answer to the first alternative writ of mandamus, and allowed the defendant 10 days in which to file a reply. Subsequent to the filing of the reply, upon the petition of the relator, an amended alternative writ was issued. To this amended alternative writ the defendant answered, and to this answer the relator has demurred, upon the ground that the facts stated in the answer do not constitute any defense to the writ, or show any fact why the peremptory writ should not issue. The demurrer attempts to segregate the new matter alleged in the answer into separate parts, and to demur to each. We shall treat the demurrer as going to the entire answer.

The facts alleged in the present writ are substantially the same as those alleged in the former writ. The brief filed on behalf of the relator states:

"The only difference between the original writ and the amended writ is that the amended writ alleges the claims more particularly than the former writ, and that it has omitted the allegations of the dereliction of the city, and substituted therefor that the contractor and the relator claimed those facts to be true, and that that claim was settled by a compromise."

Upon the former appeal the relator's brief stated his contention at that time to be as follows:

"As we view it, there is only one question involved in this controversy, and that is whether or not, under charter powers of the city of Portland, the council has the authority to pay moral obligations existing against the city."

The present writ in substance alleges that relator had an unliquidated, disputed claim against the city of Portland for an amount in excess of $36,702.84, which the city was under a legal obligation to pay; that the city offered to pay said sum as a compromise of said claim upon condition that the relator should execute a release, discharging the city from all obligations, legal, moral, or equitable, in favor of the relator and Pederson, and should place the same in the hands of a third party, to be delivered to the city when a warrant for said sum in favor of the relator was issued in payment thereof; that the city accepted said offer, and performed on its part by the passage of two ordinances, one of which authorized the payment of said sum to the relator, and the other appropriated the money for such payment; that the relator executed the release and delivered the same in escrow, and directed that it should be delivered to the city when a warrant was drawn for the payment of the money.

Because the answer admits that the two ordinances were passed, and a release was executed and delivered to an escrow holder, the relator contends that the transaction in effect created a legal obligation upon the city to pay to the relator the sum of $36,702.84. In support of this contention relator's present brief says:

(1) "That it was the payment of a part of an unliquidated, disputed claim and a receipt or release in full of the balance;" (2) "that it was a compromise, accord and satisfaction;" and that (3) "the ordinances and the release constitute a contract, and this contract recites that it was a compromise, accord, and satisfaction, and, the contract being admitted in its very terms, the defendant cannot say that the transaction was otherwise than as recited."

The contention that the transaction amounted to the payment of an unliquidated and disputed claim and a release or receipt in full for the balance cannot be sustained, because it appears very clearly from the allegations, both of the writ and of the answer, that the payment has not been made, nor has the release above referred to been delivered to or accepted by the city. It is alleged in the writ, and denied by the answer, that the relator had an unliquidated or disputed legal claim, or any bona fide claim against the city, or that he ever honestly believed that any sum of money was justly due or owing to him from the city. Thus the very question of whether or not the relator had, or in good faith believed that he had, such a claim as could, by the settlement thereof, constitute a consideration for a valid contract of compromise, is put in issue, and is a matter in dispute under the pleadings.

From the allegations of the answer, which, for the purposes of the demurrer, are admitted to be true, it appears that the city has completely performed its contract, and that it has paid to Pederson and to the relator all and more than it contracted to pay; that a final receipt has been given therefor; that a full and complete adjustment and settlement has been had with Pederson and with the relator, and that Pederson and the relator have executed and delivered to the city a full and complete release, discharging the city from all claims and demands arising from or connected with Pederson's contract. It also appears from the allegations of the answer that the relator and Pederson, as well as Pederson's bondsmen and creditors, claimed to the city council that Pederson had lost large sums of money in fulfilling his contract, and urged the city to reimburse him in full or in part for the losses he had so sustained; that the city council were of the opinion that the city was under a moral, but not under any legal, obligation to pay a part of such losses; that the city council offered to pay to the relator the sum of $36,702.84 as a moral, but not as a legal, obligation, on condition that the relator should commence legal proceedings to obtain, and should obtain, a judicial determination that the city council had authority to pay said sum of money to the relator as a moral obligation, and not as one which was enforceable in an action at law.

It also appears from the new matter alleged in the answer that, when the ordinances were passed and the release was executed and delivered in escrow, it was stipulated between the relator and the city council that the relator should not be paid, nor should the rights of the city be in any manner prejudiced, or be in any way affected by the passage of the two ordinances above referred to, unless in proceedings to be brought by the relator it should be judicially determined that the council had lawful authority to pay a purely moral obligation.

If the facts are as alleged in the answer, the city was under no legal, equitable, or moral obligation to reimburse the relator or Pederson, or the creditors and bondsmen of Pederson, in any sum or amount whatever. As disclosed by the answer, the offer was not an absolute one, but was conditional upon the happening of an event, and the condition upon which the offer was to depend has not been fulfilled. Therefore, as the condition upon which the offer was made had not been complied with, the city did not become obligated to any extent, nor did any right become vested in Pederson or the relator by reason of the passage of the ordinances and the execution and delivery in escrow of the release.

By the terms of the stipulation under which the council passed the two ordinances, and the relator and Pederson...