State ex rel. Bayer v. Funk

• Decision Date: 30 July 1921
• Citation: 199 P. 592,105 Or. 134
• Parties: STATE EX REL. BAYER v. FUNK, CITY AUDITOR.
• Court: Oregon Supreme Court

199 P. 592

105 Or. 134

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

Supreme Court of Oregon

July 30, 1921

In Banc.

Application by the State, on the relation of J. C. Bayer, trustee, for a writ of mandamus, against George R. Funk, as Auditor of the City of Portland. On relator's demurrer to the answer to the alternative writ. Demurrer overruled, with directions.

Jay Bowerman and M. E. Crumpacker, both of Portland for appellant.

Frank S. Grant, City Atty., and L. E. Latourette, Deputy, both of Portland, for respondent.

HARRIS J.

This is an original special proceeding brought by the state of Oregon upon the relation of J. C. Bayer, trustee, against George R Funk, as auditor of the city of Portland, to compel the defendant by force of a writ of mandamus to issue to the relator a city warrant for $36,702.84, pursuant to two ordinances of the city council authorizing the issuance of the warrant.

Acting upon the petition of the relator, an alternative writ of mandamus was issued, commanding the defendant to execute and deliver to the relator a warrant for $36,702.84, or to show cause for not doing so. The defendant responded to the writ by filing an answer containing denials, admissions, and affirmative allegations. The relator demurred to the answer for the reason that the "answer does not state facts sufficient to constitute a legal defense or answer to the alternative writ herein." The only question necessary to be decided now is whether or not the answer is sufficient to constitute a defense. It may be stated at the very outset that, because of the denials appearing in the answer, the demurrer must be overruled unless it can be said that the affirmative allegations made in the answer, notwithstanding the presence of the accompanying denials, admit facts sufficient to validate the ordinances.

The city of Portland concluded to erect a public auditorium, and called for bids for the erection of the building. The city accepted the bid of Hans Pederson, and on March 22, 1916, the city and Pederson entered into a contract for the construction of the auditorium. Pederson gave a bond for the faithful performance of his contract with J. F Kelly, N. A. Schanen and H. P. Scheel as bondsmen. Pederson entered upon the performance of the contract, and continued with the work until some time, not definitely shown by the pleadings, when he became financially embarrassed, and J. C Bayer was made a trustee. Although the parties do not agree in the pleadings upon the nature of Bayer's trust, and although it does not definitely appear from the pleadings whether the responsibility of completing the building was taken over by the city or by Bayer as trustee, it does appear that from the time of the appointment of Bayer as trustee the responsibility of completing the building was practically or wholly surrendered by Pederson and assumed either27 by Bayer as trustee or by the city; and, as we understand the pleadings, all payments made by the city subsequent to the appointment of Bayer as trustee were made to him.

Upon the completion of the building it was found, after balancing the accounts, that the structure had cost considerably more than the contract price. As we understand the record, some of the companies, persons, and firms who furnished labor and materials for the Public Auditorium have not yet been paid; and we infer, too, that Pederson is unable to pay the indebtedness, and that Kelly and Schanen, two of the bondsmen, have turned over to the trustee certain property for the benefit of the unpaid creditors.

It appears from the pleadings that a claim was made to the effect that because of certain alleged circumstances the city ought to satisfy the unpaid indebtedness and save the bondsmen from loss; and as a result of this claim so made the city council appointed a committee of five representative citizens to investigate the facts and report whether or not the city was under any obligation to pay more than the contract price of the building. This committee, after investigation, reported that in its opinion the city was justly obligated to pay such sum as would compensate for the increased cost of the building. Subsequently, on April 14, 1920, the council appointed a second committee, consisting of three representative citizens, to make an investigation into the facts and circumstances concerning the construction of the building and the causes, if any, of the increased cost and to report to the council with recommendations. This committee made an investigation of the claims of the contractor for the increased cost of the building, and reported to the council that, in view of all the facts and circumstances, the city was obligated to pay an additional sum of $65,493.82 for the increased cost of the building.

On March 23, 1921, after the report of the second committee, the council passed an ordinance entitled:

"An ordinance providing for settling the claims connected with the contract of Hans Pederson for the construction of the Public Auditorium."

This ordinance in effect states that it appears to the council that the claims of Hans Pederson and of J. C. Bayer, trustee, growing out of the contract for the erection of the Public Auditorium- -"present a condition where a moral obligation exists on the part of the city of Portland in the sum of $36,702.84, which should be paid"; provided, that a release, which had been signed and was then in escrow, be delivered to the city upon the making of payment.

Pederson and Bayer, as trustee, had executed a release, in which it is recited that--

"In consideration of the sum of $36,702.84 to be paid by the city * * * concurrently with the delivery of this instrument for the compromise and settlement of any and all rights, claims and/or demands, either legal, moral, equitable or otherwise, * * * said Hans Pederson and said J. C. Bayer trustee, do hereby acknowledge full and complete accord, satisfaction and discharge of any and all such rights, claims and/or demands."

The release was placed in...