U.S. Fidelity & Guar. Co. v. Feenaughty Machinery Co.

• Decision Date: 03 January 1939
• Docket Number: 27050.
• Citation: 85 P.2d 1085,197 Wash. 569
• Court: Washington Supreme Court
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. FEENAUGHTY MACHINERT CO. et al. (HOLMES, Intervener.

85 P.2d 1085

197 Wash. 569

UNITED STATES FIDELITY & GUARANTY CO. v. FEENAUGHTY MACHINERT CO. et al. (HOLMES, Intervener.

No. 27050.

Supreme Court of Washington

January 3, 1939

Department 1.

Action by Ed. Bjork and William Strom, individually and as joint administrators of the copartnership estate of Bjork Bros Pearson & Strom, who were subsequently substituted as parties defendants in their individual and representative capacities against Feenaughty Machinery Company, a corporation, which filed a cross-complaint, and others, wherein Earl M. Holmes intervened, to determine the validity of claims filed against United States Fidelity & Guaranty Company, a corporation, as surety, on bond of state highway contractors, and with the director of highways against the retained percentage withheld by the Department of Highways. From an adverse decree, the United States Fidelity & Guaranty Company appealed and Charles F. Maurer, administrator of the estate of Pearson &amp Strom, also cross-appealed, but the cross-appeal was thereafter dismissed pursuant to stipulation.

Affirmed.

ROBINSON J., dissenting.

Appeal from Superior Court, Thurston County; John M. Wilson, judge.

Wright & Wright, of Seattle, for appellant.

Tom W. Holman and Harold A. Pebbles, both of Seattle, for respondent.

HOLCOMB Justice.

After the completion of a contract for highway construction, a number of claims were filed against appellant, as surety on the contractors' bond, and with the director of highways against the retained percentage withheld by the department of highways. This action was instituted to ascertain the validity of these claims, to determine the amount of retained percentage upon the contract, and to have such amount paid into the registry of the court for disbursement in liquidation of the valid claims.

Ed. Bjork and William Strom, individually and as joint administrators of the copartnership estate of Bjork Bros., Pearson & Strom, appeared as parties plaintiff in the complaint, but, by virtue of special court order, were withdrawn as parties plaintiff and substituted as parties defendant in their individual and representative capacities.

Earl M. Holmes, assignee of a number of the claims, appeared as intervener.

Subsequent to the filing of the complaint all claims were satisfactorily settled out of court except the claims of Feenaughty Machinery Co., of the Seattle Steel Co., of the Nelson Lron Works, Inc., of Bernth & Company, of Charles F. Maurer, administrator of the partnership estate of Pearson & Strom, and these are the only claims in controversy in this proceeding.

W. S. Terry filed a release of his claim as against the retained percentage, stipulated that he did not desire to litigate the matter of the validity of his claim, and elected to wage an independent action.

The trial court entered an order directing that the retained percentage, to-wit, $15,209.76, be paid into the registry of the court, and dismissed this action in respect to the state.

By virtue of a decree entered by the trial court the Seattle Steel Co. was awarded judgment against appellant and Ed. Bjork and William Strom in the sum of $1,601.97 plus interest and costs; Bernth & Company was awarded judgment against appellant and Bjork and Strom for $296.12 and costs; Feenaughty Machinery Co. was awarded judgment against appellant and Bjork and Strom for $3,601.26 and costs, including an attorney's fee in the sum of $350. These amounts were decreed to be a lien upon the retained percentage withheld by the director of highways, and enforcible against the surety bond, save the award to respondent was made a lien on that fund and the surety bond only to the extent of $2,731.17 plus an attorney's fee in the sum of $350.

The Nelson Iron Works, Inc., was given no award either against appellant or the retained percentage, but was awarded judgment against Ed. Bjork and Strom, individually and as joint administrators of the copartnership estate of Bjork Bros., Pearson & Strom in the sum of $396.68 and costs. The claim of Charles F. Maurer, administrator of the estate of Pearson & Strom, was disallowed as against appellant and the retained percentage, but the adjudication of liability of the partnership of Bjork Bros., Pearson & Storm, of the partnership of Pearson & Strom, and of the surviving members of either or both firms, was expressly reserved for the reason that such claims were deemed not properly Before the court in this proceeding.

Appellant gave oral notice of appeal from the portions of the judgment awarding the Seattle Steel Co. $1,601.97, the Bernth & Company $296.12, and the Feenaughty Machinery Co. $2,731.17, against appellant.

Thereafter the Seattle Steel Co. and Bernth & Company acknowledged full satisfaction of their judgments, and the controversy upon this appeal is limited to respondent, Feenaughty Machinery Company.

Charles F. Maurer, administrator of the partnership estate of Pearson & Strom, also gave notice of appeal, but thereafter, pursuant to a stipulation for dismissal filed with this court, an order of dismissal was entered in respect to this cross-appellant.

In its answer and cross-complaint respondent alleged that the copartnership of Bjork Bros., Pearson & Strom furnished for use on the road construction in question vast quantities of materials and supplies in the total amount of $4,752.07, and in addition thereto 'Timkin Bits' were used and completely exhausted and consumed on the project in the sum of $2,548.67. It was further alleged that a compressor unit and one Gardner-Denver had been leased at an agreed monthly rental of $600 per month; that $2,520 was due and owing on the rental of the above-mentioned machinery, none of which have been paid; that the amount of $4,752.07 for materials and supplies was paid by the copartnership and its successors; that in addition respondent was paid $1,467.41 on account of 'Timkin Bits' consumed in the performance of this work, leaving a balance due on Timkin Bits in the sum of $1,081.26 and $2,520 for rental of equipment, or a total of $3,601.26, and that a lien for that amount was filed by respondent with the director of highways.

Appellant replied, admitting that respondent supplied Timkin Bits for the use of the contractors in the operations under the contract, and leased machinery to the contractors at a monthly rental of $600 per month; admitted only that there was approximately $120 unpaid on the monthly rental upon the machinery; admitted respondent had filed a claim with the director of highways in the sum of $3,601.26, but denied there was any other amount due respondent in excess of $120.

The following facts may be noted: February 25, 1936, the copartnership of Bjork Bros., Pearson & Strom entered into a written contract with the state of Washington for the clearing, grading, and draining of a portion of State Road No. 5, Tieton Dam Vicinity, Federal Aid Project No. 211-B, in Yakima County, between station 748+00 and station 775+60. The contractors were required to furnish a surety bond which they did, with appellant as surety thereon in the sum of $105,287.40. In February, 1936, the copartnership undertook to perform and to complete the construction of the above-mentioned road. Two of the copartners, Carl Bjork and Fred Pearson, died during the period of construction in November, 1936, leaving Ed. Bjork and William Strom as the surviving members of the partnership firm known as 'Bjork Bros., Pearson & Strom.' Upon petition to the superior court Ed. Bjork and Strom were appointed administrators of the partnership estate.

Until November, 1936, there was also another partnership known as 'Pearson & Strom,' composed of Fred Pearson and William Strom. Upon the death of Pearson in November, 1936, Maurer was appointed administrator of the partnership estate.

By order of the court Ed. Bjork and William Strom, individually and as joint members of the partnership estate, continued operations under the contract and completed the work. After the contract had been performed, the completion thereof was accepted and approved by the department of highways and the time within which to file claims against the contractors, the surety upon their bond, and the retained percentage withheld by the department of highways had expired at the time this action was instituted. July 8, 1937, respondent filed a claim with the director of highways in the sum of $3,601.26.

Respondent not only sold a considerable number of 'Timkin Bits' and other articles to the contractors for the performance of the contract, but also entered into a contract of lease with the contractors whereby it leased a portable compressor unit and a Gardner-Denver pilot with caterpillar Diesel engine at a rental rate of $600 per month.

Appellant contends the trial court erred (1) in holding 'Timkin Bits' are supplies and constitute a lien against the retained percentage and that the surety upon the principal contractors' bond could be held liable therefor; (2) in holding any sum was due respondent in excess of $120 for rentals upon respondent's machinery; (3) in allowing respondent interest on its claim from the time it was filed with the director of highways; and (4) in entering judgment for respondent for an attorney's fee in excess of $50.

The applicable statutes relating to the execution of a contractor's bond and the reservation of moneys earned by the contractor are Rem.Rev.Stat. §§ 1159 and 10320, respectively.

Rem.Rev.Stat § 1159, prescribes: 'Whenever, any board, council, commission, trustees or body acting for the state or any county or municipality or any public body shall contract with any person or corporation to do any work for the state, county or municipality, or other public body, city, town or ...