U.S. Nat. Bank of Portland v. Erickson

• Citation: 300 P.2d 449,208 Or. 141
• Parties: The UNITED STATES NATIONAL BANK OF PORTLAND (Oregon), Respondent, v. R. L. ERICKSON, d/b/a R. L. Erickson Company, Respondent, J. A. Terteling & Sons, Inc., a corporation, and J. H. Wise & Son, Inc., a corporation, Appellants.
• Decision Date: 31 July 1956
• Court: Supreme Court of Oregon

Page 449

300 P.2d 449

208 Or. 141

The UNITED STATES NATIONAL BANK OF PORTLAND (Oregon), Respondent, v. R. L. ERICKSON, d/b/a R. L. Erickson Company, Respondent J. A. Terteling & Sons, Inc., a corporation, and J. H. Wise & Son, Inc., a corporation, Appellants.

Supreme Court of Oregon, En Banc.

Submitted on briefs Feb. 23, 1956.

Decided July 31, 1956.

Koerner, Young, McColloch & Dezendorf, Portland, and James H. Clarke, Portland, for appellants.

Hugh L. Biggs, Portland, Hart, Spencer, McCulloch, Rockwood & Davies, Cleveland C. Cory, and John E. Huisman, Portland, for respondent, United States Nat. Bank of Portland (Oregon).

PER CURIAM.

The plaintiff The United States National Bank of Portland commenced a suit against the defendants R. L. Erickson, dba R. L. Erickson Company, J. A. Terteling & Sons, Inc., and J. H. Wise & Son, Inc. The trial court at the close of the evidence determined that the matter was triable as an action at law. No objection to the trial court's ruling was made, and all parties waived the right to a jury trial. Findings of fact were made and a judgment entered for the plaintiff against the defendants for the sum of $22,800, together with attorney's fees and costs and disbursements. From this judgment the defendants J. A. Terteling & Sons, Inc., and J. H. Wise & Son, Inc., have appealed. The defendant R. L. Erickson, dba R. L. Erickson Company, has made no appearance in this court.

For the purposes of this opinion we will refer to the defendant R. L. Erickson, dba R. L. Erickson Company, as 'Erickson', and to the defendants J. A. Terteling & Sons, Inc., and J. H. Wise & Son, Inc., as 'defendants.'

The defendants J. A. Terteling & Sons, Inc., and J. H. Wise & Son, Inc., as joint ventures, entered into a contract June 6, 1951, with the United States Government to rehabilitate 229 buildings situated at the Mountain Home Air Force Base, Mountain Home, Idaho. On June 12, 1951, these defendants entered into a 'subcontract agreement' with the defendant R. L. Erickson, dba R. L. Erickson Company, to do the roofing, sheet metal, and felt siding work called for in the original contract.

On June 16, 1951, the date work was commenced on the subcontract, Erickson, being unable to finance the construction work, displayed to the plaintiff his copy of the subcontract agreement and a copy of the prime contract, and asked of the plaintiff a loan for the purpose of obtaining the necessary finances to carry on the subcontract agreement. The loan application was refused by the plaintiff. The testimony of Mr. Prideaux, an officer of the bank, on this point is as follows:

'He [Mr. Erickson] advised he had been awarded a job of roofing, siding and sheet metal at the Mountain Home Air Base job for Wise and Terteling who had a contract with the army engineers for rehabilitation of that base. We declined to consider a loan at that time by reason of the fact that Mr. Erickson was of the opinion then, or so he expressed to us [,] that he would be under bond--perhaps I should explain why that would be.

'Q. Go right ahead. A. We realized that when a man makes application for a bond he thereby assigns to the bonding company all of his right and interest in monies due and to become due under the sub contract [sic] and inasmuch as we wished to be secured on the loan we then felt that he would not be able to assign invoices to us already having made an assignment to the bonding company. That being the case, application for credit was declined. As a mater of fact, as of that date, we could have made no advance even though the bonding company were not a problem, because no work had then been completed to the stage where invoicing could have been done as of that particular date.'

No bond of any kind was given by Erickson to the defendants.

Before approaching the bank, and after receiving the subcontract, Erickson talked with a Mr. Carter, secretary of the defendant J. A. Terteling & Sons, Inc., Erickson's testimony being as follows:

'After I received the contract I knew that I would have to get finances from some source either from private people or the bank and so being in Idaho or in Boise, being a stranger, I knew that that help would have to come from Portland. So, I called I believe Mr. Hill of the J. T. Terteling Company and asked him [,] because I knew him a little bit more than the others, what the company's reaction was to assignment of invoices on progress of work completed. So, he referred me to Mr. Carter of the same firm. So, I called on Mr. Carter and he advised me that it was permissible and that he would write a letter to that effect which I asked for.

'Q. (By Mr. Biggs) Write a letter to whom, Mr. Erickson? A. To, I believe at that particular time it was just a letter to whomever it may concern. As I hadn't been to Portland yet to make arrangements, and I believe that answers the question.'

On June 15, 1951, Mr. Carter wrote the following letter to the plaintiff:

'Gentlemen:

'The R. L. Erickson Co. of Portland is negotiating a subcontract with our company and J. H. Wise & Son, Inc., a joint venture, under the U. S. Army contract DA-45-164-eng-1136 at Mountain Home Air Force Base, Mountain Home, Idaho, which subcontract will be for roofing and felt siding.

'In arranging the financial requirements to handle the subcontract, this company has requested that we write you in connection with their proposal to assign contract earnings in lieu of any advances that may be obtained from the bank. This arrangement will be satisfactory with us as a member of the venture with the qualification that any known labor or material liens that come to our attention in connection with this subcontract will have preference in payment before the assignment.

'The payments to be made under this subcontract will be on a basis of completed work plus allowances for any contract materials on hand at the jobsite. The subcontractor will be paid based on the quantities as shown on the progress estimates from the principal.

'I trust this information will be sufficient for you to handle necessary arrangements with the R. L. Erickson Co. as they desire.'

On July 2, 1951, Erickson again made application for a loan from the plaintiff, and at this time presented a progress report and request for payment from the defendants showing he had completed, under his subcontract, work of the value of $38,063.31. The progress report was confirmed as substantially correct by a Mr. Matelich, the project manager for the defendants. On July 6, 1951, the plaintiff loaned Erickson the sum of $22,800 for a period of 30 days, and as of that date by airmail notified the defendants of the loan made and the assignment to the plaintiff of the moneys due Erickson under the progress report, requesting defendants, if there were any irregularities found, to so advise. Plaintiff was never notified of any irregularities.

On or about July 11, 1951, the defendants began advancing Erickson money, which advances continued until Erickson had completed the subcontract.

After several requests had been made by plaintiff of defendants as to why payment was not forthcoming, defendants on November 21, 1951, through Mr. Carter, advised the plaintiff by letter as follows:

'Gentlemen:

'In reply to your letter of November 2 regarding the status of the R. L. Erickson Co. contract with the joint venture of J. H. Wise & Son and our company at Mountain Home, Idaho, I wish to advise that the following steps have been taken in this regard and which I trust will give you the information which you desire.

'The past week, a meeting was held with Mr. Erickson, Mr. Matelich, Mr. Wise, Mr. N. L. Terteling, and myself. There was also a Mr. Mueller who is a business associate of Mr. Erickson. Mr. Erickson presented a statement that had been prepared by a public accountant, Richard D. Britton, Cascade Bldg., Portland 4, Oregon, on the status of his contract at Mountain Home. This statement indicated a loss from operations of $49,922.60; however, the statement was incomplete as far as we were concerned, and it was requested that more complete information be furnished us.

'In reviewing the history of the subcontract with Mr. Matelich, the following information was furnished:

'That Mr. Matelich had received a phone call from Mr. Pardeau of your bank to substantiate the correctness of an estimate due for work that R. L. Erickson had performed, which was indicated as being substantially correct by Mr. Matelich;

'That a notice was received from your bank dated July 6 that assignment had been made by Mr. Erickson; however, there appears to be no record of any acceptance made on this assignment and, in the meantime, before the estimate payment was due, the status of this subcontract was reviewed with Mr. Erickson, Mr. Terteling, Mr. Matelich, Mr. Wise, in which Mr. Erickson indicated he had insufficient funds with which to finance the anticipated increased payroll needs for the subcontract schedule. It was, therefor, [sic] agreed that moneys would be advanced to Mr. Erickson in the gross amount of each weekly payroll, to be deposited to a payroll account for the purpose of financing these payrolls. This was done, as well as payments being made on materials furnished to the job. The actual payments made for the liens of this labor and equipment have exceeded the earnings which Mr. Erickson has due, according to the joint venture and the U. S. Engineer estimates; in fact, the payments for such items to date exceed approximately $7,000-$12,000.00 the...