Williams v. Pacific Surety Co.

• Decision Date: 15 June 1915
• Parties: WILLIAMS v. PACIFIC SURETY CO. ET AL.
• Court: Oregon Supreme Court

149 P. 524

77 Or. 210

WILLIAMS v. PACIFIC SURETY CO. ET AL.

Supreme Court of Oregon

June 15, 1915

In Banc.

Appeal from Circuit Court, Multnomah County; Henry E. McGinn, Judge.

Action by F. F. Williams against the Pacific Surety Company, a corporation, and others. From a judgment for plaintiff, the named defendant appeals. Modified and affirmed.

See also, 146 P. 147.

This action was commenced in January, 1911, and by it plaintiff seeks to recover damages for breach of a contract to furnish logs to the sawmill located at Glendale, Or., then owned by plaintiff and defendant Ford. This is the third appeal. The issues, so far as they are of interest in this discussion are briefly as follows: On August 17, 1910, plaintiff and defendant Ford purchased a sawmill, certain personal property and a small tract of land to be used in connection therewith from the defendant Oregon-Idaho Company, and at the same time entered into a contract with such company whereby the latter was to deliver to the mill a total of 200,000,000 feet of sawlogs of the quality and at the times mentioned in the contract. This agreement also contained the following clause:

"It is further understood and agreed that both parties to this contract shall procure and deliver to the other party, as security for the faithful performance of the respective covenants of this agreement, bonds in the sum of twenty-five thousand dollars ($25,000) conditioned upon the faithful performance of such covenants and agreements and with good and sufficient sureties, or, in lieu thereof, other security satisfactory to the parties who are to receive the same."

Pursuant to this provision, the defendant Oregon-Idaho Company gave to plaintiff and defendant Ford a bond in the following form:

"Home Office, San Francisco, California.

"Know all men by these presents: That the Oregon-Idaho Company, a corporation, organized and existing under and by virtue of the laws of the state of Oregon (hereinafter called the 'principal') and the Pacific Surety Company, a corporation, organized and existing under the laws of the state of California, and whose principal office is located in San Francisco, California (hereinafter called the 'surety'), are held and firmly bound unto A. H Ford and F. F. Williams (hereinafter called the 'owner') in the full and just sum of twenty-five thousand and 00/100 ($25,000.00) dollars, lawful money of the United States of America, to the payment of which sum of money, well and truly to be made, the said 'principal' binds himself, his heirs, executors and administrators, and the said 'surety' binds itself, its successors and assigns, jointly and severally, firmly by these presents. Dated this 1st day of August, A. D. 1910."

The plaintiff did not deliver or tender any bond, but made a cash payment of $10,000 on the purchase price of the mill and other property and gave a mortgage thereon for $15,000, the balance of such purchase price. The Oregon-Idaho Company breached the contract by failing to deliver the logs at the time and in the quantities agreed upon, and on December 12, 1910, was declared an involuntary bankrupt by the United States District Court. Thereupon this action was brought upon the bond above set out. The other defendants having defaulted, the Pacific Surety Company filed its answer, in which, among other things, it pleaded affirmatively that the plaintiff had forfeited its right to recover by failure to execute and deliver the bond provided for in the logging contract and by refusing to pay more than $3.50 per thousand for certain of the logs delivered, whereas the contract called for a uniform price of $7 per thousand; that they further violated the terms of the bond by assigning their interest in the logging contract to the Cow Creek Mill Company; that plaintiff also failed to immediately notify the surety of the neglect on the part of the Oregon-Idaho Company to supply logs according to the terms of the contract, and that, at all times since the execution of the contract and bond in controversy, the state of the lumber market in Oregon has been such that the cost of manufacturing sawlogs into lumber and placing the same upon the market, together with the payment of $7 per thousand feet for logs at plaintiff's sawmill, has been largely in excess of any market price obtainable for such lumber, and that therefore plaintiff has not been substantially damaged by the alleged breach of the contract. Plaintiff's reply consists of denials and the allegation that, if the logging contract had ever been assigned, it has been reassigned to plaintiff and Ford and that plaintiff and Ford own practically all of the stock in the Cow Creek Mill Company. From a judgment for plaintiff, defendant Pacific Surety Company appeals.

Burnett J., dissenting.

Thomas H. Crawford, of La Grande, and S. C. Spencer, of Portland (Wilbur, Spencer & Beckett, of Portland, on the brief), for appellant. J. O. Bailey and Robert Treat Platt, both of Portland (Platt & Platt, of Portland, on the brief), for respondents.

BENSON, J. (after stating the facts as above).

Defendant's first contention is that the trial court erred in admitting in evidence the deed from the Oregon-Idaho Company to Ford & Williams, the bond in suit, and the escrow agreement with which they were deposited with the Security Savings & Trust Company about the 1st of August, 1910, and also the note and mortgage for the unpaid portion of the price of the mill property. This contention, however, is untenable. There is a clear-cut issue in the pleadings as to whether the contract, bond, deed, and mortgage were executed and delivered on August 1st, or August 17th, and these exhibits were relevant and proper evidence thereon. A broader justification for the ruling of the trial court is found in the fact that the escrow agreement contains evidence tending to show the interpretation put upon the logging contract by the parties thereto in regard to the giving of a bond, "or, in lieu thereof, other security satisfactory to the parties who are to receive the same." In the case of City Messenger & Delivery Co. v. Postal Telegraph Co., this court, speaking by Mr. Justice Bean, says:

"There is no more certain way of finding out what the contracting parties meant than to ascertain what they have actually done in carrying out the contract. By so doing we learn what construction the parties themselves have placed upon the terms of their stipulation." City Messenger & Delivery Co. v. Postal Telegraph Co., 145 P. 657, at page 660, and cas es there cited.

The parol testimony of plaintiff in relation to the acceptance of the cash payment and the note secured by mortgage, being specifically accepted as satisfactory security in lieu of a bond, was properly admitted upon the same theory.

Defendant...