Ausplund v. &198tna Indemnity Co.

INDEMNITY CONTRACT — RECITALS AND CONDITIONS. 1. The liability under an indemnity bond is not limited to the recitals, where — by appropriate reference the contract is incorporated into the bond — the con. tract being then the measure of the liability. For instance: An indemnity undertaking reciting that the principal has entered into a written agreement bearing a certain date, "in substance practically as follows" — followed by a general statement of the terms of the contract, and conditioned for the faithful compliance by the principal "with all the terms, covenants, and conditions of said contract," incorporates the principal's contract into the undertaking, and renders the indemnitor liable for a breach of a provision of the contract not specially recited in such general statement, the entire contract being by reference a part of the undertaking. PLEADING — WAIVES OF OBJECTION OF LIMITATION. 2. Under B. C. Comp. § 68, permitting as ground of demurrer that the action was not commenced within the time limited by the Code, an objection that the complaint shows on its face that the action was not commenced within the time specified must be taken by demurrer, or it will be deemed waived; but whether this applies to the limitation imposed by special contracts is not decided. PLEADING — ANTICIPATING DEFENSE — INSUFFICIENCY OF ANSWER SETTING UP SPECIAL LIMITATION. 3. Where a complaint shows facts sufficient to excuse plaintiff's delay in not instituting the action within the time limited in the contract sued on, which are denied, a separate answer alleging that the action was not commenced within the time so limited is demurrable, as not containing new matter constituting a defense, under B. C. Comp. § 78. The issue is made by the allegation and denial, so the allegation in the separate answer is no defense. PRINCIPAL AND SURETY — EFFECT OF ASSUMING CONTRACT BY SURETY 4. Where a surety, either corporate or individual, in pursuance of the terms of the undertaking, assumes the performance of the principal's contract, such surety is subrogated to the rights of the principal in such contract, and becomes subject to his liabilities. APPEAL — PRESUMPTION IN ABSENCE OF TESTIMONY. 5. Where the bill of exceptions does not purport to contain all the testimony given at the trial, and the court does not certify that all such testimony is incorporated in the transcript, it will be presumed on appeal that the evidence was sufficient to support the findings. VALIDITY OF SPECIAL CONTRACT LIMITATION. 6. The parties to a contract may stipulate that an action for its breach shall be brought within a certain period, and, if the limitation so prescribed is reasonable, it will be upheld. VALIDITY OF UNREASONABLE CONTRACT LIMITATIONS. 7. A building contract bound the contractor to pay for all labor and materials promptly, so that no liens should be filed against the property on account thereof. An indemnity undertaking authorized the surety to assume the contract and complete the same in case the contractor should fail to comply with the terms thereof, and further provided that any suit brought thereon should be instituted within six months after a breach of the contract. The indemnitor assumed the *Page 11 performance of the contract, and accepted payment thereon from the owner, but failed to pay for material used n the construction of the building. Liens were consequently filed against the property the amount of which could not be determined until they were foreclosed, which could not be done with reasonable promptness until more than six months after the breach. Held, that the limitation period of six months was, under the circumstances, unreasonable and inoperative. WAIVER OF CONTRACT LIMITATION BY GUARANTOR 8. An indemnitor on building contract which assumed the performance of its principal's contract, and received from the owner the money due thereon, and failed to comply with the terms of its undertaking thereby waived a stipulation in such undertaking limited to six months after breach the time within which an action might be brought on the contract. APPEAL - EVIDENCE - BILL OF EXCEPTIONS 9. A bill exceptions does not negative the fact that defendant may have introduced testimony on which the findings for plaintiff are based, where after a recital that the foregoing was all the testimony offered by plaintiff, and thereupon defendant moved for an order nonsuit, which was denied, it recites that "at the close of the case, no more testimony having been introduced on behalf of plaintiff," defendant moved for findings and judgment in its favor, which was denied. This action was instituted August 28, 1903, by Octavia Ausplund against against J.W. Higgins and the Aetna Idemnity Co. to recover damages for the breach of an agreement The complaint stats, in effect, that the defendant, the AEtna Indemnity Co., is a corporation engaged in this State in the indemnity business; that the defendant, Higgins, on June 21, 1902, entered into a written contract with plaintiff, whereby he stipulated to erect for her on or before November 1 of that year a dwelling house, and to secure the performance of the terms of such agreement the defendants duly executed to her an undertaking, of which the following is a copy: THE AETNA INDEMNITY COMPANY, HARTFORD, CONN. Know all Men by these presents, that we, J. W. Higgins, of Portland, Or., as principal, and The AEtna Indemnity Company, a corporation created and existing under the laws of the State of Connecticut, and whose principal office is located in Hartford, Conn., as surety, are held firmly *Page 12 bound unto Octavia Ausplund, of Portland, Or., in the full and just sum of twenty-three hundred and forty-six dollars, good and lawful money of the United States of America, to the payment of which sum, 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. Signed, sealed, and dated this 26th day of June, A. D. 1902. Whereas, the said principal has entered into a certain written agreement with Octavia Ausplund, bearing date of June 21, 1902, being in substance practically as follows: To faithfully erect and finish for and in consideration of the sum of twenty-three hundred and forty-six ($2,346.00) dollars a two-story and basement frame residence, situate on the west half of lots 3 and 4, block 289, in Hawthorne Park, in the City of Portland, Or., conformable to the drawings and specifications made by the owner; said work to be completed on or before the 1st day of November, 1902. Now, Therefore, the condition of the foregoing obligation is such that if the said principal shall well, truly and faithfully comply with all the terms, covenants and conditions of said contract on his part to be kept and performed according to its tenor, then this obligation shall be void; otherwise to remain in full force and effect. This bond is issued subject to the following provisions: Provided, that the said surety shall be notified in writing of any act on the part of the said principal, his agents or employees, which may involve a loss for which the said surety is responsible hereunder, immediately after the occurrence of such act shall have come to the knowledge of the fully authorized representative or representatives of Octavia Ausplund, who shall have the supervision of the completion of said contract, and a registered letter mailed to the office of Clemens O'Bryan, managers of the Ætna Indemnity Company, at Portland, Or., shall be deemed sufficient notice within the meaning of this bond. Provided, that if the said principal shall fail to comply with all the terms of said contract to such an extent that same shall be forfeited, then said surety shall have the right and privilege to assume said contract and to sublet *Page 13 or complete the same, whichever said surety may elect to do, provided it is done in accordance with said contract. Provided Further, that in the event of any breach of the conditions of this bond, said surety shall be subrogated to all the rights and properties of said principal arising out of said contract, and all payments deferred, and any and all moneys at that time due said principal under and by virtue of said contract shall be credited upon any claim the said Octavia Ausplund may make upon said surety because of said breach. And Provided Further, that any suits at law or proceedings in equity brought against this bond to recover any claim thereunder must be instituted within six months after the first breach of said contract. And Provided Further, that the said surety shall not be liable for a greater sum than twenty-three hundred and forty-six ($2,346.00) dollars because of or on account of this bond. And Provided Lastly, that the assured or superintendent of the work must give to said surety due notice before the last payment under the contract herein referred to is made to the principal; otherwise, this obligation shall be void as to any liability of the surety hereunder. In Witness Whereof, the said principal has hereunto set his hand and seal, and the said surety has caused these presents to be signed and executed by its attorney in fact at Portland, Or., the day and year first written above." It is then alleged that Higgins commenced the erection of the building, but failed to pay for the materials used in the construction thereof when the several claims therefor matured, and about October 20, 1902, plaintiff notified the indemnity company of his neglect in this respect, whereupon the company informed her that it would assume Higgins' contract, and requested her to make to it all payments of money due or accruing to him under the agreement; that in pursuance of such demand plaintiff thereafter made all payments of money due Higgins under the contract to the corporation, which assumed full control *Page 14 of the building and completed it; that the contract entered into with Higgins provided that the last payment due him thereunder was to be made when the house was completed and the possession thereof delivered to plaintiff free of liens; that after the indemnity company assumed such control and received the money due under the contract it permitted certain liens for materials furnished to be used in the erection of the house to be filed in the office of the County Clerk of Multnomah County, setting out a list thereof, and stating the several sums demanded by the respective lien claimants. It is also alleged that suits were duly instituted to foreclose such liens, and before the day for answering the several complaints therein had expired plaintiff notified the indemnity company of the pendency of such suits, and requested it to settle or defend the same; that such proceedings were had in the several suits that on April 19, 1903, decrees were rendered therein for the sums demanded by each lien claimant; that in pursuance of such decrees plaintiff's real property was offered for sale, to prevent which she, on May 19, 1903, was compelled to pay $624.50, the sum due, no part of which has ever been repaid to her; and "that plaintiff had no means of ascertaining what claims for material furnished and used in the erection of said residence defendants had failed to pay until she was served with the summons in said suit, and thereafter the attorneys' fees and costs to which said lienors became entitled could only be determined by the decrees in said foreclosure suit." The defendant, the Ætna Indemnity Co., alone answering, denied the material allegations of the complaint, and for a further defense averred that the undertaking in question was executed without consideration. For a second defense it is alleged that such undertaking provided that suits at law to recover any sum due under the bond should be commenced within six months after the first *Page 15 breach of the contract in question; that under such agreement Higgins was to complete plaintiff's building on or before November 1, 1902; that he failed to comply therewith, whereupon a breach occurred on that day; and that this action was not commenced until after the expiration of more than six months from November 1, 1902. As a third defense, it is averred that the undertaking, setting out the preamble and condition clauses, describes the only contract to which the indemnity company ever became a party; that Higgins constructed plaintiff's house in every particular as specified, except that it was not completed on the day prescribed; and that plaintiff does not claim any damage on account of such delay. For a fourth defense it is alleged that the indemnity company never at any time purchased or ordered any material for or used any thereof in the construction of plaintiff's house. And as a fifth defense it is stated that this action was not commenced until after the expiration of more than six months after each of such liens was filed. A demurrer to the several separate defenses, on the ground that neither of them stated facts sufficient to constitute a defense having been sustained, a trial was had without a jury, the court making findings of fact in accordance with the allegations of the complaint; and, a judgment having been given thereon for the sum demanded, the Ætna, Indemnity Co. appeals. AFFIRMED.