Portland v. American Surety Co.

Mr. Justice Burnett delivered the opinion of the court. 1. The question to be determined is whether or not Ryan had authority to execute the bond indemnifying — 42 — the Title Company. Without a decision we pass the demurrer against the answer of the Title Company. If the bond was indeed a valid obligation of the Western, the decree was right. On the contrary, if it was not binding’, the instrument forms no obstacle to the recovery of its claim and to participation in the benefits of the contractor’s bond. The undisputed testimony is that the bond signed by Ryan in the name of the Western was taken at the instance of A. Edward Krull, a representative of the Title Company. Ryan, while on the stand, testified as follows: “Q. Do you remember stating to Mr. Krull that you were going to get-the sale of the electric apparatus for that job if Bradley got the job? “A. No; not in those words; no. “Q. But that was it, in substance, wasn’t it? “A. No; when Mr. Bradley was to get his bond for the city, he went to Ted Langford, who was then a friend of Mr. Bradley, and I went down to the bonding company, down to Mr. Burgard’s office with him; and at the time they wanted me to go on the bond I told them that I had absolutely no authority to sign a bond. “Q. Didn’t you call up Krull that day? “A. Yes; I told Bradley and Krull that I didn’t have any authority to sign a bond, but that I would do this; that if they would get Mr. Bradley to go ahead and do that job, I would see that the electrical material would be furnished Mr. Bradley so that he wouldn’t be held up on the job. * * “Q. What representation was made when this was signed? “A. I made the statement to Mr. Krull that I would guarantee delivery of the material for the completion of job, and I specifically told Mr. Krull that I had-no authority for going on the bond, and that my signature on a bond, so. far as my company was concerned, wasn’t worth anything. Mr. Krull understood that at the time.” — 43 — W. L. Bradley testified thus: “Q. Were you present, Mr. Bradley, at the time, that is, at the time Mr. Ryan just stated this bond was made? “A. I was. “Q. Tell the court what was the understanding or agreement, or what conversation was had at that time between Krull and Ryan in your presence as to the bond. “A. At the time the conversation was between Krull and Ryan and me he says: ‘John, I can’t go ahead and issue this bond. I don’t know whether the party can furnish these goods. ’ And I asked Ryan to guarantee them, and so Jack says that as others were trying to get the contract: ‘I want to get the bond in. If Bradley gets his bond, I will guarantee that he will get his material on the job.’ ” Neither Krull nor any other witness in any way disputed the testimony quoted. The excerpts set out above constitute all the evidence on the subject. Thus Krull, representing the Title Company, had actual knowledge of the limitations upon Ryan’s authority. According to the deposition of one of the principal officers of the Western, Ryan’s sole duty, except to accept service of process, was that of sales manager, and he had never been authorized in any manner whatever to execute any bond on behalf of his principal. 2. The following are legal platitudes: As to third persons a principal is bound by the acts of his agent, not only when executed in pursuance of actual authority, but also within the scope of his apparent authority arising from the manner in which his principal has held him out to the public. 3. Apparent authority and its effect vanish, however, in the presence of the actual knowledge of the third party as to the real scope of the agent’s authority, or when the former has knowledge of facts — 44 — which would put him upon inquiry 'as to the actual warrant of the agent. 4. It is Code law that: “The rights of a party cannot be prejudiced by the declaration, act, or omission of another, except by virtue of a particular relation between them”: Section 705, L. O. L. It has often been held that a party deals at his own peril with one who professes to be the agent of another. In this case the character of sales manager does not give rise to the appearance that such an individual is also a bond giver. The mere fact that the Western had commissioned Ryan to sell its goods does not sanction the supposition that he was empowered to execute an indemnity bond binding his principal. Moreover, it was without any dispute whatever that at the time of signing the bond the representative who was acting in the matter for the Title Company was informed by Ryan that he had no authority to bind his own company in any way by such an instrument. The Title Company was thus forwarned against the liability of the Western, and took the instrument at its own peril. An effort was made in argument to construe the furnishing of the electrical supplies to Bradley and the execution of the undertaking all as one transaction, but there is nothing in the evidence justifying any such conclusion. The dealing between the contractor and the Western covering the delivery of the electrical supplies was one performance. The execution of the contractor’s bond on February 27, 1913, was another, and it was a third affair when Ryan afterward signed the indemnity undertaking on March 6th. The Title Company is in the position of saying to the Western: “The contractor whose bond we have underwritten may take your goods to the amount mentioned, and not — 45 — pay for them, but we will escape liability because we inveigled your salesman into executing an indemnity bond in our favor when we knew he had no authority to do so.” The law does not sanction such a position. 5. In its brief the Title Company endeavors to avoid responsibility for the claim of the elevator company, because there was a bond given by the latter similar in terms to the one imputed to the Western. The Title Company further questions the adjudication in favor of the Westinghouse Pacific Coast Brake Company. Even if they were sound under the pleadings and evidence, we cannot give attention to these arguments, because the Title Company did not appeal from the decree. It follows that the determination of the Circuit Court should be modified so as to allow the Western a decree, not only against Bradley, but also against the Title Company, with permission to share ratably with other established claims in the fund remaining in the hands of the city’. The decree is changed accordingly Modified. Motion to Modify Decree Denied. Mr. Chief Justice Moore, Mr. Justice McBride and Mr. Justice Benson concur. Denied January 18, 1916. Motion to Further Modify Decree. (154 Pac. 121.) Department 1. Mr. Justice Burnett delivered the opinion of the court. Under a clause of the charter of the City of Portland the relator instituted a suit against a contractor — 46 — for the erection, of a city building and his surety to recover for material's furnished by it and incorporated in the structure. Other materialmen and subcontractors were made defendants, so that, among other things, their rights to participate in the balance of the contract price remaining unpaid and in possession of the city might be determined and adjusted. The Circuit Court denied relief to the Western Electric Company, a defendant materialman, as against the contractor’s surety, the Title Guaranty & Surety Company, and postponed its participation in the city fund until all other claimants were satisfied therefrom. The Western Electric Company appealed, serving notice on all other parties to- the suit, secured a reversal '.of the decree of the Circuit Court, and established its right to participate, in the balance unpaid of the contract price and to recover from the contractor’s surety. The decree of this court awarded costs and disbursements in favor of the Western Electric Company against the Title Guaranty & Surety Company, but denied such indemnity to all other parties. The defendant Westinghouse Pacific Coast Brake Company now moves for a modification of the decree so as to allow it costs and disbursements against the appellant, Western Electric Company, and the Title Guaranty & Surety Company. 6. Let it first be set down that in equitable proceedings the allowance of costs and disbursements rests in. the discretion of the court. 7, 8. As influencing the exercise of this prerogative in this instance, it will be observed that the decree of the Circuit Court in favor of all the claimants except the appellant Western Electric Company excluded the latter from participation in the city fund until the claims of the former were satisfied. In this court this — 47 — preference was overturned, and the appellant was admitted to share in the fund like all other claimants. They were proper and necessary parties to the appeal, and the appellant prevailed against them in that respect. This is a sufficient reason for denying any of them costs or disbursements against the appellant. It might properly have been ground for awarding costs, against them. There was no dispute in this court between them and the Title Guaranty & Surety Company; hence no equitable ground exists here for giving any of them costs or disbursements against it. The principal dispute before us was between the Title Company and the Western company, wherein the latter contended for the allowance of its claim against the former which had been wholly denied by the Circuit Court. Having succeeded in establishing its entire demand against the Title Company, it would ill accord with equitable considerations, in the absence of any unusually different conditions, to deny costs in favor of the appellant and against the Title Company. In the adjustment of costs in this court the other claimants fared quite as well as they had any reason to expect and must be content. The motion is overruled. Motion to Modify Decree Denied. Mr. Chief Justice Moore, Mr. Justice McBride and Mr. Justice Benson concur.