School District No. 45 v. Hallock

Mr. Justice Bean delivered the opinion of the court. 1. It is urged by the learned counsel for defendant Surety Company that the assignment by Hallock of the contract for the building to a third party with the knowledge and consent of the obligees and without the consent of the surety released the latter: Citing Stearns on Suretyship (2 ed.), § 78, and several other authorities. Defendant raised the question presented by a demurrer to the complaint, by timely objections to the introduction of any evidence and by motion for — 691 — a nonsuit. The proposition of law urged as above may be conceded, but the record does not show that the school district had any knowledge of the assignment or consented thereto. In order for an assignment to have that effect it was necessary that both contracting parties should assent thereto: Equitable Surety Co. v. United States, 234 U. S. 448, 457 (58 L. Ed. 1394, 34 Sup. Ct. Rep. 803); French v. Powell, 135 Cal. 636 (68 Pac. 92). Neither does it appear that when Mr. Manning made the contract for the plumbing he knew that the original contract had been made in the name of any different person than the one with whom he dealt. The assignment was not indorsed on the original bond or contract held by the school district. The bond recites: “Whereas, the said principal, P. S. Hallock, entered into a written contract with the said obligee (school district) dated September 15,1914, for the erection and completion of an eight room school building, with auditorium, together with basement, located neor Hilbert Station, Multnomah County, Oregon, in accordance with the terms, covenants and conditions of said contract which is hereby expressly referred to and made a part hereof. “Now, therefore, the conditions of this obligation are such that if the said principal shall faithfully perform said contract according to the terms, covenants and conditions thereof, and shall deliver said work to the said obligee, free and clear of all liens of claims arising out of said contract, then this obligation shall be null and void, otherwise to remain in full force and effect.” In the contract we find the following stipulation: “It is further agreed that the contractor, at his own proper cost and charges, is to provide all manner of materials and labor. * * ” — 692 — 2. By the terms of the bond Hallock and his surety were required to pay for the labor and materials entering into the construction of the building in conformity with the statute pursuant to which the same was given. Under a bond given in accordance with the statute it is not necessary for the relator to show that the labor or materials were supplied under contract with the original contractor or anyone. The law does not limit the right of recovery to those who furnish the labor or materials directly to the contractor, but all who supply him with labor or materials for the prosecution of the work provided for in the contract are protected. The source of the labor or materials is not indicated or circumscribed. They are only required by the bond as well as by the statute to be supplied. In neither is the manner of supplying the same stated: United States v. American Surety Co., 200 U. S. 197, 204 (50 L. Ed. 437, 26 Sup. Ct. Rep. 168); Mankin v. United States, 215 U. S. 533, (54 L. Ed. 315, 30 Sup. Ct. Rep. 174); United States v. Burgdorf, 13 App. D. C. 506; Portland v. New England Casualty Co., 78 Or. 195, 200 (152 Pac. 253); Columbia County v. Consolidated Contract Co., 83 Or. 251 (163 Pac. 438); School Dist. No. 6 v. Smith, 63 Or. 586 (127 Pac. 797, 43 L. R. A. (N. S.) 65, 69, note); Board of Education v. United States Fidelity etc. Co., 166 Mo. App. 410 (149 S. W. 46); Bowditch v. Gourley, 24 Pa. Super. Ct. 342; Philadelphia v. Harry G. Nichols Co., 214 Pa. 265 (63 Atl. 886); Gilmore v. Westerman, 13 Wash. 390 (43 Pac. 345). 3, 4. Under our statute it cannot be thought that the school district is not interested in the covenant contained in the bond for the protection of those furnishing labor or materials for the construction of the school building because if there is a failure to take such a — 693 — bond the district and its officers are jointly liable for such labor and materials to the persons furnishing the same. This emphasizes the rule that the bond or contract cannot be changed by one of the obligors without the consent of the school district. F. S. Hallock, the contractor, by secretly writing a form of assignment upon his duplicate of the contract could not impose a new contractor upon the school district and without any new bond being given make the district and its officers liable under the law for not taking the required bond. In other words, it takes two to make a contract. The only effect that the arrangement between the contractor and his company could have had was to validate the contract with Manning and to show that there was a privity of contract between Manning and Hallock through the instrumentality of the Hallock Building Company. In so far as materialmen and laborers are concerned such an assignment was in effect no more than a subletting of the work. No one seems to have cared in whose name Hallock did the business, whether in the name of his wife or the corporation. Hallock was the contractor and responsible all the way through the undertaking. The work and materials in question were furnished to him and went into the building. Whether this was through the Hallock corporation or not would not change the matter. It is stated in 9 C. J., p. 34, paragraph 56: “The law at the time of the execution of the bond is a part of it; if it gives to the bond a certain legal effect it is as much a part of the bond as if in terms incorporated therein. Where a bond is given under the authority of a statute in force when it is executed, in the absence of anything appearing to show a different intention it will be presumed that the intention of the parties was to execute such a bond as the law required, and such statute constitutes a part of the bond — 694 — as if incorporated in it, and the bond must be construed in connection with the statute and the construction given to the statute by the courts. Such a bond must be given the effect which in reason must have been intended by the statute.” 5. The provisions of our statute as to the protection of materialmen and laborers were copied from the act of Congress approved August 13, 1894. It is a well-established rule that whenever a statute of another state is adopted in Oregon the construction placed on the act by the court of last resort of the state from which the law was borrowed made prior to the enactment of the statute controls the interpretation thereof: State v. Townsend, 60 Or. 223, 229 (118 Pac. 1020). The decisions of the federal courts, therefore, are a guide in the interpretation of our statute. While the rule was slightly different prior to the decision in United States v. American Surety Co., 200 U. S. 197 (50 L. Ed. 437, 26 Sup. Ct. Rep. 168), the rule announced in that case has been consistently followed: Pavarini & Wyne v. Title, Guaranty & Surety Co., 36 App. D. C. 348 (Ann. Cas. 1912C, 367); Smith v. Mosier, 169 Fed. 430. In United States v. American Surety Co., 200 U. S. 197 (50 L. Ed. 437, 26 Sup. Ct. Rep. 168), at page 205 of the opinion Mr. Justice Day said. “In view of the declared purpose of the statute, in the light of which this bond must be read, and considering that the act declares in terms the purpose to protect those who have furnished labor or material in the prosecution of the work, we think it would be giving too narrow a construction to its terms to limit its benefits to those only who supply such labor or materials directly to the contractor. The obligation is ‘to make full payments to all persons supplying it with labor or materials in the prosecution of the work provided for in said contract. ’ This language, read in the — 695 — light of the statute, looks to the protection of those who supply the labor or materials provided for in the contract, and not to the particular contract or engagement under which the labor or materials were supplied”: See Freeman v. Berkey, 45 Minn. 438 (48 N. W. 194); Kaufmann v. Cooper, 46 Neb. 644 (65 N. W. 796). The payment for the labor and materials in controversy comes clearly within the undertaking of F. S. Hallock and his surety. While the bond is not in the exact language of the statute it is .to the same purport and must be construed in the light of the act. While all the findings of the lower court were not necessary to the determination of the case the judgment of that court was right and it is affirmed. Affirmed. Mr. Chief Justice McBride, Mr. Justice Moore and Mr. Justice McCamant concur.