Case Title: US Nat. Bank v. Erickson

Citation: 208 Or. 141, 300 P.2d 448

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 1956-07-31T00:00:00Z

Document:
208 Or. 141 (1956)
300 P.2d 448
U.S. NATIONAL BANK OF PORTLAND
v.
ERICKSON and TERTELING & SONS ET AL

Supreme Court of Oregon.
Submitted on briefs February 23, 1956.
Affirmed July 31, 1956.
*142 Koerner, Young, McColloch & Denzendorf, 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, The United States National Bank of Portland (Oregon).
AFFIRMED.
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 *143 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 venturers, 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:
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:
On June 15, 1951, Mr. Carter wrote the following letter to the plaintiff:
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, *146 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:
The subcontract agreement between the defendants and Erickson contained the following:
*149 The defendants assert on this appeal that the matter was triable in equity and the trial court's findings of fact are advisory only and not controlling upon this court.
1. Objections relating to whether the cause is triable at law or in equity should be made in the trial court, and, unless the issues raised are wholly beyond the jurisdiction of a court of law or equity, the unchallenged ruling of the trial court determining upon which side of the court the matter lies, acquiesced in by the parties, will not be reviewed on appeal. Flaherty v. Bookhultz, 207 Or 462, 297 P2d 856; Ward v. Town Tavern et al., 191 Or 1, 228 P2d 216, 42 ALR (2) 662; United Brokers Co. v. Dose, 143 Or 283, 22 P2d 204; Topolas v. Skotheim et al., 126 Or 683, 250 P 235, 270 P 753.
However, as we view the matter, it is immaterial to the conclusion reached whether the case is considered as being at law or in equity. The facts are not in dispute, and the only logical conclusions possible to draw are: (1) That before any work was commenced by Erickson under his subcontract with the defendants, the defendants knew he was unable financially to proceed; (2) that the defendants wrote the letter to the plaintiff to induce it to finance Erickson so that he could fulfill his obligation to them under the subcontract, which would in turn fulfill their obligation to the United States Government as prime contractors; (3) that the plaintiff advanced moneys to Erickson upon the basis of the letter authorizing the assignment to it of all moneys due Erickson for work performed on the subcontract to July 3, 1951, subject only to the right of the defendants to withhold from the moneys due under the assignment Erickson's debts due and unpaid to his laborers and materialmen; and (4) that, *150 with knowledge of the plaintiff's acceptance of their agreement to honor Erickson's assignment of contract earnings, the defendants themselves began to advance moneys to Erickson, and retained all of the moneys paid to them as prime contractors to repay themselves for their advances to Erickson.
The defendants contend that "Respondent Erickson defaulted on the subcontract before any sums were paid to him for the work, and, pursuant to their obligation to perform the prime contract, appellants were compelled to make advances against Erickson's subcontract on account of labor and material claims in the amount of $189,266.08, * * * which was $7790.06 in excess of the subcontract price of $181,476.02," and that they "were entitled under the terms of the subcontract and the prime contract and as a matter of law to retain all sums received from the United States for subcontract work performed by Erickson."
Whether the defendants' rights to a preferred position in the moneys over general creditors of Erickson arose by reason of law or the contract of the parties is immaterial. The plaintiff apparently does not contend that the defendants' position was not preferred, but that the defendants by their letter waived these rights, and are now estopped to assert them.
The trial court held that these rights were waived by the defendants and they were estopped to now assert them.
2. It is a well-established principle of law in this state that a person in a protected position may waive this preferred position, and by so doing be then estopped from asserting his protected rights. Ore. Sur. & Cas. Co. v. Bank of Eugene, 136 Or 573, 300 P 336; Cole v. Reeves et al., 135 Or 98, 294 P 1099; First *151 Nat. Bk. v. United States F. & G. Co., 127 Or 147, 271 P 56.
3. The letter addressed to the plaintiff by the defendants was given to Erickson for the purpose of inducing the plaintiff to advance credit to Erickson, and, when this credit was received, an agreement in accordance with the letter came into existence. The letter having been prepared by the defendants, if ambiguous, is to be construed most favorably to the plaintiff. Ore. Sur. & Cas. Co. v. Bank of Eugene, supra; Salem Kings Products Co. v. Remp, 100 Or 329, 196 P 401.
The defendants contend that the use of the word "liens" in the letter means "debts," since all parties were cognizant of the fact that this contract was to be performed for the United States Government, and liens upon the property could not be had.
The word "liens" as used in the letter expresses more than debts; as used it refers to debts due and unpaid by Erickson, not to debts to be created subsequent to the assignment. As previously stated herein, the letter authorized the assignment of all moneys due Erickson upon the subcontract, subject only to the right of the consenting defendants to withhold moneys which Erickson himself owed his laborers and materialmen. It did not authorize nor permit them to advance money to Erickson for the purpose of meeting future payrolls and material bills, and then claim a preferred position over the plaintiff.
There is no evidence in this case that there were ever due and unpaid labor and material bills which the defendants paid. On the contrary, the evidence conclusively shows that from time to time the defendants placed themselves in the position of creditors of Erickson by advancing moneys to him at his request.
*152 4, 5. The general rule is stated in 31 CJS 362, Estoppel § 114, as follows:
The trial court correctly held that there had been a waiver which now estopped the defendants from asserting their prime rights.
6. The defendants contend that they are not liable for the attorneys' fees as allowed by the trial court. We are unable to distinguish on principle the rule established by this court upon somewhat similar facts in Cole v. Reeves, supra, where we said on page 107:
The judgment of the trial court is affirmed.
Justice ROSSMAN did not participate in this opinion.
Justice WARNER did not participate in this opinion.