Daily capital journal. (Salem, Oregon) 1903-1919, 1911-11-09

luS lut LudhluS anu ISSUING VI luuelu- |
nifty contracts and bonds to contrac-
tors, builders and Others, for COM
pensation in money. The office of the !
Association was furnished in the
usual way, with counter and railing,
behind which, scattered over the
room, were desks and table for the
various officers and clerks, but there
were not cards, signs or notices in
the place, nor any of the desks to in
dicate the office, position or employ
ment of the several occupants, so that
strangers having business with the
association made inquiry at the coun-
ter were directed by some person in
the office behind the counter to the
clerk or official to whose department
the matter appertained, At the time
the indemnity bond in question was
issued, N. w. Rountree was general
manager of the Guarantee Associa-
tion, but, having business Of his
own, did not make his office with the
association and gave but small part
of his time to its business.
Gostlow completed the building
about September IL, 1909, and on Sep
tember 13 the architect issued his
final certificate of completion and ac-
ceptance. From time to time, during
the progress of the work, plaintiff
paid to Gostlow on certificates of the
architect, as provided in the contract,
sums aggregating $475O, or a little
less than 80 per cent Of the contract
price of $4,000. so that at the time of
completion there was due to Gostlow
81 ,45O, or a little over the 20 per cent
which the contract required plaintiff
to retain. Gostlow demanded pay
ment, but, before settling with him,
plaintiff went to the office of the sur
ETY. company and asked for the man
ager of the bonding department, and
was introduced to ]. Edward Krull,
as such official, plaintiff testified that
in this interview, he stated to Krull
that Gostlow had completed his con-
tract, and that the final payment
would amount to about $14O0; that
Gostlow had requested him to pay
some of his subcontractors or en-
lployees sums aggregating about $500,
and that there would be in the neigh
borhood of $500 to be paid to Gostlow
personally; and that he offered to pay
the amount over to the Guarantee
company if they saw fit to accept it.
Kfull inquired as to whether Gostlow
owned any other money and plaintiff
told him he only knew of two other
accounts, one being for about $525
and the other for six or seven hun
dred dollars. Krull expressed conf
dence in Gostlow's honesty and told
plaintiff that the company had been
secured by Gostlow for the bond and
gave plaintiff written permission over
the signature of the company to make
a final settlement with Gostlow.
Plaintiff thereupOn settled with Cost
low, paying $S5295 to his subcon-
tractors on his order, and $597.05 to
him personally. Gostlow, at the time,
was insolvent but this fact was not
known either to the plaintiff or to
the company, and in day or two af-
ter the settlement he absconded.
On September 2S, 1909, suit was
commenced against Aerne to fore
close a lien on the property which
was the first notice plaintiff had of a
failure on the part of Gostlow to pro.
, tect him from loss, as provided in his
undertaking. Later other liens were
filed which, with the first lien men.
toned, aggregated S2,46943. Plain
tiff gave the defendant company no,
tlce of these liens, as required in the
, undertaking, and requested It to set
tie and adjust the same, and .upor
their refusal to do So he settled thC
claims at cost of $243O15, anC
brought this action against the de
, PENDANTS to recover the amount
Gostlow made default and tn,
g Guarantee company answered, first b!
= general denial and also by furtheI
+ and separate answer, setting up three
I defenses, the first being as follows:
= That the bond referred to in plain
! tif's complaint and set out as a par
! of said plaintiffs Exhibit A, amont
: others, contains the following proH
sions; Provided however, that thii
bond is issued subject to the follow
ing conditions First That upon an
, default on the part Of said principa
/ in the performance Of any OF th'
> terms or conditions Of said contract
! written notice thereof with a verihe,
q statement Of the particulars const
o tuting the default with the date there
Of shall be delivered by the obllge'
o to the surety at its home Office in th'
q city Of Portland, county of Multno
nah, state Of Oregon, within thre
n days after the occurrence Of said de
4 fault shall have come to the know
n ledge Of the obigee.' And this de
!, fendant alleRes that said plaintii