Daily capital journal. (Salem, Oregon) 1903-1919, 1911-11-09
Aerne, Jr, V. GOstlOw, ct al, MultnO-
nah County.
Decided, October "a, 1911.

Decided, October "a, 1911.
c. Aerne, Jr., plaintiff, and re-
spondent, v, A. E. Gostlow, and Union |
Guarantee Association, a corporation, J
defendants, Union Guarantee Associa-
tion, appellant. Appeal from the cir
cult court for Multnomah county.
The Hon. w. n. Gatens, Judge, Ar
gued and submitted Oct. II, 1911. T.
G. Greene Bauer & Greene, on brief) |
for respondent. S, c. Spencer, w. E.
Farrell and (Wilbur & Spencer and
A. NJ. Dibble, on brief) for appellant.
Mcbride, ]. Affirmed.
In March, 1909, plaintiff let a con-
tract to defendant Gostlow for the
erection of dwelling house in Port
land. The contract price was $4,000
and the building was to be completed
within 100 days from March 9, 1909.
Gostlow entered into an undertaking
for the faithful performance of the
contract, and defendant, Union Guar
antee Association, became his surety
thereon. The contract was made part
of the undertaking and is in the form
in general use by the American In
stitute of Architects and the National
Association Of Builders. Those por-
tions of it material to this case are
substantially as follows:
The contractor was to provide all
materials and labor in the erection of
the building, according to the draw
ings and specifications of E. Kroner,
architect for the owner, who was
made sole arbiter. Alterations in the
work on Kroner's written order were
provided for. Upon failure of the
contractor to promptly prosecute the
work or other default in the condi-
tions of the contract, upon certificate
to that effect by the architect, the
owner was authorized to take pos
session and complete the work; and
that in the event of delay in the COM
pletion of the contract caused by the
act of the owner, architect, or other
contractor, or by fire, strikes, lock-
outs or other casualty not chargeable
to the contractor, the time fixed by
the contract for the completion of the
building was to be extended for an
equivalent period which was to be
determined by the architect; the lat
ter was also to make estimates every
two weeks as the work proceeded, of
the value of labor and materials fur
nished by the contractor, and there
upon the owner was to pay the con-
tractor so per cent of the amount Of
such estimates, as certified by the
architect The final payment was to
be made within five days after the
building was completed 1t is also
provided that the owner be permitted
to retain out of any installment of
the contract price due or to become
due, an amount sufficient to indemni-
fly him against any lien or claim
chargeable to the contractor, for
which if established the owner would
be liable, and a covenant on the part
of the contractor to refund to the
owner all money that the latter may
be compelled to pay in discharging
any lien on the premises suffered in
consequence of the contractors de-
fault.
The bond provides in substance
; that the Union Guarantee Association
shall indemnify and save harmless
the owner from ANY monetary loss
resulting from a violation of any OF
, the terms, covenants and conditions
of the above mentioned contract on
the part of said principal (the con-
tractor) to be performed" 1t was
, issued subject to the following con.
ditions among others not material tC
! the present controversy: (D That
upon any default on the part of the
contractor in the performance of any
/ of the terms or conditions Of the con
tract, written notice thereof shall bt
delivered by the obligee to the suret!
at it's home office within three day
! after the occurrence of such defaul
shall have come to the knowledge o
the obligee; (2) that the surety shall
I have the option, in default on the par
! Of the contractor, to assume anC
complete the contract, and be entitled
to all the rights and properties o
! the contractor arising out Of the con
tract. including all deferred pay
ments, retain percentages and credit
. due at the time of such default or t
= become due; (5) that the obligee shall
retain not less than Is per cent 0
the value Of all work and materia
furnished in the performance Of tn
contract until complete performanc
of all its terms, covenants and condi
tions by the contractor, and that tn
obligee shall faithfully perform hi
part of the contract.
The Union Guarantee Association
had its head office and principal an
only place Of busine IS in room o