Simpson Logging Co. v. American Bonding Co.

Citations

• 76 Wash. 533
• 137 P. 127
• 1913 Wash. LEXIS 1855

Syllabus

<p>Principal and Surety- — Release of Surety — Failing to Hold Reserve — Indemnity Bond — Liability. The surety is discharged from liability on an indemnity bond guaranteeing a bridge contract, which required the owner to give notice in writing before paying the last or reserve payment of $7,000, where the owner paid all but $4,461, without giving any notice and then telegraphed the surety that the last payment of $7,000 was due and needed to meet pressing claims, and upon thereby obtaining authority to apply the reserve upon lienable items, overpaid the principal by several thousand dollars by paying claims an uncertain part of which were not lienable; since the surety is entitled by a “superior equity” to have the sum agreed upon held as indemnity until his rights and liabilities are determined.</p> <p>Same — Payments—Misapplication—Liens — Confused Accounts. Where a surety on a defaulted bridge contract authorized the reserve balance to be applied in taking up outstanding lienable items, the payment of any nonlienable items would be a misapplication of the fund pro tanto; and where it is impossible to say to what extent the items were not lienable, no part would be lienable, under the rule of confused accounts.</p> <p>Contracts — Bridge Contracts — Construction—“Cost” of Structure. Under a contract for the construction of a bridge for $31,000, providing that if the bridge company is unable to show a profit of ten per cent on “cost” of the bridge at said price, the owner will make the ten per cent good up to a maximum of $32,500, followed by a provision that “cost” is understood to cover all labor, materials, plant items, liability insurance, general expenses, and all other expenses and miscellaneous items which are chargeable against the job direct, the latter clause cannot be construed as requiring the bridge company to pay for every item of expense that the owner might be put to had it built the bridge itself; but merely as intended to fix the basis upon which