American System of Reinforcing v. Breakers Hotel Co.

California Supreme Court Dec 23, 1932 No. Docket No. L.A. 12278.Published

Before: Tyler

AI Brief

AI-generated · verify before citing

Holding. The court held that the plaintiff accepted a $10,000 note as payment for materials furnished, and is therefore estopped from claiming that amount in a mechanic's lien foreclosure, as the surety relied on the plaintiff's representations that the debt had been satisfied.

Issues

Whether the evidence supports the trial court's finding that the plaintiff accepted a $10,000 note as payment for materials.
Whether the plaintiff is estopped from denying the note was accepted as payment after the surety relied on the plaintiff's representations to its prejudice.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The court found that the note in question was indorsed by Reed without recourse and was delivered by him to American System of Reinforcing, and by said plaintiff accepted as payment in the sum of $10,000.”

“Moreover, we are of the opinion that plaintiff company is estopped from making any objection to the payment.”

“The judgment is affirmed.”

[69]

TYLER, J.

pro

tem.

Action to foreclose a mechanic’s lien for materials furnished in the erection of a certain building. The amount claimed was $11,600.31. Defendant Metropolitan Casualty Insurance Company, as surety, confessed judgment in the sum of $1600.31, and set up as a defense that the balance of $10,000 had been paid. The trial judge so found and accordingly judgment was rendered against the surety for said sum of $1600.31. From this judgment plaintiff appealed and the District Court of Appeal reversed the same, and a hearing was granted by this court.

The facts show that on September 25, 1925, the Breakers Hotel Company entered into a contract with one William G. Reed, as contractor, for the erection of a hotel building on certain property owned by it in the city of Long Beach, for the contract price of $847,269.20. On the same date Reed, as principal, and the Metropolitan Casualty Company, as surety, executed a bond for the benefit of laborers and materialmen, and on October 2, 1925, this contract and bond were filed for record. The contract provided that the last payment of $105,000 of the contract price was to be made by notes of the Breakers Hotel Company, secured by a second deed of trust on the hotel property. On October 12th the plaintiff herein, American System of Reinforcing, entered into a contract with Reed, the contractor, by which it agreed to furnish certain material for use in the construction of said building. The contract, among other things, provided that plaintiff was to accept as part payment upon its contract, in lieu of cash, $10,000 in notes secured by a deed of trust given by Fred B. Dunn, the president of the Breakers Hotel, to Pacific Southwest Trust & Savings Bank, as trustor, out of the final payment of this contract. This contract also referred to the general contract between Reed and the Breakers Hotel Company. In carrying out this contract, plaintiff furnished material to the amount of $64-420.33, of which $52,820.02 was paid in cash, leaving a balance of $11,600.31.

On March 6, 1926, the contractor, Reed, delivered to plaintiff as payment on this balance a $10,000 note dated September 25, 1925, executed by the Breakers Hotel Company, due June 15, 1927, with interest and secured by a deed of

American System of Reinforcing v. Breakers Hotel Co.

AI Brief

TYLER, J.

More from California Supreme Court

Related research

AI Brief