Pankey v. Oregon, California & Eastern Railway Co. ( 1927 )

McBRIDE, J.

Reduced to a skeleton the complaint alleges that the plaintiff furnished supplies to the amount mentioned in the complaint which were used by the contractors in the prosecution of the work on this road, and for which plaintiff had a lienable claim; that the contractors had given a bond with the National Surety Company as surety to save harmless the railway company from all liens; that the contractors allowed liens to accumulate to the amount of over $25,000, which included plaintiff’s lien, and that the defendant brought an action against the surety company and recovered $25,000, which judgment included the amount of plaintiff’s lien on the property, and that the railway company has recovered, among other things, the amount of plaintiff’s lien and refuses to pay it to the plaintiff but retains it for its own purpose. In other words, defendant claimed in the District Court of the United States for the District of Oregon that it was indebted to plaintiff on account of the lien in the sum specified therein and it recovered judgment which included substantially that amount, but, instead of paying it to plaintiff, defendant retained it.

A good deal of technicality is expended in the briefs in discussing the question as to whether plaintiff ought to recover this sum, but the good old rule of honesty seems to us to point clearly to the conclusion that the defendant received this money under a claim that it owed it to plaintiff herein and recovered it from the surety company on that theory, and having adopted the theory that it owed plaintiff this money, and having recovered the amount on that theory, it ought not to be permitted to hold it to the injury of plaintiff, but should be required to pay it over to him, or at least pay pro rata with the lien claims of other creditors.

The demurrer concedes that plaintiff has a good lien; that he furnished the supplies and material which went to constitute the lien and that they were used in the construction of the railway and that, therefore, the defendant herein received the benefit of it and only holds • the money recovered now by reason of the theory advanced in the District Court of the United States for the District of Oregon that it owed it to plaintiff. Under such circumstances it is really useless to grope around among authorities to find precedents for saying that, equitably, defendant should be held as trustee of said amount for the benefit of the plaintiff.

The proceedings in the District Court of the United States for the District of Oregon are not given to us in full and of course a trial of the cause may put an entirely different face upon the matter, but we are clearly of the opinion that the complaint states sufficient facts to render it invulnerable to an attack by a general demurrer.

The judgment of the Circuit Court is reversed and the cause remanded, with directions to proceed with, the making up of issues for the trial of the cause in accordance with this opinion.

Reversed and Remanded, With Directions. Costs Taxed.