Sparks

(dissenting). Reduced to its simplest form, the question before the court is this: A firm of contractors enters into a contract with a municipal corporation for the improvement of one of its streets, and executes the customary statutory bond, conditioned for the payment of claims for labor and material. A material-man furnishes material to the contractors, a part of which is used in this street improvement, and a part is otherwise used or disposed of. The contractors make payments from time to time to the materialman, without any designation or application of the payments so made, and the materialman, without notice or knowledge of the source from which the contractors received their money, applies the payments on account of the material which was not used in the street improvement. I say without notice or knowledge of the source from which the money came, because notice is neither alleged in the answer, nor found by the court, and the pleadings and findings must support the judgment. Under these facts the court holds that payments thus made and applied by the creditor must now he reapplied on account of material used in the street improvement and secured by the bond.

From this…

(after stating the facts as above). [1] In determining the nature of the obligation of the sureties upon the bond the court below followed the decision of the Supreme Court of Washington in Crane Co. v. Pacific Heat & Power Co., 36 Wash. 95 , 78 Pac. 460 . The court in that case had under consideration the provisions of a bond given under the same statutory provisions -as was the bond in the case at bar. The court held that where a surety company guarantees the faithful performance of a contract pursuant to the statute for the benefit of laborers arid materialmen, and the contractor pays money received upon the contract to a party who furnished material for the improvement, and to whom the contractor was also indebted upon an old or' unsecured account,, the surety is not bound by an application of the money to the old account, but is entitled to have the same applied on. the contract in discharge of its liability. Said the court:

It is urged that Crane Co. v. Pacific Heat & Power Co., 36 Wash. 95 , 78 Pac. 460 , so followed and applied by the court below, is against the weight of authority. It is of course the general rule, as stated in 30 Cyc. 1228, 1233, and cited by the…