Mutual Building & Homestead Ass'n v. Fidelity & Deposit Co.
Mutual Building & Homestead Ass'n v. Fidelity & Deposit Co.
Opinion of the Court
The opinion of the court was delivered by
This suit was brought on the contract of defendants by which they bound themselves as sureties for the faithful performance of the engagement of Anderson & Allen to build a house for
The building contract was made on the 27th August, 1895. On the 19th October in the progress of the work the third payment became due to the contractors and on the demand of one of them, and the exhibition of the agreement of dissolution with his partner authorizing plaintiff to pay the partner making the demand, they made that payment; a day or two afterward plaintiffs were informed by their supervising architect that the contractor receiving the payment had left the city, that the workmen on the building were unpaid and had quit work; thereupon there was some discussion between plaintiff and the other contractor with reference to the completion of the building by him; in these discussions the agent of defendants took part, but after a few days this effort to secure the completion of the building failed, and on the 25th October, as we read the record, defendants were notified in writing by the plaintiffs of the abandonment of the work by the contractors, and plaintiff s demanded that defendants under their suretyship should take charge of and complete the building; defendants replied they had been discharged of all liability and this suit followed.
The argument for the defendants insists there was a change by the
It is earnestly pressed on us that the sureties were discharged by the alleged non-compliance of plaintiffs of the stipulation in the defendants’ contract requiring immediate notice to them of any fact that might result in loss to defendants. The answer avers that plaintiffs failed and neglected to notify the defendants of the dissolution of the firm of Anderson & Allen; or of plaintiffs’ acting on the dissolution or of their consent to the continuance of the work by Anderson alone, or of the third payment to him and his receipt for the payment. Of course, if there had been any consent of plaintiff to the continuance of the work alone by Anderson and the discharge of Allen, the effect of that discharge would make unimportant the question of notice. The plaintiffs had no agency in bringing about the dissolution or control over it. No consent on their part was given or asked to the continuance of the work by Anderson. All the plaintiffs did was to make the third payment to him which, in our view, they were bound to make, and the payment carries no assent to that dissolution or continuance of the work by Anderson. The argument for the defendants in its other aspect is that the dissolution should have been notified on Saturday, the 19th October, when brought to plaintiffs’ knowledge. On this branch of the case our attention has been called to the full cognizance of all the facts by defendants’ general agent here, and to the part taken by him in the efforts to have the building completed by Anderson. Again, it is contended that no possible harm could result to defendants, because they were not notified on Saturday, the 19th, or Monday, the 21st. In this connection the knowledge of their agent is insisted upon and it is also urged that on the 25th October all attempts to secure the finishing of the building having failed, defendants had written notice of the condition accompanied with the demand they should take charge of and complete the building. The answer of defendants to all this, is that the knowledge of their general agent here on the spot is not their knowledge, and irrespective of any other question they are entitled to stand on the letter of their contract of- written notice to them. If we are to accept this view at least plaintiffs are entitled to a fair construction of the stipulation as to notice. They insist the contract placed no such duty on them as defendants’ argument exacts. The contract does not define “ disso
Another defence is that plaintiffs failed to record their building contract as required by the act of 1894, providing that the owner must require security from the contractor for payment of the laborers on the building and of the material men; reserving their-right to record their bills and thus secure their privileges, and pro-
We find no evidence in this record that the plaintiffs have paid any of the privileges that appear to have been recorded against the building after Anderson abandoned the work. It may be that the owner not having paid the contractors by anticipation, is not liable for any of the recorded claims, and it may be that the building is not subject to any such privileges. We therefore find no basis on which the sureties can be held for any of the privilege claims, and the recovery must be restricted to the amount claimed for finishing the building.
It is therefore ordered and adjudged that the decision of the lower court be annulled and reversed, that plaintiffs do have and recover from defendants one thousand and ninety-eight dollars and twenty-five cents with legal interest and costs, and as to the privileges recorded against the property for which judgment is claimed in the petition, that there be judgment of non-suit.
070rehearing
On Application for Rehearing.
The appellant takes it for granted that the court assumed that it as surety was not discharged for the reason that, under the articles of the Code, no such discharge could be claimed.
That having thus assumed to determine the relations of the parties (exclusively with reference to the articles of the Code relative
We must enter a kindly denial to that suggestion.
It is true that, interpreting the different articles of the Oode, we held substantially that it was a question of subrogation. That upon the obligee of the bond was imposed the obligation to protect all the securities in order that upon payment of the bond by the security it would become subrogated to all of the right plaintiff had against the principals (the contractors) of the bonds. Had the plaintiff failed to guard all of its right as payee of the bond, it would not have been in its power to transfer to the security upon payment the right which the law provides a security should have upon payment of the principal obligation. There was no negligence committed on the part of plaintiff and no act done, if the articles of the Civil Code alone be considered, which in the least impaired the rights of the securities against the principals on the bond. But we did not, as apprehended by the defendant, overlook the stipulations contained in the contract of suretyship between plaintiff and defendant. The agreement of the contractors, principals on the bond, was personal to themselves, and the fact that one continued with the work under the contract and the other chose to transfer to him his right, was not an agreement in which the plaintiff was concerned, or to which it was in any respect a party. A few days after the agreement between these contractors, one of them applied for an amount due.
The work having been done satisfactorily, the amount was paid.
The workmen of these contractors had not been paid. They had the mechanic’s privilege on the building. One of the conditions of this bond was to secure the plaintiff against the claim of “subcontractors, laborers, mechanics, workmen and furnishers.”
The payment to the contractor who remained (as the plaintiff’s officers evidently thought) to continue in good faith with the work of building, was made at the time agreed upon among all parties concerned. It appears that neither of those contractors were in good faith — one was as anxious as the other to abandon the contract and one was as indifferent as the other aaout paying their employees and workmen. The object of the bond was to protect plaintiff from any failure on the part of the contractors to pay these very claims.
These propositions are not at this time disputed by the defendant.
It is clear in our judgment the contract provided the surety should be notified in writing of any act which might involve a loss. Upon this branch of the case we note that the contractors individually and without suggesting a partnership signed the contract. The bond also, subsequently furnished, was signed individually, save that in the body of the bond the principals referred to themselves as co-partners. When one of the partners came to collect the third instalment he produced in support of his right to collect, a copy of the agreement dissolving the partnership authorizing him to collect amoufit due the partnership, which had been signed a few days previous. The payment made by the plaintiff to the contractor was made to him as to one authorized, as he was, to receive payment. This payment did not have the effect of prejudicing the rights which the defendant had. They remained unaffected; the amount was due. A few days after the plaintiff was notified, as required by the contract of suretyship. It is not evident that the delay caused a loss or that the necessity of giving notice was such as to render it imperative on tne part of the plaintiff to give immediate notice. It appears that everything was done in the utmost good faith until the day that contractors abandoned the work.
We have seen that immediately after the final abandonment of the building, the notice was given. We think there was a substantial compliance with the contract.
Heretofore our decree granted compensation for the services of plaintiff’s attorney.
We have given this claim further attention and after some consideration have concluded to reduce the amount of the fee.
Our decree established that plaintiff was entitled to five hundred and ninefy-eight dollars plus counsel fee.
In view of this amount and the services rendered in the case, we think that the fee should be considerably less.
There was another question, that relating to other claims recorded against the property, but not sufficiently proven on the trial to sus - tain a decree. The matter is argued by the plaintiff in the reply
It is therefore ordered, adjudged and decreed that the attorney’s fee heretofore allowed be reduced to one hundred dollars.
It is further ordered and decreed, after this deduction and amendment, that our prior decree be reinstated.
The opinion heretofore rendered, and the decree are made the opinion and decree of the court, after deduction and amendment as above.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.