124 F. 866 | 6th Cir. | 1903
This writ of error is to a judgment of the lower court in an action brought therein by the defendant in error against the plaintiff in error to recover on a guaranty bond executed by the latter April 18, 1899. At that date a suit was pending in said court, brought by the Farmers’ Loan & Trust Company against the Baltimore & Ohio Southwestern Railway Company, to foreclose certain mortgages on the latter’s railroad, extending from Belpre, Ohio, through that state and the states of Indiana and Illinois, to East St. Louis, Ill., and its branches, one of which extended to Louisville, Ky., and suits, ancillary thereto were pending in the Circuit Courts of the United States for the districts of Indiana and Kentucky and the Southern District of Illinois. In those suits Judson Harmon and Joseph Robinson had been appointed receivers of said railroad and its branches, and they had taken possession thereof, and were then engaged in operating them. Prior to the institution of said suits said railway company had made beneficial contracts for the purchase of a large number of cars, locomotives, steel rails, continuous rail points, and bridges, some of which cars and bridges had been delivered, in pursuance to plans which contemplated also the laying of a second track from Cochran to Milan, in the state of Indiana, and a change of grade at Skillet Fork Creek, near Iuka, irt the state of Illinois. After their appointment, and prior to the date of the execution of said guaranty bond, said receivers, with the consent of the holders of about 90 per cent, of the bonds secured by said mortgage, had been authorized by said courts to carry out said contracts, to make said improvements, to borrow sufficient money for those purposes, and to issue certificates therefor, which should be a first lien on the property in their possession and its earnings. In pursuance of this authority, on said date, to wit, April 18, 1899, they entered into a contract with the Globe Construction Company, whereby said company promised to do the grading, masonry, and track-laying for said second track, and to change said grade, and prepare it for metal viaducts, bridges, and ballasting, the work to be done under the immediate supervision of an employé of the receivers, called “engineer in charge of construction,” in .many particulars according to his directions, and in a few according to the directions of a superior employé, called “engineer of maintenance of way,” to be estimated monthly by the former, whose estimates were subject to revision and alteration by the latter, but were otherwise final and conclusive, to be begun in 10 days thereafter, and to be completed December 1, 1899; and whereby, further,
Before this, to wit, on May 28, 1899, the day after the entry of the decree of foreclosure and sale, the construction company began the Indiana work, and at the time when said railroad company acquired title and possession of the property and said assignment was made it had done about 10 per cent, of that work. It continued to work there after said transfer the same as if no change had taken place. The persons who had been in the employ of the receivers as engineer in charge of construction and engineer of maintenance of way, respectively, were employed by plaintiff in said positions, and so continued during the times hereinafter mentioned. The work on said second track progressed, and monthly payments were made to and on account of the construction company until about January 18, 1900. At that' date the Indiana work was still uncompleted, and the Illinois work had never been begun, though the time when said company had promised to complete the work at both places, to wit, December 1, 1899, had passed. The failure so to do was due largely to the fault of the construction company, but also to an increase in the amount of work to be done over that in contemplation when the contract was made, but within its terms. A little over 50 per cent, of the Indiana work so contemplated was then done. In this condition of things the construction company abandoned the work, and plaintiff, by reason thereof, was compelled to and did complete it at both places. The action brought by it against the defendant on the guaranty bond was to recover the damages sustained by it because of the failure of the construction company to comply with its contract, to wit, the increased cost of doing the work contracted for over the contract price. Plaintiff claimed that the increased cost thereof exceeded the amount of the bond, and it therefore sued for the whole amount. The case was tried by a jury. It returned a verdict in favor of plaintiff for the sum of $36,427.98, upon which the judgment complained of herein was entered. Other provisions of said contract and other facts in relation to what was done under it will be stated further on.
Plaintiff in error assigns as error quite a number of rulings of the lower court, and they may be conveniently classified as those which involved questions affecting plaintiff’s right to recover at all and those which involved questions affecting the amount -which it had .a right to recover.
1. Of the first class the principal one is the refusal of the court to give a peremptory instruction to the jury to find for the defendant
(a) One of these related to the assignability of the bond sued on. Plaintiff in error contends that it was not assignable, and that, therefore, defendant in error had no right to sue on it. It is not contended by it that the proceedings in said suit subsequent to the execution of said bond and said written assignment did not have the effect of assigning it to defendant in error, if it was assignable at all. Indeed, there is no room for such a contention. Nor is it contended by it that, if such was the case, the defendant in error did not have a right to bring the action in the lower court in its own name as plaintiff. At common law it is true it would not have had such a right. Glenn v. Marbury, 145 U. S. 499, 12 Sup. Ct. 914, 36 L. Ed. 790. But in the state of Ohio, where the assignment took place, if at all, and where the action was brought, it is provided by statute that every action must be prosecuted in the name of the real party in interest. 2 Rev. St. Ohio (6th Ed.) § 4993. And it is the settled interpretation of this provision by the Supreme Court of Ohio that whenever a thing in action is assignable the assignee may sue on it in his own name. Allen v. Miller, 11 Ohio St. 374. This being so, defendant in error had the right to maintain the action in the lower court, though a federal court, in its own name, if the bond sued on was assignable. Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U. S. 379, 8 Sup. Ct. 1308, 32 L. Ed. 246; Delaware County v. Diebold Safe & Lock Co., 133 U. S. 473, 10 Sup. Ct. 399, 33 L. Ed. 674; Glenn v. Marbury, supra. The contention of counsel for plaintiff in error relates solely to the assignability of said bond.
In Pollock on Contracts, p. 201, it is stated that the origin of the rule that the benefit of a contract — i. e., the right of one party thereto to have the other perform an obligation on his part arising therefrom —could not be assigned at common law, so as to enable the assignee to sue in his own name for a breach thereof, was attributed by Coke to the “wisdom and policy of the founders of our law” in discouraging maintenance and litigation. In opposition to this the author states:
“But there can be little or no doubt that it was in truth a logical consequence of the primitive view of a contract as creating a strictly personal obligation between the creditor and the debtor.”
According to this conception of a contract, the relation created by it cannot be severed by either party thereto, the creditor or debtor, without the consent of the other. It is as impossible for either to substitute another in his place as it is for him to change any other term of the contract. This primitive view of a contract prevails no longer. The treatment by courts of equity of such assignments, the judicial cognizance by courts of law of the usage of merchants in relation to bills of exchange rendering it a part of the common law, the passage of statutes making certain contracts assignable, the construction placed upon the statutes enacted in numerous jurisdictions requiring actions to be brought in the name of the real party in interest, and the conception of such rights as property and the possession thereof as ownership, account for its passing away. But, notwithstand
“Parties may, in terms, prohibit the assignment of any contract, and declare that neither personal representatives nor assignees shall succeed to any right in virtue of it, or be bound by its obligations.”
Such a stipulation in a contract with the state of Texas for the erection of its capitol building was upheld and enforced in the case of Burck v. Taylor, 152 U. S. 635, 14 Sup. Ct. 696, 38 L. Ed. 578. It was contended in that case, according to Mr. Justice Brewer, as follows:
“The contract in the possession of the contractor was his property, and the profits arising therefrom and any interest therein were as much the subject of disposal as any other property, and the only limitation was one for the benefit of the state, and could not be claimed by any subsequent assignee from the contractor.”
In response to this contention he said:
“That contract, however, was as binding on the one party as on the other. The contractor assented to its terms precisely as did the state, and his promise was not to assign the contract in whole or in part, without the consent in writing of the state authorities. It was a promise which entered into and became one of the terms of the contract, and one which was binding, not only upon the parties, but upon all others who sought to acquire rights in it. It may be conceded that, primarily, it was a provision intended, although not expressed, for the benefit of the state, and to protect it from interference by other parties in the performance of the contract, to secure the constant and sole service of a contractor with whom the state was willing to deal, and to relieve itself from the annoyance of claims springing up dur-. ing or after the completion of the contract in favor of parties of whose interest in the contract it had no previous knowledge, and to the acquisition of whose interest it had not consented. Concede all this, and yet it remains true that it was a stipulation which was one of the terms of the contract, and binding upon the contractor, and equally binding upon all who dealt with him.” .
It will also do it if it is a bilateral contract, and the counter obligation on the part of the creditor to the debtor is of such a nature that the reasonable inference therefrom is that it was the intention of the parties that it should be performed by the creditor, and no one else. Perhaps a more careful statement would be that in such a case the right cannot be assigned so as to compel the debtor to accept performance of that obligation from the assignee, and, if an attempt is made to so assign it, the assignment will be invalid. It is so stated in Bishop on Contracts, § 1182, where he says:
“An agreement involving personal trust in tbe party, or to be carried out by bis personal skill, cannot be so assigned as to compel tbe other party to accept performance by the assignee, and pay him therefor.”
If the rule here goes no further than this, there is nothing in the existence of such a counter obligation to prevent an assignment by a creditor of his right after he has performed that obligation, and thus
“During the time that must elapse between the delivery of the ore and the ascertainment and payment of the price the defendant had no security for its payment, except in the character and solvency of Billings and Biler. The defendant, therefore, could not be compelled to accept the liability of any other person or corporation as a substitute for the liability of those with whom it had contracted.”
And again:
“The cause of action set forth in the complaint is not for any failure to ‘ deliver ore to Billings before his assignment to the plaintiff (which might perhaps be an assignable chose in action), but it is for a refusal to deliver ore to the plaintiff since this assignment. Performance and readiness to perform by the plaintiff and its assignors, during the periods for which they respectively held the contract is all that is alleged. There is no allegation that Billings is ready to pay for any ore delivered to the plaintiff. In short, the plaintiff undertakes to step into shoes of Billings, and substitute its liability for his. The defendant had a perfect right to decline to assent to this, and to refuse to recognize a party with whom it never contracted, as entitled to demand further deliveries of ore.”
“At the present day, no doubt, an agreement to pay money or to deliver goods may be assigned by the person to whom the money is to be paid or the goods are to be delivered, if there is nothing in the terms of the contract, whether by requiring something to be afterwards done by him, or by some other stipulation, which manifests the intention of the parties that it shall not be assignable. But every one has a right to select and determine with whom he will contract, and cannot have another thrust upon him without his consent.”
Another case in which the Supreme Court of the United States has held that an assignment was contrary to the intent of the parties to the contract, and therefore invalid, is that of Delaware County v. Diebold Safe & Dock Company, supra. That was the case of a partial assignment; but in Indiana, where the transaction took place and the suit was brought, the assignee, by valid assignment of a part of a contract, may sue thereon jointly with his assignor, or may maintain an action alone if no objection is taken by demurrer or answer to the misjoinder of the assignor. The question, therefore, was whether there had been a valid partial assignment. Meyers & Son had a contract with the board of commissioners of Delaware county, in said state, for the construction of a jail for said county, for which they were to be paid the sum of $20,000 in monthly payments, on the architect’s certificate, reserving on each payment 20 per cent., to be paid on the completion and acceptance of the building. It was expressly agreed that the county should not in any manner be answerable or accountable for any materials used in the work, and that, if the contractors should fail to finish the work by the time agreed on, they should pay to the commissioners, as and for liquidated damages, the sum of $25 for every day the work should remain unfinished. The statutes of Indiana required the contractor in such a case to give bond, with sureties, for the faithful performance of his contract, and payment of all debts incurred by him in the prosecution of the work, and provided that any laborer or materialman having a claim against the contractor might sue upon the bond, which suit, or one against the contractor alone, was the only remedy they had according to the holding of the Supreme Court of Indiana. Meyers & Son executed such a bond. Thereafter they made a subcontract with the Diebold Safe & Lock Company, to do the ironwork necessary in the construction of the jail, and assigned to it $7,700 of the sum coming to them under the contract. Having done that work according to contract, said company brought an action against the board ofxommissioners to recover said sum, and one of the questions considered and determined by the Supreme Court of the United States'when the case came before it was as to the validity of said assignment. It was held to be invalid. Mr. Justice Gray said:
“This ease does not require us to consider whether an assignment of the entire contract for the construction of the jail would have been consistent*875 with the intention of the parties1 as apparent upon the face of the contract, or with the intention of the Legislature1 as manifested hy the statutes undei which the contract was made. The plaintiff claims under no such assignment. Those statutes and the judicial , exposition of them by the Supreme Court of the state are quite inconsistent with the theory that the original contractors can, at their pleasure, and without the consent of the county commissioners, split up the contract, and assign it in parts, so as to transfer to different persons or corporations the duty of furnishing different kinds of material and labor, and the right of recovering compensation for such material and labor from the county commissioners.”
As to assignment of contracts to pay money, he said generally:
“A contract to pay money may doubtless be assigned by the person to whom the money is payable, if there is nothing in the terms of the contract which manifests the intention of the parties to it that it shall not be assignable. But where rights arising out of contract are coupled with obligations to be performed by the contractor, and involve such a relation of personal confidence that it must have been intended that the rights should be exercised and the obligations performed by him alone, the contract, including both his rights and his obligations, cannot be assigned without the consent of the other party to the original contract.”
These decisions of the Supreme Court of the United States are sufficient to furnish us with a rule as to the assignability by a creditor of his right to have the obligation of his debtor arising out of a binding contract between them, which can be applied to this case in determining whether the guaranty bond in question herein was assignable. That rule is that such a right is assignable unless there is something in the terms or nature of the contract, considered from the standpoint of the situation as it existed when the contract was made, that evidences that it was the intention of the parties thereto that it should not be assignable. For such a right to be assignable, absence of evidence of an intention that it should not be is sufficient. If there is no evidence of such intention, it is to be presumed that it was the intention of the parties to the contract that it should be assignable— i. e. that the creditor could substitute another in his place in the right to the performance of the obligation by the debtor — and that in this way, and to this extent, at least, the relation thereby created between them could be severed. If, on the other hand, there is evidence in the terms or nature of the contract so considered which evidences that it was within the contemplation and the intention of the parties that it should be assignable, so much the greater reason for holding that it was.
It remains to apply this rule to this case. It must be conceded at the outset that, if the application of this rule to the principal contract —i. e., the contract of construction — results in the conclusion that the right to have the construction company perform the work which it thereby promised to do was not assignable, then neither was the guaranty bond assignable. There would be enough in this alone to show that it was the intent of the parties thereto that it also should not be assignable. It is in order, therefore, first to apply the rule so deduced to that contract. It is certain that it contained no express stipulation prohibiting the receivers from assigning the right which they had to have the construction company perform its obligations arising therefrom. There is, however, a similarity between that contract and the
The presence in the contract of these limited prohibitions against the company having the right to shift the duty of performing its contract to others, and of assigning its right to payment of the monthly estimates, makes the absence therefrom of a provision prohibiting an assignment by the receiver of said right and privilege, and a shifting of its duty to pay to another, quite significant. It shows that the parties’ minds were directed to the matter of severance, in whole or in part, of the relation between them growing out of the contract, and such severance was prohibited only to the extent stated. In addition to this is the fact that, when the contract was entered into-the possession and control of the property by the court was only temporary; i. e., until it should be in position and might deem it proper to sell and deliver possession thereof to the purchaser. It must have then been within the contemplation of the parties at that time that it was possible, if not probable, that long before the time for completion of the work agreed to be done (as in fact turned out to be the case) the property would be sold, and possession and control thereof delivered to the purchaser; or in other words, that the property with which the contract had to do would pass into other hands pending its completion. This, in connection with the absence of a stipu
“Receivers are like public officers wbo are not individually responsible upon tbeir official contracts, nor for torts committed by tbeir subordinates, but only for torts committed by themselves, or contracts on which they assume to bind themselves personally.”
Mr. Justice Brown, in the case of McNulta v. Lochridge, 141 U. S. 327, 12 Sup. Ct. 11, 35 L. Ed. 796, said:
“Actions against the receiver are in law actions against the receivership, or the funds in the hands of the receiver, and his contracts, misfeasances, negligences, and liabilities are official, and not personal, and judgments against him as receiver are payable only from the funds in his hands.”
The proper attitude of a court towards receiver’s obligations, duly authorized, is thus stated by Judge Brewer in the case of Farmers’ L. & T. Co. v. Burlington S. W. Ry. Co. (C. C.) 32 Fed. 805. He said:
“The court should be chary of promise, but eager of performance; careful not to burden property in its possession with obligations, and equally careful to see that every obligation is discharged before possession is fully surrendered.”
This was the attitude which the lower court in said suits maintained toward said contract of construction. In its decree of sale and order of confirmation it is provided that the purchaser and his assignee should carry out and perform said contract, and, not only this, but it reserved the power to thereafter order a compliance with said contract on their part, and to retake and resell the property for that purpose, and the purchasers and their assignees took the property subject to such reservation. As to the effect of such reservation, Judge Love said, in Farmers’ L. & T. Co. v. Central R. of Iowa, supra:
“If the receiver had been discharged, and the property turned over to the new company unconditionally and without reservation, I am at a loss to see what legal remedy claimants, without established liens, would have. But the court did not in this case so turn over the property. It would have been a most unwise and unjust proceeding to have done so, leaving just claims and liabilities incurred by a receiver of its own appointment, without any provision whatever to enforce them. On the contrary, this court, in the final*878 decree of May 20, 1879, retained here the case of the Farmers’ Loan & Trust Company against the Central Railroad Company of Iowa and others, and in express terms reserved its jurisdiction of said cause to enforce the payment of debts and liabilities incurred by its receivers. For this purpose, at least, that suit has never been dismissed. It is still pending, and any claimant with a demand against the receiver, which he has a right by law to have established as a lien against the railway property, may, by leave of the court, intervene in the foreclosure cause and assert his claim. It is not necessary that the plaintiff should make new parties to his petition. He intervenes in the old chancery case, which is still pending. He asserts his right to a lien upon the property which the court turned over with a reservation of jurisdiction to hear and determine his cause.”
It follows from this that, after the sale of the property and delivery thereof, and assignment of said contract to the defendant in error, assignee and vendee of the purchasers, the construction company had the same security for payment of the moneys which would become due to it under the contract that it had before. The assignment of the contract of construction to the defendant in error amounted, therefore, to no more than an assignment of the right to have the construction company perform its obligations arising therefrom, and to recover damages for failure to do so, and of the privilege of having its said employés supervise and estimate the work as stated.
The contract contained a clause by which it was provided that the receivers might at any time, without fault on the part of the construction company, and for any reason that might appear sufficient to them, upon io days’ notice to it, cancel the contract, in which event it should be entitled to the full amount of the estimate for the work done by it up to that time, without deduction, and not be entitled to any damages on account of the cancelment. Counsel for plaintiff in error contend that this clause evidences an intention of the parties that the right to have the contract completed should not be assignable by the receivers to the purchasers, in the event of a change in the title and possession of the property, because of a sale before its completion. We do not think that any such effect can be given to it. It did not provide that upon a sale the contract, though uncompleted, should be annulled. It simply conferred upon the receivers the right, for any reason appearing to them sufficient, to annul the contract in the course of its execution. If they did not see fit to exercise that' right, the contract was to be completed. There is no ground for saying that a sale of the property was to have any special bearing upon the exercise of this right.
The conclusion in regard to the construction contract must, therefore, be that it certainly does not evidence an intention that the right which it conferred on the receivers to have the work provided in it performed by the construction company should not be assignable to the purchaser in the event of sale before its completion, and that there is strong reason for holding that it shows affirmatively that it was within the contemplation of the parties thereto, and their intention, that it should be so assignable. If, then, there was any intention on the part of the parties to the guaranty bond that the right of the receivers to have the obligation created by it performed should not be assignable, it must be found in its terms or nature, considered as stated aforesaid. It is certain that it was their intention that it should not
“Ordinarily a guaranty is not negotiable. It may, indeed, be made so, if such appears to be the intention of the guarantor. It may not be addressed to any particular person. It may be an offer addressed to all the world, as in case of a reward offered. But, if addressed to a particular person, as in this case, we think it cannot be transferred so as to enable another to sue upon it in his own name. There may be good reasons why the guarantor should be willing to deal with one person, and not with another; there may be equities or other dealings between the guarantor and guarantee which the former may desire to provide for.”
He said further:
“But when the contract is such as to imply peculiar confidence in the honesty, pecuniary ability, knowledge, or skill of the person to whom the guaranty is addressed, there is good reason for holding it to be strictly personal, unless its language implies the contrary.”
They cite other cases involving guaranty bonds or contracts of that nature that were held not to be assignable, because, for them to have been so would have permitted one party to the contract to change a term thereof other than the person who is entitled to performance as well as that term. They are the cases of Thompson v. Young, 2 Ohio, 334; Bensinger v. Wren, 100 Pa. 500; Burgett v. Paxton, 15 Ill. App. 379.
In Thompson v. Young, the surety on a bond for the fidelity of a cashier was held not liable for the cashier’s defalcation after the bank’s charter was extended, and in Bensinger v. Wren the surety on a bond for the fidelity of the cashier of a private banking association was held not liable for the cashier’s defalcation, after the association had been merged into an existing corporation chartered as an insurance and trust company, to the assignees of such corporation for the benefit of its creditors. The bond in the one case was to cover the acts of the cashier whilst such officer of the then existing bank, and in the other case as cashier of the then existing private banking association. There was no agreement in either case to answer for his acts as cash
In the case of First National Bank of Quincy v. Hall, ioi U. S. 43, 25 E. Ed. 822, cited by them, the question involved was not whether the party who was entitled to performance of the contract of guaranty (the guarantee) could assign the right, but whether the party who was under the obligation of performing it (the guarantor) could shift the duty of so doing to another. It was claimed that a firm composed of three at Chicago had guarantied payment of drafts drawn on them by their agent at Quincy, conditioned upon stock to meet the drafts being in transit the same day or day after they were presented, to a bank at the last-named place, if it should advance money on them, and, drafts so drawn and advanced upon, against which no stock had been shipped, having been paid by the firm, it brought suit against the bank to recover the money so paid. Between the making of the alleged contract and said advances, there had been a change in the membership of the firm by the admission of two new members without the knowledge of the bank, and after the transaction complained of. It was held that no recovery could be had because of this fact. It was in this sort of a case that Mr. Justice Swayne said:
“The proof is conclusive that the bank had no knowledge of the change until after the commencement of this suit. The alleged cause of action arose more than eight months after the new partnership was formed, and nearly a year after the date of the letters by which the contract is claimed to have been made. There was no privity between, the bank and the new firm. There was no binding acquiescence by the bank. There could be none without knowledge, and it is not claimed or pretended that such knowledge existed. A new party could no more be imported into the contract and imposed upon the bank, without its consent, than a change could be made in like manner in the other pre-existing stipulations. The bank might have been willing to contract with the firm as it was originally, but not as it was subsequently. At any rate, it had the right to know, and to decide for itself. Without its assent, a thing was wanting which was indispensable to the continuity of the contract.”
Then as to the case of Dupee v. Blake, 148 Ill. 453, 35 N. E. 867, cited by them. That was a case where an attempt was made to change the person whose fidelity had been guarantied, without the consent of the guarantor. It was there held that a surety who guarantied the performance of certain conditions by a firm is not liable for the default of the firm after it has been changed by the addition of a new member. Judge Magruder said:
*881 “A party may be induced to become surety for tbe individuals wbo compose o firm because of bis confidence in tbeir integrity, prudence, accuracy, and ability as business men, but be cannot be presumed to bave intended to become responsible for tbe possession of sucb qualities by some third person, who may be afterwards taken into tbe firm without his knowledge or consent. It is often in tbe power of one partner by want of discretion or integrity to ruin another.”
This case is certainly no authority in support of the contention for which it is cited.
Now, the case in hand is like all the cases so cited which have been so far considered in that the contract involved herein is a guaranty contract. In no other respect, though, is it like them. No attempt was made by the assignment relied on to change the obligor or any term of the contract other than the person entitled to the performance, and the amount of liability did not depend upon the future to any further extent than it would be affected by the action of the emtployés of the party entitled to the performance of the principal contract in the exercise of their liberal powers as to directing, changing, and estimating the work. It is the case of a guaranty of a contract already made, and within the knowledge of the guarantor at the time he signed the contract. It is a guaranty that, except as stated, is absolute in its terms, and definite as to amount and extent. It is held, in relation to absolute guaranties, in the state of New York, that they will pass by an assignment of the principal contract, without more, as an incident thereto. Craig v. Parkis, 40 N. Y. 181, 100 Am. Dec. 469; Claflin v. Ostrom, 54 N. Y. 581.
Counsel for pláintiff in error urge further that the bond in suit is an insurance contract, and is for this reason nonassignable. It is true that contracts of the kind involved herein have been held to be insurance contracts; i. e., contracts insuring a guarantee against loss by reason of want of fidelity of an employé or the nonperformance of a contract. It was so held in the cases of Jackson v. The Fidelity & Credit Co., 75 Fed. 359, 21 C. C. A. 394; Guaranty Co. v. Mechanics’ Bank, 80 Fed. 766, 26 C. C. A. 146; Am. Credit & Ind. v. Athens Woolen Mills, 92 Fed. 581, 34 C. C. A. 161; American Surety Co. v. Pauly, 170 U. S. 133, 18 Sup. Ct. 552, 42 L. Ed. 977; Guaranty Co. v. Mechanics’ Bank, 183 U. S. 419, 22 Sup. Ct. 124, 46 E. Ed. 253. But the sole effect given to this consideration in those cases was to apply to such contracts the general rules of construction applicable to ordinary insurance policies. Companies like plaintiff in error, being in the business of guarantying for profit upon contracts whose provisions are prepared by themselves, those provisions are construed most favorably to the insured. No other effect has heretofore been given to the fact that these contracts are in their nature insurance contracts. Should that circumstance be given in this case the effect of rendering the guaranty bond sued on herein nonassignable? Not unless nonassignability is of the essence of an insurance contract. It is true that ordinary fire insurance policies are held to be nonassignable. This, however, is due to some extent to an element of trust in such a contract on part of the insurer in the insured, and also to the fact that, accompanying a sale of the property, for them to be assignable without an express provision to that effect would be to permit
“A policy oí fire insurance is a personal contract, and, in tne, absence of the consent of the insurer, it cannot be assigned so as to permit the assignee to sue thereon in his own name. The contract is that the insured shall sustain no damage to the extent of the amount named in the policy, and, though it is an insurance on the property, still it does not pass with the sale thereof, and it is considered only as a contract of indemnity to the person named in the policy.”
But the law is not so as to life or marine insurance policies. As to life insurance policies, the law is thus stated in Joyce on Insurance, vol. 3, § 2346:
“The rule that fire policies cannot be assigned without the consent of the insurer does not control in the assignment of policies of life insurance. * * * With the gradual extension of the principles controlling ehoses in action, courts of law now recognize an assignment thereof to the extent of vesting the assignee with an equitable interest and permitting him to recover for his own benefit in the name of his assignor.”
And as to marine insurance policies the law is thus stated in Joyce on Insurance, vol. 3, § 2350:
“The strict rules controlling the assignment of policies of fire insurance do not prevail in the assignment of marine policies. The latter is not distinctly a personal contract, as is a fire policy. * * * The reason for the distinction between fire and marine policies is due to commercial necessities and convenience, and the fact, as we .have stated above, that mere personal consideration is not such an important factor in marine policies.”
There is nothing, therefore, in the nature of the bond in question, which renders it nonassignable. It is a guaranty of the performance of a contract, which does not simply contain no evidence that the right to have it performed shall not be assignable, but shows that it was within the contemplation and intention of the parties, could, and in all probability would, be assigned before the time for its completion would arrive. It must be held that it was equally within the contemplation and intention of the parties to the guaranty bond that it should be assignable along with the principal contract. And as to the liberal powers conferred on the employes of the party entitled to the performance by the construction company, hereinbefore referred to, the contract did not provide for the selection of any particular persons, but left that entirely to the receivers. They had the right to change them as they saw fit. Such provisions are usual in such contracts. We do not think that the element of confidence and trust contained in those provisions is sufficient of itself to warrant the conclusion that it was the intention of the parties either that the construction contract or the guaranty bond should not be assignable. And as a matter of fact the persons who held those positions under the receiver were continued therein by the plaintiff during all the time that the construction company was at work under the contract.
The result of our consideration of the question as to the assign-ability of the bond sued on is that we must hold that it was assignable.
“It may be questionable whether the provision in the contract authorizing them, after three days’ notice, to take the work in their own hands, and complete it at the contractor’s expense, is not to be regarded, when acted upon as a remedy agreed upon, as a substitute for future damages.”
And the following extract from the opinion of Judge Lewis, in O’Connor v. Bridge Co., 95 Ky. 633, 27 S. W. 251, 983, to wit:
“In our opinion, the Henderson Bridge Company has no cause of action against O’Connor et al. by reason of their alleged failure to progress with the work according to an agreed program, or failure to comply with the contract in any respect. The remedy provided for the company in case of noncompliance with the contract by the contractors, and manifestly the only remed;, contemplated by the parties was the right to annul the contract "in either one of the three conditions stated therein, and in one of them to have the unpaid part of the earnings forfeited.”
But the concluding portion of said alleged clause, providing what shall be the effect of the engineer of maintenance of way serving the notice therein provided, and which portion we have given within quotation marks, is not contained in the printed record or original transcript. The sole authority we have for its existence is the statement of counsel for plaintiff in error in their brief, not denied by counsel for defendant in error. This omission is sufficient in and of itself to dispose of this contention of counsel for plaintiff in error, but, in order to relieve from apprehension that serious harm may have been done by this omission, we deem it proper to go further, and say that the point is not well taken. It may be that, even if this clause did provide an exclusive remedy in so far as the construction contract
(c) Counsel for plaintiff in error claim that still another question was involved in the refusal to give the peremptory instruction, and was decided by it against their contention, and that, therefore, that ruling was erroneous. It grows out of the following facts, in addition to those that have already been stated: The contract between the receivers and the construction company, as heretofore stated, called for work to be done by the latter at two distinct places — one between Cochran and Milan, in Indiana, and the other at Skillet Fork, near Iuka, in Illinois. The construction company agreed.to raise an iron bridge and wooden trestles at the latter place, in addition to changing and preparing the grade, and that without other compensation therefor than what it was to receive for excavation done in connection with the grading. Before the contract was entered into, the company was furnished with plans and specifications of the work to be done at that place, on which to make calculations for its bid. The contract contained a provision by which the receivers retained the right to change, at any time during the progress of the work, the alignment grades and widths of the road, or any part thereof, and also the limits of the sections, or to alter the character, vary the dimensions, or change the location of structures, or substitute one kind of material for another, or to omit entirely, when found necessary, or to require to be built where not then contemplated, without the contract prices per unit being thereby affected. In June, 1899, whilst the work was
Counsel for plaintiff in error contend that said change was a material one, and not within the contemplation of the parties when the contract was made, that the construction company, by reason thereof, was not only justified in refusing to go on with the work at Skillet Fork, but would also have been justified in abandoning the work in Indiana, and that, therefore, it was released from further liability on its guaranty. The question as to whether this position is correct, is the further question which they contend was involved in and erroneously decided by the refusal to give the peremptory instruction. But this ruling, in so far as it relates to this question, was right, for the reason, if none other, that the court could not say, as a matter of law, that the conceded change that was made in the plans and specifications as to the Illinois work was' a material one, and not within the contemplation of the parties when the contract was made. That was a question of fact to be determined by the jury, if it was true that the consequences claimed would indeed follow from it. For this reason, also, that ruling did not involve the question as to whether those consequences would follow if that fact was as counsel for plaintiff in error claim it to have been, and was not disposed of by it.
2. Other rulings are assigned as error on the ground that they involved this question, and disposed of it contrary to their contention. They are as follows:
At the close of all the testimony, defendant moved the court to exclude from the jury all evidence in relation to the work in Illinois. This the court refused to do. It requested the court to charge the jury that, if they found from the evidence that the change made in said work “materially decreased the profit to be derived” by the company, and were “a departure from the plans” upon which it made its bid and entered into the contract, it was “justified in refusing to do the work as so changed, and in abandoning the same.” This charge it refused to give, but it was given substantially in other words. The jury were told that, if they found from the evidence that the change was “a radical departure from the plan, which would materially reduce the chances of profit, which the contractor had a right to expect, or involve loss to him,” it was “an unreasonable exercise” of the discre
3. There was a ruling, howeve'r, that may be said to involve this question, and dispose of it adversely to defendant, which was duly excepted to by it, and has been assigned by it as error herein by plain-tiff in error. It was the refusal of the court to give this request to the jury, to wit: “I charge you that, if you find that there was any material alteration of the original contract, you must find for the defendant.” Assuming that this ruling does involve, and so dispose of, this question, was it or not properly decided? At the outset we are met with the suggestion of counsel for defendant in error that defendant had no right to raise this question in the lower court, because it had not pleaded said change as affecting plaintiff’s right to recover for the damages which it sustained by reason of the construction company’s failure to complete the work in Indiana. It is claimed that it is pleaded only as a justification for the abandonment of the Illinois work, and as affecting plaintiff’s right to recover damages for said company’s failure to do the Illinois work. There is some basis for this contention in relation to the amended answer, and it is possible that a fact pleaded, though it is entitled to have a greater effect given to it, should'be limited to the effect claimed for it in the pleading. But, however this may be, said change, as pleaded in the amendment to the amended answer, was not limited, and at any rate we will assume that the question is properly before us, and dispose of it on its merits, as we are of the opinion that from that standpoint the position is not well taken.
The contract contained a provision to the effect that, if the receiver should determine to build bridges, culverts, walls, or other masonry, or do other work not therein enumerated, on the said section or sections, the company would perform, build, and complete the same as
We cannot assent to this proposition. Nor do we think it makes any difference that the party is not conscious that he is making a material alteration, and does not intentionally do so. The position is that because he was not consciously arid intentionally making a material alteration, a release takes place. The matter should be considered from the standpoint of the ground upon which the release is claimed; i. e., there has been a material alteration. Though a material alteration should otherwise be a ground of release, it should not, where the party making the alteration has the power to annul the provision attempted to be altered, and that irrespective of the question whether he is consciously and intentionally making it.
“The failure to perform some provision of the contract, unless accompanied by acts indicating an intention on the part of the party in default to renounce and abandon the contract, would not justify the other party in renouncing and abandoning it. Failure to pay the estimate at the time would not justify the Globe Construction Company in abandoning the contract unless it was accompanied by conduct that would indicate that the railroad company itself was renouncing the contract.”
The defendant excepted to the ruling of the court in refusing to give to the jury each of the requests so made by it, and in so instructing the jury and these rulings are assigned as errors.
Counsel for plaintiff in error contend that the defendant in error failed to pay the estimates for November and December due under the contract December 10th and January 10th, and withheld from certain, if not all, of the other estimates certain illegal charges; that this conduct on its part would have justified the construction company in abandoning the contract entirely; and that, therefore, though it did not abandon the contract on either account, but because of inability to go ahead, there was no longer any responsibility on the guaranty bond. In support of their contention that the mere failure to pay a monthly estimate or wrongful withholding of a part of one to pay illegal charges wmuld have justified the construction company in abandoning the contract entirely, they cite the following cases: Canal Co. v. Gordon, 6 Wall. 561, 18 L. Ed. 894; Phillips Construction Co. v. Seymour. 91 U. S. 646, 23 L. Ed. 341; Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, 29 L. Ed. 366. We do not think that these cases support this contention, but, without deciding whether they do or not, or the further question as to the effect of this contention being correct on the liability on the guaranty bond, we do not think that the judgment complained of should be reversed on account of these rulings. The construction contract contained a clause providing that the monthly and final estimates should not be payable until the construction company had paid in full all persons, laborers, and subcontractors in its employ in the work, for all work done up to and including the date for which preceding estimates had been made, and give evidence of such payment by filing with either of said engineers the pay rolls receipted in full, and that the engineer of maintenance of way should have the right at any time he saw fit to pay them the amounts due them, and deduct amounts so paid from the amounts payable under said estimate. The estimates for November and December were not paid because of numerous unpaid claims of such persons. The evidence was undisputed as to this. The court, however, in.connection with that portion of its charge last referred to above, called the jury’s attention to said clause of the contract, and left it to them to determine whether said estimates were withheld- to pay hands, and, if
So far as the claim of wrongfully withholding parts of the monthly estimates on account of illegal charges, there was no such withholding, as will be shown when we come to consider the other class of rulings complained of.
Then as to the rulings which involved questions affecting the amount of recovery which have been assigned as error.
1. The permitting plaintiff’s witness H. Devereux to testify as to the estimates made by him, and admitting those estimates in evidence. The ground upon which it is claimed that this evidence was not competent is that under the contract Devereux was not the proper person to make those estimates. The contract provided that the monthly and final estimates of the work to be done thereunder should be made by the engineer in charge of construction, should be subject to revision and correction by the engineer of maintenance of way, but should otherwise be final and conclusive. Devereux’s title was resident engineer. With assistants and a force of hands under him, he had immediate charge of the work of construction in Indiana, and the estimates made and testified to by him were as to this work. He had nothing to do with' the Illinois work which the construction company refused to do, and which was done by plaintiff after it abandoned the work, and made no estimates in regard thereto. They were made by the resident engineer in whose district that work lay, and who had immediate charge thereof. Over those two engineers was another officer, whose title was engineer of construction, who had general supervision of all the work of construction on the Mississippi division, extending from Cincinnati to East St. Eouis, and who in turn was under the engineer of maintenance of way. The estimates made by the resident engineer were made under immediate supervision of the engineer of construction, and were approved and so indorsed by the engineer of maintenance of way. We are of opinion that said estimates were properly admitted in evidence. If the resident engineers were not the engineers in charge of construction within the meaning of the contract, the estimates made by them should be considered as madé by the engineer of construction. But plaintiff in error is not in position to complain here of the admission of said estimates in evidence and permitting Devereux to testify in regard thereto. All of the estimates for the work done at both places from the beginning until the completion thereof were identified and read in evidence when the engineer of maintenance of way, who testified before Devereux, was on the stand as a witness; and they were allowed to be so read in evidence without objection. And when Devereux testified he was .permitted to state that he made the estimates for the Indiana work, and that the monthly estimates were reasonably correct, and the final one correct, without objection. The only objection made was as to his being permitted to give a description of the final estimate.
2. Certain rulings which involve the question whether, under a provision of the contract that the receivers should transport over their railroad all materials used in construcfion at the rate of three mills per ton for each mile the same should be transported, required the
3. The ruling in the original charge to the jury in regard to redressing the embankments between Cochran and Dillsboro, a distance of about six miles, the embankments covering about one-half of that distance. The contract provided that cuts and embankments should be dressed up in a thoroughly workmanlike manner, brought to the true subgrade, and the drain ditches in cuts neatly and evenly finished, as the engineer in charge of construction might require, and that the construction company should not receive compensation for such dressing and finishing up of the work, as the price paid for excavation should cover that cost. Said company dressed said embankT ments, and brought them to a grade even with the top of the ties of the main track. Evidence was introduced by defendant to the effect that said company so did by direction of Devereux, the resident engineer, the evidence of plaintiff being to the contrary. After these embankments were so dressed, the engineer of construction required them to be redressed to a grade even with the bottom of the ties, and, upon the construction company refusing so to do without extra compensation, the plaintiff put in a force of Italians to so redress said embankments, and the construction company, with its force, thereafter assisted in this work. The money expended by plaintiff in this work was deducted from the monthly estimate succeeding, and in making up the damages sought to be recovered it was put in as a part of the cost of construction. The court instructed the jury in its original charge as follows:
*891 “If the Globe Construction Company’s version of this matter is true, and if it involved a loss to the Globe Construction Company, the loss does not enter into the present account, and cannot be stricken from the account. There is nothing here in pleading in the way of counterclaim or recoupment, and I am unable to see how it could be credited upon this account, if any should be found.”
This is the ruling complained of herein. But this is not the entire charge of the court on this subject. The jury were recalled, and charged in substance that, if the resident engineer required said embankments to be leveled up to the top of the ties of the main track, and the engineer of construction thereafter required it to be reduced to the bottom of the ties, the subgrade, the amount which plaintiff had paid to the Italians should be deducted from plaintiff’s account. To this charge no exception was taken. It is true that it has no reference to the expense which the construction company incurred on this account, in so far as its force was engaged in the redressing. This, however, should have been made the ground of a counterclaim or recoupment, if it could have figured in the case at all, and was not so made.
4. The admission in evidence of a certified copy of the record in a suit brought by certain subcontractors of the construction company in an Indiana state court against said company and plaintiff, in which suit said subcontractors obtained judgment for the amount of their claim, costs, and a $20 attorney’s fee, which judgment was subsequently paid by plaintiff, and the amount paid charged as part of cost of construction. The contract provided that the final estimate should be payable upon the construction company’s giving a release, under seal, of all claims and demands whatsoever growing in any manner out of the agreement. The ground upon which it is claimed that this record was inadmissible is that the construction company was not served with process in said suit, and plaintiff in error was not a party thereto. We do not think that the point is well taken; but, whether so or not, it must be considered to have been waived by the agreement of the parties hereto; that said record should be omitted from the transcript, which has been done.
5. The refusal to permit certain witnesses of plaintiff to answer certain questions asked on cross-examination in regard to the original estimates put upon the work to be done by the receivers and amount of money appropriated therefor. They were so asked with the view of showing that the cost exceeded those estimates, and thereby the officers of plaintiff had a motive to treat the construction company unfairly in their classification and estimation of the quantity of the work done by it, and subsequently by plaintiff. The evidence was too remote, and the action of the court proper.
6. The refusal to permit Col. C. B. Childe, an old civil engineer of much experience in railroad construction, to testify as to the proper classification of the material removed from Spellzhaus’ cut — work done by plaintiff after the construction company had abandoned the work. Col. Childe had not seen the material removed either before, during, or after its removal. He had seen the cut a short time before the trial, and with a view to testifying. The opinion which he was asked to give was drawn from an inspection of the sides of the cut at
7. The ruling of the court in regard to interest. The court, in its charge, had said nothing on this subject. At its close a juror asked in regard to the matter. The court stated that the plaintiff claimed interest from the 1st of December up to the first day of the then term of court. The defendant excepted to this statement. The court then said: “The court has simply said, with reference to interest, that so much is claimed, and the jury will determine from the facts how much should be allowed.” No exception was taken to this, and plaintiff in error is now in no position to complain of it. If it desired a more definite charge on the subject of interest, it should have requested it. T. & P. Ry. Co. v. Cody, 166 U. S. 606, 616, 17 Sup. Ct. 703, 41 L. Ed. 1132.
Perceiving no error in the proceedings of the lower court, its judgment must be affirmed.