177 A.D. 582 | N.Y. App. Div. | 1917
The action is brought by plaintiff against the defendant upon its bond to secure the faithful execution of a contract entered into between the plaintiff and one John W. Davis for the construction of a certain building at Petersburg, Va. The complaint alleges that Davis proceeded to construct said building, and made default therein; that the defendant surety was notified of said default, and neglected to proceed with the construction; that the plaintiff thereupon was required to proceed with the construction at a cost to the plaintiff in addition to what had been paid to the contractor of $14,809.43 in
The clause of the contract which requires to be construed is the clause relating to payment. The contract binds the plaintiff to pay to the contractor $93,800 in the following manner: “ Eighty-five per centum of the amount which shall be due on the first of each and every month from and after the date hereof for work done and materials furnished under this contract, as per bill to be rendered to the owner by the contractor, and upon the certificates of the architects of the accuracy of the bill rendered by the contractor. The balance shall be paid when the work is finished and accepted by the owner upon the certificate of the architects * * * .” On December 1, 1913, the contractor presented an account which contained items of materials furnished and work done and claimed a balance thereon of $12,432.18. Up to this time there had been paid upon the contract $62,897.45. The attention of the plaintiff was called to the fact that the building was not more" than seventy-two per cent finished, and the architects’ representative upon the job refused, therefore, to certify the bill oh the ground that to pay the bill would pay the contractor a greater proportionate amount of the contract price than would represent the proportionate amount of the contract work finished. The first question, therefore, that arises is as to the construction of this clause of the contract. Upon that construction I think this court is foreclosed by the case of Hastings Land Imp. Co. v. Empire State Surety Co. (156 App. Div. 258). In that case it was held that under a contract substantially similar to that in this case the requirement was that the owner should pay to the contractor the eighty per cent of the actual material furnished and work done irrespective of the fact that such payment might be making a greater payment upon the contract than represented the proportionate fulfillment of the contract. The case of Hawkins v. Burrell (69 App. Div. 464) holds a contrary rule, and that case has been followed by the case of O’Neill v. Title
The defendant also contends that in the payment of $79,288.52 there was overpayment in three particulars, first, in that certain items were duplicated in the contractor’s bills as presented; second, that the bills paid included an item of $466.50, which was paid for this bond, and, third, that in the bills there was included the sum of $7,208.04, representing ten per cent commission upon the cost of material furnished and work done.
As to the first claim of overpayment, to wit, in the matter of duplication of items, we are of opinion that the defendant is not in a position to question the same, by reason of its failure to allege that the duplicated items were paid by the defendant knowingly, collusively or in bad faith. The contract provides that the owner shall pay upon the bill of the contractor certified by the architect. The owner had the clear right, therefore, to pay the bills so certified for material furnished and work done unless payment were made with knowledge of the fact that the contractor was receiving overpayment, and the question can only he raised by a specific charge to that effect in the answer, thus putting the owner upon notice of the necessity of proving its good faith.
The defendant’s challenge as to the second and third items of overpayment is, we think, well made. The language of the contract unmistakably indicates that each month there shall be paid to the contractor eighty-five per cent of the cost of materials that have gone into the building or have been furnished for that purpose, and of the actual work done in the performance of the contract. It would seem clear that the moneys paid for securing a bond for the faithful performance of the work cannot be deemed either a payment for materials furnished or for work done upon the building. While it was a necessary disbursement of the. contractor, he is presumed to
It follows that the credit which the Special Term has given to the contractor as payments upon the contract of $466.50 for the bond and $7,208.04 as commission, were improperly made, and upon the reference stipulated for by the parties and directed by the judgment, the plaintiff cannot have credit therefor, and that the judgment must be modified accordingly.
It is insisted by the defendant, however, that these overpayments entirely released it from its obligation upon the bond. With this contention we are not in accord. The terms of the contract were not changed and there is no allegation that the overpayments were made through collusion or in bad faith. They appear to have been made under a mistaken interpretation of the contractor’s rights as to the basis upon which the
Nor can we agree with the defendant’s contention that the contract was violated by the failure to notify it of a possible breach of the contract by the contractor in December. The contractor was not in default at that time, and until such default there was no occasion for the plaintiff’s giving any notice whatever to the surety. It is further claimed that when these payments were made in December and January, at the request of the contractor, the plaintiff kept such knowledge from the surety. The surety has by this concealment been in no way harmed. If the payments were valid payments when made there was no occasion for giving the surety notice. In so far as they were invalid payments the surety is now given credit for them with the same effect as though notice had been given thereof.
Clarke, P. J., Laughlin, Scott and Davis, JJ., concurred.
Judgment modified as directed in opinion, and as modified affirmed. Order to be settled on notice.