129 P. 412 | Utah | 1912
This was an action. to recover damages for an alleged breach of a building contract, and upon a surety bond. The contractor and surety are parties to the action. For convenience the respondent Hamilton Realty Company will hereafter be called the contractor, and the other respondent, Salt Lake Security & Trust Company, will be designated trust company. The appellants in their complaint, after alleging that they are husband and wife and the corporate existence of respondents, in substance alleged that they entered into a contract with the contractor aforesaid; which is dated on the 23d day of June, 1909, wherein said contractor covenanted and agreed to furnish all the materials and perform all the labor necessary to erect and complete a certain dwelling house (except the plumbing therein) in accordance with certain plans, specifications, and drawings, which were made a part of the contract aforesaid', and to do the work “in a good, substantial, and workmanlike mannerthat it was' also agreed that all the materials used should “be fit, proper, and
The trust company also filed an answer in which it made the same admissions that the contractor made in its answer, except that it had executed the bond, and denied all other allegations of the complaint. As an affirmative defense it also pleaded the condition in the contract respecting the effect of the occupancy of the dwelling by appellants, and that they for a long time had been and were in actual occupancy thereof. The trust company also averred that, pending the construction of said dwelling, the appellants and the-contractor had entered into a “supplemental article of agreement” in which it was agreed that certain matters of difference had arisen and existed between appellants and the contractor with respect to whether the contractor was complying with the terms and conditions of his contract in the erection of said dwelling, and that said differences were submitted to one Fred. A. Hale, an architect, to pass upon and determine. It was further alleged on information and belief that said appellants and the contractor accepted the decision of said architect, and that said dwelling was thereafter completed “in accordance with the terms of said agreement and the decision of said Fred. A. Hale.” The supplemental agreement aforesaid was set forth in full in its answer, but it was not averred that said agreement was not entered into with the consent of the trust company, or that by reason thereof the terms of the original agreement were materially changed or departed from. That matter was left to inference from an inspection of the agreements.
Upon the trial of the issues it was made to appear without dispute that the contractor had in many material matters failed and refused to comply with the terms of its contract, and had failed to comply with the plans and specifications both as to the furnishing of material and doing the work; that the appellant John A. Christensen, the owner of the building, protested against the further progress of the work unless the terms of the contract were complied with; that he notified the trust company through Mr. F. E. Mc-Gurrin, who signed the surety bond as its president; that, after the matter had been discussed, said supplemental agreement was drawn up, and pursuant thereto said MeGur-rin, Mr. Hamilton, representing the contractor, John A. Christensen, the owner, and Mr. Patterson, his attorney, and Mr. Fred. A. Hale, the architect mentioned in said supplemental agreement, went to the dwelling house then in process of construction to inspect it for the purpose of complying with the terms of said supplemental agreement. The architect then pointed out and discussed a number of defects in the building and departures from the plans, and specifications. Such defects were found in the walls, in the setting of the window and door frames and in other respects. No specific agreement with respect to what should be done was reached, however, at the time, but a short time thereafter Mr. Hale, the architect, suggested to the interested parties,
It seems that the dwelling house was to be erected at a cost of $3300, including the plumbing, but that the contractor agreed to construct the dwelling without the plumbing for the sum; of $3000; the plumbing to be paid' out of the remaining $300 so far as that amount would pay for the same, and the balance, if any, should be paid personally by the owner. It seems that for this reason the sum of $3300 is mentioned in the bond, while in the contract the amount is stated to be $3000. It was further made to appear that the whole transactions relating to the loan, the building contract, and bond were all consummated in the-office of the trust company, and that all the papers relating thereto were prepared and executed there. The trust company was thus mortgagee furnishing the money for the erection of the building, as well as surety for the contractor.
The trust company then interposed a motion for nonsuit upon substantially the following grounds: (1) That the contract sued on Was not the contract for which the trust company became surety, as appears from an inspection of said contract and bond; (2) that the terms of the original contract were changed, modified, and rescinded by the supplemental agreement heretofore referred to; (3) that the terms and conditions of the supplemental agreement materially changed and modified the original agreement, and that such changes and modifications were acted on by the parties, and therefore appellants cannot rescind the supplemental agreement; (4) that, if appellants may rescind the supplemental agreement as contended for by them, they nevertheless cannot recover on the original contract because they have taken possession of the dwelling house, and therefore have conclusively waived all right to sue the contractor for any defects that may exist in such dwelling; (5) that, in taking possession of said dwelling, appellants have
The case against the contractor was submitted to the jury upon the evidence, and they found a verdict in favor of appellants as follows:
“For defective construction, $217; for damages for delay in completion, $224.”
Judgment was duly entered upon the verdict, and no ono is here complaining of that judgment. The appellants, however, appeal from the judgment in favor of the trust company dismissing the action as against it. Appellants assign a large number of errors why the court erred in sustaining the motion for a nonsuit, but we think our decision will be understood better by referring to the reasons advanced by the respondent trust company why its motion for a nonsuit was properly sustained.
“A bond may be good as a common law obligation, though no person be named therein as obligee. The naming of an obligee is the merest formality possible, so that if the instrument failed to name one, the substance of the undertaking would remain.”
It is quite true that an obligee is necessary' — that is, some person must be designated, either expressly or by necessary implication, who may enforce tbe bond for tbe benefit of those for whom it is made — but it is not true that it is necessary to name all- tbe beneficiaries for whose benefit a bond is given in order to make it valid and enforceable. (Leach v. Flemming, 85 N. C. 447.) That this is so is very frequently illustrated in bonds to secure tbe faithful performance of building contracts where, in such bonds, a particular obligee is named, yet the bond is given for tbe benefit of all who may furnish materials or perform labor upon tbe building. (Board of Education v. Grant, 107 Mich. 151. 64 N. W. 1050.) In tbe case at bar Selma Christensen signed tbe building contract as tbe wife of John A. Christensen, and in that way became merely a nominal party thereto. But she nevertheless was interested in tbe home as tbe wife’ of Mr. Christensen, and as such was a beneficiary under tbe contract, and, since she is made a party to tbe action, no one can complain.
any material departure from the terms of the original contract in executing it, the sureties are released from their -obligations. The rale is well stated by Mr. Justice Straup in Smith v. Bowman, 32 Utah, 38, 88 Pac. 687, 9 L. R. A. (N. S.) 889, and is approved in Daly v. Old, 35 Utah, 82, 99 Pac. 460, 28 L. R. A. (N. S.) 463. It is, however, •also pointed out in Daly v. Old, supra, that the doctrine applies only after the terms and conditions of the obligation are ascertained, and that, in ascertaining the obligations assumed by the surety in his contract, the same rales of constraction are applied as in the construction of other contracts. (See, also, 1 Brandt on Suretyship and Guaranty, sec. 103, and Henricus v. Englert, 17 N. Y. Suppt 235, 237.
“As bondsman for the contractor, this company does not feel like taking any further part in the matter.”
It was after the foregoing transactions that the appellants brought this action, which is based on the breaches of the building contract.
“Upon -a breach of tbe terms of a compromise agreement or-abandonment by one party thereto, the other party may treat the-agreement as a nullity and be remitted to his original claim or cause of action.”
Upon the question that appellants could have based an-action upon the compromise agreement, it is said:
“The right to be remitted to his original cause of action is. for the 'benefit of the other party to the compromise, and he may,, if he so desire, waive the breach and proceed upon the compromise.”
As the evidence now stands, the undisputed facts are that the contractor was permitted to proceed with the completion of his contract upon the express agreement that the retaining wall should be erected as part compensation, at least to the owner of the building for defective construction; that the contract price was paid to the contractor in reliance upon that agreement; and that 'the owner finally entered into possession of the dwelling, and in doing so apparently waived all claim for damages except for delay in completing the building, and that the wall be constructed. After the contract price was paid, however, the contractor repudiated the compromise agreement, refused to comply with the terms thereof, and the trust company in effect approved its repudiation. TJnder such circumstances the owner of the building may well say, “I now elect to stand upon the terms of the original agreement and shall insist upon my rights thereunder, whatever they may be.” If the contractor and the trust company may now say that appellants are not bound by the compromise agreement, then, as we view it, they may taie advantage of their own wrong. We are clearly of the opinion that, under the evidence as it now stands, the trust company must be held to have consented to both the terms of the compromise agreement and the abandonment or repudiation thereof by the contractor. It therefore cannot take ad
The question of whether appellants may or may not recover damages from the trust company for delay in completing the building for the full period of time that it remained uncompleted, when it should have been completed as provided in the contract, is a question that we cannot determine at this time. All we can say is that, as 'the evidence now stands, a finding of liability for the whole period of time' would be justified.
The judgment of dismissal entered in favor of the trust company is reversed, and as to said company the cause is remanded to the district court, with directions to grant appellants a new trial and to proceed with the case in accordance with the views herein expressed. Appellants to recover costs on appeal.
Reported in full in tlie New York Supplement; reported as a memorandum decision without opinion in 63 Hun, 625.
. Reported in full in the New York Supplement; reported as, a memorandum decision without opinion in 53 Hun, 636.