192 Iowa 890 | Iowa | 1921
J. C. Mardis Company is a trade name used by J. C. Mardis; and for the sake of brevity, we shall refer to the Mardis Company and Mardis as Mardis, or the general contractor ; and the United States Fidelity and Guaranty Company will be referred to as the surety company or bonding company.
The record is a very long one, and we shall attempt to abbreviate and to avoid repetition by stating the issues, which alone take up nearly 100 pages of the abstract, and by stating so much of the contract provisions as seem to be material to the controversy, and by stating the more important facts in a general way, to a better understanding of the general situation, and shall then take up somewhat more in detail the claims, contract provisions, and evidence as to the different propositions.
There was a stipulation as to some of the facts, which covers several pages of the abstract. The amounts due the various laborers and materialmen were stipulated. As to some of the stipulated facts, the surety company objected to the materiality and relevancy thereof, and while admitting such facts as stated, it does not admit liability under such facts. As to other stipulations, it was admitted by defendants' that plaintiff and other witnesses, if called, would testify thereto, and that the defendants did not expect to controvert the same by evidence; but objections were reserved, which objections were made part of the stipulation. There is a conflict in the evidence at some points. We take it that the more important claim or defense, of the several de
The building contract was entered into on March 10, 1916; and Mardis, as principal, and the surety company, as surety, executed and delivered a bond for the faithful performance of the contract. Thereafter, Mardis entered upon the performance of the contract by purchasing material and employing labor. He failed to purchase the material or furnish the labor and prosecute the work as provided in the contract, or to pay for the labor and material required to complete the erection of the building, according to the terms of the contract. The second, year’s premium on the bond, $1,060.75, was paid May 16, 1917, and it was stipulated that the limit of time for bringing suit as specified in the original bond was extended to March 15, 1918. The suit was brought March 14, 1918, though the building was not entirely
The surety company, after making certain admissions and denials in Count 1, alleged, in Count 2: That, prior to the execution of the contract and the bond, plaintiff submitted' to Mardis a writing known as instructions to bidders, which writing stated that:
“The owner has contracted with the Morava Construction Co., of Chicago, for all structural steel (except as noted below) erected in place eight weeks after the foundations are ready to receive it. Any delay on the part of the Morava Construction Company in completing their contract shall operate to extend the time of completion of the general contract, but the general contractor shall not claim damage on account of such delay.
“The company further alleged that this was believed and relied upon by Mardis at the time he made his bid and entered into the contract with plaintiff. Defendant further alleged that the contract with the Morava Company provided:
“Erection shall begin nine weeks after the architect’s complete plans for the steel are delivered to the contractor, and foundations ready to receive the steel. The work of erection shall be carried on without interruption, and entirely completed within eight weeks.”
Defendant alleged that Mardis did not know, at the time he entered into the contract, and defendant did not know, at the time of the execution of the bond, that the representations made by the plaintiff in its instructions to bidders, were false and untrue; that it and Mardis were misled and deceived; that it relied upon and believed that the work of the erection of the steel
“Confirmation of verbal agreement, made July 19th, 1917, that five per cent shall be added to the cost of the work covered by Article XXI of contract dated March 10th, 1916, such additional work to be done any time before . the contract is completed.”
Said defendant alleged that thereafter, pursuant to said agreement, orders were given by plaintiff for the performance of said work, amounting to $20,000; that it had no notice or knowledge of such agreement, or of the orders, until the trial of this ease began; that, by said Article XXI of the original contract, plaintiff was given the right to have said floors completed and finished, from the eighth to the twelfth floor, at a cost not to exceed $3,500 per floor, provided plaintiff exercised its option so to do before a certain date — which plaintiff did not do;- that, by reason of the foregoing, the original contract was altered and changed in material particulars, without the consent of the surety company; and that it is thereby released. .Count 5 alleged that plaintiff failed to give it notice of delay, and consequent default of the general contractor, as provided in the bond; that Mardis was guilty of default in the matter of delaying the progress of the work; that no notice was given it, except the notice of December 5, 1917, wherein the architects notified it that there had been a breach of the contract on the part of Mardis, in failing to diligently prosecute the work and in failing to complete the building; that Mardis did not pay for the excess cost of labor and material, but that he had refused to make such payments; and that he had advised the architects and the owner that he was unable to comply with his contract, and that the surety company would be held liable, under the terms of the bond. In Count 6, defendant alleged that plaintiff had paid the contractor his percentage, contrary to the terms
Replying to the matters alleged by Mardis and the surety company, plaintiff denies all matters alleged by them or either of them, as constituting an affirmative defense.
The bond is dated March 13, 1916, and is in the penalty of $63,500, and runs to Gardner Cowles, obligee. The principal and surety bind themselves, jointly and severally. It refers to the contract between plaintiff and Mardis, dated March 10, 1916, to erect and complete a twelve-story, mezzanine, and basement, business and office building, under the direction and to the satisfaction of Proudfoot, Bird & Rawson, the architects, according to the specifications prepared by the said architects, which contract and specifications are made a part of the bond. It provides that no liability shall attach to the surety hereunder unless, in the event of any default on the part of the principal in the performance of any of the terms, covenants, or conditions of the said contract, the obligee shall promptly,' and in any event not later than 30 days after knowledge of such default, deliver to the surety at its office in the city of Baltimore written notice thereof, with a statement of the principal facts showing such default and the date thereof; nor unless the said obligee shall deliver written notice to the surety at its office aforesaid, and obtain the consent of the surety thereto, before making to the principal the final payment provided for under the contract herein referred to.
Second. “That, in case of such default on the part of the principal, the surety shall have the right, if it is so desired, to assume and complete or procure the completion of said contract; and in case of such default, the surety shall be subrogated and entitled to all the rights of the principal arising out of the said contract and otherwise, including all securities and indemnities theretofore received by the obligee, and all deferred payments, retained percentages, and credits due to the principal at the time of such default, or to become due thereafter by the terms and dates of the contract. That the surety shall not be liable for damages resulting from an act of God, etc., or by employees leaving the work being done under said contract on account of strikes or labor difficulties. ’ ’
“Article III. The owner, without invalidating the contract, may make changes by altering, adding to, or deducting from the work. No alterations, additions, or deductions shall be made in the work except upon written order of the architects; the amount to be paid by the owner or allowed by the contractor by virtue of such alterations to be stated in said order. * * *
“Article V. The contractor shall employ all the labor and purchase all the materials necessary for the construction of the work. The owner agrees to advance to the contractor, from time to time, as the work progresses, money in sufficient amounts to meet the pay rolls, pay all material bills when due, and to discount all bills that are subject to discount.
“Article VI. The contractor agrees to perform all of the work contemplated by this contract to be by him performed, together with all of the duties incident thereto, for a sum equal to 8 per cent of the cost of the building, and guarantees that the total cost of said building, as hereinafter defined and including said 8 per cent, shall not exceed the sum of $212,150. If the total cost, including said 8 per cent, but not including extras, shall exceed the said sum of $212,150, then the contractor agrees to pay all excess over such sum. If said total cost, not including said 8 per cent, shall be less than $196,435.18, then he shall be paid a sum equal to 8 per cent of such total cost, and a further sum equal to 20 per cent of the difference between such total cost and the sum of $196,435.18. In addition to the foregoing, the contractor shall receive a sum equal to 8 per cent of all extra
Article VII provides that it shall be the duty of the contractor to receive and check all materials as to quality and quantity.
“Article XII. Should the contractor refuse or neglect to supply a sufficiency of properly skilled workmen, or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence, or fail in the performance of any of the agreements herein contained, or be adjudged a bankrupt, such being certified by the architects, the owner shall be at liberty, after three days’ written notice to the contractor, to provide any such labor or materials; and if the architects shall certify that such refusal, neglect, or failure is sufficient ground for such action, the owner shall also be at liberty, after three days’ written notice to the contractor, to terminate the employment of the contractor for the said work, and to enter upon the premises and take possession, for the purpose of completing the work included under this contract, of all materials, tools, and appliances thereon, and to employ any other person or .persons to finish the work, and to provide the materials thereforand in case of such termination, the contractor shall not be entitled to receive any further payment under this contract until the said work shall be wholly finished, at which time, if the total cost of the work to the owner shall exceed the guaranteed maximum cost of $212,150, then the contractor shall pay to the owner the amount of such excess. If the total cost, not including the 8 per cent, shall be equal to or less than the sum of $196,435.18, the contractor shall be entitled to any balance yet due him of the 8 per cent of said total cost, but from said 8 per cent shall be deducted any additional sums paid for superin-
“Article XV. The contractor shall complete the several portions and the whole of the work comprehended in this agreement, on or before April 1, 1917. It is agreed by and between the parties hereto that time is the essence of the contract, and the contractor agrees to pay to the owner $50 per day for each and every day the work remains unfinished after the time specified for completion; said sum may be deducted by the owner as liquidated and ascertained damages out of any balance due the contractor on this contract, and in case such. balance is insufficient, the remainder shall, upon demand by the architects, be paid by the contractor to the owner. Should the contractor be delayed in the prosecution of the work by the act, neglect, or default of the owner* of the architects, or of' any other contractor employed upon the work by the owner, or by any damage caused by fire or other casualty for which the contractor is not responsible, or by combined action of workmen in no wise caused by or resulting from default or collusion on the part of the contractor, then the time herein fixed for the completion of the work shall be extended for a period equivalent to the time lost by reason of any or all the causes aforesaid, which extended period shall be determined and fixed by the architects, but no such allowance shall be made unless a claim therefor is presented in writing to the architects within 48 hours of the occurrence of such delay. *' * *
“Article XXI. Should the owner on or before September 1, 1916, elect to have one or more floors above the seventh floor finished, the contractor agrees to furnish labor and materials, and complete any or all of the said floors, guaranteéing that this cost shall not exceed $3,350 per floor on the basis of the seventh-floor arrangement, including the contractor’s percentage. Such work to be done within the time herein specified for completion of the building. Metal frames and sash shall be installed in the
It appears that, on Dé ember 4. ; ; C, t:-'Tr . - ■ among some o" i1 e workmen, wbi h i-; s va.-d.; and t,,at, o.i April 2, ¿9 ., b. k s ers struck, causing the stone masons to stop work; and on the 4th, other workers joined. This strike wa s settled as to s >.ne , the workers on April 17th, but others held out until the 21st. The architect testifies that they figured they were through with Mardis’s contract February 16, 1918; that they moved some tenants in on that date on the upper floors; but that it was May before all the floors were finished. Plaintiff testifies that the steel men took longer than he thought they should; that there were other delays; and that the whole work was not given the proper oversight. Other witnesses, including some for the defendant, say that the work dragged both in 1916 and 1917. Mardis’s foreman testifies that, when a job gets to dragging, it is difficult to get it out of the habit; and that they thought they had practically done that, but that the architect and plaintiff did not think so. The contractor had large contracts at Camp Dodge,- and the Herring building, and perhaps others. Plaintiff says he knew of these, but did not expect Mardis to neglect his job for the others. There is evidence that not as much work can be done in cold weather as in warm; that they laid off some on account of cold weather, during the winter of 1916 and 1917; that some of the men would not work in cold weather; and that those who do, cannot make as much progress. A witness for defendant who was assistant superintendent for Mardis testifies that he went over the building about May 25, 1917, and found Mardis pushing every line of work that it was possible to do, and employing the maximum number of men under the conditions, except where their work was delayed by other contractors; that there was some delay in that month because the owner and architects had not fully decided just what they wanted, and the plans had not been fully decided on and furnished; that changes were made; and that the contractor was requested to hold off on certain work until after a decision had been made as to changes. The superintendent and engineer for Mardis, testifying for defendant, says that, in his opinion, the building
These eases hold to the general doctrine that a false representation or concealment or deception as to a material fact, tending to deceive or mislead a surety to his damage, by increasing the risks of the undertaking, vitiates the contract and releases the surety. In the Bank of Monroe case, it was said that whether the obligee, before accepting the undertaking of the surety, and without being- applied to by him for information on the subject, is bound to inform him of facts within his knowledge which increase the risks of the undertaking, depends on the circumstances of the ease. We deem it unnecessary to indulge in any extended discussion of the cases, for the reason that we do not understand plaintiff to dispute the legal proposition. Their contention is that there was, in fact, no representation prejudicial to the defendants.
There are some additional facts bearing upon this point, not heretofore set out, to which it will be necessary to refer. The plaintiff made arrangements for the steel a considerable time in advance, doubtless due to conditions then existing. At any rate, the contract with the Morava Company for the furnishing and erection of this steel was made in April, 1915, and the complete plans-and specifications delivered to it at that time; and the steel was all, or substantially all, fabricated and ready for erection during the year 1915. It is true that, at one stage of the work, the Morava Company did claim that the language of the contract gave it 17 weeks in which to complete the erection of the steel after the foundations were ready to receive it. This
Going back to the claim of the surety company. The language in the bond that no liability should atta'ch in the event of any default might, by a strained construction, mean the driving of a nail improperly. We suppose no one would contend that that would release the surety, nor would delays for which no one was responsible. The very purpose of the bond was to indemnify plaintiff for the default of the general contractor. We said, in Bartlett & Kling v. Illinois Surety Co., 142 Iowa 538, at 554, that manifestly the surety cannot rely upon the default of the principal which he promised he would not make. Article XVII of the contract between plaintiff and Mardis, which contract is a part of the surety company’s bond, contains provisions in regard to the contractor’s duty to proceed diligently with the work, and provides that, if the architects shall certify that his refusal, neglect, or failure is sufficient ground for such action, the owner may terminate the employment, and take possession of the work. It was a matter somewhat for the architect to determine. He was on the ground, and knew the conditions, the delays, and causes therefor, and who, if anyone, was to blame. Plaintiff alleges that, about December 12, 1917, Mardis failed and refused to proceed in accordance with the terms of the contract, and that thereupon the architects gave notice to Mardis thereof, and authorized and directed plaintiff to take charge of the work and complete the building, which he did, all in accordance with the contract.
It would be difficult, from the evidence, to pick out a definite, continuous period of delay, outside of the delay occasioned by the Morava Company; though, as said, the evidence of plaintiff does tend to show that the work dragged at times, during both 1916 and 1917. Extensions of time were permitted, under the contract, under certain conditions.
Appellant surety company cites Bankers Surety Co. v.
Agreement for Extra Work.
July 20, 1917.
“ J. C. Mardis Company,
“City.
“Gentlemen: Re Register & Tribune Bldg.
“Confirmation of verbal agreement made July 19, 1917, that 5 per cent shall be added to the cost of the work covered by Article XXI of contract dated March 10, 1916. Such additional work to be done any time before the contract is completed. 5 upper floors $3,350 plus 5 per cent. In accepting this order for extras .or deductions it is agreed by the contractor that the time for completing the building shall not be extended unless expressly stated in the order and that this order shall not in any way alter the terms of the contract. When this order constitutes an original contract it is understood, unless otherwise distinctly stated, that it covers the furnishing of all labor, material, and apparatus necessary to deliver, install, and complete the work named. The contractor must verify all measurements at the building, and report any seeming errors before executing the work. All work and materials shall be the best of their respective kinds and subject to the approval of the architects. The contractor shall be responsible for' all violations ’of building laws and regulations. The contractor shall be responsible for all damages to the premises and for the safety of his own work until its acceptance, and he shall remove all his rubbish.
“Accepted: J. C. Mardis Co., J. C. Mardis, Contractor.
Proudfoot, Bird & Rawson.
“Approved: Gardner Cowles.”
It is the contention of the surety company that this was an agreement without its knowledge or consent to alter the contract, and that thereby it was released. On this point, they cite Ward v. Haren, 139 Mo. App. 8 (119 S. W. 446) ; Missouri Bridge & Iron Co. v. Stewart, 134 Mo. App. 618, 621; Judah v. Zimmerman, 22 Ind. 388; Beers v. Wolf, 116 Mo. 179 (22 S. W. 620). The first two cases hold, in substance and effect, that a contractor may not be held to the time limit by an owner, with
We think the cases are not applicable. The contract and the facts are not similar to the instant case. There was no agreement for an extension of time, and the order of the architects, though not made until after September 1, 1916, provided that the work of finishing the upper floors should be done before the building was completed. Other provisions of the contract provide for extras. A completion of a part of these floors was required under the terms of the contract; but under the order of the architect of July 20, 1917, the agreement for extra work, Mardis was required to perform the work covered by Article XXI, and such additional work, under the architects’ order, was to be done at any time before the contract was completed. This covered five extra floors, at the compensation therein fixed and agreed upon. The work was ordered as extra work, and
5. It is contended by appellant surety company and Mardis that no competent evidence was offered by plaintiff to prove his damages for furnishing material or finishing the work, for the reason that the same had not been ordered and certified by the architect in accordance with the expressed provisions of the contract; and hence that, there being no competent evidence of such damage, the contractor is not liable to the owner; and that, if the contractor is not liable, the surety is not. The part of the contract relied upon at this point is the latter part of Article XII, which provides that:
“The expense incurred by the owner as herein provided, either for furnishing material or for finishing the work, and any damage incurred through such default, shall be audited and certified by the architects, whose certificate shall be conclusive upon the parties, and such damage shall be paid by the contractor to the owner.”
As before said, the architects did issue proper certificates in December, and they issued a certificate as to the number of days for which plaintiff was entitled to damages for delay; but as to
As we understand the claim, or one of the claims, of these appellants, it is that, from the cases cited, the action is prematurely brought, and the suit may not be maintained until the certificate is produced. If it is the claim that the action should abate, then we do not find that defendants have pleaded the matter in abatement.
Plaintiff contends that all conditions precedent have been waived by these appellants and by the surety company, by its repudiation and attempted cancellation of the bond and its claim that it was void from the beginning, because the claimed cancellation was on other grounds. On this, appellee cites Carson v. German Ins. Co., 62 Iowa 433; Boyd v. Cedar Rapids Ins. Co., 70 Iowa 325; Elliott v. Home Mut. H. Assn., 160 Iowa 105; and other cases. Plaintiff contends, also, that no other ground can now be urged in defense, except the alleged misrepresentation as to the Morava contract, citing Wood v. Hall, 138 Iowa 308; Prichard v. Mulhall, 140 Iowa 1, 9; and other cases. These cases are cited as a waiver of all conditions precedent to be kept and performed by the plaintiff. To this the surety company responds that a waiver is a voluntary relinquishment of a known right (citing cases), and that the surety company did not know of the alleged misrepresentation relied upon, until the work was partly completed.
¥e shall not discuss the matter as to whether there was a waiver, since we have, in prior divisions of the opinion, held that the other defenses were not sustained. Nor shall we go into the question of the waiver as to the point under consideration in this paragraph, preferring to place the decision upon other grounds. The cases cited hold that, where the contract makes the production of the architect’s certificate a condition pre
Without taking further time at this point, we think that, under the entire record, the action should not abate, nor should
6. The next contention on the part of the appellant surety company is that the court erred in overruling its motion to require plaintiff to elect whether he would proceed solely against it, or solely against the other defendants; and that, if plaintiff refused to elect, the court should strike from the petition the alleged cause of action against the other defendants. The thought is that, as to the surety company, this was an action at law. No motion was made to transfer the cause to the law docket. The other defendants are not complaining that the court refused, on motion of this defendant, to strike the cause of action of the other defendants. Whether .this was the proper remedy, we need not determine. There is no argument at all on this point by plaintiff, and appellants’ argument is very brief. No cases are cited. The motion recites that if, in this suit, plaintiff should procure a. judgment against Mardis, then, upon the failure of the surety company to fulfill the conditions of its bond, plaintiff could sue at law on the bond. The several defendants and cross-petitioners could, perhaps, also bring separate suits against Mardis and plaintiff. The theory of plaintiff was to bring in all parties having any interest, that all might be bound, and to prevent a multiplicity of suits. On this particular feature of the matter, the surety company does not argue that this may not be done.
7. It is contended by the surety company that the excess cost of the building, over and above the amount named in the contract, was caused by plaintiff, or by those under his supervision ; and that, therefore, plaintiff cannot recover against Mar-dis or against the surety. Mardis makes the same claim, and that the excess cost was the result of the false representation before referred to, and that he was entitled to recover compensation and damages asked by him in his counterclaim. Some of the matters before set out have a bearing on this. We shall not go into the evidence further, but content ourselves with saying that such claims by the defendants are not sustained.
It is thought by plaintiff that the' court erred in finding that the contract between plaintiff and Mardis constituted a contract of agency or employment. The claim is that Mardis was an independent contractor, and that the cross-petitioners were subcontractors under Mardis.
As to the first class of cross-petitioners above referred to, whose liens were established, there is no controversy. The cross-appellant concedes that their claims were rightly established, and concedes that the questions involved by plaintiff’s cross-appeal are immaterial, except as they enter into the rights of plaintiff and Mardis and the surety company. The claim is that the judgments in favor of the last class of cross-petitioners were erroneous; that, since they have not appealed from the refusal
There are some provisions in the- contract between plaintiff and Mardis which may have a bearing upon this feature of the case, and which have not before been set out. We have before referred to Article I of the contract, by which Mardis was to purchase all materials and employ all labor necessary to complete a twelve-story building, and by which he agreed to furnish, at his own expense, all the tools, machinery, etc., necessary. Article X provides in part, and substantially, that the contractor agrees that he will not purchase any materials for use in the construction of the work unless or until the prices and quantity have been approved by the owner, and that he will furnish to the owner a statement of all prices of all materials he proposes to purchase, except that the contractor shall have the right to make small 'purchases, from time to time, without submitting prices, but not exceeding $350. Article XI provides substantially that the contractor is to take all necessary precautions and safeguards against the happening of accidents, and that he will be responsible for them and will indemnify and save harmless the owner from the payment of damages that may occur' in or about the work, etc. Article XIII provides that, upon the completion and final acceptance by the owner, and upon payment by the owner to the contractor of the account then due and owed to him', the contractor will execute a release to the owner of all claims, etc. Article V, heretofore set out, provides that the contractor shall employ all the labor and purchase all the materials, and the owner agrees to advance to the contractor, from time to time, money in sufficient amounts to meet the pay rolls and pay all material bills when due, etc.
As said, it is conceded that the labor and material furnished by cross-petitioners went into the building. It is urged by the glass company, and the argument applies to other cross-petitioners now in controversy, that whether or not the contract between plaintiff and Mardis was strictly an agency contract, by its terms, plaintiff was at all times primarily liable for the
We think plaintiff has no just cause of complaint, and the judgment and decree are affirmed on plaintiff’s appeal. — Affirmed on all appeals.