A jury having been waived and said cause tried by the court, and the issues found in favor of the defendants in error Ward and Latta, the sureties on said bond, there being testimony reasonably tending to support the findings of the lower court, such finding is conclusive in this court.
The plaintiffs in error, however, insisted that there was error in rendering judgment in favor of said defendants in error, and it becomes necessary to determine whether or not, as a matter of law, under the facts found, the court erred in rendering judgment in their behalf. In the case of Board ofCommissioners of Morgan County v. Branham et al., (C. C.) 57 Fed. 180, Baker, District Judge, says:
"It is well settled that a surety is bound only by the strict terms of his engagement; and, as he assumes the burdens of the contract without sharing in its benefits, he has the right to prescribe
the exact terms upon which he will enter into an obligation, and to insist upon a discharge if those terms are not observed. An innocent surety is always the subject of legal protection.State v. Cutting, 2 Ohio St. 1; Raymond v. Whitney, 5 Ohio St. 201;Hall v. Williamson's Adm'rs, 9 Ohio St. 17. It is not a question whether he is harmed or benefited by a disregard of the of the terms to which he has assented. Miller v. Stewart, 9 Wheat. (U.S.) 681, 6 L.Ed. 189; Manufacturing Co. v. Kimmel,87 Ind. 560; Post v. Losey, 111 Ind. 74, 12 N.E. 121, 60 Am. Rep. 677. Where, by the terms of the contract, the principal is to be paid by the debtor or obligee in installments, and the payments are made in advance of the time specified in the contract, the surety will be discharged. Brandt, Sur. (Ed. 1878) § 102; Id. § 371. Calvert v. Dock Co., 2. Keen, 639, is a case similar to the one at bar. One Streather contracted to build certain works for the dock company, and to furnish the materials. The company was to pay the agreed price of 52,200 pounds in installments, to wit, three-fourths of the cost of the work done to be paid for every two months, on the certificate of the company's engineer, and the residue on the completion of the contract. Walburton and Laycock became sureties upon the bond of Streather for the performance of the contract. Streather entered upon work, but failed to complete it, and finally abandoned it, and suit was instituted upon the bond. Streather had been paid, from time to time, more than three-fourths of the estimated cost of the work performed, and it was held that thereby the sureties were released. In the course of his opinion Lord Langdale, M. R., said: 'What the company did was perhaps calculated to make it easier for Streather to complete the work, if he acted with prudence and good faith; but it tlso took away that particular sort of pressure which, by the contract, was intended to be applied to him. And the company, instead of keeping themselves in the situation of debtors, having in their hands one-fourth of the value of the work done, became creditors to a large amount, without any security; and, under the circumstances, I think that their situation, with respect to Streather, was so far altered that his sureties must be considered to be discharged from their suretyship.' "
In the case of Bragg v. Shain et al., 49 Cal. 131, Chief Justice Wallace, delivering the opinion of the court, in effect held that where a contractor agrees with the owner to erect for him
a building and furnish the materials, and deliver the same discharged from all liens, and by the terms of the contract the owner is to pay 75 per cent. of the contract price each month as the work progresses, and the other 25 per cent. when the work is completed, and a third person becomes surety for the contractor, if the owner, during the progress of the work, pays the contractor more than the 75 per cent., the surety is discharged from his liability.
In the case of Simonson v. Grant, 36 Minn. 439, 31 N.W. 861, the plaintiffs were sureties for the faithful performance by defendants of their building contract with their codefendant, Grant. Said plaintiffs also furnished materials used in the building erected in pursuance of the contract, and claimed a lien thereon in this action. Grant's objections against the enforcement of the lien rested on the claim that the engagements of plaintiffs as sureties estopped them from claiming any lien for materials furnished under the same contract. Plaintiffs replied that they had been released from the obligation of their bond before any materials were furnished by them. The building contract in that case contained a provision that the contractors would protect said Grant, and save him harmless from all claims and liens for labor and materials contracted by them on said building. The contract provided that a certain installment was to be paid when all the lumber was on the ground except siding and flooring, and the first floor laid, and the second when the building was inclosed, sheathed, shingled, and back-plastered, chimneys built, and roof painted. It further provided that so much of these payments as should be necessary to pay for materials and labor furnished should be used for that purpose, and after the first payment, and before the others were made, said contractors should furnish Grant with a written statement from the parties furnishing the materials and labor, or other satisfactory evidence that the money paid had been so used. After the payment of the first installment according to the terms of the contract, said Grant, having discovered that the greater part
thereof had not been applied as required by the terms of the contract, thereupon refused to make any further payments directly, but thereafter from time to time made payments upon their orders to divers parties who had valid claims against them, and which, if not seasonably paid, might be enforced against the building by filing liens therefor in pursuance of the statute. The trial court found " 'that the contractors did not perform the work called for by said contract in the order provided for, and the payments made by defendant Grant were made without reference to the state of the work at the time of such payments, or conditions prescribed by said contract in respect to the progress of the work, but that said Grant made only such payments as were necessary to be made to protect the house from liens aforesaid,' " and that plaintiffs had notice of such payments and of his object in making them; but it does not appear that they ever authorized or consented to any departure from the terms of the contract, or any change or modification thereof. Mr. Justice Vanderburgh, delivering the opinion on behalf of the court, held that said sureties were released.
In the case of Bell et al. v. Paul, 35 Neb. 240, 52 N.W. 1110, a contractor entered into a written agreement with the owner to furnish all materials and erect for him a building in accordance with certain plans and specifications and deliver same free from all liens for labor or material; and the contract further provided that the contractor was to receive therefor a stipulated sum, payable as the work progressed, on the estimate of the architect, less 15 per cent., which was to be retained by the owner until the expiration of 90 days from the completion of the work, and then was payable only in the event that there were no liens upon the property for labor or materials supplied through the contractors. A bond was given by the contractor, with sureties, to complete the building according to the contract, and turn the same over to the owner discharged of all liens. Payments were made to the contractor without the consent of the sureties during the progress of the work, and without estimates of the architect, and in excess
of 85 per cent. of the contract price. In an action on the bond it was held that the sureties were discharged from liability.
In the case of Backus v. Archer, 109 Mich. 666, 67 N.W. 913, the sureties on a contractor's bond, conditioned for the principal's faithful performance of a building contract, which provided that the consideration was to be paid to the principal at times therein specified as the work progressed, are released from all liability on the bond if payments are made before they are due by the terms of the contract.
In the case of Cowdery v. Hahn et al., 105 Wis. 455, 81 N.W. 882, 76 Am. St. Rep. 923, a building contract provided for payments up to 85 per cent. of the value of the material furnished and the labor performed, and for payment of the balance of the contract price within thirty days after the contract was performed. All payments were to be made upon certificate of the architect. The contractors executed a bond with the defendants as sureties for the discharge of all liens. When work to the amount of $275 remained unperformed, the plaintiff, on the final certificate of the architect, paid the balance of the contract price; and thereafter leins of subcontractors were filed for $3,000, which plaintiff was compelled to pay, and thereby the sureties were released.
In the case of Evans v. Graden, 125 Mo. 72, 28 S.W. 439, payments by the owner of a building to a contractor thereon in excess of the percentage provided for in the contract, and without the consent of the sureties on the contractor's bond, releases the sureties.
In the case of Peters v. Mackay et al., 20 Wn. 172, 54 P. 1122, a surety on the bond of a building contractor, conditioned to complete the building according to the contract, was held to be not liable thereon where the provision in said contract to the affect that the first three installments of the contract price were to be for only 75 per cent. of the value of the work doviolated by a payment on the third installment of a sum in excess of 75 per cent. of the value of the work
There is nothing in this record to show that the plaintiffs in error did not act in the utmost good faith. It is probable that what they did was with a view, not only of conserving their own interests, but that of the contractors, and consequently that of the sureties, but it took away certain prescribed and exact terms upon which the sureties entered upon that obligation, and they had a right to insist upon a discharge if those terms were not observed. We are unable to find reversible error in the record.
The judgment of the lower court is affirmed.
All the Justices concur.