40 So. 415 | Ala. | 1906
This Avas an action by appellant against appellee, based upon a bond which appellee executed March 7, 1901, as surety for John W. Hood & Co. to secure the faithful performance of a contract by which said Hood & Oo. had agreed to furnish materials and erect a certain building in Montgomery, Ala.
The first point raised by the pleadings, and strenously and ably argued in the briefs of both the appellant and appellee, is AArhether or not, in a case like this, Avhere the building contract specifies that payment shall be made as the Avork progresses upon certificate of the architect, and estimates for material Avhen delivered, reserving 10 per cent, to be paid only when the Avork is completed, and the OAvner undertakes to pay in a different way, as by adAmncing money to the contractor to be repaid .as the estimates and certificates are made, and paying for lumber before it is delivered, Avitliout regard to the 10 per cent, reduction, the surety is released. The appellant relies upon the case of Fidelity & Deposit Company of Maryland v. Robertson, 136 Ala. 379, 34 South. 933, and especially the remark of the court, on page 409 of 136 Ala., page 943 of 34 South., to the effect that the provision of the contract, authorizing the temporary reservation from payments of 15 per cent, of estimated earnings, was solely for the benefit of the original contractor, and one AAdiich, in the absence of any prohibition in the bond, the original contractor might Avaive Avithout the consent of the surety.” It is a maxim of the laAV that all parties, whether principal or surety, avIio reduce their contracts to writing, haATe a right to insist upon the terms of the contract as Avritten, and it does not lie in the poAArer of the courts to say that, although a party has contracted to do one thing, yet he has done something else, which is more beneficial to the other party, and is therefore entitled to the enforcement of the contract.
The leading case in England is that of Oalvert v. London Bock Go., 2 Keen 638. And the Supreme Court of the United States in an able opinion by Justice White, in. which he reviews the decisions of that court and others, plants itself squarely on the English doctrine, declaring that “the rulings of this court haVe been equally emphatic in upholding the right of a surety to stand upon the agreement, with reference to Avhich he- entered into this contract of suretyship, and to exact compliance Avith its stipulations.”- — Prairie State Bank v. U. S., 164 U. S. 227, 237, 17 Sup. Ct. 142, 41 L. Ed. 312. Equally emphatic are the cases of Simonson v. Thori (Minn.) 31 N. W. 861 ; U. S. v. Am. B. & W. Co., 89 Fed. 925, 930, 32 C. C. A. 420 ; Backus v. Archer (Mich.) 67 N. W. 913, and cases cited; Stearns on Suretyship, § 79, and note ; 27 Am. & Eng. Ency. Law, 495. See, also, Manatee County State Bank v. Weatherly, 144 Ala. 655 ; 39 South. 988. It is unnecessary to extend this opinion by citing all the cases that could be produced, or by going over the arguments in those here cited. The declaration of the principle is clear and the reasoning satisfactory. We are compelled to hold that the court below committed no error in overruling the demurrers to the
Without subscribing to any intimations of the court on that point, it may be remarked that the corresponding, provision in the contract now before this court differs from that in the important particular that, after referring to the alteration, etc., it goes on to state that it shall not “make void the contract, but the difference shall be added to or deducted from the amount of the contract, as the case may be, by a fair and reasonable valuation,” showing clearly that the allusion is not to the manner of payment, but tu the alteration in the work. While, as between the original parties to the contract, either party may waive any of its provisions, yet when a third party becomes interested in the contract by binding himself to its faithful execution, the contract becomes a part of his obligation, and its provisions cannot be waived so' as to affect his interest without his consent. We hold that under the contract and bond in this case, which constitute one transaction, if the plaintiff did not pay for the work and the material in the manner provided by the contract, but instead thereof, by an arrangement made either at the- time the contract was
Appellant next insists that by the terms of the bond the appellee waived so much of the construction contract as required payments to be made upon certificates and estimates, and he bases that construction on that part of the bond which recites that “whereas, under article 1 of chapter 71 of the Code of Alabama of 1896, certain liens are provided,” etc., and concludes with these words, to-wit: “But any such sum may be retained and paid such mechanic, laborer, or materialman, by the owner or proprietor, if he wishes, and shall be a credit on this contract as if paid to the contractors.” Appellant claims that this was an authorization to the appellant to pay all said bills, without any regard to certificates or estimates, and without reserving any per cent. We do not construe the bond in this way. The clause in question is really the conclusion of the first preamble, in which the writer of the bond is stating what he understands to be the statutes on the subject of liens of mechanics and materialmen. He goes on Avith another preamble, and then comes to the obligation of the appellee
In this connection appellant further insists that the words in the bond, “And to pay any claims of mechanics,” etc., are a waiver of the requirements as to the particular manner of making payments, and an authorization to appellant to pay said items, without regard to certificates or estimates. The grammatical construction of the sentence will not admit of such an interpretation. The infiinitive “to pay” is the object of the verb “agree” in the first line of the-paragraph. In other words, the surety company (with Hood & Co.) “agree” to hold appellant harmless from all these contracts, claims, etc., to exempt it from making demands for lists of .material-men, “and to pay any claims of mechanics, laborers, and materialmen,” etc. It is just as if it had read, “And we agree to pay,” etc., and, as if to make it clearer still, they exempt appellant “from any demands or liability whatever to any other person than John W. Hood & Co. In other words, it is clear that the intention was that appellant was not to pay anything to any one, except Hood & Co. If the materialmen said that they were not wil
Coming to the facts of the case: While it is true that the president of the bank denies that there was any agreement, at ¡the time the contract was made, that the business should be conducted as it was, which is contradicted by two wtinesses on the other side, yet the fact remains that it ivas conducted in that way, that the contract was not complied with in the manner of payment, nor in the reservation of the 10 per cent., and the circumstances make it very evident that there ivas an understanding between the parties that the1, money should be advanced and that the certificates and estimates should be credits (as they were) on the general accounts. The transaction bears none of the earmarks of a separate, independent loan. There was no separate account, but merely the general account. We can judge of the intention of the parties only by their acts; and the manner in which the advancements' were made, in excess of the certificates and estimates and of the 10 per cent, reserve, and the estimates subsequently credited thereon, changed the contractual relations of the parties, deprived the surety of the security which it had bargained for and released it from its obligations. It is
The books show that the account was frequently overdrawn to the amount of several thousand dollars over the entire amount due. President Baldwin, in his letter of November 30, 1901, tells the contractors that at that time the bank had paid them more than the entire contract price. He testified that not a single estimate was paid in accordance with the contract, but that they were merely used in paying the checks drawn on said deposit account. He testified, also, ■ that he does not know whether the items in any of the various accounts, which were paid for before the abandonment of the contract, had in fact been delivered before that time; also that all the payments for material, etc., were charged to Hood & Co. on the general account at the bank, on which the estimates were also credited as they came in. The pay rolls were paid without any certificate, estimates, or reservation. All these facts show clearly that the parties made and carried out arrangements in regard to payments entirely different from the provisions of the contract.
The appellant next raises the point that President Baldwin had no authority under the proof in the case to make the agreement for the bank to pay otherwise than according to the provisions of the contract. The president’s testimony shows that the matter was in his hands on the part of the bank. It is also shown_that, where orders came in, they were taken to him, and he gave a slip to the teller, and that when he was not in the teller or other officer paid them; and it shows, also, that all these payments appeared on the books of the bank, many of them showing on their face what the payments were for; and in addition to all this the bank is here suing under the contract and claiming credit for
The judgment of the court is affirmed.