113 Me. 465 | Me. | 1915
These actions are against the defendant as surety in the bonds given by a contractor to secure his contracts for construction work. They are reported on an agreed statement.
June 16,1909, William J. McHale entered into two contracts with the plaintiff, one for the construction of masonry work, and the other for the doing of grading and formation work, in revising the line and
The masonry work was to be completed by November 1, 1909, and the other work by November 16, 1909. The following is the provision for payment in the grading contract: “And the Company agrees to pay the Contractor at the rates aforesaid, monthly, on or about the fifteenth of each month, for all work done and materials furnished and delivered on the work, up to and including the last day of the preceding month, certified to by the Company’s Chief Engineer to be in accordance with this contract, less fifteen per centum of such amount, which percentage shall be withheld by the company until the final completion and acceptance of the work, under the terms and agreements of this contract, when the percentage so retained together with the balance due on the Final Estimate, shall be paid by the Company upon the certificate of the Company’s Chief Engineer that the whole work provided for in this contract is completed and acceptably finished within the time specified.” The provision for payment in the masonry contract was to the same effect, providing for the payment on or about the fifteenth of each month ‘ ‘of eighty-five per cent (85%) of the value of the work done and materials furnished in their final position in the work during the preceding month, as shown by estimate of the Chief Engineer of the said Railroad.”
In each contract it was provided that in case the contractor made default in any of his undertakings, or failed to carry on the work with such efficiency as to insure its completion within the time provided, the Company could take over the work and complete it at the contractor’s expense; and in the grading contract it was provided that the Company could take possession of the said work, or any part thereof, “with the tools, materials, plant, appliances, houses, machinery,- and other appurtenances thereon, and hold the same as security for any or all damages or liabilities that may arise by reason of the nonfulfilment of the Contract within the time herein stipulated, and furthermore, may employ the said tools and other appurten
Mr. McHale, the contractor, died September 3,1909, while the work was in progress. Previous to his death, on August 25, 1909, an advance payment of $5000 was made to him by the plaintiff without the knowledge of the surety. This payment was not due under the terms of the contracts until September 15, 1909. On the date when the payment was made no estimate of the work was made by the engineer, but, according to the agreed statement, “it was believed that the work done was in excess of this amount and the August estimate for the work done for that month showed this to be the fact.” As the work progressed, other advance payments were made to subcontractors before they were due, but only after estimates had been made showing that the amount of work done was in excess of the advance payments.
Administration on the estate of Mr. McHale was taken out in Penobscot County, Maine, and his widow, Evelyn F. McHale was appointed administratrix thereof, and she undertook to complete said contracts. On September 30, 1909, after previous notice to her as provided for in the contract, the plaintiff notified her “that the Maine Central Railroad Company does hereby take possession of the said work with the tools, materials, plant, appliances, houses, machinery and other appurtenances thereon, and hold the same as security for any and all damages or liabilities that may arise by reason of the nonfulfilment of said contract, and will employ said tools and other appliances as it may be deemed proper to complete the work at your expense and will deduct the cost of the same from
In August, 1910, the estate of Mr. McHale was represented insolvent and the plaintiff was named as a creditor to the amount of $6,840. In the warrant to the'commissioners, however, it was not named as a creditor, and in March, 1911, it petitioned the Probate Court for an extension of time to file its claim, which was granted and an additional warrant was issued to commissioners in which the plaintiff was named as a creditor to the amount of $22,070.13. Its claim was disallowed by the Commissioners, whereupon an appeal was taken to the Supreme Judicial Court and an action was brought thereunder by the plaintiff claiming therein to recover $6,782.44, its direct loss under the grading contract, and $16,120 as consequential damages resulting to it from the failure of the contractor to complete the work under the contracts within the times provided therefor, less the $832.51 profit on the masonry contract, leaving a balance as claimed of $22,070.13. The plaintiff also filed in Penobscot County, Maine, a bill in equity against the administratrix. The administratrix, on the other hand, brought against the plaintiff an action of trover in the County of Suffolk, Massachusetts, to recover the value of the plant and other property which the plaintiff had taken possession of as above stated, and she also brought another action against it under the contracts. Subsequently a compromise was made between the plaintiff and the estate of McHale by which the administratrix was to have judgment for $7,299.50 and costs in her action of trover, judgment was to be entered for the defendant without costs in her other action against the plaintiff, the bill in equity was to be dismissed without costs, and the plaintiff was to take judgment for $5950.13 in its suit pending in Maine on its claim against the estate. That com
It is stipulated that if the court shall find that the defendant is liable the cases shall be referred to an auditor to ascertain and report the amount of damages according to such rules as the Law Court shall determine.
1. The defendant complains that it was not notified by the plaintiff as to the progress of the work in the contractor’s lifetime, or of his death and what was done thereafter in respect to the completion of the work. But there was no provision in the contract of suretyship for any such notice. In the absence of such provision there was no duty on the plaintiff to keep the surety constantly informed as to the state of the work under the contracts. In such case the surety must protect his own interest to the extent of ascertaining that his principal is performing his duty under the contract which he has guaranteed. Wakefield v. American Surety Co., 209 Mass., 173, 177. Watertown Fire Ins. Co. v. Simmons, 131 Mass., 85.
2. It is claimed in behalf of the defendant that it was released from all liability as surety on the bonds in suit by reason of the payments made by the plaintiff to the contractor in advance of the time they would have become due under the terms of the contracts, and without its consent.
The principle is elementary that any material alteration in the terms of a contract for the performance of which a surety is bound, if made without the surety’s consent, releases him from liability. It is also an established rule that a surety for the faithful performance of
There is a long line of cases, following the ruling in Calvert v. London Dock Co., 2 Keen, 538, wherein the sureties for the faithful performance of building contracts have been held released from liability on account of payments having been made by the creditor to the contractor in advance of their becoming due under the terms of the contract. It is believed, however, that a careful examination of those cases will show that they are based on the holding that the advance payment was a plain violation of the spirit as well as the letter of the contract, being a payment that either encroached upon
An advancement of money by an owner to his contractor before a payment becomes due under the building contract does not necessarily operate as an alteration of the contract itself. Whether it has that effect depends, we think, upon the amount of the payment and the conditions and circumstances under which it was made, considered in connection with the rights and obligations of the surety under his contract of suretyship. Instead of weakening the contractor’s incentive to carry on the work to a prompt completion, it may strengthen his capacity to do so. It may be found to be in effect only an advancement at the owner’s risk, which is not to be
In the quite recent case of St. John’s College v. Aetna Indemnity Co., 201 N. Y. 335, 94 N. E. 994, the owner paid the contractor, after the fifth payment and before the sixth was due, $1000 to save him from failing and to enable him to pay his men, and thereafter paid $1226.05 more to laborers to avoid labor troubles. At the time of thofce payments about $3000 worth of work had been performed subsequent to the fifth payment. The court there held that those payments did not release the surety from all liability. But it did hold that the payments, under the circumstances disclosed, were made at the risk of the plaintiff and that they should not be considered a part of the cost of the work to the plaintiff, as against the surety. Numerous other cases might be cited where it has been held that the surety in a building contract was released only pro tanto as the effect of advance payments to the contractor, or payments made without a strict compliance with some other provisions of the contract as to the manner of payment; and there are other cases where it is held that such payments do not release the surety at all.
In the case at bar we are of the opinion that the advance payments made by the plaintiff to the contractor, under the circumstances and conditions disclosed, did not constitute an alteration of the contract so as to release the surety from all liability. When the advances were made work in excess of the amounts had been performed. The contractor died nine days after the $5000 advance was made, and the administratrix of his estate was permitted to and did carry on the work until the plaintiff took it over under the terms of the contracts. Under these facts and circumstances it does not seem reasonable to conclude that the making of the advances had any effect to remove or diminish to any degree the contractor's incentive to complete the work. Nor do we think they affected in any way the protection of the surety against the subsequent default of its principal. Indeed it is difficult to perceive that those advancements, under the facts disclosed, concern the surety. They would have been payable to the contractor in a few days for work then performed in excess of
It is not shown that the contractor used the $5000 payment in liquidation of expenses of the work. It is perhaps entirely immaterial, so far as the surety is concerned, whether it was so used or not. Certainly if it was not so used the surety is not to be held liable for it. And it is our opinion that to the extent of that payment of $5000 the surety is released. Or, what seems to be the more logical statement, the surety is not to be charged with that as a part of the cost of the work. Such a holding is in accord with the great weight of authority. And in St. John’s College v. Aetna Indemnity Co., supra, it was so held notwithstanding it affirmatively appeared that the payments were used in paying for labor employed in the work.
3. As noted above, the agreed statement shows that the plaintiff brought suit against the estate of the contractor for the damages to it resulting from his breach of the contracts and recovered judgment therein for $5950.13. Is the plaintiff estopped in this action against the surety from claiming damages in excess of that sum? That question involves the primary inquiry, whether, as between the parties to that action, that judgment is conclusive as to the amount of the damages for the breach of the contracts. The learned counsel for plaintiff in their brief, in speaking of that judgment, say: “It must not be forgotten that it only covers the actual damages and that the auditor did not determine the amount of consequential damages and that he so expressly states in his report .... so that the allowance and amount of such damages are still open for consideration.” The plaintiff’s contention, that the matter of consequential damages for the breach of the contracts is still open to it as against the estate of McHale, is not sustainable we think.
Four actions were pending between the plaintiff and the contractor's estate — two in favor of the plaintiff in this jurisdiction, and two against it in Massachusetts. The parties entered into a compromise agreement for the final disposition of all those actions. The
But the plaintiff contends that inasmuch as the auditor’s report shows that he did not consider the matter of consequential damages, such damages are still open for consideration. We think not. The plaintiff’s cause of action against the contractor’s estate was for a breach of the contracts. For that breach but one action under each contract was maintainable, and the plaintiff was entitled therein to recover all the damages it sustained by the breach both direct and consequential. A plaintiff is not permitted to have several successive actions for one breach of a contract, simply by limiting his claim for damages in his earlier actions to less than full damages. A fortiori,
That judgment, however, is not a bar to this action against the surety, because it has not been satisfied. But is it not an adjudication as to the amount of the damages that the plaintiff sustained by the contractor’s breach of the contracts, which the plaintiff is not permitted to question in this action against the surety for the same breach? That the surety may question it we have no doubt, but we are constrained to the opinion that the plaintiff cannot be permitted in this action to do so. The case, United States v. Allsbury, 4 Wallace, 186, is directly in point. Allsbury had become bound as a surety on the official bond of one Dashiel, paymaster. Suit was brought against Dashiel and one of his sureties, but not Allsbury, to recover $20,085 as damages, and judgment was rendered therein for $10,318.22. While proceedings were pending to have that judgment.reversed on writ of error, an action on the same official bond was brought against the personal representatives of Allsbury, and the
In the case at bar the plaintiff saw fit to have the question of the damages it sustained by the breach of the contracts, for the performance of which the surety was bound, determined in an action against the contractor in a court having jurisdiction to determine that question. We think the judgment recovered in that action fixes the amount of the damages for the breach of the contracts, so far as the plaintiff’s rights are concerned.
Under the terms of the grading contract the plaintiff had the right to take possession of “the tools, materials, plant, appliances, houses, machinery, and other appurtenances thereon, and hold the same as security for any and all damages or liabilities that may arise by reason of the nonfulfillment of this contract within the time herein stipulated.” The plaintiff having taken possession of the contractor’s plant in the exercise of its right under the contract held the property so taken, for the benefit of the surety as well as itself, as security for any damage it sustained by reason of the contractor’s breach of the contracts. Springer v. Toothaker, 43 Maine, 381. And notwithstanding the action of trover against the plaintiff for the value of the property so taken, and its settlement of that action by payment to the contractor’s estate of $7299.50, which was done without the surety’s consent, it must still be regarded, so far as the surety is concerned, as holding the plant and property as security.
The foregoing conclusions of the court may be summarized thus: (1) that the defendant has not been released from all its liability as surety under the bonds in suit; (2) that the payment of August 25, 1909, does not form a part of the damages for the breach of the contracts, so far as the defendant is concerned; (3) that the judgment recovered in the plaintiff’s action against the contractor’s estate for
The cases will, therefore, be remanded to nisi prius to be disposed of in accordance with the stipulation and this opinion.
So ordered.