| Ark. | Jul 2, 1906
Lead Opinion
(after stating the facts.) A majority, of the court are of the opinion that the undisputed evidence shows that Long did not notify the National Surety Company within the time in which he was required to do so by the contract and bond. The time for the completion of the building was September 1, 1901, and the evidence shows that the appellee knew, sometime prior to that date, that the contractor would not complete the building by that date, and the bond specially provided that, if at any time it appeared that the contractor would not be able to> complete the building by that time, the appellee would immediately notify the surety company. We think, as a matter of law, the notification on September 12 did not meet the requirements of the contract and bond,, that the default of Long in not notifying the surety company within the time required was a substantial breach of the contract, and that he can not maintain an action against the other contracting party. As was said in this-case, when in the Federal court, in the 125 Fed. Reporter, page-892: “This bond contains mutual covenants of the parties; covenants by the surety company that Humphreys, the principal, should construct the building, and keep it free' from liens; covenants by the plaintiff that, if Humphreys was unable or failed to-perform the contract in the time 'and manner therein specified, he would immediately notify the surety, and that the latter might then take the contractor’s place. Thé plaintiff -failed to keep his' covenant before the surety company had in any way failed to-comply with those which it had made. On this account he cannot enforce the fulfillment of the covenant of the defendant. He who commits the first substantial breach of the contract cannot maintain an action against the other contracting party for a subsequent failure on his part to perform;” citing many authorities. National Surety Co. v. Long, 60 C.C.A. 623" date_filed="1903-11-23" court="8th Cir." case_name="National Surety Co. v. Long">60 C. C. A. 623.
Long agreed in his contract that he would pa}*- to Humphreys' in installments, according to written estimates to be made by an architect or superintendent as the work progressed, 75 per cent, of the value of the work done and materials furnished and incorporated in the building.” The evidence clearly shows that he-failed to keep this part of his contract. He states himself that at the time Humphreys left there was $1,600 to $1,700 worth of material on the ground, and that the work done, and materials furnished and incorporated into the building, together with the amount of lumber on the ground, amounted to only- $6,600, or the contract price. Giving him the benefit of the smallest amount, or $1,600 worth of material on the ground, and subtract this amount from the $6,600, the contract price, and the total amount on which he says he based the 75 per cent, which he paid to the contractor Humphreys would leave only $5,000 for work and material which had been incorporated into the building. 75 per cent, of $5,000 is only $3,750, showing that he had overpaid Humphreys the sum of $1,148 at that time, or, taking his other ■statement that there was $3,200 for work, labor and material in the building, not embracing the material on the ground which amounted to $1,670 the two aggregating, that is the work, labor and material not embracing the material on the ground and the $1,670 for the material on the ground, would only make a total of $4,870, which would include everything, work, labor and material incorporated into the building and the material on the ground, so that a payment of $4,908 was more than 100 per cent, of the work, labor and material incorporated into the building and material on the ground. This clearly shows that Long either wilfully, or from a misconception of the meaning of his contract, or out of generosity to Humphreys, paid much more than he was entitled to pay under his contract and bond. We think his conduct in this regard released the surety company, because it affected the liability of the surety, and the clause in reference to this was not intended solely for the protection of the owner. As was said by Judge Riddick in Lawhon v. Toors, 73 Ark., page 476: “Counsel for Lawhon contends with much earnestness that this provision of the contract in reference to the reservation of a portion of the contract price until after the performance of the contract was intended solely for the protection of the owner, and that the failure to retain it did not affect the liability of the surety. If this was a new question, it might be worthy of some consideration, but it is now well settled that, if a stipulation of that kind in a building contract be waived without the consent of the surety, it operates to discharge him from liability on his bond for the performance of the contract.”
To quote the language of Lord Langsdale in Calvert v. Low-don Dock Company, 2 Keen (Eng. Chan.), 644, the payment of the money before the completion of the contract was calculated to make it easier for the contractor “to complete the work if he acted with prudence and good faith; but it also took ¿way that peculiar sort of pressure which by the contract was intended to be applied to him.” So we think in this case that the retention of 25 per cent, of the work done and material incorporated into the building would have been an effective incentive to compel the contractor to complete his work, while an overpayment was a temptation to abandon his work, to the injury of this surety. If there would have been any peculiar pressure upon the contractor in holding back part of the contract price, a fortiori it would have have increased the pressure to hold back part of the price o.f the work already done. The contractor had a present interest in the work already done and incorporated into the build'ing, when he would only have had a prospective interest in the part of the contract price retained.
We have not overlooked the fact that the appellant in this case is not an accommodation surety, but is a paid surety, and we recognize the difference between them (Remington v. Fidelity & Dep. Co., 27 Wash. 429" date_filed="1902-02-25" court="Wash." case_name="Remington v. Fidelity & Deposit Co.">27 Wash. 429; Walker v. Holtzclaw, 57 S. C. 459) ; but we hold that a paid surety is only bound by the stipulations of his contract of suretyship.
The evidence is not sufficient on this point to sustain the verdict. Where there is nothing to do but make additions of figures, and the verdict is contrary to the results so obtained, the verdict is not supported by the evidence.
Reversed and remanded.
Dissenting Opinion
(dissenting.) 1. The bond provides: “The company shall not be liable for any damages on account of delay in the performance of any work or the furnishing of any material, unless the principal shall, without reasonable excuse, purposely and premeditatedly delay the completion beyond the time limited by the contract, and in no event shall the liability of the company on account of delay exceed a sum equal to five per cent, of the penal sum of this bond-.” Having expressly stipulated that delays, except a delay purposely and premeditatedly caused, should not create a liability on the bond, it seem to me that the surety company can not in good grace say that because it was not notified of delay it is released. The undisputed evidence is that the notice was given the next day after appellee learned that the contractor had abandoned the work; that wa.s the first time the surety company was interested, the abandonment falling within the clause of purposely and premeditatedly delaying the work and other clauses of the contract. To permit a bondsman to stipulate that delay in the work shall not create a liability against him, and then to release him because he was not notified of the delay, is a proposition which does not meet my concurrence.
2. The reversal on the facts is also, in my opinion, erroneous. I fully concur in the rule that where a mathematical calculation demonstrates that there is no basis for an action, although such action is sustained by witnesses swearing against matters demonstrably otherwise, then such evidence is not substantial evidence sufficient to sustain a verdict. A familiar illustration of this principle is where a witness with good eyesight and hearing in plain daylight looks along a level and straight railroad track and says he does not see nor hear an' approaching train as it bears down on him till he is struck. Then his evidence against such an impossibility of failing to see and hear is not substantial evidence, and will not sustain a verdict. But, as I understand this case, such is far from the facts. If the material and work done were worth no more than the contract price, then the calculation made would demonstrate the correctness of the court's position. But it is evident that this was a case of a contractor far underbidding the actual value of the work undertaken. It required $3,032 more to complete the building than the contract price called for. Appellee and two contractors testified to the state of the building when it was abandoned. They variously estimate it from 65 to 75 per centum finished. If this testimony was treating the contract price as the basis to make the estimate from, then the majority of the court is right; if they were referring to the real value of the building, then manifestly the majority is in error.
As the two contractors were called to explain how much the whole building was worth and estimates they made to. complete it. the fair construction is that they were referring to the real value of the work and material, and not what may have been the contract price.
This question was submitted to the jury under an instruction given at instance of appellant; and I respectfully dissent from the holding that there are not facts enough to sustain the verdict.
Rehearing
ON REHEARING.
A majority of the court in the former opinion in this case held that the date for the completion of the building under the contract and bond was September 1, 1901, and that-a failure on the part of the appellee to notify the surety company that the contractor would be unable to complete the building by that date, and a notification sent to said surety company on the 12th of September, 1901, was too late, and prevented a recovery by the appellee.
While Mr. Justice Battle and the writer adhere strictly to the opinions expressed in the original opinion, Mr. Justice Wood, after careful research, has decided to concur with Chief Justice Hill on this point, and hence a majority of the court now concur on this point with the views expressed by Chief Justice Hill, but a majority of the court are still of the opinion that under the evidence, as set out in the record, there was a substantial breach of the contract and bond by the appellee herein, as set out and expressed oh other points in the original opinion, and therefore, feeling that no injustice would be done by a reversal of the case, the motion for rehearing is denied.