Schwartz v. American Surety Co. of New York

231 Mass. 490 | Mass. | 1919

Carroll, J.

The plaintiff (hereinafter called the owner) entered into a written contract with the Hancock Engineering Company (hereinafter called the contractor) for the erection of a house in Worcester. A bond was given to the owner for the faithful performance of the contract, with the contractor .as principal and the American Surety Company of New York as surety. The condition was that, if the contractor should indemnify the owner against all loss or damage “directly arising by reason of the failure” of the contractor to perform faithfully the building contract, the bond was to be void, “otherwise to remain in full force and effect.”

The contract was dated June 22, 1914. By its terms the house was to be completed November 1, 1914. Without the knowledge of the surety, by agreement of the owner and contractor the time for completion was extended to Christmas, 1914. The surety asked the judge to instruct the jury “That there was no evidence of any waiver by any person authorized to make a waiver for the defendant, the American Surety Company” and “That upon all the evidence there was no waiver by this defendant.” The jury, in answer to a question, found that on December 17, 1914, the surety ratified “the action of the plaintiff in extending the time for completion of the building from November 1, 1914, to Christmas, 1914,” and returned a verdict for the plaintiff.

The obligation assumed by the surety was that the contractor should complete the building on the first of November, 1914. The extension of time to Christmas, 1914, was a substantial change in the contract and as modified it was not the contract for the faithful performance of which the surety bound itself. The agreement for the extension without its knowledge or consent, discharged the surety. Greely v. Dow, 2 Met. 176. Atkins v. Boylston Fire & Marine Ins. Co. 5 Met. 439. Appleton v. Parker, 15 Gray, 173. Warren v. Lyons, 152 Mass. 310. There was no evidence that the surety knew of the modification in the contract extending the time of its performance, either when the change was made or subsequently thereto, before the action was brought.

The plaintiff in his brief contends that the time stipulation of the contract was waived, and to show this he relies on certain statements made December 17, 1914, by Philbrick and Roberts, representatives of the American Surety Company. At that time the plaintiff and his attorney met Philbrick and Roberts at the office of the American Surety Company of New York, in Boston. The plaintiff testified that at this interview Philbrick and Roberts were .told "the Hancock Engineering Company had failed and that now they wanted the company to complete the house,” to which Philbrick said, "We will not finish the building, why don’t you people go ahead — go ahead and finish — you have that right and produce the bills for us.” Although the surety knew that the contractor had not performed its contract, there is nothing in the conversation or in any of the evidence to show that when this conversation took place 'the surety knew that the contract had been altered and the time for performance'had been extended; indeed, there was evidence that the defendant was ignorant of this fact until the time of trial. Assuming, but not deciding, that the ’representatives of the surety were authorized to waive the terms of the original contract and bind the surety by a new and different agreement from the one stipulated in the bond, there is nothing disclosed in the record to indicate such a waiver.' To constitute a waiver there must be knowledge of the right which is claimed to have been waived. George N. Pierce Co. v. Beers, 190 Mass. 199, 205. When the owner agreed with the contractor to extend the time for performance beyond November 1, the .surety was discharged, and it did not waive the right to rely on this discharge without knowledge of the facts. Even if we assume that all the other elements of waiver are present, there is no evidence to show that the surety knew the time had been extended; nor did the facts disclose anything from which an inference could be drawn that it had knowledge of the modification and change in thccontract.

Without intimating that the surety could be held to have ratified, the agreement made by the owner and the contractor for their own benefit and convenience, (see, in this connection, New England Dredging Co. v. Rockport Granite Co. 149 Mass. 381, 382,) it is enough to say that when the principle of ratification is applicable in order to becomé effective it must appear that the ratifier had full knowledge of the essential facts of the act or contract to be ratified. Dickinson v. Conway, 12 Allen, 487. Manning v. Leland, 153 Mass. 510, 513.

As the case was tried in the Superior Court and on the exceptians before us, it is unnecessary to consider the effect of article seven of the building contract, providing for an extension of time if the contractors were delayed in the prosecution of the work through the fault of the owner, the architect, or other contractors employed by the owner, for a period fixed by the architect, if the claim is presented in writing within forty-eight hours after the delay. Nor is it important to pass upon the bearing of article five of this contract, or on the first condition of the bond, requiring notice to the surety within ten days after knowledge of the default of the contractor.

The only questions open on this bill of exceptions are these: Was there any evidence for the jury that the surety ratified the action of the plaintiff in extending the time, and should the surety’s request that there was no waiver have been given. In submitting to the jury the question of the ratification and in refusing the surety’s request, there was error of law.

We do not deem it necessary to discuss the question raised by the plaintiff in his brief, that no written motion was made by the surety to direct a verdict in its favor. The request of the defendant surety, that on all the evidence there was no waiver, should have been given and the instructions to the jury were wrong.

Exceptions sustained.