192 F. 364 | D. Del. | 1912
This is an action of debt brought in the name of the United States of America for the use of the Delaware Hardware Company against Joseph G. Lynch, Jacob A. Lynch and Calvin Z. Lynch trading as Lynch Bros., and the Fidelity and Deposit Company of Maryland, on a bond given by the defendants under and pursuant to the act of Congress of August 13, 1894, entitled “An act for the protection of persons furnishing materials and labor for the construction of public works,” 28 Stat. 278 (U. S. Comp. St. 1901, p. 2523), as amended by the act of February 24, 1905, 33 Stat. 811 (U. S. Comp. St. Supp. 1909, p. 948). The act as amended, among other things, provides:
“That hereafter any person or persons entering into a formal contract with the United States for the construction of any public building, or the prosecution and completion of any public work, or for repairs upon any public building or public work, shall be required, before commencing such work, to execute the usual penal bond, with good and sufficient sureties, with the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract; and any person, company, or corporation who has fhrnished labor or materials used in the construction or repair of any public building or public work, and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the United States on the bond of the contractor, and to have (heir rights and claims adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claim and judgment of the United States. If the full amount of the liability of the surety on said bond is insufficient to pay the full amount of said claims and demands, then, after paying the full amount due (he United States, the remainder shall be distributed pro rata among said intervenors. If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying-the contractor with Labor and materials shall, upon application therefor, and furnishing affidavit to the Department under the direction of which said work lias been prosecuted that labor or materials for the prosecution of such work has been supplied by him or them, and payment for which has not been made, be furnished with a certified copy of said contract and bond, upon which he or they shall have a right of action, and shall be, and are hereby, authorized to bring suit in the name of the United States in the circuit court of the United Stales In the district in which said con-iract was to be performed and executed, irrespective of the amount in controversy in such suit, and not elsewhere, for his or their use and benefit, against said contractor and his securities, and to prosecute the same to final judgment and execution: Provided, That where suit is instituted by any of such creditors on the bond of the contractor, it shall not be commenced until after the complete performance of said contract and final settlement thereof, and shall be commenced within one year after the performance and final settlement of said contract and not later: And provided further, That where suit is so Instituted by a creditor or by creditors, only one action shall be brought, and any creditor may file his claim in such action and be made party thereto within one year from the completion of the work under said contract, and not later. If the recovery on the bond should be inadequate to pay the amounts found due to all of said creditors, judgment shall be given to each creditor pro rata of the amount of the recovery. The surety on said bond ’may pay into court, for distribution among said claimants and creditors, the full amount of the sureties’ liability, to wit, the penalty*366 named in the bond, less any amount which said surety may have had to pay to' the United States by reason of the execution of said bond, and upon so doing the surety will be relieved from further liability.”
The bond in suit bears date November 16, 1908, and was executed by Lynch Bros, as principals and the Fidelity and Deposit Company of Maryland as surety. It recites that Lynch Bros, had entered into a contract with the United States for furnishing labor and materials required in the construction of certain military buildings, consisting of a two-company barrack building, and a band barrack building, and contains a condition that it should be void if Lynch Bros.® or their heirs or personal representatives should fully perform all covenants, conditions and agreements in the building contract on their part to be performed and should promptly make full payments to all persons supplying labor or materials in the prosecution of the work contracted for. Service of process was not effected on Lynch Bros, nor has there been an appearance for them or any of them in the suit. The. declaration was accordingly filed against the surety. It contains two counts in each of which the sum of $32,500, the penalty of the bond, is declared for. The declaration does not in either of the counts assign any breach of the condition of the bond, but makes proferí and has annexed to it a copy of the bond and its condition.The Fidelity and Deposit Company of Maryland, without craving oyer of the bond and its condition, has interposed a plea to both counts which after averring that the condition of the bond was that if the principal therein should “promptly make full payments to all persons supplying labor or material in the prosecution of the work provided for in said contract, then the above obligation shall be void and of no effect, otherwise to remain in full force and virtue,” is to the effect that the hardware company furnished materials in the prosecution of the work' provided for in the contract under an agreement with Lynch Bros, that payment should be made by them for materials furnished when and as they received from the United States payment on account of the work contracted for; that Lynch Bros. August 25, 1909, without the knowledge or consent of the surety gave to the hardware company their negotiable promissory note dated on that day for $500, payable to its order, and maturing November 25, 1909, to be applied on account of indebtedness then existing for materials so furnished by it; that the two-company barrack building provided for in the contract mentioned in the bond was completed by Lynch Bros, and accepted by the United States, and final payment therefor was made by the latter to the former September 22, 1909; that the band barrack building provided for in that contract was completed by Lynch Bros, and accepted by the United States, and final paymer.it therefor was made by the latter to the former October 7, 1909; that the hardware company accepted the above mentioned note of Lynch Bros', and, in consideration of the payment by them of a certain sum in advance as interest on the note or an agreement on their part to pay such sum in advance as such interest, agreed to extend the time for the payment by Lynch Bros, of their indebtedness to the hardware company for materials theretofore furnished until November 25, 1909,
“2. It does not appear that any unusual credit or extension of time was given by the said Delaware Hardware Company to the said Lynch Bros, in the taking of the said note.
“3. It does not appear that the said defendant was in any way damaged or injured by the faking of the said note by the said Delaware Hardware Company.”
“It is conceded that, by the general law of suretyship, any change whatever in the contract for the performance of which the guarantor is liable, made without his consent, such, for instance, as an extension of time for payment, if made upon sufficient consideration, discharges the guarantor from liability.”
The rule that the liability of a surety is strictissimi juris has, however, been much relaxed in cases of corporate suretyship generally, and especially of such suretyship entered into under and pursuant to-the act of August 13, 1894, as amended February 24, 1905. Hill v. American Surety Co., 200 U. S. 197, 26 Sup. Ct. 168, 50 L. Ed. 437; Guaranty Co. v. Pressed Brick Co., 191 U. S. 416, 24 Sup. Ct. 142, 48 L. Ed. 242; Young v. American Bonding Co., 228 Pa. 373, 77 Atl. 623; Title Guaranty & Trust Co. v. Crane Co., 219 U. S. 24, 31 Sup. Ct. 140, 55 L. Ed. 72; Phila. v. Fidelity & Deposit Co., 231 Pa. 208, 80 Atl. 62; United States v. Ætna Indem. Co., 40 Wash. 87, 82 Pac. 171; Mankin v. Ludowici-Celadon Co., 215 U. S. 533, 30 Sup. Ct. 174, 54 L. Ed. 315; Lesley v. Kite, 192 Pa. 268, 43 Atl. 959; United States v. National Surety Co., 92 Fed. 549, 34 C. C. A. 526. In Hill v. American Surety Co., 200 U. S. 197, 26 Sup. Ct. 168, 50 L. Ed. 437, the’ court having under consideration the act of August 13, 1894, said :
. “The courts of this country have generally given to statutes intending to secure to those furnishing labor and supplies for the construction of buildings a liberal interpretation, with a view of effecting their purpose to require payment to those who have' contributed by their labor or material to the erection of buildings to be owned and enjoyed by those who profit by the-contribution-of-such.-labor or materials. Mining Co. v. Cullins, 104 U. S. 176, 177 [26 L. Ed. 704]. And the rule which permits a surety to stand upon his. strict legal rights, when applicable, does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract in the light of the language used and the circumstances surrounding the parties. Ulster County Savings In. v. Young, 161 N. Y. 23, 30 [55 N. E. 483]. As against the United States, no lien can be provided upon its public buildings or grounds, and it was the purpose of this act to substitute the obligation of a bond for the security which might otherwise be obtained by attaching "a lien to , the property of an individual. The purpose of the law is, as íts'tiüe' declares: ‘For the protection of persbns furnishing materials and labor for the construction of public works.’ If literally construed,.*369 the obligation of the bond might be limited to secure only persons supplying labor or materials directly to the contractor, for which he would be personally liable. But we must not overlook, in construing this obligation, the-manifest purpose of the statute to require that material and labor actually contributed to thp construction of the public building shall be paid for and to provide a security to that end.”
In Young v. American Bonding Co., 228 Pa. 373, 77 Atl. 623, the' court say:
‘•The trend of all our modern decisions, federal and state, is to distinguish between individual and corporate suretyship where the latter is an undertaking for money consideration by a company chartered for the purpose of such business. In the one case the rule of strictissimi juris prevails, as it always has; with respect to the other, because it is essentially an insurance against risk, underwritten for a money consideral ion by a corporation adopting such business for its own profit, the courts generally hold that such a company can be relieved from its obligation of suretyship only where a departure from the contract is shown to be a material variance.”
In United States v. National Surety Co., 92 Fed. 549, 34 C. C. A. 526, it was held by the circuit court of appeals for the eighth circuit that the surety in a contractor’s bond given pursuant to the act of August 13, 1894, was not discharged from liability to persons supplying labor and materials by changes in the contract or specifications, agreed upon by the United States and the contractor subsequent to the execution of the bond without the knowledge or consent of- the surety, where the general nature of the work and materials remains the same. The court said:
“The real plaintiff is the corporation for whose use the suit was brought, and it sues to enforce an obligation which congress required to be inserted' in the bond for its protection and for the protection of others who might furnish labor or materials while the work was in progress. * * * The bond which is provided for by the act was intended to perform a double function. — in the first place, to secure to the government, as before, the faithful performance of all obligations which a contractor might assume towards it; and, in the second place, to protect third persons from whom the contractor obtained materials or labor. Viewed in its latter aspect, the bond, by virtue of the operation of the statute, contains an agreement between the obligors therein and such third parties that they shall be paid for whatever labor or materials they may supply to enable the principal in the bond to execute his contract with the United States. The two agreements which the bond contains, the one for the benefit of the government, and the one for the benefit of third persons, are as distinct as if they were contained in separate instruments, the government’s name being used as obligee in the latter agreement merely as a matter of convenience. In view of these considerations, we aré of opinion that the sureties in a bond, executed under the act .now in question, cannot claim exemption from liability to persons who have supplied labor or material to their principal to enable him to execute his contract with the United States, simply because the government and the contractor, without the surety’s knowledge, have made some changes in the contract, subsequent to the execution of the bond given to secure its performance, which do not alter the general character of the work contemplated by the contract or the general character of the materials which are necessary for its execution.”
The foregoing language is equally applicable to the case oí a bond given under the above act as amended February 24, 1905.
The decision of the demurrer under consideration is, I think, controlled by Guaranty Co. v. Pressed Brick Co., 191 U. S. 416, 24 Sup.
“In respect to the condition of the bond required to be given, the language of the amended act is precisely the same as ■ that contained in the act of August 13, 1894, and the condition is that ‘such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract.’ ”
In Guaranty Co. v. Pressed Brick Co. a bond had been executed by one McIntyre as principal and the United States Fidelity and Guaranty Company as surety in connection with a contract to furnish labor and materials and do certain work in the erection of a mint in Denver. The action was brought by the United States for the use of the brick company, which had furnished brick to the principal contractor. The surety denied its liability on the ground that the brick company had without the consent or knowledge of the former granted to McIntyre October 1, 1898, an extension of the time of payment of the balance due for brick so furnished, and accepted two promissory notes therefor, one at thirty days and the other at sixty days after September 15, 1898. It was held that the surety had not been discharged by such extension of time. The court said:
“The question involved is whether the ordinary rule that exonerates the guarantor, in case the time fixed for the performance of the contract by the principal be extended, applies to a bond of this kind executed by a Guaranty Company, not only for a faithful performance of the original contract, but for the payment of the debts of the principal obligor to third parties, * * * In an ordinary guaranty the guarantor understands perfectly the nature and extent of his obligation. If he becomes surety for the performance of a building contract, he is presumed to know the parties, the terms of their undertaking, the extent and feasibility of the work to be done, the character and responsibility of the principal obligor, and his ability to carry out the contract. If he guarantees the payment of a particular debt, he usually knows the exact amount of the debt, the time when it matures, and something of the ability of the principal to meet it. If he becomes responsible for the payment of the principal’s debts generally, or lends his credit.to a proposed purchaser of goods, he knows the amount of his liability and the means of his principal to meet, them. In such eases he contracts in reliance upon the exact terms of his principal’s undertaking, and has a fight to suppose that no change will be made without his consent; and the courts have gone so far as to hold that any change will exonerate him, though it really redound to his benefit. This covenant, however, is inserted for an entirely different purpose from that of securing to- the government the performance of the contract for the construction of the building. Inasmuch as neither the contractor nor his sub-contractors can secure themselves by a mechanic’s lien upon the proposed building, the government, solely for the protection of the latter, requires a covenant for the prompt payment of their claims, and the same security that it requires for the performance of the principal contract. In this covenant the surety guarantees nothing to the principal obligee — the government — though the latter permits an action upon the bond for the benefit of the sub-contractors. The covenant is made solely*371 for their benefit. The guarantor is ignorant of the parties with whom his principal may contract, the amount, the nature, and the value of the materials required, as well ns the time when payment for them will become due. These particulars it would probably be impossible even for the principal to furnish, and it is to be assumed that the surety contracts with knowledge of this fact. Not knowing when or by whom these materials will be supplied, or when llie bills for them will mature, it can make no difference to him whether they were originally purchased on a credit of sixty days, or whether, after the materials are furnished, the time for payment is extended sixty days, and a note given for the amount maturing at that time. If a person deliberately contracts for an uncertain liability he ought not to complain when that uncertainty becomes certain. Stress is laid upon the fact that the defendant company guaranteed that the principal obligor should ‘promptly’ make payment to his material men, and that this, properly interpreted, required that the contrae! or should pay at once upon the'maturity of the lulls, and that as such bills became due October 1. 1898, the promptness guaranteed required their immediate payment. We are not impressed with the force of this contention. If the word ‘promptly’ has any particular significance in this connection, it is satisfied by such payment as the sub-contractor shall “accept as having been promptly made; or perhaps it was intended to give him an immediate action upon the bond, in case such payment be not made with sufficient promptness. It was not intended, however, that the want of an immediate payment should be set up as a defence by the surety. As these Mils are rarely paid the very day they become due, the narrow construction claimed would destroy the principal value of the security. The facts of this case do not call for an expression of opinion as to whether, if an unusual credit were given, and in the meantime the principal obligor had become insolvent, or the surety were otherwise damnified by the delay, it might not be exonerated; since neither of these contingencies supervened in this case, we are remitted to the naked proposition whether the giving of a customary credit, with no evidence of loss thereby occasioned, is sufficient to discharge the surety. We find no difficulty whatever in answering this question in the negative. The rule of strictissimi juris is a stringent one, and is liable at times to work a practical injustice. It is one which ought not to be extended to contracts not within the reason of the rule, particularly when the bond is underwritten by a corporation, which has undertaken for a profit to insure the obligee against a failure of performance on the part of the principal obligor. Such a contract should be interpreted liberally in favor of the subcontractor with a view of furthering the beneficien! object of the statute. Of course, this rule would not extend to cases of fraud or unfair dealing on the part of a sub-contractor, as was the case in United States v. American Bonding & Trust Co. [C. C.] 89 Fed. 921, 925, or to cases not otherwise within the scope of the undertaking.”
There was no allegation in the above case that by reason of the extension of the time of payment the surety had sustained any loss or injury, and it is urged on the part of the surety here that it is fairly to be deduced from the language of the court that, had it appeared that the surety had suffered loss or damage from the extension, although granted for only a reasonable time, the surety would have been discharged. But this is a misapprehension caused mainly, if not wholly, by a palpable variance between tire last two lines of the syllabus of the case and the language of the court. The syllabus states that the surety, under the circumstances therein set forth, will not necessarily be relieved “where it does not appear that such extension was unreasonable, or that the surety was prejudiced thereby”; from which it naturally might be inferred that the surety would be discharged, not only by an unreasonable extension, but equally by loss sustained through an extension, whether reasonable or unreasonable. But the
“Since neither of these contingencies supervened in this case, we are remitted to the naked proposition whether the giving of a customary credit, with no evidence of loss thereby occasioned, is sufficient to discharge the surety.”
The two contingencies above referred to' were the giving of an unusual credit to the principal obligor, and loss or damage to the surety whether caused by the occurrence of insolvency of the former in the meantime or by the unusual credit in any other manner. The case disclosing only a “customary credit” and no “loss thereby occasioned” or, in other words, no unusual credit, and no loss to the surety occasioned by it, the court, of course, treated the question as reduced to a “naked proposition.” B’ut the court did not say or intimate that damage or loss resulting, in the absence of fraud, to the surety from only a customary or usual credit would discharge him. To resort to such a construction as would have this effect would conflict with the plain meaning of the clause last above quoted and is forbidden by the broad language and spirit of the opinion. To hold that the words “otherwise damnified by the delay” in the clause do not have reference to the “unusual credit” mentioned only a couple of lines before would violate the rules of correct diction and introduce wholly unnecessary uncertainty and confusion. The only extension mentioned is “an unusual credit” and the words “and in the meantime” have reference to that credit, and equally apply to insolvency of the principal obligor or damage otherwise resulting to the sui „y from the • delay. In the present case it is not alleged in the plea that the hardware company practiced or meditated any fraud or wrong against the surety or had knowledge or notice of the financial standing oi Uynch Bros, at the time of granting the extension. Nor is it alleged, nor can this court say as matter of law, that the extension in and by itself was unreasonable, or other than a proper and customary credit. The question, then, at this point is whether in the absence of fraud or unfair dealing the binding extension for a .reasonable, usual and proper period by the hardware company to Tynch .Bros, of the time for the payment of their debt to it, has discharged the surety because of loss or damage sustained by it by reason of such extension. In solving this question it is helpful to advert for a .moment to the general principles of suretyship. Under those principles the creditor does not owe to the surety any duty of active diligence as against the principal, and he does not lose hi.s remedy against the surety by omitting to proceed against the. principal, although the latter afterwards becomes insolvent. Indeed, there is great conflict in the decisions on the question whether it is necessary that the creditor even at the request.of the surety should pursue the principal in order to retain his rights .as against the surety. However this may be, it is dearly settled that
“In this covenant the surety guarantees nothing to the principal obligee— the government — though the law permits an action upon the bond for the benefit of the sub-contractors. The covenant is made solely for their benéfit. The guarantor is ignorant of the parties with whom his principal may contract, the amount, the nature, and the value qf the materials required, as*374 well as tlie time when payment for them will become diie.' These particulars ■it would probably be impossible even for the principal to furnish, and it is to be assumed that the surety contracts with knowledge of this fact. Not knowing when or by-whom these materials will be supplied, or when the bills for them will mature, it can make no difference to him whether they were originally purchased on a credit of sixty days, or whether, after the materials are furnished, the time for payment is extended sixty days, and a note given for the amount maturing at that time. If a person deliberately contracts for an uncertain liability he ought not to complain when that uncertainty becomes certain.”
The proposition that the surety is not discharged in such a case as this .from liability for loss sustained through a reasonable and bona fide binding extension of the time of payment, though without his consent or knowledge, is supported not only by the language of the court in Guaranty Co. v. Pressed Brick Co., but by decisions of other courts directly in point. In United States v. United States Fidelity & Guaranty Co. (C. C.) 172 Fed. 268, Judge Holland held that a surety on a bond given pursuant to the act of August 13, 1894, was not released from liability to a sub-contractor by the taking by the latter from the contractor of a three months’ note for his claim, such note not maturing until after final settlement between the United States and the contractor, and after receivers in insolvency had been appointed for the latter. He said:
“There is no averment in this case to lead to the conclusion that an tin-usual credit was extended, resulting in injury to the defendant. The transaction was conducted ,in the usual way, and only a usual credit extended. It is not alleged that there was anything unusual either in the purchase of " the material or extension of credit, and the liability resulting was a liability for which the defendant contracted when it signed the bond. The fact that the contractor became insolvent before the note given by him to the use plaintiff became due is no defense, because it cannot be said as a matter of law that three months was an unusual credit to extend to the contractor by the use plaintiff for the materials furnished. It is no unusual thing for subcontractors and contractors to take one, two, three and even four months’ notes for materials furnished in all lines of construction, and, so long as it is not averred the usual course was violated in the extension of credit, it is no defense that the usual credit given in this case happened to extend the time to a point six days beyond the da’te-^when the receivers were appointed for the contractor, which was December 9, 1904. The date of final settlement was not definitely fixed in the contract, and the use plaintiff could not 'know when it would take place. While it is true he had furnished the material for which the notes were taken on March 4, 1904, and accepted three months’ notes on September 15, 1904, there was no unusual extension of time; and, as stated by the court in Guaranty Co. v. Pressed Brick Co., supra, it could make no difference to the surety that ‘after the materials are furnished the time for payment is extended 60 days [in this case 90 days] and j a note given for the amount maturing at that time.’ ”
On a writ of error this decision was affirmed by the circuit court of appeals, 178 Fed. 692, 102 C. C. A. 192, upon another point than that on which the court below had rested its decision; the appellate court, however, expressly leaving open the question decided by Judge Holland. In United States v. Ætna Indem. Co., 40 Wash. 87, 82 Pac. 171, an action had been brought in the name of the United States for the use of the Standard Furniture Co. on a bond given pursuant to the act of August 13, 1894, against R. M. Henningsen and others, including the ^itna Indemnity Company, surety on the bond. The
"(2) For a second and further affirmative defense this defendant alleges that the goods, wares, and merchandise alleged to have been furnished to the defendant K. M. Henningsen & Co. were' furnished on or about the 17th day of April, 1903, and that the time for payment therefor by the defendant It. M. Henningsen & Go. was extended without the knowledge or consent of this surety and to its detriment.”
To this alleged defence a demurrer was interposed which was sustained. The supreme court of Washington held that there was no error in sustaining the demurrer, saying:
“Appellant further contends that the court erred in sustaining respondent’s demurrer to its second affirmative defense. Under authority of United States Fidelity & Guaranty Co. v. United States, 191 U. S. 416, 24 Sup. Ct. 142, 48 L. Ed. 242, we think said demurrer was properly sustained.”
In passing it may be observed that the above case was cited with approval by the Supreme Court of the United States in Title Guaranty & Trust Co. v. Crane Co., 219 U. S. 24, 33, 31 Sup. Ct. 140, 55 L. Ed. 72, on another point, it is true, but. without a suggestion of disapproval or doubt as to the construction placed by the Washington court upon Guaranty Co. v. Pressed Brick Co., under the name of United States Fidelity & Guaranty Co. v. United States.
I am not aware of any decision to the effect that a bona fide binding extension of the time of payment for only a reasonable or customary period, though without the consent or knowledge of the surety, will discharge the latter on account of loss or damage sustained by him by reason of such extension. On behalf of the surety company reference was made at the hearing to United States v. American Bonding & Trust Co., 89 Fed. 921, 925. But of that case- two things are to he said. First, it was a case of fraud or unfair dealing by the sub-contractor, the court in Guaranty Co. v. Pressed Brick Co. stating* that the rule of liberal interpretation in favor of a sub-contractor “with a view of furthering the beneficent object of the statute” would not “extend to cases of fraud or unfair dealing on the part of a subcontractor, as was the case in United States v. American Bonding & Trust Co., 89 Fed. 921, 925, or to cases not otherwise within the scope of the undertaking.” Second, that the case was decided in 1898, before the Supreme Court had enunciated the rule laid down in Guaranty Co. v. Pressed Brick Co. that on such a bond as that in suit a bona fide binding extension of the time of payment for only a reasonable period, though without the consent of the surety, will not discharge him. In Phila. v. Fidelity & Deposit Co., 231 Pa. 208, 80 Atl. 62, the court, speaking of a bond with corporate surety given
“In its nature the obligation was more ef a contract of insurance than of suretyship; .so long as the extensions of credit did not go beyond the two-year limit for suit fixed in the bond, and in the absence of fraud or unfair dealing on the part of the subcontractors to the prejudice of the.surety, or of material harm actually suffered, the surety was not released.”
If it be assumed that the above language was intended to express- or suggest the idea that a bona fide binding extension for only a reasonable time without the consent of the surety would discharge the latter in case of “material harm actually suffered,” that language, in so far as expressing or suggesting that idea, was a dictum, unnecessary to the decision of the case, which in fact was against the surety. Further, how far the court may have been influenced by the misleading portion of the syllabus in Guaranty Co. v. Pressed Brick Co. it is impossible tó say. On authority as well as on principle I have reached the conclusion that the demurrer to the plea must be sustained on the ground that the binding extension by the hardware company of the time for payment was without fraud and was not for an unreasonable or unusual period, and, therefore, that the surety continued liable as such, within the penalty of the bond, regardless of the amotmt of loss or damage sustained by reason of such extension.
But wholly aside from this last point it does not appear from the plea that the surety was in anywise injured by the extension granted by the hardware company to Lynch Bros. It is not directly or indirectly alleged that at any time during the period of the extension the hardware company knew or had notice of the financial ability of Lynch Bros, or of their becoming insolvent and filing a petition in bankruptcy, or of the payment by the United States to them on or about September 22, 1909, and October 5, 1909, of moneys which had become due to them under the contract, or oí a retention by the United States of those moneys for the purposes set forth in the plea, or for any other purpose or purposes, or of the applicability of those moneys at the instance of the surety as alleged in the plea, or of the expenditure or distribution by Lynch Bros, of those moneys, or any part thereof, or of their alleged omission to make payment to persons supplying labor and material in the prosecution of the work contracted