194 F. 611 | 9th Cir. | 1912
Lead Opinion
(after stating the facts as above). The findings, as well as the evidence, show many failures on the part of the contractor to perform his obligations under the contract, including his refusal to remedy defects pointed out to him by representatives of the government and his failure to remedy such defects within the stipulated time after the serving upon him of the required notice, and also his. failure to complete the work contracted for within the stipulated time. The taking of possession by the government of the premises, together with all materials, tools, and machinery thereon belonging to the contractor, was therefore fully authorized by the contract; but for the purpose, as is expressly declared in the contract, “at the expense of said party of the second part, to complete or have completed the said work, and to supply or have supplied the labor, materials and tools of whatever character necessary to be purchased or supplied by reason of the default of the said party of the second part; in which event,” proceeds the contract, “the said party of the second part and his sureties on the bond to be given for the faithful performance of this agreement shall be further liable for any damages incurred through such default and any and all other breaches of this contract.”
While the complaint alleges that the subsequent contract made by the government with Owen for the construction of the mess-hall and kitchen, which Boggs' had failed to build and complete as he had agreed to do, was, except as to the time of completion thereof, based upon the same plans and specifications, and! was in all respects the same as the Boggs’ contract, the findings of fact made by the court below, as well as the evidence in the case, show such allegations to be far from true. The court expressly finds, what the evidence abundantly shows, that the contract between the government and t Aven and the plans and specifications upon which it was based “were different in many substantial respects from the contract, plans, and specifications between plaintiff and the said Augustus W. Boggs; that
The government, pursuant to the terms of the contract between it and Boggs, byj' reason of his default, took from him the possession of the premises as well as all of his material's, machinery, and tools thereon for the purpose of having, at his expense, his contract fulfilled ; and for that his surety bound itself, but not for the fulfillment of any essentially different contract. It is true that by its contract with Boggs the government reserved to itself the right “to make changes, alterations or omissions from or additions to the work and materials herein provided for” ; that is to say, changes in, additions to, or omissions from, the work covered by the plans and specifications of the contract. This is plainly shown by the subsequent provisions of article 3 of the Boggs’ contract, in which the reservation occurs. It is, in the same clause, followed by these provisions:
“The valuation of such work and materials (that is to say, such work and materials as might be embraced by the authorized changes and alterations), if not agreed upon, to be determined on the basis of the contract unit of value of material and work referred to, or, in the absence of such unit of value, on prevailing market rates, which market rates, in the case of dispute, are to be determined by the said Commissioner of Indian Affairs, whose decision with reference thereto shall be binding upon both parties; that no claim of damages on account of such changes or for anticipated profits shall be made or allowed; that the party of the second part (Boggs) shall not be allowed any additional compensation for labor or material unless he receives written authority from the Commissioner of Indian Affairs, and the price agreed upon before execution of the work; that no addition to or omission from the work herein specifically provided for shall make void or affect the other provisions or covenants of this contract, but the difference in the cost thereby occasioned, as the case may be, shall be added to or deducted from the amount of the contract; and that in the absence of any express agreement or provision to the contrary, no addition to or omission from the work herein specifically provided for shall be construed to extend the time fixed herein for the final completion of the work.”
That reservation, in our opinion, affords no ground for holding the government entitled to make a substantially different contract with a
“Coming, then, to the question of the effect on the responsibility of the surety of the supplemental agreement of August 17th,' we, agree with the Circuit Court and the Circuit Court of Appeals in holding that the alterations thereby caused were beyond the terms of the undertaking of the surety, and extinguished his liability. The seventh action had in view such changes as might be found advantageous or necessary in the plans and specifications. But the changes called for by the new agreement had no reference to the original plans and specifications, but changed the location of the dry dock, requiring the contractor to make additional excavations and connections with the water, at an increased expense, and gave an increased time of performance.”
We do not understand the case just referred to (United States v. Freel) to be overruled by the very recent decision of the same court in the case of United States v. McMullen et al. (decided January 9, 1912) 222 U. S. 460, 32 Sup. Ct. 128, 56 L. Ed. -.
In the present case not only do the findings show that the contract and the plans and specifications upon which it was based, subsequently made between the government and Owen, were different in many substantial particulars from the contract for which the plaintiff in error became surety, but that the government waited more than one year before entering into a new contract, during which time there was such a change in the cost of labor and building supplies as, according to the findings of the trial court, “the two contracts furnishes no basis for estimating the plaintiffs damages.”
In the case of American Bonding Co. v. United States, 167 Fed. 910, 93 C. C. A. 310, the question here involved was carefully considered by us, and, being satisfied of the correctness of that decision, if is useless for us to pursue the subject further. Boggs’ surety is not, in our opinion, liable in this action for the reason that the government did not complete Boggs’ contract, as it had the right to do, but instead chose to have the structures erected in a subs! antially different manner, pursuant to the contract made by it with Owen.
It results that the judgment must be reversed, and' the cause remanded, with directions to the court below to enter judgment for the defendant surety company on the findings.
It is so ordered.
Dissenting Opinion
(dissenting). The case, as I view it, contains no question of a release of a surety resulting from a change in the contract with the assured, as in the cases of United States v. Freel, 186 U. S. 309, 22 Sup. Ct. 875, 46 L. Ed. 1177, and American Bonding Co. v. United States, 167 Fed. 910, 93 C. C. A. 310. No such issue is presented in the complaint, and no such defense is pleaded or even remotely suggested in the answer. It is a case of an action for damages for the total failure of a contractor to carry out his contract. The contract, the breach thereof, and the surety’s undertaking are established by the findings of the trial court. The only question in the case
“With reference to the new contract, no recovery is Sought on it in this action. And it is not apparent to us how the so-called 'substitutions’ complained of can or could affect the rights of the defendants under the original contract.”
In the present case, although a building was constructed by the contractor, it was not constructed according to the contract, but was essentially different therefrom, and the work done constituted “a willful and substantial departure from said contract and said plans, drawings and specifications,” and the contractor “willfully, knowingly, purposely, fraudulently, and intentionally failed, neglected, and refused to erect the structure in accordance with the plans and specifications,” as found by the trial court. The government rejected the work done, the materials furnished, and the building thereby and thereof constructed, and gave the contractor formal notice to tear down the building and construct another in exact accordance with the specifications. The contractor insured his interest in the building against loss by fire, and while the building was still in his possession it was totally destroyed by fire. During the'progress of the work the contractor, in accoVdance with the terms of his contract, was paid on account thereof
‘•This is not a suit to recover generally whatever damages the United States would have sustained had Axman abandoned his contract, but a suit for damages under the express stipulations of the contract which are set. forth in the complaint and made the basis of the action.”
In brief the decision gave effect to the rule that, if there be in the contract a provision for ascertaining the damages incurred through a violation of any of its provisions, the surety has the right to insist on its observance before being held responsible.
In George A. Fuller Co. v. Doyle (C. C.) 87 Fed. 687, in a case similar to the case at bar, the court said:
“Before plaintiff undertook the work, the contract had been broken by Doyle, and plaintiff’s rights and Doyle’s obligations under it had become fixed. If plaintiff made any changes in the details of the work in the progress of completing it, they were not made as a result of any agreement between it and Doyle, such as usually operates to discharge a surety, and such changes imposed no new or modified obligation upon Doyle. He had already failed to perform his contract, and abandoned the work, and plaintiff’s cause of action had arisen thereupon, and, in my opinion, the surety’s liability is in no manner affected by the fact that, plaintiff, while it was doing the very work which Doyle had contracted to do, did, of its motion, some other things for the doing of which no claim is made against Doyle or his surety.”
The plaintiff in error contends that tile partial payments having been properly made during the progress of the work, the loss thereof constitutes no element of recoverable damages. The general rule is that, in an action against a builder for a breach of his contract, all damages are recoverable which are the proximate result of the breach. 6 Cyc. 113. The payments made by the government were totally lost through the default of the contractor. The action is not one to recover money negligently paid, but to recover damages for a breach of the contract. The government ought not to be and is not bound by payments made upon a fraudulent, negligent, or inefficient inspection of work during the progress therfcof, when in fact the work has been fraudulently done in willful disregard of the terms of the contract. Dox v. Postmaster-General, 1 Pet. 318, 7 L. Ed. 160; Kingston v. Harding (1892) 2 Q. B. Div. 494; Glacius v. Black, 50 N. Y. 145, 10 Am. Rep. 449: Barker v. Nichols, 3 Colo. App. 25, 31 Pac. 1024. It is only where the contract stipulates in express terms that
But in any view of the defenses that may be urged against recovery of damages arising out of payments of installments of the agreed compensation, they are of no avail in a case like this, where before the completion of the building according to the plans and specifications, and before its acceptance by the government, the building was destroyed. In such a case the loss is that of the contractor, and he is not only denied a recovery of compensation for the work done, but the other party to the contract may recover from him his damages, including the partial payments made as the work progressed. Tompkins v. Dudley, 25 N. Y. 272, 82 Am. Dec. 349; School Trustees of Trenton v. Bennett, 27 N. J. Law, 513, 72 Am. Dec. 373; School District No. 1 v. Dauchy, 25 Conn. 530, 68 Am. Dec. 371; Adams v. Nichols, 19 Pick. (Mass.) 275, 31 Am. Dec. 137; Stees v. Leonard, 20 Minn. 494 (Gil. 448); 30 Am. & Eng. Encyc. of Law, 1249,