89 F. 925 | 4th Cir. | 1898
This case comes before us upon a writ of error to a judgment of the circuit court of the United States for the district of Maryland rendered on the 2d day of February, 1898, in an action at law pending in said court under the name of the United States, suing for the use of Heise, Bruns -& Co., the plaintiffs in error here, against the American Bonding & Trust Company, the defendant in error here, who were the sureties for Minor & Bro., sued jointly with said defendant in error.
The specific grounds of error assigned here are that the learned judge in the court below erred in refusing the first prayer or finding asked for by the plaintiffs, and in granting three certain prayers or findings offered by the defendant. The plaintiffs’ first prayer, refused by the court, is as follows:
*928 “Tlie plaintiff prays the court, if it shall find from the evidence that the firm of Heise, Bruns & Oo. made a contract with Minor & Bro. to furnish material for the construction of the hospital building at Ft. Meyer, Virginia, and that the terms of the said contract were the usual terms of their business dealings with said Minor & Bro,, and that the conditions of said contract were not changed during its pendency, the plaintiff is entitled to recover from the defendant the American Bonding & Trust Company the balance now due Heise, Bruns & Co. for account of said materials so furnished, provided the court shall find that the plaintiff complied with the provisions of the statute under which the proceedings are authorized.”
What may be said of the objection of the plaintiffs in error to the action of the court in refusing to grant this prayer may be said, more or less, of the several assignments of error made to the action of the lower court; that is to say, the court failed to find the existence of the state of facts upon which the instruction was predicated. Upon the facts contemplated by the proposed prayer, the law may have been correctly stated therein, but upon the finding of the facts by the court the law would have been improperly enunciated. The case was submitted to the court without a jury, pursuant to section 649, Eev. St. U. S., and the general finding of the court upon questions of fact has the same effect as the verdict of a jury. The prayer was asked upon the hypothesis that the court would find as a fact that the terms of the contract between Minor & Bro. and the plaintiffs in error for the purchase of materials were the usual terms of their business dealings, and that the conditions of the said contract were not changed during its pendency. The court, however, did not find this as the correct state o'f facts, and, on the contrary, determined that the contract and understanding was that Minor & Bro. would pay for the materials purchased' by them as' they received money from the government on account of the building, and not that they were to be paid for by the acceptance of the notes of Minor & Bro., which notes might be renewed, from time to time, as seems to have been done, — extending in fact beyond the period at which the government paid for the building, and until Minor & Bro. had failed. If Minor & Bro. were to have paid plaintiffs in error as they received the money from the government on account of the building, and, instead thereof, plaintiffs in error accepted notes running indefinitely, then it would not be seriously claimed, we take it, that the prayer in question should have been granted. This is precisely what the court held that they did do, and upon this state of facts we are of opinion that the court was clearly right in not granting the proposed prayer.
The next assignment of error is that the lower court erred in granting defendant’s first, fourth, and sixth prayers, which, in substance, determined: First, that plaintiffs in error, having answered the questions propounded by the defendant in error as to the financial condition of Minor & Bro. before going upon the bond in question incorrectly in a material matter, the existence of which increased the risk assumed, and a disclosure of which might have led defendant in error not to have joined in the bond (that is to say, certified to said defendant in error that Minor & Bro. were free from debt, when in point of fact they were largely indebted to them at the time), they
The two remaining assignments of error we will consider together, first taking up the prayer granted by the lower court, — “that tlie contract of suretyship should be strictly construed, and not extended by implication.” There can, in our judgment, be no doubt of tlie correctness of this statement of the law. When tlie rights of sureties are involved, they'afe only bound by the contract which they have signed, and have a right to look to a literal and strict construction of the same, and not that such contract shall be extended, either by implication, or as a consequence of what others may do in matters oí which they have no notice, and with which they are not connected. Miller v. Stewart, 9 Wheat. 680-702; Leggett v. Humphreys, 21 How. 66; Reese v. U. S., 9 Wall. 13. In this last case, Mr. Justice Field, speaking for the court, at page 21, thus states the doctrine:
"Any change In tlie contract on which they are sureties, made by tlie principal parties to it, without their assent, discharges them, and for obvious reasons. When the change is made they are not hound by (lie contract in its original form, for that, has ceased to exist. They are not bound by the contract in its altered form, for to that they have never assented. X'or does it mal ter how trivial the change, or even that it may be of advantage to tlie sun1 ties; they have the right to stand upon the eery terms of their undertaking.”
We come now to consider lie action of the court in granting defendant’s first prayer, as io the consequence of plaintiffs in error accepting notes for tlie amount due them for material furnished under the government contract, extending beyond the time of the completion of the work, and tlie payment therefor by the government, and in this conned ion will consider the case carefully upon its merits, and the result of the dealings between plaintiffs in error and Minor & Bro. on liie rights of die defendant in error, the surety for said Minor & Bro. The doctrine is so well settled as to the effect on the rights of sureties of a creditor changing, without the consent of the surety, his securities, and extending the time of payment of, or in any manner contracting to enlarge, the same, for a fixed and definite period, ihat it seems almost useless to state the same, or cite authorities in its support. It is that a surety is bound by the terms of his contract, and if a creditor, by agreement with the principal debtor,
“It is well settled that taking a bill or note payable at a future day for an existing debt implies an agreement to wait until the instrument matures, which will discharge all the parties who are secondarily liable for the payment of the debt as sureties or guarantors.” Okie v. Spencer, 2 Whart. 253; Mercer v. Lancaster, 5 Pa. St. 160; Myers v. Welles, 5 Hill, 463; Fellows v. Prentiss, 3 Denio, 512; Bangs v. Mosher, 23 Barb. 478; Chickasaw County v. Pitcher, 36 Iowa, 593; Brooks v. Wright, 13 Allen, 72; Andrews v. Marrett, 58 Me. 539; Appleton v. Parker, 15 Gray, 173.
The principles upon which the surety is discharged by certain acts of the creditor without his concurrence are well stated by Lord Lough-borough in the leading case of Rees v. Berrington:
“It amounts,” he observes, “to this: that there shall be no transaction with the principal debtor without acquainting the person who has the greatest interest in it. Xhe surety only engages to make good the deficiency. It is the clearest and most evident equity not to carry out any transaction without the privity of him who must necessarily have a concern in every transaction with the principal debtor. You cannot keep him bound and transact his affairs (for they are as much his as your own) without consulting him. You must let him judge whether he will give that indulgence, contrary to the nature of his engagement.”
Upon tbe facts in this case, it seems to us clear that the plaintiffs in error were not entitled to recover in any event. The contract for the work was made with the government on the 12th of June, 1895, and thereunder materials were furnished for the government building from time to time from July, 1895, to May, 1896, amounting in all to $2,474.51. That during said period other purchases were also made by Minor & Bro. of the plaintiffs in’ error. That payments were made to the said Minor & Bro. by the government from month to month. That during the running of the said transactions $6,500 was actually paid by said Minor & Bro. to the plaintiffs in error. That the whole of the original debt of $3,196.78, outstanding at the time of the answering of the question by the plaintiffs in error on the 5th of April, 1895, was entirely extinguished, so that there remained at the time of the failure of said Minor & Bro., on July 24, 1896, only $3,415.78 due the plaintiffs in error from Minor & Bro., including the $2,474.51 furnished on account of the government. That no part of the $6,500 thus received by the plaintiffs in error during that time, and much of which was the very money received from the government for the work in question, was applied to the extinguishment of the account due for materials furnished for the government building, except the sum of $185, although the entire original debt of $3,196.78 was extinguished. Indeed, as far as possible, in the dealings between the parties, it would seem that the materials furnished for the government building were allowed to remain unpaid for, and, instead thereof, notes were accepted in settlement therefor, continuing