Boppart v. Illinois Surety Co.

BROADDUS, P. J.

This is an action against the surety, alone, for the default of its principal. The bond is for the penal sum of two thousand dollars, conditioned for the performance by one G. A. Love of all the terms and conditions of a certain building contract entered into between plaintiff and said Love. By the terms of this contract, dated October 15, 1906, Love agreed to construct a two-story frame dwelling, furnish all material and labor, and. to complete the same free of all mechanics’ liens, according to plans and specifications prepared by A. Van Brunt and Brother, Architects, by January 20, 1907. The plaintiff agreed to pay the contractor $3912, upon certificates furnished by the architects.

There were various conditions in the contract among which was, that plaintiff should purchase the hardware to be used and should have credit on the contract price for the same; that Love should use good material and keep the house in good repair for one year; “that said surety shall be notified in writing of any act, omission or default on the part of said principal, or his, their or its agents or employees, which may involve a claim or loss for which the said surety is or may be responsible hereunder, within twenty-four hours after the occur-*679renee of such act, omission or default shall have come to the knowledge of the owner, or his, its or their agents, officers or representative;” and that “said notification must be given by a United States registered letter mailed to said surety at its office in Chicago, Illinois;” that no alterations were to be made in the work except upon the written order of the architects, the amount to be paid to the owner or allowed by the contractor by virtue of such alterations to be stated in said order; that “should the contractor be delayed in the prosecution or completion of the work by the act, neglect or default of the owner, of the architects, or any other contractor employed by the owner upon the work, or by any damages caused by fire, lightning, earthquake, cyclone, or other casualty for which the contractor is not responsible, . . . then the time herein fixed for the completion of the work shall be extended for a period equivalent to the time lost by reason of any or all of the causes aforesaid, which extended period shall be determined and fixed by the architects, but no such allowance be made unless a claim therefor is presented in writing to the architects within forty-eight hours of the occurrence of such delay;” and that the owner, in case any lien shall be established against the property which is chargeable to the contractor, shall have the right to retain out of any payment then due or thereafter to become due an amount sufficient to completely indemnify him against such lien or liens; and should there be any such claims after all payments are made, the contractor shall refund to the owner all moneys that the latter may be compelled to pay in discharging any lien on said premises made obligatory in consequence of the contractor’s default.

The plaintiff alleges that there was a breach of the contract in several particulars, viz.: That from time to time as the work progressed he paid to the contractor $8500 of the contract price, but that the contractor abandoned his work before completion “and failed and *680refused to complete the building free and clear of mechanics’ liens and left many claims for material furnished for the building which Avere reduced to judgment and paid by plaintiff.” The plaintiff then makes an itemized statement of such claims: That the work performed by the contractor Avas not done according to the plans and specifications, stating the default in that respect, and that he was damaged in the sum of $100 thereby. That plaintiff paid for the hardAvare used in said building and that he did not receive any credit therefor in the payments he made as aforesaid.

The plaintiff pleads the clause in the bond Avhereby plaintiff should notify the defendant in Avriting of any act, omission or default on the part of the contractor .Avhich might involve a claim or loss for which defendant Avas responsible under the bond, Avithin tAventy-four hours after the occurrence of such default shall havé come to his knowledge by registered letter as stated, but that defendant waived the giving of such notice, by defendant’s agent, whereby defendant agreed to pay such loss, and further by the acceptance of the certificate for the balance due to the contractor on final settlement.

The defense is that the building had not been completed Avithin the date fixed in the contract, but that by agreement betAveen plaintiff and the contractor the time for its completion was extended without the consent of the surety; and that changes were made in the plans and specifications and work done accordingly, Avithout the consent of the surety.

In March, 1907, the plaintiff was informed that there Avere unpaid bills for material furnished to the building and work done. There were some changes made in the specifications without the knoAvledge of the defendant, but most of them were made by the architect in the manner provided by the contract; the others were slight as we shall see hereafter.

On January 20th, the contractor not having completed the work on account of the conditions of the *681weather, further time was given him for that purpose by the architect without notice to defendant.

The plaintiff paid for the hardware used in the building in the sum of $69.91, for which he received no credit.

There was evidence tending to prove that he had been damaged in the sum of $100, by reason of defective material used in the construction of the building and by reason of defective Avork in its construction.

Sometime in March, 1908, plaintiff first learned of one of the said outstanding lien bills, but he did not give defendant notice thereof Avitkin the time provided for by the bond. Sometime thereafter he with his architect had a meeting Avith the defendant’s agent in reference to the matter, at Avhich time a certificate of the balance due the contractor was handed to the agent who received and kept it. The plaintiff was asked on this occasion, or some other about that time, what the agent said to him. In ansAver he stated that the agent said: “Boppart, you don’t need to worry after this claim at all; Ave will acknowledge this default and settle the matter right up. You don’t need to hire a lawyer in this case because it will be settled right up.” At this time no suits had been filed to enforce any lien for material-men for material furnished.

On M'ay 29th, plaintiff gave defendant notice of said unpaid lien charges by registered letter.

The plaintiff recovered judgment for the excess he paid for building material over the contract price for the erection of the building; for the damage he sustained on his claim that the contractor had not furnished good material as provided for in the contract; and for the amount he paid for the hardware. At the close of plaintiff’s case and at the close of all the evidence defendant requested the court to instruct the jury to return a verdict in its favor, which the court overruled. The defendant appealed.

The position of defendant is, that plaintiff forfeited *682the obligations of the bond, by his failure to give notice, as required by its terms, of the unpaid bills for material used in the building, and of the breach of the contractor in not completing the building in time; and because of unauthorized change in the plans and specifications whereby work other than that provided for in the contract was performed by the contractor.

On the other hand it is contended by plaintiff that defendant waived notice of said outstanding and unpaid liens, when its agent accepted the balance of the unpaid contract price for the building and made the statement we have quoted; that the additional time given for a completion of the building, by the contractor is not a ground for forfeiture; and that the additional work other than that provided for in the plans was not material and did not affect the risk.

The evidence is not conflicting and the most important question is that of waiver. The trial court tried the case upon the theory that when defendant’s agent McClure accepted the certificate or payment for the balance due on the contract price for the building, and made the statement that the company would settle the matter for unpaid material, and that he need not worry and employ a lawyer “in this case because it would be settled right up,” it waived the conditions in the bond for notice of the contractor’s default to pay for material.

The defendant contends that this was not a waiver for the reason that it was not shown that the agent at the time knew that plaintiff had not given the required notice of such default. A waiver presupposes knowledge of the thing to be waived, and a party relying upon a waiver must prove that it was made with knowledge of all the facts by the party who releases a right. [Callies v. Modern Woodmen, 98 Mo. App. 521; Dyas v. Hanson, 14 Mo. App. 363.]

Giving to the rule its broadest intendment we are of the opinion that when defendant’s agent accepted the balance of the unpaid contract price, accompanied with *683tbe expression to tbe effect that plaintiff need not worry or employ a lawyer “in tbe case because it would be settled right up,” be assumed in bebalf of bis principal tbe duty of adjusting tbe delinquencies of tbe contract- or without regard to whether notice bad or bad not been given of such delinquencies; and that it amounted t!o a waiver of tbe notice itself.

Tbe fact that plaintiff permitted or gave bis consent to an extension of time for tbe completion of tbe building did not amount to a violation of tbe provision of tbe contract which provided that tbe timie for such extension should be fixed by tbe architect. Tbe contract provided for an extension of time on account of tbe conditions which demanded such extension, but tbe fact that it was not made in tbe manner pointed out did not forfeit tbe contract unless plaintiff insisted on such forfeiture, as this was a provision made for bis benefit and which be bad tbe right to waive and did waive by bis assent to such extension. And tbe effect of tbe extension was not to relieve defendant as surety by allowing tble contractor additional time to fulfill the obligations of tbe contract. [Wing & Bostwick Co. v. United States Fidelity & Guaranty Co., 150 Fed. Rep. 672.]

Tbe court submitted to tbe jury tbe question whether tbe changes in tbe specifications were material. Tbe jury returned a verdict that they were not.

Tbe general rule is that a surety has tbe right to stand on tbe strict terms of bis contract. This rule is especially applicable to voluntary sureties who have no interest in tbe subject-matter of tbe contract. Where however tbe surety has received a consideration in tbe way of hire tbe contract is somewhat in tbe nature of an indemnity. Having enjoyed compensation for bis undertaking, it is tbe policy of tbe law, when properly interpreted, to disregard technical and immaterial departures from tbe letter of tbe contract on tbe part of tbe obligee. This modification of tbe rule is almost universally applied to contracts of insurance. The obliga*684tions of a surety company, while not strictly insurance, partakes more or less of that character. • They clothe their obligations with all sorts of conditions for the violation of any of which they provide for discharge from liability altogether, notwithstanding they have reaped the benefits of the obligation. They stand on a different footing from an ordinary or straight obligation, uncoupled with any conditions whatever except those provided for in the letter of the contract itself.

We are of the opinion that the rule is that a substantial compliance with the contract upon the part of the obligee is all that is required in cases like this, and that no mere technical and immaterial departures from the letter of the contract should operate to defeat the purpose of such contract by relieving the surety from all liability.

The contract at bar contemplated changes in the specifications, and provided the manner in which they should be brought about. Some were made in conformity to the strict letter of the contract; one or two unimportant ones were made without such conformity, one for which the plaintiff paid, and the other consisted of two areaways around windows which were constructed by the contractor as a matter of necessity to prevent water from running into them. Under such circumstances we do not believe that there was such a change in the specifications as would justify a court in holding that its effect would operate to discharge the surety. The changes as we have seen were mere deviations in the manner of performance of the contract and in no way tended to destroy its identity. [Martin et al. v. Whites et al., 128 Mo. App. 117.]

What we have said disposes of all the objections raised by defendant to the giving and refusing of instructions by the court. And we are of the opinion that the judgment was for the right party and ought to be affirmed, and it is so ordered.

All concur.