Rule v. Anderson

• Citation: 142 S.W. 358,160 Mo.App. 347
• Parties: ALICE H. RULE and C. D. RULE, Appellants, v. R. H. ANDERSON and NATIONAL SURETY COMPANY, Respondents
• Decision Date: 04 December 1911
• Court: Kansas Court of Appeals

142 S.W. 358

160 Mo.App. 347

ALICE H. RULE and C. D. RULE, Appellants, v. R. H. ANDERSON and NATIONAL SURETY COMPANY, Respondents

Court of Appeals of Missouri, Kansas City

December 4, 1911

Appeal from Jackson Circuit Court.--Hon. John G. Park, Judge.

REVERSED AND REMANDED.

Judgment reversed and cause remanded.

Boyle & Howell for appellants.

(1) The finding and judgment of the court should have been for the plaintiffs. (2) The court erred in giving its declaration and conclusion of law numbered 3, page 24 appellants' abstract of record. Boppart v. Surety Co., 140 Mo.App. 675; Martin v. White, 128 Mo.App. 117; Beers v. Wolf, 116 Mo. 179; Risse v. Planing Mill Co., 55 Kas. 518; Martin v. White, 128 Mo.App. 123; Smith v. Molleson, 148 N.Y. 241; Fuller Co. v. Doyle, 87 F. 687; Am. and Eng. Ency of Law, 494-5-6. (3) Under the court's findings of fact the judgment of the court should have been for plaintiffs.

Botsford Deatherage & Creason, Frank Hagerman, Kimbrough Stone and Ingram D. Hook for respondents.

(1) The court below found changes and alterations in the contract were made by the obligee and the principal in the bond--that those changes were important and material and were made without notice to or the knowledge or consent of the surety. Liability on the bond was thereby released. Eldridge v Fuhr, 59 Mo.App. 44; Burnes Estate v. Fidelity & Deposit Co., 96 Mo.App. 467; Lumber Co. v. Gates, 89 Mo.App. 201; Reissans v. Whites, 128 Mo.App. 135. (2) The judgment was for the right parties on other grounds in addition to those assigned by the court below and this court is justified in affirming on such other grounds. Turner v. Anderson (Mo. Sup.), 139 S.W. 180; Joy v. Cale, 124 Mo.App. 569; R. S. 1909, sec. 2083. (3) Such other grounds for affirming the judgment are: The bond was not signed by the principal and therefore not binding on either the principal or surety. Baum v. Jetmore, 70 Mo. 228; Gay v. Murphy, 134 Mo. 98; St. Louis Ass'n v. Obert, 169 Mo. 507. The bond required immediate notice in writing to the surety of any default by the principal. The contract required the work to be finished by November 20, 1904. It was not completed at that time and notice was not given to the Surety Company, until January 21, 1905. This was not immediate notice and by reason thereof all liability on the bond ceased. Savings & Loan Ass'n v. Trust Co., 73 Mo.App. 161; Hurley v. Fidelity Co., 95 Mo.App. 88; 32 Cyc., p. 176, par. 2 and notes, 59-60-61.

OPINION

JOHNSON, J.

This suit is on a builder's bond executed by defendant, a surety company, as a surety for hire. A jury was waived by agreement and, after hearing the evidence, the court made and filed findings of fact and conclusions of law on which it rendered judgment for the defendants. Plaintiffs appealed.

The facts of the case thus may be stated. Plaintiffs are husband and wife and in August, 1904, acting for himself and as the agent of his wife, the husband entered into a contract with defendant Anderson by the terms of which Anderson, who is a contractor, agreed to do the carpenter work and provide the materials therefor for an apartment building to be erected on lots in Kansas City owned by Mrs. Rule. The work was to be done according to plans and specifications in the office of the architect employed by plaintiffs and the contractor was to be paid $ 4,102.25 for the work at stated times and on the architect's certificates. November 20, 1904, was fixed as the date for the completion of the work.

Among other provisions of the contract, which was in writing, were the following: "Should the proprietor, at any time during the progress of the said works, require any alterations of, deviations from, additions to, or omissions in the said contract, specifications or plans, he shall have the right and power to make such change or changes, and the same shall in no way injuriously affect or make void the contract; but the difference for work omitted, shall be deducted from the amount of the contract, by a fair and reasonable valuation; and for additional work required in alterations the amount based upon same prices at which contract is taken shall be agreed upon before commencing additions, as provided and hereinafter set forth in article number six; and such agreement shall state also the extension of time (if any) which is to be granted by reason thereof."

"No new work of any description done on the premises, or any work of any kind whatsoever shall be considered as extra unless a separate estimate in writing for the same, before its commencement, shall have been submitted by the contractor to the superintendent and the proprietor, and their signatures obtained thereto, and the contractor shall demand payment for such work immediately it is done. In case of day's work, statement of the same must be delivered to the proprietor at latest during the week following that in which the work may have been done, and only such day's work and extra work will be paid for, as such, as agreed on and authorized in writing."

Defendant, the National Surety Company, is a New York corporation engaged in the business of guaranteeing the fidelity of employees and contractors and authorized to transact business in this state. It maintains an office in Kansas City in charge of a district manager, and on October 4, 1904, at the request of Anderson, executed a bond at that office by the hand of the manager by which, in consideration of a premium paid by Anderson, it undertook to guarantee the performance of Anderson's contract with plaintiffs. The building contract was referred to and made a part of the bond.

Among the stipulations of the bond were the following:

"The obligee shall at all the times and in the manner specified in said contract, perform all the covenants, matters and things required to be by the obligee performed; and if the obligee default in the performance of any matter or thing in this instrument, or in said contract agreed or required to be performed by the obligee, the company shall thereupon be relieved from all liability hereunder.

"If said principal shall in any manner default in the performance of any matter or thing in said contract specified to be by said principal performed, or in the event of said principal abandoning the work provided by said contract to be done by said principal, the obligee shall immediately so notify the company, and thereafter the company shall have the right at its option to assume and sublet said contract and to proceed thereunder as if no default or abandonment had occurred; and if the company elect to assume said contract, all moneys agreed therein to be paid said principal and which at the time of the default be due the principal shall thereupon become payable to the company, and shall be paid to it, anything to the contrary in said contract notwithstanding . . .

"If any changes or alterations by the principal and obligee be made in the terms of said contract or in the plans or specifications for the work mentioned in said contract, the obligee shall immediately so notify the company of such changes or alterations giving a description thereof and stating the amount of money involved by such changes or alterations. . . .

"None of the conditions or provisions contained in this instrument shall be deemed waived by the company unless the written consent to such waiver be duly executed by its president or vice-president and its seal be thereto affixed and duly attested; nor shall this instrument or any rights thereunder be assignable unless with like consent duly executed and attested as aforesaid . . .

"All notices and other evidence required by this instrument to be furnished by the obligee to the company shall be in writing and shall be forwarded by registered letter addressed to the company at its principal office in the city of New York."

The work was not completed until January, 1905, and plaintiff failed to give written notice of this default of Anderson until January 21, 1905. In answer to this notice, defendant's vice-president in New York wrote plaintiffs as follows:

"Referring to your communication of the 21st inst., concerning your contract with Mr. R. H. Anderson of Kansas City, the contract required the completion of the work on or before November 20th, 1904. It appears from your letter that the work was not completed at that date, but in fact was being continued up to about the date of your letter. It is assumed that Mr. Anderson was given an extension of time within which to complete; a careful examination of our papers fails to disclose any assent on our part to any such extension--if one has been granted without our assent, all liability on our part to you ceased under the bond at the time such extension was granted. If no extension was granted, then you have not complied with the conditions of the bond on your part to be performed, in that you knew on November 20th, 1904, and previously to that date, that Mr. Anderson had not completed the work and did not intend to complete it by that date, and under the conditions of the bond it was your duty to forward in the manner and at the time required by the bond, written notice to us to that effect. This was not done, and for your omission so to do, under another condition of the bond, it was agreed that all liability should cease.

"We regret that you are placed in the position of being without security for that portion of the work which you say remains uncompleted, but the responsibility for this condition does not rest with us."

The court found, and the finding is supported by substantial evidence, that "defendant Anderson began the carpenter work and had erected a considerable part of it on November 1, 1904, at which time plaintiffs had paid him $ 1000 under...