American Bonding Co. v. Regents of University

Decision Date14 June 1905
Citation11 Idaho 163,81 P. 604
PartiesAMERICAN BONDING COMPANY v. REGENTS OF UNIVERSITY
CourtIdaho Supreme Court

BONDING COMPANY ON CONTRACT-WHEN ASSUMED FULFILLMENT OF CONTRACT IS LIABLE FOR INFERIOR MATERIALS USED BY CONTRACTOR A WITNESS WHO IS A CONTRACTOR AND RETAIL DEALER MAY TESTIFY FROM PRICES PROCURED FROM A WHOLESALE CATALOGUE.

1. A bond provided that if the principal shall fail to comply with all the conditions of the contract to such an extent that the same shall be forfeited, said surety shall have the right and privilege to assume said contract and to sublet or complete same whichever surety may elect to do, provided it is done in accordance with the contract, is a legal and valid obligation, and the company may elect to complete the contract, stand on the terms of the bond, or voluntarily pay any damages resulting from the principal's default.

2. Where a bonding or surety company assumes a defaulted contract, it assumes all defects of the principal's work together with inferior materials used, and is entitled to the benefits of the contract from the time of the default of the principal, together with any sum that may be due the principal at the time the default is declared.

3. Appellant cannot be heard to complain of an instruction that respondent cannot recover on a counterclaim for stipulated damages at the rate of ten dollars per day for all the time after the work should have been completed under the contract until after the last payment has been made to the contractor when a similar instruction has been given by the court at his request.

4. A witness who has been engaged in the hardware and plumbing business for a period of five years and more may testify as to the difference in cost of materials used in a building and the kind the contract calls for, even though he testifies that he fixes the difference in prices from a catalogue sent out by a wholesale dealer in such articles, especially where he testifies that he has compared catalogue prices of various wholesale dealers and they are all alike in prices.

(Syllabus by the court.)

APPEAL from the District Court of Nez Perce County. Honorable Edgar C. Steele, Judge.

Judgment for the respondent from which, and an order overruling a motion for new trial, plaintiff appeals. Judgment affirmed.

Judgment affirmed, with costs to respondents.

W. S Gilbert and Orland Smith, for Appellant.

The language of the provision of the bond is, "That said surety shall be notified in writing of any act on the part of the said principal, or his agent or employees, which shall involve a loss for which the said surety is responsible hereunder, immediately after the occurrence of such act shall have come to the knowledge of the duly authorized representative or representatives of the Regents of the University of Idaho." (National Surety Co. v. Long, 125 F. 887, 60 C. C. A. 623.) The notice provided by the contract upon the default of the contractor is a condition precedent to the right of the respondent to recover upon the bond. ( Guarantee Co. v. Mechanics' Sav. Bank, 183 U.S 402, 22 S.Ct. 124, 46 L.Ed. 254; Imperial Fire Ins. Co. v. Coos County, 151 U.S. 452, 14 S.Ct. 379, 38 L.Ed. 233.) The party to a contract of surety which commits the first breach is not entitled to recover of the other party for a subsequent failure on its part to perform. (Robson v. Bohn, 27 Minn. 333, 7 N.W. 357; Pope v. Porter, 102 N.Y. 366, 7 N.E. 305; Rice v. Fidelity etc. Co., 103 F. 427; Creswell R. & C. Co. v. Martindale, 63 F. 84; Filley v. Pope, 115 U.S. 213, 6 S.Ct. 19, 29 L.Ed. 372.) The rule is firmly established that, where payments are to be made by installments, if the terms are not strictly complied with, the surety is discharged. The surety has the right to insist that payments be not made prematurely, that no variations be made without the consent of the surety, and if there are any made, the surety will be released. (Bell v. Paul, 35 Neb. 240, 52 N.W. 1110; Bragg v. Shain, 49 Cal. 135; Bachus v. Archer, 109 Mich. 666, 67 N.W. 913; Kane v. Thuener, 62 Mo.App. 69; Kissing v. Allspaugh, 91 Cal. 231, 27 P. 655, 13 L. R. A. 418; Simonson v. Thori, 36 Minn. 439, 31 N.W. 861.) It is not sufficient that he may sustain no injury by a change in the contract, or that it may be for his benefit. He has the right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal, and courts of equity, as well as law, have been in the constant habit of scanning the contracts of surety with considerable strictness. (Tomlinson v. Simpson, 33 Minn. 422, 23 N.W. 866; Fidelity & Deposit Co. v. Robertson, 136 Ala. 379, 34 So. 933; Wehrung v. Denham, 42 Or. 386, 71 P. 133; Cowdry v. Hahn, 105 Wis. 455, 76 Am. St. Rep. 923, 81 N.W. 882; Peters v. Mackay, 20 Wash. 172, 54 P. 1122.) Appellant respectfully submits that the action of the court in permitting the witness Sherer to testify from catalogue and discount sheet prices was a gross infraction of the ruling prohibiting the admission of hearsay evidence; and the decision of the courts in this connection are so uniform and the rule itself is supported with so much reason that we believe this court will have no difficulty in deciding that the action of the trial court amounted to reversible error. ( Whelan v. Lynch, 60 N.Y. 469; Cook County v. Harms, 10 Ill.App. 24; Vogt v. Cope, 66 Cal. 31, 4 P. 915; Nelson, Morris & Co. v. Columbian Iron Works etc., 76 Md. 354, 25 A. 417, 17 L. R. A. 851; O'Brien v. Gallagher, 26 Misc. 838, 57 N.Y.S. 250; Norfolk & Western Ry. Co. v. Reeves, 97 Va. 284, 33 S.E. 606; Deither v. Ferguson Lumber Co. , 9 Ind.App. 173, 35 N.E. 843; Fairley v. Smith, 87 N.C. 367, 42 Am. Rep. 522.)

Forney & Moore, for Respondent.

Testimony as to the market value of goods from one who has been engaged in the business of buying and selling such goods in connection with his business for a number of years is admissible, even though it appear that he bases his estimates on price lists, such as market lists furnished to him by dealers, viz., such market lists as dealers are governed by in their transactions. (Sirrine v. Briggs, 31 Mich. 443; Cliquot's Champagne, 3 Wall. 114, 18 L.Ed. 116; Republican Newspaper Co. v. Northwestern Associated Press, 51 F. 377, 2 C. C. A. 282; Whitney v. Thatcher, 117 Mass. 523; Harrison v. Glover, 72 N.Y. 451; Fennerstein's Champagne Case, 3 Wall. 145, 18 L.Ed. 121, and footnotes; Sisson v. C. & T. R. R. Co., 90 Am. Dec. 252, and notes.) The Champagne cases were explained and approved by Field, J., in Chaffee v. United States, 18 Wall. 516, 21 L.Ed. 908.

STOCKSLAGER, C. J., AILSHIE, J. Ailshie, J., Sullivan, J., and Stockslager, C. J., concurring.

OPINION

The facts are stated in the opinion.

STOCKSLAGER, C. J.--

Appellant commenced its action in the district court of Latah county and alleged its existence as a corporation under and by virtue of the laws of the state of Maryland, and that the defendants, the Regents of the University of Idaho is a body corporate, created and organized under the laws of Idaho.

The fourth allegation is that the defendant university and defendant Dullanty, on the twenty-seventh day of July, 1901, made, executed and delivered a certain agreement in writing, a copy of which is made a part of this complaint, marked "Exhibit A."

The fifth is that to secure the performance of said agreement on the part of the defendant Dullanty, said Dullanty, as principal, and plaintiff, as surety, on the twenty-seventh day of July, 1901, executed and delivered to the Regents of the University of Idaho a certain bond, a copy of which is annexed to this complaint, marked "Exhibit B," and made a part hereof.

6. That Dullanty performed all the matters and things required of him by said contract with the regents of the university in accordance with the terms thereof, up to about February 24, 1902, at which time he threw up said contract and wholly abandoned the same.

7. That on the twenty-seventh day of February, 1902, defendant, the Regents of the University of Idaho according to the terms and conditions of the above-mentioned bond, notified and requested plaintiff to proceed with said contract and complete the same; that in compliance with said notice, and in accordance with the terms of said contract and bond, the plaintiff immediately assumed said contract and fully completed the same at its own cost.

8. That under said contract and by direction and with the consent of the defendant, the Regents of the University of Idaho said Dullanty furnished extras in labor and material not called for in the specifications mentioned in said contract, of the value and agreed price of $ 805.

9. That under the said contract and by direction and with the consent of the defendant, the Regents of the University of Idaho plaintiff, after it had assumed said contract, furnished extras in labor and material not called for in the specifications mentioned in said contract, of the value and agreed price of $ 428.55.

10. That plaintiff expended in completing said contract the sum of $ 3,087.

11. That defendant, the Regents of the University of Idaho has paid defendant Dullanty under said contract the sum of $ 8,135.10.

12. That on or about March 14, 1902, plaintiff agreed with defendant, the Regents of the University of Idaho that formal acceptance of the work under said contract be waived.

13. That plaintiff completed the work under said contract to the satisfaction of it, A. Ritchie, the architect mentioned in said contract, and the Regents of the University of Idaho and that on or about the 12th of June, 1902, said architect and the Regents of the University of Idaho accepted the work under said contract.

14. That on or about the...

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