Bankers' Surety Co. v. Watt

• Decision Date: 17 May 1915
• Docket Number: (No. 391.)
• Parties: BANKERS' SURETY CO. et al. v. WATT.
• Court: Arkansas Supreme Court

Page 20

177 S.W. 20

BANKERS' SURETY CO. et al. v. WATT.

(No. 391.)

Supreme Court of Arkansas.

May 17, 1915.

Appeal from Garland Chancery Court; Jethro P. Henderson, Chancellor.

Action by Samuel C. Watt against the Bankers' Surety Company and another. Judgment for the plaintiff, and defendant named appeals. Reversed and remanded, with directions to dismiss the complaint.

Samuel C. Watt instituted this action in the chancery court against the Bankers' Surety Company and Thomas J. Prichard to recover on a building contract. Several other persons filed interventions claiming liens on the building for materials furnished by them which were used in the construction of it.

On the 5th day of May, 1910, the plaintiff, Samuel C. Watt, entered into a written contract with the defendant Thomas J. Prichard whereby the latter was to erect for him in Hot Springs, Ark., a two-story brick veneer residence in accordance with certain plans and specifications which were made a part of the contract. The contract price was $12,910, which included $800 that the contractor was to give for a five-room cottage which was then situated on the lots where the dwelling was to be erected. The contract also provided that the contractor should deliver said building complete in all its parts and free from all liens and claims to the owner on or before the 1st day of September, 1910, under penalty for delay of $10 per day for each and every day after said date during which said building should remain incompleted and unfinished. There was a clause in the contract which provided that the owner should withhold 20 per cent. of the estimate made by the architect until the final payment; and another clause provided that notice in writing should be given to the surety on the bond of any proposed change or addition to the contract in case it should involve or cost an extra expense of $500 additional to the contract price.

The Bankers' Surety Company executed a bond as surety of Prichard for the faithful performance of all the terms, covenants, and conditions of the contract on his part. The first condition of the bond provided that, in event of any default on the part of the principal, a written statement of the particular facts showing such default and the date thereof should be delivered to the surety by registered mail within 10 days after the owner of the building should learn of such default, and that the surety should have the right within 30 days after receipt of such statement to proceed or to procure others to proceed with the performance of the contract, and should be subrogated to all the rights of the principal. Another clause of the bond provided that no claim, suit, or action by reason of any default should be brought against the principal or surety after the 1st day of December, 1910, and that no recovery should be had for damages accruing after that date. This clause was afterwards changed by extending the date to March 1, 1911.

The contractor did not finish the building by September 1, 1910, and it was not finished until some time in February, 1911, when the owner took charge of it and finished it. The contractor also failed to pay several materialmen for materials furnished to be used in the construction of it. On November 23, 1910,...