Christensen v. Hamilton Realty Co.

• Decision Date: 28 December 1912
• Docket Number: 2420
• Court: Utah Supreme Court
• Parties: CHRISTENSEN et al. v. HAMILTON REALTY COMPANY et al

129 P. 412

42 Utah 70

CHRISTENSEN et al. v. HAMILTON REALTY COMPANY et al

No. 2420

Supreme Court of Utah

December 28, 1912

APPEAL from District Court, Third District; Hon. M. L. Ritchie Judge.

Action by John A. Christensen and another against the Hamilton Realty Company and the Salt Lake Security and Trust Company.

Judgment dismissing complaint against Salt Lake Security and Trust Company.

Plaintiffs appeal.

REVERSED AND REMANDED FOR NEW TRIAL AS AGAINST THE TRUST COMPANY.

C. S Patterson for appellants.

Dey &amp Hoppaugh, Edward McGurrin and W. E. Rydalch for respondents.

FRICK, C. J. McCARTY and STRAUP, JJ., concur.

OPINION

FRICK, C. J.

This was an action to recover damages for an alleged breach of a building contract, and upon a surety bond. The contractor and surety are parties to the action. For convenience the respondent Hamilton Realty Company will hereafter be called the contractor, and the other respondent, Salt Lake Security & Trust Company, will be designated trust company. The appellants in their complaint, after alleging that they are husband and wife and the corporate existence of respondents, in substance alleged that they entered into a contract with the contractor aforesaid, which is dated on the 23d day of June, 1909, wherein said contractor covenanted and agreed to furnish all the materials and perform all the labor necessary to erect and complete a certain dwelling house (except the plumbing therein) in accordance with certain plans, specifications, and drawings, which were made a part of the contract aforesaid, and to do the work "in a good, substantial, and workmanlike manner;" that it was also agreed that all the materials used should "be fit, proper, and sufficient for the completion of said building;" that said dwelling and all work connected therewith should be furnished and completed, "provided that possession of the premises be given to the contractor on or before September 15, 1909;" that, in case the contractor should furnish the materials and perform the labor and should complete the said building as aforesaid, appellants agreed to pay it the sum of $ 3000 therefor; that it was further agreed that "the occupancy of said building by said party of the second part (appellants), his tenants, heirs, or assigns, shall be conclusive evidence of the performance of this contract against any claim of the owner and an acceptance of the same." It was also alleged that the trust company executed and delivered a surety bond, which is also set forth in the complaint, the material parts of which are, that the contractor, as principal, and the trust company, as surety, are "held and firmly bound unto John A. Christensen in the sum of $ 1500" upon the condition that said contractor "has entered into a contract with the said John A. Christensen for the building of a house . . . according to plans and specifications agreed upon and signed by all of said parties for the sum of $ 3300; said agreement for building being dated June 23, 1909." It is further provided in said bond that, if said contractor "shall well and faithfully perform all of the covenants and agreements by it to be performed in said agreement, . . . then this obligation to be void, otherwise to remain in full force and effect." The place where said dwelling should be erected is also specifically stated both in the contract and in the surety bond. Appellants further alleged that they had performed their part of the building contract, but averred that the contractor had failed to do so, and then proceed to set forth in detail wherein the contractor had failed and refused to comply with the terms of the contract, and damages in that regard are fully specified. It was also alleged that the dwelling house was not completed within the time specified, and that, by reason thereof, appellants were damaged. Appellants demanded judgment against both the respondents for the amount claimed by them.

The contractor answered the complaint admitting the relationship of appellants and the capacity of respondents, admitted that it had entered into the agreement set forth in the complaint and that the trust company had executed the surety bond, and denied all other allegations of the complaint. As an affirmative defense, the condition contained in the contract with respect to the occupancy by appellants of the dwelling house and the effect thereof were pleaded, and it was averred that appellants, long before bringing the action, went into and remained in actual possession of said dwelling.

The trust company also filed an answer in which it made the same admissions that the contractor made in its answer, except that it had executed the bond, and denied all other allegations of the complaint. As an affirmative defense it also pleaded the condition in the contract respecting the effect of the occupancy of the dwelling by appellants, and that they for a long time had been and were in actual occupancy thereof. The trust company also averred that, pending the construction of said dwelling, the appellants and the contractor had entered into a "supplemental article of agreement" in which it was agreed that certain matters of difference had arisen and existed between appellants and the contractor with respect to whether the contractor was complying with the terms and conditions of his contract in the erection of said dwelling, and that said differences were submitted to one Fred. A. Hale, an architect, to pass upon and determine. It was further alleged on information and belief that said appellants and the contractor accepted the decision of said architect, and that said dwelling was thereafter completed "in accordance with the terms of said agreement and the decision of said Fred. A. Hale." The supplemental agreement aforesaid was set forth in full in its answer, but it was not averred that said agreement was not entered into with the consent of the trust company, or that by reason thereof the terms of the original agreement were materially changed or departed from. That matter was left to inference from an inspection of the agreements.

Appellants filed a reply in which they admitted that the supplemental agreement was entered into, and fully explained the reasons for the same, and averred that the same was entered into "with the consent and by the procurement" of the trust company. Appellants in said reply further explained why and under what circumstances they went into possession of said dwelling; that both said contractor and said trust company, before bringing this action, had repudiated the compromise agreement and the terms and conditions imposed on them thereunder by said Fred. A. Hale, the architect mentioned therein. Appellants averred that, for the reasons aforesaid, they relied on the terms of the original agreement.

Upon the trial of the issues it was made to appear without dispute that the contractor had in many material matters failed and refused to comply with the terms of its contract, and had failed to comply with the plans and specifications both as to the furnishing of material and doing the work; that the appellant John A. Christensen, the owner of the building, protested against the further progress of the work unless the terms of the contract were complied with; that he notified the trust company through Mr. F. E. McGurrin, who signed the surety bond as its president; that, after the matter had been discussed, said supplemental agreement was drawn up, and pursuant thereto said McGurrin, Mr. Hamilton, representing the contractor, John A. Christensen, the owner, and Mr. Patterson, his attorney, and Mr. Fred. A. Hale, the architect mentioned in said supplemental agreement, went to the dwelling house then in process of construction to inspect it for the purpose of complying with the terms of said supplemental agreement. The architect then pointed out and discussed a number of defects in the building and departures from the plans and specifications. Such defects were found in the walls, in the setting of the window and door frames and in other respects. No specific agreement with respect to what should be done was reached, however, at the time, but a short time thereafter Mr. Hale, the architect, suggested to the interested parties, including the trust company, that in view that the walls of the house were substantially completed, and for that reason to remedy some of the defects therein, they would have to be taken down at great expense, and, in view that it was necessary to construct a retaining wall along one side of the lot upon which the dwelling was erected in order to compensate the owner thereof for the defects pointed out in the erection of the house, the contractor should erect the retaining wall aforesaid, and the owner, Mr. Christensen, should furnish the material therefor. According to the evidence on the part of the appellants, this offer was accepted by all the parties, including the trust company, and the house was thereafter completed by the contractor. In doing so he was compelled to tear down and rebuild some of the flues in order to make them comply with the specifications. It was also made to appear that, before entering into the building contract, John A. Christensen, one of the appellants, negotiated a loan of $ 3300 from the trust company, and to evidence the same he and his wife Selma executed and delivered their promissory notes for said sum, and to secure the payment thereof also executed and delivered a mortgage to said company, which was a first lien upon the property on which the dwelling was erected.

It seems that the dwelling house was to be erected at a cost of $ 3300, including the plumbing, but that the contractor agreed to construct the dwelling without the plumbing for the sum of $ 3000; the...