Corporation of President of Church of Jesus Christ of Latter-Day Saints v. Hartford Accident & Indemnity Co.

• Decision Date: 17 November 1939
• Docket Number: 6024
• Citation: 95 P.2d 736,98 Utah 297
• Parties: CORPORATION OF PRESIDENT OF CHURCH OF JESUS CHRIST OF LATTER-DAY SAINTS v. HARTFORD ACCIDENT & INDEMNITY CO. et al. THOMAS B. CHILD & CO., et al., Intervenors
• Court: Utah Supreme Court

95 P.2d 736

98 Utah 297

CORPORATION OF PRESIDENT OF CHURCH OF JESUS CHRIST OF LATTER-DAY SAINTS v. HARTFORD ACCIDENT & INDEMNITY CO. et al.

THOMAS B. CHILD & CO., et al., Intervenors

No. 6024

Supreme Court of Utah

November 17, 1939

Rehearing Denied, March 14, 1940.

Appeal from District Court, Third District, Salt Lake County; Allen G. Thurman, Judge.

Action on a contractors' bond by the Corporation of the President of the Church of Jesus Christ of Latter-Day Saints against the Hartford Accident & Indemnity Company and the Inter-Mountain Marble Company, in which Thomas B. Child &amp Co., a copartnership, and others, intervened. From a judgment for plaintiff as against defendant marble company and named intervener, but in favor of defendant indemnity company as to such plaintiff and intervener, plaintiff and named intervener appeal.

Judgment for defendant indemnity company set aside and new trial granted, judgment for defendant marble company against named intervener set aside, and judgment for such intervener against the marble company entered, and judgment appealed from otherwise affirmed.

Bagley Judd, Ray & Nebeker, of Salt Lake City, for plaintiff and appellant.

Albert B. Hall, of Dallas, Tex., Ingebretsen, Ray Rawlins & Christensen, Sidney N. Cornwall and S. J. Quinney, all of Salt Lake City, for defendants and respondents.

Henry D. Moyle and Paul E. Reimann, both of Salt Lake City, for intervenors and appellants.

WOLFE, Justice. MOFFAT, C. J., and LARSON and McDONOUGH, JJ., concur. PRATT, Justice, dissenting.

OPINION

WOLFE, Justice.

This is an appeal by the plaintiff Church of Jesus Christ of Latter-Day Saints, hereinafter called the Church, and intervenor Thomas B. Child & Company, hereinafter called Child & Company, from a judgment of the District Court in favor of the Church as against defendant Inter-Mountain Marble Company, hereinafter called the Marble Company or Contractor, but in favor of the defendant Hartford Accident & Indemnity Company, hereinafter called the Surety, as to both appellants; and in favor of the Church as between the appellants. The Contractor has not appealed from the judgment against it in favor of the Church, nor from the judgment against it in favor of the intervenor Mt. Nebo Marble Company. The Church and the Mt. Nebo Marble Company were allowed recovery against the Contractor, but no recovery was allowed in favor of any of the other parties.

This suit arose out of the building of a chapel in Washington, D. C., by the Church. In July 1931, the Church entered into an agreement whereby the Contractor was to furnish the exterior marble facing for the chapel from the quarries of the Mt. Nebo Marble Company in Utah, which quarries the Contractor leased. The finished marble was to be delivered in Washington on or before January 31, 1932. The cost was to be $ 111,600 with provision for payment of 90% of the total as the work progressed and for the remaining 10% after completion. The Surety gave bond in the amount of the contract price, warranting the faithful performance of the Contractor, for a money consideration. Delay in performance of the contract was waived by the Church. All of the marble was finally delivered, but the Church paid out $ 205,863.25, instead of $ 111,600, in the manner hereinafter set out. The Church sued the Contractor and its Surety for the difference. The Church alleged and urged that it complied with the contract; that the Contractor defaulted; that it notified the Surety of the Contractor's default; that the Surety denied liability and refused to take over the work; that therefore the Church "did secure at its [own] expense, finished marble facing [from this same quarry, the only one known where such marble could be procured] sufficient to complete its said Chapel in accordance with said contract and specifications, to plaintiff's loss and damage in the total sum of $ 99,328.78".

The Surety counters with the defense that there was no default on the part of the Contractor, but that from the beginning to the time the last marble was delivered there was no cessation of work and no change in contractors nor in method, manner or procedure in handling the marble or the payments; that the Contractor therefore fully performed its contract; that the over-payments by the Church to the Contractor must be considered as loans to enable the Contractor to complete its contract just as if a bank or separate party had advanced the money to complete the contract. The Surety also contends that the Church departed from the terms of the contract and such failure to comply releases it as Surety. To this last proposition the Church has two answers: (1) the Surety by its own bond agreed that neither alterations in the terms of the contract nor in the work done under it should release the Surety; (2) that even if there was non-compliance, under the later decisions of the courts, a paid surety is not released absolutely but only to the extent to which it has been prejudiced or has suffered damage by the non-compliance. The district court accepted the position of the Surety. Appellants have assigned numerous errors based on the conduct of the trial, the findings of fact and conclusions of law. Pertinent facts will be more fully presented as an examination of these assignments requires.

We shall first consider the question whether the Church failed to comply with the contract and if so whether the Surety is totally released or only to the extent to which it was damaged by such non-compliance. At this point there should be introduced to the reader the salient sections of the contract in regard to which non-compliance is asserted, and also the provisions of the bond. The contract, dated July 25, 1931, provided:

"Article 1. That the Contractor shall at his own cost and expense, furnish all the materials and all the labor, plants, tools, implements, power, apparatus, tackle, appliances, cartage and transportation, etc., required to fully and completely manufacture and deliver F.O.B. Cars, Washington, D.C., all the exterior marble facing in accordance with the drawings and specifications. * * *

"Article 3. That the Owner shall pay to the Contractor in current funds for the full performance of the contract One Hundred Eleven Thousand Six Hundred and no/100 ($ 111.600.00) Dollars, subject to additions and deductions as provided in the General Conditions of the Contract and shall make payments on account thereof as follows:

"On the first of each month, ninety (90%) per cent of the Architect's estimated value of all finished material delivered F.O.B. Cars, Washington, D.C., or of the actual value of same as shown by presented, receipted bills, less the aggregate of previous payments and the remaining ten (10%) per cent fifteen (15) days after satisfactory completion and acceptance of the entire work. * * *"

The bond, executed July 31, 1931, provides, so far as material here:

"Whereas, the Principal has, by means of a written agreement, dated July 25th, 1931, entered into a Contract with the Owner for the furnishing of the exterior marble facing work for the Washington, D.C., Chapel to be built in the City of Washington, District of Columbia, a copy of which agreement is by reference made a part hereof.

"Now, therefore, the Condition of this Obligation is such that the Principal shall faithfully perform the Contract on his part, and satisfy all claims and demands, incurred for the same, and shall make prompt payment to all persons supplying labor and materials used in the prosecution of the work provided for in such Contract and shall fully indemnify and save harmless the Owner from all cost and damage which he may suffer by reason of failure so to do, and shall fully reimburse and repay the Owner all outlay and expense which the Owner may incur in making good any such default.

"If said Principal and Surety shall perform as aforesaid then this Obligation shall be null and void; otherwise it shall remain in full force and effect.

"Provided, that any alterations which may be made in the terms of the Contract, or in the work to be done under it or the giving by the Owner of any extension of time for the performance of the Contract, or any other forbearance on the part of either the Owner or the Principal to the other shall not in any way release the Principal and the Surety or Sureties, or either or any of them, their heirs, executors, administrators, successors or assigns from their liability hereunder, notice to the Surety or Sureties of any such alteration, extension or forbearance being hereby waived."

In order to contrast the manner in which the Church actually dealt with the Contractor, with the manner contemplated by Article 3 of the Contract, certain detailed facts now become material. The Church paid for the entire marble $ 205,863.25, represented by fifty payments. The first payment was made on July 13, 1931, before the date of the Contract. The last was made on March 14, 1933, for marble which was delivered more than a year after the date on which the contractor was required to deliver all the marble in Washington (January 1, 1932). The Church extended the time for completion, but the Surety claims no release on that account because its bond provided that such extension should not release it.

The payments were not made on the first of each month, as provided by the contract, nor was 10% of each or any payment retained until fifteen days after the satisfactory completion and acceptance of the entire work. The payments were made not on the architect's estimated value of finished material delivered in Washington, nor on presented and receipted bills showing expenses incurred or paid for the quarrying and fabrication of marble delivered in Washington,...