Fidelity & Deposit Co. v. Merchants' & Farmers' Bank

• Decision Date: 01 November 1915
• Docket Number: (No. 210.)
• Citation: 179 S.W. 1019
• Parties: FIDELITY & DEPOSIT CO. v. MERCHANTS' & FARMERS' BANK et al.
• Court: Arkansas Supreme Court

179 S.W. 1019

FIDELITY & DEPOSIT CO. v. MERCHANTS' & FARMERS' BANK et al.

(No. 210.)

Supreme Court of Arkansas.

November 1, 1915.

Appeal from Desha Chancery Court; Z. T. Wood, Chancellor.

Action by the Fidelity & Deposit Company against the Merchants' & Farmers' Bank and others. Judgment for defendants, and plaintiff appeals. Reversed and rendered.

Cockrill & Armistead, of Little Rock, for appellant. Jack Bernhardt, of Arkansas City, and Samuel Frauenthal, of Little Rock, for appellees.

SMITH, J.

The parties to this litigation prepared an agreement in the nature of an agreed statement of facts, it being in effect a statement of the respective contentions of the parties, and it was stipulated that this agreement might be read in evidence in lieu of depositions, but that either party might take proof to controvert the facts as there recited, but no such proof was taken. From this agreement we copy the following facts:

On July 31, 1913, R. J. McBride and J. M. McCammon, partners under the firm name of McBride & McCammon, and the Merchants' & Farmers' Bank, of Dumas, the appellee herein, entered into a building contract, a copy of which was attached as an exhibit to the agreement between counsel. Pursuant to a stipulation of this building contract the contractors made a written application to the appellant bonding company for a bond, which the bonding company thereafter executed. This bonding company made, executed, and delivered a contractor's bond to the state of Arkansas for the use of the Merchants' & Farmers' Bank and all persons in whose favor liens might accrue in compliance with Act No. 446 of the Acts of the General Assembly of 1911 in the penal sum of $17,700, which bond was approved and filed as required by said act.

The building contract was an ordinary standard form building contract, by which the contractors agreed to construct a building for the bank for $8,500. Certificates of the architect were to be issued during the progress of the work, based on his estimate of the value of labor performed and materials incorporated in the building to the amount of 85 per cent., 15 per cent. of the whole to be retained until final completion and acceptance of the work.

The contractors agreed to use all moneys paid them on the work and not to divert it to any other other purpose until all labor and materials were paid for, and the contractors were given no right to demand any payment at all until they had shown, to the satisfaction of the architect and owner, that the preceding payment had been disbursed as theretofore provided. The owner or architect was given the right to demand statements and receipts showing payment for materials or labor and to withhold payments until such statements and receipts had been furnished. Upon the failure of the contractors to carry out their contract the owner, upon three days' notice, was authorized to take possession, carry out, and complete the work, and charge the expense thereof to the contractors deducting the same from the contract price and to collect any loss from the contractors or bondsmen.

Charles L. Thompson was named as the architect, and was made superintendent for the owner with power to reject work, etc. The contractors agreed to complete the building on or before December 25, 1913. This contract was dated July 3, 1913.

The application to the bonding company for a bond was made on August 1, 1913, and the work on the building commenced soon thereafter.

On March 14, 1914, Charles L. Thompson, the architect, wrote the agent of the bonding company that the contractors were in financial difficulties, and were unable to complete their contract, and that claims amounting to about $1,000 had been filed against the building. On the 20th of March the bonding company as surety advised the architect that it would undertake the completion of the work, and would protect the bank against all claims of labor men and materialmen, and would in other respects comply with and carry out the terms of said bond, and notified the architect, as the agent for the bank, to make no further payments or give no further certificates to said contractors. The architect was requested to furnish an estimate of the probable cost of completing the building in accordance with the contract, and in response to this letter the architect advised the appellant that the uncompleted work on the building was of the value of $600. After the agent of appellant had notified the architect to issue no more certificates in payment of the work done by the contractors, the bank, through its attorney, applied to and received from the architect a certificate showing a balance then due the contractors, less the retained percentage, of $1,853. This certificate was dated the 23d of March, 1914,...