Fuqua v. Tulsa Masonic Bldg. Ass'n
| Decision Date | 31 January 1928 |
| Docket Number | 17118. |
| Parties | FUQUA et al. v. TULSA MASONIC BLDG. ASS'N. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
Where the building contract provides that payment shall be made upon the certificate of the architect as the work progresses and full payment upon the issue of the final certificate of the architect, ordinarily the issuance of the final certificate is conclusive upon the parties as to the performance of the building contract, but, in order for this certificate to have this effect, the architect must have exercised an honest judgment in issuing it, and any fraud or want of good faith on the part of the architect destroys the force of the certificate, and renders the same subject to impeachment.
A surety has the right to prescribe the exact terms upon which he will enter into a contract of surety, and, where he has assumed the burden without compensation, or without sharing in the benefits, he may insist upon a discharge from the obligations where the terms thereof have not been strictly observed. He is a favorite of the law and the benefits of the rule strictissimi juris.
The obligation of a surety for hire, or who has a personal interest in the matters out of which his obligation arose will be liberally construed most strongly against the obligor.
The failure of the obligee in a builder's contract to retain the percentage of the value of the work finished and in place lastly to be paid according to the terms of the contract assuming that compliance with such stipulation is a condition precedent to a right of recovery on the builder's bond of which the contract is made a part, such failure so to retain such percentage does not defeat a recovery against the surety for hire in toto, but only to the extent such surety has been injured by such failure of the obligee so to perform; and the burden is on the surety to plead and prove the extent of such injury.
A surety for hire on a contractor's bond is not liable to the owner, who voluntarily paid obligations for materials furnished the contractor when such materialmen had permitted the statutory time for filing a lien statement to elapse without so filing liens and such obligations were not legally binding upon the owner at the time of such voluntary payment therefor.
Appeal from District Court, Tulsa County; Edwin R. McNeill, Judge.
Action by the Tulsa Masonic Building Association against J. R. Fuqua and the Maryland Casualty Company on builder's bond. From a judgment for plaintiff, defendant Maryland Casualty Company appeals. Affirmed in part, and reversed and remanded in part with instructions.
Ross & Thurman, of Oklahoma City, for plaintiff in error.
William S. Rogers and P. D. Busby, both of Tulsa, for defendant in error.
Plaintiff below, Tulsa Masonic Building Association, a corporation, secured a judgment against the defendants below, J. R. Fuqua and Maryland Casualty Company, a corporation, in the sum of $14,410.41. The action was based upon a breach of a builder's bond wherein Fuqua was principal and the casualty company was a surety for hire.
On June 20, 1922, plaintiff entered into a written contract with Fuqua wherein the latter agreed to furnish the material and perform the labor in constructing the Masonic Temple at Tulsa, for the consideration of $77,450, in consideration of the faithful performance of the obligations of Fuqua. The plaintiff agreed in a written contract to pay the total sum of the consideration to Fuqua "during the progress of the work, on written certificates issued by the architect above mentioned based on the proper assessments of the actual work performed on the building less 15 per cent. as margin, which margin will be accumulated and lastly paid with the final certificate, which will not be issued until after the expiration of 21 days after the whole work under the contract is fully completed and accepted." It was further agreed that the work called for by this contract should be delivered to plaintiff free from all liens, claims, or incumbrances of any description whatsoever, other than the right of Fuqua to his lien; that, if the contractor neglected or was unable to proceed with the work, plaintiff, after giving 48 hours' notice in writing, might furnish the material and labor for completing the work, "if the architect shall think proper," and charge the same against the contract price, the contractor to make good any deficiency.
The indemnity bond executed by Fuqua and the Maryland Casualty Company bound them to the plaintiff in the sum of said contract price. It recited that Fuqua, the principal, had entered into said written contract, "a copy of which is hereto annexed, and which contract is made a part hereof, as fully as if recited at length herein." The bond was to indemnify plaintiff against any loss or damage directly arising by failure of the principal to faithfully perform his contract. It provided that certain conditions were precedent to any right of recovery, among these was that, on default of the principal, the surety, upon notice and terms, might take over and complete the work; that the plaintiff should faithfully perform all the terms, covenants, and conditions to be performed by it in said contract.
Pursuant to his contract and bond, Fuqua commenced the construction of the building. On April 29, 1923, he notified plaintiff that he would be unable to comply with his contract and that the unpaid bills at that time incurred in the performance of the contract amounted to the sum of $8,586.42. He itemized these bills. Thereupon plaintiff and the surety company from its office at Baltimore carried on correspondence whereby it was agreed between them that the surety company waived its right to assume the contract of Fuqua and to complete the building thereunder, and that plaintiff Tulsa Masonic Building Association should "proceed accordingly, * * * reserving, however, all the rights and privileges to recover damages from the bonding company and the contractor." The plaintiff did thereafter complete the building. It paid the said sum of $8,486.42, of itemized delinquent bills, which amount, together with other sums expended in completing the work, amounted to $15,680.19, for which amount plaintiff brought its action. During the trial, plaintiff admitted that the sum of $1,269.75 had been expended for labor and materials for extra work not included in the contract and judgment was rendered for the amount claimed less the amount expended for extras. The cause was tried to a jury. At the close of defendants' evidence, on motion, the court instructed the jury to render a verdict in favor of the plaintiff in the sum of $14,410.41, which was accordingly done.
Fuqua has abandoned his appeal by failing to file briefs in support of his petition in error; consequently he is eliminated from the case. The surety company has perfected its appeal.
The first assignment of error presented by the surety company in effect is that it is not liable on its bond for failure of plaintiff to prove the amount it paid out for completing such work, and to prove that such amounts were the reasonable and necessary costs of the material and labor actually used in completing the building.
It is to be noted that the contract was by express reference made a part of the bond sued upon. Under provisions of the contract it is to be noted that Fuqua was to perform the labor and furnish the material according to the plans and specifications, which, by reference, were also made a part of the contract, and such performance was to be to the entire satisfaction and under the direction of the architect named, and that plaintiff should make payment to Fuqua "during progress of the work on written certificates issued by the architects, above named, based upon the proper assessments of the actual work performed on the building," etc. It is conceded by the surety that all amounts for which plaintiff recovered were paid upon and in pursuance of written certificates issued by said architects.
In National Surety Co. v. Board of Education of the City of Hugo, 62 Okl. 259, 162 P. 1108, it is held:
"Where the building contract provides that payments shall be made upon the certificate of the architect as the work progresses, and full payment upon the issue of the final certificate of the architect, ordinarily the issuance of the final certificate is conclusive upon the parties as to the performance of the building contract; but, in order for this certificate to have this effect, the architect must have exercised an honest judgment in issuing it, and any fraud or want of good faith on the part of the architect destroys the force of the certificate, and renders the same subject to impeachment."
Such is the general rule. 9 C.J. 826; Southern Real Estate & Financial Co. v. Bankers' Surety Co., 276 Mo. 183, 207 S.W. 506.
As to this general issue, it is neither pleaded nor contended by the surety company that the architects in this case did not exercise an honest judgment in issuing the certificates for the work and labor done, nor is any fraud or want of good faith on their part pleaded or proven.
The first assignment must be overruled.
It is next contended that plaintiff cannot recover because it failed to...
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