Holland v. Story County

• Decision Date: 13 March 1923
• Docket Number: 35018
• Citation: 192 N.W. 402,195 Iowa 489
• Parties: O. J. HOLLAND, Appellee, v. STORY COUNTY et al., Appellants
• Court: Iowa Supreme Court

192 N.W. 402

195 Iowa 489

O. J. HOLLAND, Appellee, v. STORY COUNTY et al., Appellants

No. 35018

Supreme Court of Iowa, Des Moines

March 13, 1923

Appeal from Story District Court.--E. M. MCCALL, Judge.

ACTION in equity by a surety on a bond who is also a party to a contract, to obtain release from liability under each of said written instruments. Decree was granted as prayed. The facts appear in the opinion.

Affirmed.

E. H Addison and B. B. Welty, for appellants.

Fred E Hanson, J. F. Martin, and Harry Langland, for appellees.

FAVILLE J. PRESTON, C. J., EVANS and ARTHUR, JJ., concur.

OPINION

FAVILLE, J.

A certain drainage district was established by the board of supervisors of Story County. The improvement consisted wholly of underground tile. The contract for the construction of said drain was let to one Hambly. In May, 1919, appellee Holland and one Hardin signed the contractor's bond of the said Hambly, as sureties. The penalty of said bond was $ 625. Hambly entered upon the construction of the improvement, and, having failed to complete the same, was discharged, and on or about the 17th of November, 1919, the sureties, Holland and Hardin, entered into a written contract with Hanson and Jacobson for the construction of the uncompleted portion of the said drain. This latter contract was obtained at the solicitation and upon the representations of the county engineer of Story County. Subsequently, this action was brought by Holland, claiming that the original bond was obtained from him by misrepresentation, and at a time when he was intoxicated; also claiming there was a material alteration in said bond after the same was executed, and that there was a material alteration in the contract secured by said bond in regard to the work performed thereunder, all of which were made without his consent. The bondsman Hardin having died, his administratrix was substituted as a party to said action, and, by cross-petition, adopted the allegations of the petition of the plaintiff in the action, and prayed the same relief.

I. The first question for our consideration is whether or not there was such a material change in the work of the construction of the improvement under the contract as to release the sureties from liability under the contractor's bond. We think it sufficiently appears from the evidence in the case that there was a substantial change in the work of construction of the improvement under the contract. As the work of digging the ditch progressed, it was discovered that said ditch crossed a line of title that had previously been laid, and because thereof the county engineer directed the contractor to construct a portion of said improvement along a new line parallel with and about one rod distant from the line as provided in the plans and specifications. The engineer surveyed and set the necessary stakes marking the new line of the ditch, and it was finally constructed at this place. The contention of the appellee is that this constituted a material change in the original contract, which resulted in releasing the sureties on the contractor's bond.

The real question is one of fact, and is whether the change was slight and inconsequential, or whether it was material and substantial. It appears from the evidence that the portion of the improvement that was so changed was approximately 1,300 feet in length. The contractor testified that, at the time the change was ordered by the engineer, he had dug one spading the full length of this distance of 1,300 feet, two spadings for about half the distance, and three spadings a portion of the way. There is evidence tending to show that the estimated cost to the contractor, by reason of said change, was about $ 760.

This case must be governed by the rules announced by us in Humboldt County v. Ward Bros., 163 Iowa 510, 145 N.W. 49. In said case, we said:

"It is true that if the plans and specifications were changed so that the surety is damaged, or its liability increased, and these are made in violation of the contract, the surety is released, but then only to the extent that the liability is increased by reason of the change. The nature of the work contracted to be done suggests that, in its full performance and completion, some slight changes must be anticipated."

Appellants lay particular stress upon the phrase in the opinion in said case that the surety is released "only to the extent that the liability is increased by reason...