London & Lancashire Indemnity Co. v. Board Of Commissioners; Aetna Casualty & Surety Co. Board Of Commissioners

• Decision Date: 06 February 1923
• Docket Number: 17400,17399
• Citation: London & Lancashire Indemnity Co. v. Board Of Commissioners; Aetna Casualty & Surety Co. Board Of Commissioners, 140 N.E. 672, 107 Ohio St. 51 (Ohio 1923)
• Parties: The London & Lancashire Indemnity Co. Of America v. Board Of Commissioners Of Columbiana County Et Al.; The Aetna Casualty & Surety Co. v. Board Of Commissioners Of Columbiana County Et Al.
• Court: Ohio Supreme Court

140 N.E. 672

107 Ohio St. 51

The London & Lancashire Indemnity Co. Of America v. Board Of Commissioners Of Columbiana County Et Al.; The Aetna Casualty & Surety Co. v. Board Of Commissioners Of Columbiana County Et Al.

Nos. 17399 , 17400

Supreme Court of Ohio

February 6, 1923

Supreme court - Review of evidence - No findings of fact or law by trial court - Presumption that court of appeals weighed evidence - And that affirmative defense sustained thereby - Contracts - Defenses - Discharge by subsequent events or rules of law - Governmental interference prevents performance - Suretyship - Release by changes in contract.

1. Where in the trial of an action at law a jury is waived and a general finding is made by the court and judgment entered thereon without separate findings of fact and conclusions of law, this court will only determine whether there is any evidence, measured by the law applicable thereto under the issues made by the pleadings, to support the judgment of the trial court.

2. Where in such case the answer pleads an affirmative defense and a general finding is rendered for plaintiff and the judgment is affirmed by the court of appeals on the general ground that no error is found, this court will not weigh the evidence but will presume that the court of appeals weighed the evidence and found that the affirmative defense was not proven.

3. An express contract to do an act which is possible in the nature of things and not contrary to law will not be discharged by subsequent events or rules of law which do not render performance physically impossible, but merely make performance more burdensome, expensive or difficult, nor where such subsequent events or rules of law might reasonably have been contemplated.

4. In order to make available the defense of legal impossibility of performance by reason of governmental interference in the control of production, of labor, and transportation, in the prosecution of the world war, it must be proven that there was either actual seizure or such direct intervention or governmental mandate as prevented further performance.

5. A paid surety will not be released from his obligation of suretyship by changes in the contract guaranteed by him unless such changes operate injuriously to affect materially his rights and liabilities.

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These two causes have been heard jointly in the court of appeals and in this court. They were filed at the same time in the court of common pleas of Columbiana county, where they were tried together. These cases will be decided together by this court, the issues in No. 17399 including all the issues in cause No. 17400.

On September 5, 1916, M. P. Connolly & Son, a partnership entered into two separate contracts with the board of county commissioners of Columbiana county for the construction of two separate road improvements. In the first contract the consideration was $38,135.14, and The London & Lancashire Indemnity Company of America became surety for the faithful performance of the contract. In the second contract the contract price was $22,161.07, and The Aetna Casualty &amp Surety Company became surety. In the first contract the improvement was to be concluded within ten months and in the second contract within five months. In each case the contract was incorporated into and made a part of the indemnity bond. In the second case no work was ever done or materials furnished by the contractor and no payments were ever made by the board of county commissioners. In the first contract performance was begun, and certain labor performed for which the contractors were paid the sum of $3,238.84 upon estimates, and the transaction was conceded to be regular but the amount of $2,579.31 was paid to material men, which payments were claimed to be not regularly made, but were for materials delivered along the road and afterward employed in the construction of the improvement, for which credit was given. Upon all points other than the work done and payments made on account of the first contract, the two cases are upon similar facts and must be controlled by the same principles of law.

No work having been done on the second contract and only a small part of the first contract having been performed, the county commissioners, on April 8, 1918, by separate resolutions, declared both contracts abandoned and ordered re-advertisement for bids for the completion of the same. On the day when bids were to have been received, to-wit, May 6, 1918, the indemnity companies, plaintiffs in error, notified the board of commissioners in writing that they assumed and elected to take over the contracts and complete them, and proposed to start work on or before June 3, 1918, and to complete the same on or before June 3, 1919. On the same day the board of county commissioners by unanimous action accepted the written propositions and extended the time for the completion of the contracts to June 3, 1919.

Thereafter no work was ever done on either of such improvements by either the contractor or the surety, and on June 4, 1919, on the day following the expiration of the extension period, the commissioners adopted a resolution reciting the contract, the extension, and the failure of the contractor and surety to perform any part of the work, and ordered advertisement for sealed bids on the work, on the same plans and specifications, such bids to be opened June 20, 1919.

Pursuant to those advertisements the first contract was awarded to The J. C. Devine Company, for the sum of $65,564.48, the contractor to have the benefit of the labor and materials for which the county had already expended the sum of $5,818.15. The second contract was awarded to The Jones Construction Company for the sum of $39,179.93. Both improvements were thereafter completed under those contracts. Other pertinent facts will be stated in greater detail in connection with the discussion of the legal questions involved in the opinion.

On March 10, 1921, suits were begun in the Columbiana county common pleas court against the contractor and surety companies to recover the difference between the original contract price and the cost of the improvement. A jury was waived in each case, trial had before the court, and judgment recovered for the full amount claimed, which judgments were affirmed in each instance in the court of appeals, and these causes have been admitted to this court upon allowance of motion to certify.

Mr. Chas. S. Druggan and Mr. George T. Farrell, for plaintiffs in error.

Mr. Jesse C. Hanley, prosecuting attorney; Mr. Robert M. Brooks, assistant prosecuting attorney, and Mr. C. C. Connell, for defendants in error.

MARSHALL C. J.

The discussion of the legal questions involved will be based upon cause No. 17399, since it includes all the issues of the other cause and one additional issue.

The first issue to be discussed is the minor issue in the case, relating to the payment of $2,579.31 to parties furnishing material or performing labor, which payments were apparently made otherwise than upon estimates, and, therefore, not strictly in accordance with the provisions of the contract. Upon this feature the trial court reached the conclusion that the undisputed evidence disclosed that the payment of that sum of money redounded to the advantage of the road, and represented a sum less than the value of the materials and labor for which it was paid, and that therefore the variations were favorable to the contractor and in the aggregate lessened his ultimate liability by the sum of several hundred dollars.

It is urged on the one hand that the payments made for materials otherwise than upon estimates have the effect of releasing the surety from its obligation in toto and on the other hand that there was no loss or damage to either the contractor or surety as the result of such payments, but that even if such loss or detriment were shown it could be measured in money and that by giving proper credit the parties could thus be made whole. It must be admitted that there was a wide difference of opinion among the early cases on this subject, and without entering into a discussion of the respective merits of the two lines of cases it is sufficient to state that the later expressions of those courts entitled to the highest judicial respect favor the less technical rule, and this is more particularly true of those contracts where the bond is underwritten by a corporation which has undertaken for a profit to insure the obligee against a failure of performance on the part of the principal obligor. We are of the opinion that in the determination of this issue in the present controversy it is not necessary to go beyond a consideration of the language of the bond itself, applying thereto certain principles which have recently been declared by this court. From the bond we quote:

"The conditions of the above obligation is such, that whereas said * * * M. P. Connolly & Son, have * * * entered into a contract * * * for the improvement of a * * * road * * * and the furnishing of all labor and materials and performance of all work required for the same as provided in said contract, * * * a copy of which contract is hereto attached, incorporated herein and by reference thereto made a part thereof;

"Now therefore, the conditions of this obligation is such that if the said * * * M. P. Connolly & Son, shall honestly and faithfully commence, proceed with, perform and complete said contract, and furnish all materials and labor and perform all work * * * and shall fully save, indemnify and hold harmless the said county * * * and shall pay for all material and labor furnished for or used in the construction of said improvement which is or may be furnished to said * * * M. P. Connolly & Son, or any subcontractor, or...