Milavetz v. Oberg

• Decision Date: 02 November 1917
• Docket Number: No. 20461.,20461.
• Citation: 138 Minn. 215,164 N.W. 910
• Parties: MILAVETZ v. OBERG et al.
• Court: Minnesota Supreme Court

138 Minn. 215

164 N.W. 910

MILAVETZ

v.OBERG et al.

No. 20461.

Supreme Court of Minnesota.

Nov. 2, 1917.

Appeal from District Court, St. Louis County; Martin Hughes, Judge.

Suit by Ben Milavetz against S. Oberg and others. Judgment for plaintiff. Motion of defendant Oberg for judgment notwithstanding the verdict, and alternative motion by defendant Lofbacka for judgment notwithstanding the verdict or for a new trial, denied, and they separately appeal. Orders affirmed.

Syllabus by the Court

Where a building contract authorizes the owner to make changes in the work to be performed thereunder, and provides that the increase or decrease in the cost resulting therefrom shall be added to or deducted from the contract price, and that any agreement for changes made in writing shall not affect the liability of the sureties, the contractor, by making the desired changes and receiving full payment therefor without having the agreement for the changes reduced to writing, waives that formality, and as such waiver does not affect the contract of his sureties in matter of substance they are not released thereby, in the absence of an express stipulation to that effect.

The evidence is sufficient to sustain the finding of the jury that plaintiff substantially complied with the requirements of the contract in the matter of making payments during the progress of the work.

Payments to the amount of three-fourths of the actual value of the work then performed were required to be made monthly; and the fact that, in consequence of paying these amounts as the work progressed, plaintiff had paid more than three-fourths of the contract price before the completion of the work, did not discharge the sureties.

Defendants, having been given a proper opportunity to defend the action brought to enforce the liens filed against the building the labor and material, are bound by the judgment rendered therein.

Making the judgment recovered against the contractor the measure of defendant's liability was not reversible error, although no proof was offered to show the nature or validity of the claims for which such judgment was rendered, as the amount thereof was less than the amount of the liens as established by the judgment in the lien action. John Jenswold and John D. Jenswold, both of Duluth, for appellants.

Daniel D. Morgan, of Virginia (Edmund M. Morgan, of Minneapolis, of counsel), for respondent.

TAYLOR, C.

Oscar Dahlvik contracted to erect a dwelling house for plaintiff and to furnish all the labor and material therefor, and gave a bond, executed by defendants as sureties, to secure the performance of the contract and the payment of all obligations incurred for labor and material and to hold plaintiff harmless from any claim on account thereof. He erected the house and received the contract price therefor, but failed to pay certain claims for labor and material. Liens were filed against the property for these claims and were subsequently foreclosed. Thereafter plaintiff brought suit against Dahlvik and recovered a judgment but an execution thereon was returned unsatisfied. He then brought this suit against defendants, as sureties on Dahlvik's bond, and recovered a verdict. Defendant Lofbacka made an alternative motion for judgment notwithstanding the verdict or for a new trial. Defendant Oberg made a motion for judgment notwithstanding the verdict but did not ask for a new trial. These motions were denied. Judgment was entered, and the defendants took separate appeals therefrom.

Defendants contend that they have been released from liability on the bond, and in support of that contention they assert: (1) That plaintiff made changes in the building not agreed upon in writing; (2) that plaintiff made payments to Dahlvik at different times, in different amounts, and in a different manner than the contract provides; (3) that plaintiff increased the cost of the work by wrongfully interfering with and hindering the performance thereof by Dahlvik and his employés.

[1] 1. The contract gave plaintiff the right to deviate from the plans and specifications and make any changes in the building that he should deem proper, and provided that the increase or decrease in cost resulting from such changes should be added to or deducted from the contract price. The bond made the contract a part thereof, and then provided that the bond should not be invalidated by any changes agreed upon in writing by plaintiff and Dahlvik. It contained no expressly prohibitive provisions. During the construction of the building, the plans and specifications were departed from in certain particulars at plaintiff's instance. Plaintiff testified that a writing specifying all the changes of any consequence and the amounts agreed upon therefor was signed and given to Dahlvik, and that the full cost of such changes, amounting to the sum of $319, had been paid in addition to the contract price. Defendants asserted that this writing had not been signed, and that changes not specified therein had been made. The court charged the jury to the effect that, if plaintiff made changes in the building, this fact released defendants from liability, unless the changes were agreed upon and the agreement was reduced to writing and signed by plaintiff and Dahlvik, or unless the jury found that plaintiff had paid Dahlvik the full value of all such changes and that defendants had been in no manner prejudiced by them. By their verdict the jury necessarily found either that the changes made had been agreed upon in writing or that they had been in no manner prejudicial to defendants.

Defendants contend that, if changes were made in the building which were not agreed upon in writing, they are released from liability under the bond, even if such changes were not prejudicial but beneficial to them; that as sureties who received no compensation for becoming such, any deviation from the strict letter of the bond, even if it inured to their benefit, discharged them from liability. In support of this contention they cite Board of County Commissioners v. Greenleaf, 80 Minn. 242, 83 N. W. 157;Board of County Commissioners v. Gray, 61 Minn. 242, 63 N. W. 635;Flanigan v. Phelps, 42 Minn. 186, 43 N. W. 1113;Simonson v. Grant, 36 Minn. 439, 31 N. W. 861;Erickson v. Brandt, 53 Minn. 10, 55 N. W. 62;Tomlinson v. Simpson, 33 Minn. 443, 23 N. W. 864. In the first three cases cited, the instrument itself upon which suit was brought had been materially altered after its execution without the knowledge or consent of the sureties, and they were held not liable on the ground that the instrument sued upon was not the instrument they had executed. None of these cases involved building contracts. In Erickson v. Brandt, 53 Minn. 10, 55 N. W. 62, which involved a building contract, the owner had made changes which increased the cost of the work, and it was held that the sureties were discharged thereby; but the contract contained no provision authorizing the owner to make changes. In Simonson v. Grant, 36 Minn. 439, 31 N. W. 861, which also involved a building contract, the sureties were held not liable because the owner had failed and refused to make payments to the contractor as stipulated in the contract. The effect of changes in the work made at the instance of the owner was not involved or considered. In Tomlinson v. Simpson, 33 Minn. 443, 23 N. W. 864, no claim was made that the surety had been released from liability upon the bond, and the court merely determined the extent of such liability.

The instant case is distinguished from all the cases above cited by the fact that the plaintiff was authorized by the contract to make the changes in controversy. The question here is not whether the sureties were released by the making of unauthorized changes, but whether they were released by the making of authorized changes, unless such changes were agreed upon in writing in the manner provided in the contract. In other words, whether the mere failure to provide written evidence of the agreement for the changes released them. While there are decisions to the contrary, the weight of authority is to the effect that the contractor waives a provision that changes shall be ordered or agreed upon in writing by making the changes without requiring written authority for them, and that his waiver of this formality is not a matter of substance, and does not operate to release his sureties. Prescott National Bank v. Head, 11 Ariz. 213, 90 Pac. 328,21 Ann. Cas. 990;Bartlett v. Illinois Surety Co., 142 Iowa, 538, 119 N. W. 729;Hohn v. Shideler, 164 Ind. 242, 72 N. E. 575;Enterprise Hotel Co. v. Book, 48 Or. 58, 85 Pac. 333;De Mattos v. Jordan, 15 Wash. 378, 46 Pac. 402;Grafton v. Hinkley, 111 Wis. 46, 86 N. W. 859;Smith v. Molleson, 148 N. Y. 241, 42 N. E....