N. Light Lodge, No. 1, I. O. O. F. v. Kennedy

• Decision Date: 02 December 1897
• Parties: NORTHERN LIGHT LODGE, NO. 1, I. O. O. F., et al. v. KENNEDY et al.
• Court: North Dakota Supreme Court

7 N.D. 146

73 N.W. 524

NORTHERN LIGHT LODGE, NO. 1, I. O. O. F., et al.

v.KENNEDY et al.

Supreme Court of North Dakota.

Dec. 2, 1897.

Syllabus by the Court.

1. A building contract between a corporation and a firm provided that the corporation “shall be at liberty to make such changes or alterations during the construction of the building as they shall consider necessary, and the contract shall not be violated by such acts”; and also provided that “no alterations shall be made in the work shown or described in the drawings and specifications except upon a written order of the architects.” Held, construing the two provisions together, and in the light of the customs of the business, that the contract meant that the corporation had the right to order changes and alterations, but that such orders must be in writing, and the architects were merely designated as the agents of the corporation in giving such orders.

2. While, under our statute (section 4651, Rev. Codes) and settled rules of law, a surety cannot be held beyond the express terms of his contract, yet, in ascertaining those terms, the same rules of construction must be applied as in other contracts.

3. It is further held that the provision in said contract, declaring that no alterations should be made except upon written order, was inserted for the mutual benefit of the owner and contractor, and the owner alone could not waive or abrogate it. The contractor might legally have refused to make any changes or alterations not ordered in writing.

4. Where a bond had been given by the contractor for the faithful performance of the above contract, and where, without the knowledge of the sureties, the owner ordered, by parol, certain changes that materially increased the cost of such building, and such changes were executed by the contractor, held, that the parties thereby changed their contract, and to hold the sureties liable under this substituted arrangement would be to hold them beyond the express terms of their contract.

5. The fact that the owner paid the contractor in full, without retaining money to pay off claims of mechanics and material men, when by the contract it was authorized so to do, would not release the sureties on the bond.

6. In order to recover the amount of a mechanic's lien which had been filed against the building, it was not necessary that such lien should have been reduced to judgment, provided the amount of the account was duly proven.

Appeal from district court, Cass county; William B. McConell, Judge.

Suit by the Northern Light Lodge, No. 1, I. O. O. F., and Frank Marsh and others, trustees, against M. W. Shanley and T. Mournin, co-partners, and James Kennedy and others as sureties, to recover upon a bond. From the judgment for plaintiffs, defendants appeal. Reversed.J. W. Tilly, for appellants. Ball, Watson & Macly, for respondents.

BARTHOLOMEW, J.

The plaintiff the Northern Light Lodge, No. 1, I. O. O. F., is a corporation. The defendants Shanley & Mournin were co-partners as building contractors. In June, 1894, the plaintiff entered into written contract with said Shanley & Mournin for the erection of a certain building in the city of Fargo. To secure the faithful performance of the contract upon their part, Shanley & Mournin gave the usual bond in such cases, with the defendants Kennedy, O'Neil, and Elliott as sureties. Plaintiff brought suit upon the bond. The sureties alone defended, their main defense being such a change in the building contract, without their consent, as released them as sureties. There was a directed verdict against them, and they appeal.

The first difficulty in the case arises upon the construction of the written contract. By a provision in the contract the specifications were made a part thereof. In the specifications it is provided that: “The I. O. O. F. shall be at liberty to make such changes or alterations during the construction of the building as they shall consider necessary, and the contract shall not be violated by such acts, but a proper allowance shall be made in the price of contract at the time of such changes, either to the I. O. O. F. or the contractors, as the case may be.” In the body of the contract it is declared: “No alterations shall be made in the work shown or described in the drawings and specifications except upon the written order of the architects, and the amount so ascertained shall be added to or deducted from the contract price.” It is conceded the evidence shows that alterations were made which increased the cost of the building over $1,000, and that such alterations were not made upon the orders of the architects, either written or oral, but that they were made upon the oral orders of plaintiff. Do these conceded facts change the contract in a manner that releases the sureties on the bond given for its faithful performance? Our statutes declare (section 4651, Rev. Codes) that “a surety cannot be held beyond the express terms of his contract,” and that is the elementary law of the text-books. The difficulty in this case lies in determining the terms of the contract. It is clear that the contract expressly declares that the plaintiff may make such alterations or changes as it may deem necessary, and that the contract shall not be vitiated by such acts. If it went no further, the case would be plain, as such provisions are proper, and will be enforced as against a surety on a bond to secure the performance of the contract. Hayden v. Cook (Neb.) 52 N. W. 165;Risse v. Mill Co. (Kan. Sup.) 40 Pac. 904;Beers v. Strimple (Mo. Sup.) 22 S. W. 620. The complication arises when we consider the foregoing provision in connection with the provision which declares that no alterations shall be made in the work “except upon a written order of the architects.” If we construe this provision to mean that the right to order changes or alterations in the work is placed exclusively with the architects, then, necessarily, we destroy the provision which gave the owner that right, and declared that the exercise of the right by the owner should not vitiate the contract. On that construction both provisions cannot stand. One or the other must be nullified. But, on familiar rules of construction, it is our duty to so construe the contract as to give some effect to all its provisions, if its language will reasonably bear such construction. And while it is true that a surety cannot be held beyond the express terms of his contract, yet in ascertaining those terms the same rules of construction must be applied that would be applied as between the principals to the contract. Brandt, Sur. § 80, declares: “The rules for construing the contract of a surety or guarantor should by no means be confounded with the rule that sureties and guarantors are favorites of the law, and have a right to stand upon the strict terms of their obligations. * * * In the construction of the contract of a surety or guarantor, as well as of every other contract, the true question is, what was the intent of the parties, as disclosed by the instrument, read in the light of the surrounding circumstances? * * * The meaning of the words is not affected by the fact that the party sought to be charged is principal surety or guarantor.” And see, also, Crist v. Burlingame, 62 Barb. 351;Belloni v. Freeborn, 63 N. Y. 383;Standley v. Miles, 36 Miss. 434;Birdsall v. Heacock, 32 Ohio St. 177. It has often been said that one of the greatest aids in reaching the true meaning and intent of an uncertain contract is to consider...