National Surety Co. v. Queen City Land & Mortgage Co.

• Decision Date: 07 May 1917
• Docket Number: 8552.
• Citation: 164 P. 722,63 Colo. 105
• Court: Colorado Supreme Court
• Parties: NATIONAL SURETY CO. v. QUEEN CITY LAND & MORTGAGE CO.

164 P. 722

63 Colo. 105

NATIONAL SURETY CO. v. QUEEN CITY LAND & MORTGAGE CO.

No. 8552.

Supreme Court of Colorado, En Banc.

May 7, 1917

Error to District Court, City and County of Denver; James H Teller, Judge.

Action by the Queen City Land & Mortgage Company against the National Surety Company. Judgment for plaintiff, and defendant brings error. Affirmed.

White C.J., dissenting.

George P. Steele, of Denver, for plaintiff in error.

Ponsford & Carnine, of Denver, for defendant in error.

HILL J.

The defendant in error, hereafter called the plaintiff, secured judgment against the plaintiff in error, hereafter called the defendant, upon a contractor's bond. Two trials were had each to a jury, in both of which the verdict was for the plaintiff. In his opening brief, counsel for defendant says:

'Practically all of the testimony at both trials was directed to an issue whether in the construction of the project the plans and specifications had been so materially departed from that the surety on the bond was relieved. This particular issue was given to each jury under correct instructions, and will not therefore be discussed here.'

Counsel follow this with the statement:

'But another and an equally important issue was offered by the pleadings, which involved the question whether the Queen City Company itself had complied with certain conditions precedent required of it by the terms of the bond. The surety company contended that the Queen City Company had not given it the required notice of the failure on the part of the Golden Company to complete the project within the time specified for such completion. It is in relation to this question that the errors now complained of were committed.'

That portion of the bond the conditions of which it is now claimed were not complied with reads:

'(3) If said principal shall in any manner default in the performance of any matter or thing in said contract specified to be by said principal performed, or in the event of said principal abandoning the work provided by said contract to be done by said principal, the obligee shall immediately so notify the company, and thereafter the company shall have the right at its option to assume and sublet said contract and to proceed thereunder as if no default or abandonment had occurred; * * *

'(9) All notices and other evidence required by this instrument to be furnished by the obligee to the company shall be in writing, and shall be forwarded by registered letter addressed to the company at its principal offices in the city of New York.'

We agree with counsel that practically all of the testimony was directed to an issue whether in the construction of the project the plans and specifications had been so materially departed from that the surety on the bond was relieved. But we cannot agree that an issue was offered by the pleadings which involved or raised the question that the plaintiff had not complied with the conditions precedent required of it by the terms of the bond pertaining to notice in order to entitle it to recovery. Paragraph 7 of plaintiff's second amended complaint alleges:

'That the plaintiff has performed each and every term, provision, covenant, and condition on its part to be performed in said contract and in said bond contained.'

This method of pleading is permitted by section 72, Revised Code 1908, which reads:

'In pleading the performance of conditions precedent in a contract, it shall not be necessary to state the facts showing such performance, but it may be stated generally that the party duly performed all the conditions on his part; and if such allegations be controverted, the party pleading shall establish on the trial the facts showing such performance.'

The defendant's answer to this paragraph reads:

'Denies the allegations in paragraph 7 of said second amended complaint contained.'

This denial was insufficient to put plaintiff on proof concerning the question of notice. A similar question was under consideration in Penn M. L. I. Co. v. Ornauer, 39 Colo. 498, at page 505, 90 P. 846, at page 848, wherein this court said:

'It is unquestionably true that under a general denial a defendant may introduce any evidence which controverts the facts which plaintiff is bound to establish in order to sustain his action. Under this doctrine the defendant contends that, under its general denial, it may show that what it calls conditions precedent had not been fulfilled. In this complaint there was an averment generally permitted by section 56 of our Code that plaintiff had fully performed all conditions of the contract to be by him performed. Where such an averment of performance of conditions precedent is allowed in the complaint, the rule is that, if a defendant relies upon nonperformance, he must specially allege the condition or conditions on the nonperformance of which he relies, and negative their performance. Bliss on Code Pleading (3d Ed.) § 356a; Nash on Pleading, 300.'

To the same effect are Insurance Company v. Allis Co., 11 Colo.App. 264, 53 P. 242; Branham v. Johnson, 62 Ind. 259; Parks v. Holmes, 22 Ill. 522; Preston v. Roberts, 12 Bush (75 Ky.) 570; Kahnweiler v. Phenix Ins. Co., 67 F. 483, 14 C.C.A. 485; Hamilton v. Insurance Co., 136 U.S. 242, 10 S.Ct. 945, 34 L.Ed. 419; Hamilton v. Home Ins. Co., 137 U.S. 370, 11 Sup.Ct. 133, 34 L.Ed. 708; Breard v. Mechanics' & Traders' Ins. Co., 29 La. Ann. 764; Continental Ins. Co. v. Chase, 89 Tex. 212, 34 S.W. 93; Evarts v. U.S. Mut. Acc. Ass'n, 16 N.Y.S. 27. ^[1]

The record discloses that the present counsel of defendant did not represent it in the trial court and in his reply brief he practically concedes the correctness of the position above outlined, but claims that the question of the time of the service of the notice was treated as an issue; that testimony was offered concerning it and an instruction given in relation thereto; that for these reasons, it must, for the purposes of this hearing, be thus considered.

Anderson et al. v. Sloan, 1 Colo. 485, Althoff Mfg. Co. v. Althoff, 52 Colo. 501, 123 P. 326, Perkins v. Russell, 56 Colo. 120, 137 P. 907, and other cases are relied upon as sustaining this conclusion. We adhere to the ruling in these cases, but cannot agree that the record shows any testimony was offered upon the question as an issue in the case. The defendant offered no testimony concerning it. The only testimony upon behalf of plaintiff which tended to establish when notice of the default of the contractor was given was when, upon request of the plaintiff, the defendant produced a notice signed by the plaintiff to the defendant notifying it of the default and requesting that it exercise its option of election thereunder. It bore date November 3, 1911. The time limit for completion of the contract was October 5, 1911, but no witness testified as to when the notice was sent. From these dates it would appear to be about 29 days after the default...