Nodaway Drainage District Number One v. Illinois Surety Company
| Decision Date | 24 November 1913 |
| Parties | NODAWAY DRAINAGE DISTRICT NUMBER ONE v. ILLINOIS SURETY COMPANY, Appellant |
| Court | Missouri Supreme Court |
Appeal from Holt Circuit Court. -- Hon. W. C. Ellison, Judge.
Affirmed.
Frank Petree and David J. Peffers for appellant; Albert J. Hopkins of counsel.
(1) The court erred in sustaining the motion of the plaintiff to strike out certain portions of defendant's answer, by which the court struck out all that part of the answer referring to the failure of Gilligan Company to procure a license to do business in the State of Missouri. Inasmuch as it is admitted that Gilligan & Company had not complied with the laws of Missouri, the contract made and entered into by the Gilligan Company with the drainage district was void, and no recovery can be had thereon. Shoe Mach. Co. v Ramlose, 210 Mo. 631; Construction Co. v Railroad, 154 F. 929. (2) The court erred in refusing to sustain defendant's demurrer to the evidence, and to instruct the jury to find a verdict in favor of the defendant. (a) The testimony shows that the contract work was far from being completed at the time the suit was commenced, or at the time of the trial. The surety has the right to stand on the strict terms of its contract. The drainage district cannot use the unpaid balance of the contract price, or pay it out as against the surety, on any other terms than those fixed in the contract, and it must be paid out as the work progresses. This necessarily required the drainage district to proceed with the work and pay the fund on estimates as provided in the contract and to complete the work before calling on the surety to answer damages. If the drainage district collects the amount of its damages in this case, there is no obligation upon it to proceed with the work and finish it, and the money collected from the surety, if it is collected, may be used for other purposes and different ditches than those covered by the original contract. The surety stood only for the construction of this particular system of ditch. Until the work was completed, the drainage district had no cause of action against appellant. Hunt v. Railroad, 36 F. 481. (b) The various new contracts bear no resemblance whatever to the original contract as modified. The size of the ditch in some of these contracts is different from the size fixed by the original contract as modified. The method and means of payment are different. These new contracts so changed and altered the work to be done that the appellant was and is discharged from all liability to the said drainage district. Transit Co. v. Walker & Son, 158 F. 850; Transit Co. v. Mott, 169 F. 543; Bonding Co. v. United States, 167 F. 910; Evans v. Graden, 125 Mo. 72; Beers v. Wolf, 116 Mo. 179. (c) Under the law the Surety Company had the right to have any retained percentage of the installments earned by the Gilligan Company, and any unexpended balance of the contract price held by the drainage district, applied toward the construction of the particular ditches covered by the original contract. Large portions of the balance of the contract price held by the district were paid out and expended upon a different size ditch, and upon contracts which materially differed in their terms, provisions and conditions and methods, from the original contract. These payments discharged the surety. (d) Again, the original contract provides that ten per cent of each installment due upon the estimate of the engineer, should be retained until the close of the work under the contract. This was not done. Evans v. Graden, 125 Mo. 72; Fidelity Co. v. Agnew, 152 F. 955; Welsh v. Hubschmidt, 61 N.J.L. 57; Wehrung v. Denham, 42 Ore. 386. The surety has the right to stand upon the strict terms of his bond; that he is bound to the extent of his contract, and no further. Any changes made in the provisions of the contract, or any payments made in violation of the same, discharge the surety. The surety is bound in toto, or not at all. Burnes v. Fidelity & Deposit Co., 96 Mo.App. 467; Reissaus v. Whites, 128 Mo.App. 135; Bowman v. Heating Co., 80 Mo.App. 628. (f) The bond required that the surety should be notified in writing of any act, omission or default on the part of the principal or his agents or employees, which may involve a claim for which the surety is or may be responsible, within twenty-four hours after the occurrence of such act, omission or default shall come to the knowledge of the obligee, or its agents or officers. The district knew by December 1, 1907, the work was not progressing and could not be completed by the time and various defaults of the contractor were known by the district and no notice was given the surety. The failure to give notice discharged the surety. Surety Co. v. Long, 125 F. 887.
T. C. Dungan and James W. Boyd for respondent.
The circuit court committed no error in striking out certain portions of defendant's answer relating to the failure of the Gilligan Company to procure a license to do business in the State of Missouri. (a) While it may be true that the circuit court struck out of the appellant's answer the portion referred to, it is also a fact that the appellant made no further complaint thereof; and even in its motion for a new trial made no mention of the point it now makes in this respect. Appellant having failed to do this, the contention made by it here, now, is upon a matter not before this court. Williams v. Railroad, 112 Mo. 163; Acock v Acock, 57 Mo. 154; Curtis v. Curtis, 54 Mo. 351; Lyon v. LaMasterm, 103 Mo. 612; State ex rel. v. Burckhardt, 83 Mo. 430; Bollinger v. Carrier, 79 Mo. 318; Bank v. Allen, 68 Mo. 474; State v. Gilmore, 110 Mo. 1; Railroad v. Carlisle, 94 Mo. 166; State v. Richardson, 194 Mo. 336; Shohoney v. Railroad, 231 Mo. 142; Sternberg v. Levy, 159 Mo. 624; Godfrey v. Godfrey, 228 Mo. 507; Bank v. Klein, 33 Mo. 559; Tarkio v. Clark, 186 Mo. 285; Bick v. Dry, 134 Mo.App. 589; State v. Fraker, 137 Mo. 258; Daggs v. Smith, 193 Mo. 494. (b) The matter stricken out by the court, constitutes no defense, nor any part of a defense, in this case. The statute relied upon by the appellant was not enacted to protect an incorporation violating it, nor was it enacted to protect a surety who or which assisted the contractor or corporation, to go contrary to the laws of this State. Secs. 3039, 3040, R.S. 1909. No person can take advantage of his own wrong. It is absolutely sure that the said contract was binding upon John Gilligan and John Gilligan Company, and it was and is equally binding upon the Illinois Surety Company, which became the surety, with full knowledge of all the facts in the case. Lobaugh v. Thompson, 74 Mo. 600; Long v. Cockrell, 55 Mo. 93; Machine Co. v. Maxwell, 63 Mo. 486; 24 Am. & Eng. Ency. Law (1 Ed.), 773; In re Wiggin's Appeal, 100 Pa. St. 155; Tenant v. Tenant, 4 Pa. St. 478; Winn v. Sanford, 145 Mass. 302; Kimball v. Newell, 7 Hill (N.Y.), 116; Yale v. Wheelock, 34 Pa. St. 60; Adams v. Cuny, 15 La. Ann. 485; Whitsworth v. Carter, 43 Miss. 61; State v. Watts, 44 N.J.L. 126; Foxsworth v. Bullock, 44 Miss. 457; Hicks v. Randolph, 59 Tenn. 352; Smyley v. Head, 2 Rich. (S.C.) 590; Nabb v. Koontz, 17 Md. 283; Stillwell v. Bertrand, 22 Ark. 375; Jones v. Crosthwaite, 17 Iowa 393; Lee v. Yandell, 69 Tex. 34; Davis v. Statts, 43 Ind. 103; Bank v. Dillon, 30 Vt. 122; Bank Note Co. v. Cement Co., 155 Mo.App. 351; Young v. Gaus, 134 Mo.App. 166; Coal & Coke Co. v. Lead & Zinc Co., 157 Mo.App. 720; Steele v. Culver, 158 Mo. 136; Layson v. Cooper, 174 Mo. 211; 19 Cyc. 1301-C. (2) Much is said by the appellant as to what it contends to be a rule of law in reference to a surety. Appellant has said, and repeats five times, that a surety is entitled to have a contract literally construed, or that it is entitled to rely upon its terms. This old suggestion was made when one person became a surety for another, without consideration, and as a matter of accommodation. That was the method pursued for hundreds of years. Now, the appellant is not entitled to be protected or guarded by any other than the usual rule of law relating to contracts. The appellant is in business to become a surety, for a consideration, just like an insurance company issues a policy for the premium paid. In the answer, the appellant says it is a corporation created, organized and incorporated under the statutes and laws of Illinois "for the purpose of providing and furnishing surety to contractors, agents, trustees and public and private officers, and for doing a general surety business." Martin v. White, 128 Mo.App. 117. While the appellant is a surety it ought to be held under the circumstances of this case to full performance of its duty to the Nodaway Drainage District No. 1, which was organized for the benefit of the public, and not for gain or profit. (3) The contention of the appellant made by its point 2, is not tenable and the authorities cited by appellant to sustain this position on its part, are not in point. (a) In the first place, it is admitted, or shown by the undisputed evidence, that the Gilligan Company abandoned its contract, about the 15th of January, 1908, and left the ditch unfinished. The appellant was promptly notified by full and complete communications. (b) It does not lie in the mouth of the appellant to say that this suit is premature. After the Gilligan Company abandoned its contract, and when the respondent instituted this suit, it was respondent's duty to sue for the full amount of the damages which accrued to it by said breach, and the appellant is estopped from a contrary contention. (c) Appellant claims that certain new contracts bear no resemblance to the contract on its part, as modified. In this statement the appellant is absolutely in error. The contracts made by the...
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