Southern Real Estate & F. Co. v. Bankers' Surety Co.

• Decision Date: 19 December 1918
• Docket Number: No. 20430.,20430.
• Citation: 276 Mo. 183,207 S.W. 506
• Parties: SOUTHERN REAL ESTATE & FINACIAL CO. v. BANKERS' SURETY CO.
• Court: Missouri Supreme Court

207 S.W. 506

276 Mo. 183

SOUTHERN REAL ESTATE & FINACIAL CO. v. BANKERS' SURETY CO.

No. 20430.

Supreme Court of Missouri, in Banc.

December 19, 1918.

Appeal from St. Louis Circuit Court; Charles B. Davis, Judge.

Action by Southern Real Estate & Financial Company against the Bankers' Surety Company. Judgment for plaintiff for part of the relief demanded, and it appeals. Reversed and remanded, with directions.

This is the second time this case has reached this court. The opinion written on the former appeal is reported in 184 S. W. 1030, which reversed and remanded the cause for another trial.

The facts are practically undisputed, but the contest centers around two legal propositions, which will be presently stated.

When the mandate of this court reached the circuit court, the plaintiff filed an amended petition, setting up the building contract entered into between the plaintiff and the E. H. Abadie Company, a contractor, whereby the latter undertook "to provide all of the materials and perform all the work for the steam heating, ventilating and power plant for a hotel and theater building being erected on the northeast corner of Seventh and Market streets, in the city of St. Louis," for the sum of $60,000 "to be paid in installments on the 15th day of each month of ninety per cent. of the work in place during the preceding month, according to the certificate of the architect, the final payment to be made thirty days after the completion of the work included in the contract."

Counsel for the plaintiff correctly states the case substantially in the following language:

"The amended petition pleaded the bond entered into between Abadie Company, as principal, and defendant, as surety, and the plaintiff as obligee, wherein defendant agreed to keep the plaintiff `harmless and indemnified from and against all and every claim, demand, judgments, liens and mechanics' liens, costs and fees of every description, incurred in suits or otherwise, that might be had against it or against the building to be erected under said contract, including such alterations and to repay to the said plaintiff all sums of money which it might pay to other persons on account of work and labor done, or materials furnished on or for said buildings by reason of the failure on the part of the said E. H. Abadie Company to pay to said plaintiff all damages it might sustain and all forfeitures to which it might be entitled by reason of the nonperformance or malperformance on the part of said E. H. Abadie Company of any of the covenants, conditions, stipulations and agreements of said contract including such alterations and additions.' The penalty of the bond is $15,000. Said bond further provided that the parties might by agreement make alterations and additions to said contract provided the additional cost thereof did not exceed $5,000. Thereafter an amendment to the bond was agreed upon by the parties whereby alterations and additions to said contract might be made to the amount of $15,000 without any other or further consent of the surety.

"The amended petition further pleaded that additions were made to said contract at a cost of $8,963.98, the partial performance of the contract, and the abandonment thereof by the contractor after payment by plaintiff to said contractor of $62,502.50, upon certificates of the architect, and that said amount constituted approximately 90 per cent. of the value of the work and materials in place on said building to said time; that thereafter plaintiff paid on account of materials furnished on the order of the contractor and incorporated in the building to various persons and corporations the sum of $2,432.50; that plaintiff paid, on account of mechanics' lien judgments against said building on account of material furnished to said contractor, the aggregate sum of $9,468.21; that the cost to plaintiff to complete said contract was $5,607.24, a total cost to plaintiff over and above the contract price of $68,962.98, of $11,064.47, for which amount with interest plaintiff prayed judgment.

"Defendant answered, admitting the execution of the contract and bond and the terms thereof, and as an affirmative defense pleaded a violation of the provisions of the contract in that plaintiff overpaid the contractor. Other affirmative defenses were set out in said answer, but were apparently abandoned by defendant at the trial, as no evidence was offered by defendant and no instructions, save on the question of overpayment to the contractor.

"The defendant offered no evidence at the trial, and that introduced by plaintiff was to the effect that the contract was breached by the contractor; that the money paid the contractor before the breach was 90 per cent. or less of the value of the work in place; that all of the money paid to others, including that expended to complete the contract, was paid for materials which actually went into the building in the performance of the contract.

"Frederick C. Bonsack testified that he was the architect designated by the contract of the parties and the performance of which the bond in suit was executed to secure; that his particular duty was to see that the work was done according to plans and specifications; that, in pursuance of this duty, he was on the building almost every day and had Samuel C. Black, his superintendent, representing him there all of the time. Mr. Bonsack testified to the additions and alterations made to the contract commonly known as `extras,' being plaintiff's Exhibits E-F, Exhibits (I-H, Exhibits I-J, Exhibits K-L, Exhibits M-N, Exhibits 0-P. The aggregate amount of these `extras' was the $8,963.98, constituting the additions to the original contract.

"He further testified, as to his method of determining the amount of money to be paid to the contractor, that on each month the contractor would submit a statement to his office of the amount of work he did during the month past; that he (Bonsack) had his superintendent and the representative of the owner on the work to check up this statement, after which he checked it himself and determined to what extent it was correct; that in arriving at this amount he took into consideration the amount of work that had been done according to the best of his ability and that he allowed him ninety per cent. of the amount thereof.

"In connection with the testimony of the architect, Mr. Bonsack, as to his manner of making this computation, plaintiff offered in evidence his certificates identified by him as plaintiff's Exhibits Q, R, S, T, U, V, W, X, Z, AA, BB, respectively, stating that each of them represented 90 per cent. or less of the work in place at the time. Each of these certificates had appended thereto an acknowledgment of receipt of the money called for therein by the contractor, said receipts being admitted by defendant to be genuine, showing payment to said contractor on account of said contract of the sum of $62,502.50.

"He further identified the orders on the owner to pay various amounts to materialmen, same being plaintiff's Exhibits CC, DD, and EE, and stated that these amounts were paid and that the material they represented went into the building under the Abadie contract.

"On cross-examination he testified that the incompleted portion of the contract would not bear the same ratio to the entire work as the $5,607.24 which it cost to complete would bear to the entire contract price, because it would cost more labor to take hold of a job in that condition and finish it than it would have cost the original contractor to complete it.

"Samuel C. Black confirmed Mr. Bonsack's statements as to his employment in connection with the Abadie contract; that the money paid direct to the materialmen after Abadie abandoned the contract covered specified articles which went into the building. He likewise confirmed Mr. Bonsack's statement that both he and Bonsack checked over Abadie's statements and determined from an examination of the work itself how much was due, and that the amounts allowed were based on estimates of 90 per cent. of the work in place and that the $62,500 paid Abadie represented 90 per cent. of the actual work and materials in place.

"He further testified to the amount it cost to complete the contract, some $5,600, he said; that he participated in buying the materials and employing the labor to complete the contract; and that this amount was the fair and reasonable cost of the work, though it was probably considerably more than it would have cost the contractor if he had finished it, without allowing his work to lax; that the contractor had allowed his work `to lax.'

"Mr. Bonsack, on further examination, testified that the work was done during the panic of 1907, money was hard to get, and the contractor was not overpaid at any time; that at the time the contractor quit the work was virtually complete, minor details only to be finished up; and that the $62,500 paid to Abadie represented 90 per cent. or less of the work and materials in place.

"The deposition of Edward A. Richards was offered, wherein he testified that he was a mechanical engineer and was employed by the plaintiff to superintend the erection of the building in question; that Mr. Black, acting for Mr. Bonsack, the architect, assisted him in overseeing the Abadie contract; that after Abadie abandoned the contract the work was completed under the direction of himself and Mr. Black according to the original plans and specifications; that he and Black employed the labor at union wages, and bought the material at the lowest price obtainable, taking competitive bids therefor; that he and Black both kept records of the moneys expended, which records were exactly alike; and that he had recently examined Black's book, and he identified the item constituting the architect's certificate of the cost of completion as the amounts actually expended in the work, stating in each Instance what the article was which was so purchased. His own...