Standard Asphalt & Rubber Co. v. Texas Bldg. Co.

• Decision Date: 06 January 1917
• Docket Number: 20591
• Citation: 162 P. 299,99 Kan. 567
• Parties: STANDARD ASPHALT & RUBBER CO. v. TEXAS BLDG. CO. ET AL.
• Court: Kansas Supreme Court

162 P. 299

99 Kan. 567

STANDARD ASPHALT & RUBBER CO. v. TEXAS BLDG. CO. ET AL.

No. 20591

Supreme Court of Kansas

January 6, 1917

Syllabus by the Court.

In a building contract, the performance of which was secured by a guaranty company, provisions were included for alterations and additions, and that payments should be made in a particular way as the work progressed. Because of the inability of the contractor to meet claims and obligations as they accrued upon the work, an arrangement was entered into between the contractor and the railway company by which payments were made in a different way, but as the change in the plan of payments was made in good faith and did not result in injury to the guaranty company, the change did not operate to relieve it from liability upon its bond.

Appeal from District Court, Montgomery County.

Action by the Standard Asphalt & Rubber Company against the Texas Building Company and others, and the United States Fidelity & Guaranty Company. From a judgment for plaintiff, the last–named defendant appeals. Affirmed.

Dale Amidon & Buckland, of Wichita, and Tomlinson & Shukers, of Independence, for appellant.

Stanford & Stanford, of Independence, for appellee.

OPINION

JOHNSTON, C. J.

This action was brought upon a bond given to secure the payment of claims for labor and material employed and used in railroad construction.

The Texas Building Company entered into a contract with the Wichita Union Terminal Railway Company for the construction of parts of a union station at Wichita. A number of contracts were made by it for that purpose, and the one involved in this proceeding was designated as contract No. 10, which covered the construction of retaining walls, subways, and other concrete structures. In that contract certain parts of the work were to be done for lump sum prices amounting to $67,210, while other parts of the work were to be paid for by the cubic yard or lineal foot. In the contract it was provided that alterations and changes, increasing or diminishing the expense of the work, might be made without invalidating the contract. It was also stipulated that approximate estimates should be made monthly, and payments made to the contractor about the 20th of each month, less 10 per cent. of the amount of the monthly estimate which the railway company was authorized to retain until the performance of the contract was complete. It was also provided that the contractor should give a bond signed by a surety company for the faithful performance of the contract, and a bond was given under the statutory requirement in section 7006 of the General Statutes of 1909, to secure the payment of all persons who might perform labor or furnish material in carrying on and completing the work. A part of the work was done and payments therefor made upon a bond given by another surety company, and afterwards the defendant the United States Fidelity & Guaranty Company became security for the completion of the contract and the payment of the labor and material which are involved in this action. The Standard Asphalt & Rubber Company, in pursuance of an agreement with the contractor, furnished waterproofing and the labor necessary for installing it to the amount of $10,127.28. This claim was not all paid by the contractor, and the present action was brought upon the bond to recover the unpaid balance, and judgment for $8,432.28 was awarded.

On this appeal it is contended that the alterations and additions which were made involved such an increase in the cost of the work that the guaranty company is released from liability, at least for the increased cost. It is said that the cost of the work was $113,944.12, while the contract price was $67,210.50, and that while alterations and additions were provided for in the contract, such radical alterations and such large increases could not have been within the contemplation of the parties. It appears from the record, however, that the contract price was not limited to $67,210.50. That was the amount which particular parts of the work were to cost, and on which lump prices were stipulated. Other parts of the work provided for in the contract which could not be definitely ascertained until the work was completed were to be paid for by the foot or yard. This work was included in the contract as much as that which was to be done at lump prices, and amounted to $42,938.38, leaving only the inconsiderable sum of $5,165.26 for the payment of what might be classed as additions and extras. It is readily seen that the alterations and extras are not excessive for work done under such a contract, and cannot be said to be beyond the contemplation of the parties, nor outside of the obligation of the guaranty company.

It is next contended that the guaranty company is released from liability because payments were not made in the mode prescribed in the contract. It contained a provision that payments should be made upon monthly estimates about the 20th day of each month, less 10 per cent. of such monthly estimate, the percentage to be retained until the completion of the work. The inability of the building company to meet its obligations made a change in the manner of payments necessary to the continuation of the work by the building company. The trial court found:

"In October, 1913, it became apparent that the building company was out of funds and would not be able to meet its pay rolls, and on October 24, 1913, an arrangement was entered into between the building company and the terminal company, by which the National Bank of Commerce of Wichita advanced each week to the building company an amount sufficient to meet the pay rolls and some few other items upon the assurance from the terminal company that the bank would be protected by payment to it of such sums as would be due the building company as the work progressed to completion."

This arrangement continued from October, 1913, till the work was completed in April, 1914, the bank taking care of the pay roll, and also paying some items for material and freight charges and interest on money advanced, as well as an attorney fee of $100 on a liability claim under the contract. The trial court found that the change in the mode of payment was made to avoid delay and an increase of expense and damages that would have necessarily accrued if there had been a forfeiture or abandonment of the work by the contractor for lack of funds. With the assistance of the bank secured by the guaranty of the railway company the building company was enabled to finish the work. The arrangement was made and carried out in good faith, and resulted in no wrong or injury to the guaranty company. As will be seen, no substantial modification in the contract was made. It was not abandoned by the contractor, nor was it assigned or taken over by the railway company, but it was performed and completed by the building company through the assistance rendered by the bank at the instance and upon the security of the railway company. While an employe of the railway company supervised the payments that were made by the bank to the extent of seeing that the funds provided for went to the payment of labor performed and material used on the work, it was all done in carrying out and completing the contract of the building company. The deviations from the provisions of the contract as to the manner of making payments related to matters intended mainly...