Stephens v. Elver

• Decision Date: 16 December 1898
• Citation: 77 N.W. 737,101 Wis. 392
• Parties: STEPHENS v. ELVER.
• Court: Wisconsin Supreme Court

101 Wis. 392

77 N.W. 737

STEPHENS

v.ELVER.

Supreme Court of Wisconsin.

Dec. 16, 1898.

Appeal from circuit court, Dane county; R. G. Siebecker, Judge.

Action by David Stephens against Charles Elver. There was a judgment for defendant, and plaintiff appeals. Affirmed.

On March 6, 1897, one Joseph Pickering contracted with defendant to furnish the necessary materials and do the required mason work in the erection of a brick hotel building on the premises of the latter, in the city of Madison. Such work was to be done according to the plans and specifications prepared by Conover & Porter, architects. The contract price for the materials and work was to be $5,349, and was to be paid in monthly installments,--90 per cent. as the work progressed, on estimates of the superintendent, and the remainder when the work was completed. On the same date, Pickering delivered to defendant a bond, signed by the plaintiff as surety, in the penal sum of $5,000, conditioned that he would carry out the contract, and pay all bills for labor and materials incurred therein. In consideration of plaintiff signing his bond, Pickering agreed to purchase from him the brick, rubblestone, caps, and sills necessary for the building, at prices then agreed upon. Pickering entered upon said work, and from time to time purchased building materials from plaintiff to the amount of $1,202.39, on which he paid $466.31 on July 15, 1897, and no more. The court finds that Pickering completed the contract, and that defendant paid him in full, as provided by the contract, 90 per cent. as the work progressed, on monthly estimates of the architects, and the remainder upon completion and acceptance of the work. The court further finds that, during the progress of the work, Pickering applied to the defendant for certain payments in advance of the estimates, with the knowledge and at the suggestion of the plaintiff, which was refused, and that no payments or advances were in fact made, except they were duly made upon the estimates of the superintendent. During the progress of the work, however, certain transactions occurred between Pickering and defendant, which plaintiff claims substantially varied the terms of the building contract, and operated to release him as surety on said bond. The court made no findings in detail as to these transactions, but the evidence shows that they were based upon the following facts: Pickering commenced work under the contract in May, and the first estimate was made June 1st. Sometime in May, Pickering wanted $600 on the contract, but defendant refused to make any advance. Later he wanted to go to Fond du Lac to see about some stone for the building, and he applied to defendant for the money to pay his expenses. Defendant declined to pay him anything on the contract, but finally loaned him $20, taking his duebill therefor, which was thereafter repaid defendant from the amount due on the June estimate. In June, defendant loaned Pickering $200, to pay freight on some of the building material. On June 17th, one of the men quit work, and Pickering obtained another loan of $40; and on June 21st, under similar circumstances, a further loan of $17.30, taking a note or duebill in each instance. The next estimate became due July 1st, but was in fact made July 3d. July 4th was Sunday. Some of the men wanted their money for the “Fourth”; so, on June 30th and July 2d, Pickering arranged for a further loan, and defendant gave his personal checks to the men, and took Pickering's note, which was repaid to defendant out of the July estimate, and which was considerably less than the amount due Pickering thereon. The court finds that these transactions were personal loans to Pickering, and were made without reference to the contract, and upon his personal security. Plaintiff gave notice to defendant that he had furnished materials to Pickering, on August 7th, and on the 17th filed his lien. Prior to the receipt of such notice by defendant, he had fully settled and paid Pickering the amount due on his contract. As conclusions of law, the court found that there had been no violation of the contract, and that plaintiff, as surety, had no right to assert a lien against the defendant's building, and gave judgment dismissing the complaint, The plaintiff appeals.

H. W. Chynoweth, for appellant.

R. M. La Follette and G. E. Roe, for respondent.

BARDEEN, J. (after stating the facts).

The sole question for decision in this case is whether the transactions mentioned show such a material alteration in the original contract as to release the surety. Unless this question should be answered in the affirmative, the plaintiff has no standing in court. The rule laid down by all the authorities is that one who is a surety for the contractor on his bond to pay for all materials cannot claim a lien for materials furnished by him at the request of the contractor. That would enable a man to exact payment for what he had promised should be paid by another. Phil. Mech. Liens, § 43a; McHenry v. Knickerbacker, 128 Ind. 77, 27 N. E. 430;Spears v. Lawrence, 10 Wash. 368, 38 Pac. 1049;Herrell v. Donovan, 7 App. D. C. 322. Another rule, however, is to the effect that “a surety for the completion of work to be performed by the principal, where, by the terms of the contract, the principal is to be paid by installments, is discharged if the principal is paid faster than the contract provides. The surety is thereby deprived of the inducement which the principal would have to perform the contract in due time.” “And it is no answer to say that it is for the advantage of the surety, or that he has sustained no prejudice.” Brandt, Sur. § 397. Mr. Justice Story, speaking of the contract of suretyship, in Miller v. Stewart, 9 Wheat. 680, says: “Nothing can be clearer, both upon principle and authority, than the doctrine that the liability of a surety is not to be extended, by implication, beyond the terms of his contract. To the extent, and in the manner, and under the circumstances pointed out in his obligation, he is bound, and no further. It is not sufficient that he may sustain no injury by a change in the contract, or that it may even be for his benefit. He has a right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal.” This language has been often quoted and many times misunderstood. Some courts, in deference to his great learning and ability, and without studying the case he then had under consideration, have followed this statement of the law to the very utmost limit of technicality. But the same court, in a later case, says: “There must be another contract substituted for the original contract, or some alteration in a point so material as, in effect, to make a new contract, without the surety's consent to produce that result.” Benjamin v. Hillard, 23 How. 149. In another case the court again lays down the rule “that any agreement with the creditor which varies essentially the terms of the contract without the assent of the surety will discharge him from his responsibility.” Sprigg v. Bank, 14 Pet. 201. Thus, it will be seen that the statement so often quoted, “that, if there is any variation in the terms of the original contract, the surety will be released,” must mean that such variation must be material and substantial, in the sense that the contract is not the same contract for the performance of which the surety bound himself. This is the principle recognized and enforced in Kimball Co. v. Baker, 62 Wis. 526, 22 N. W. 730, where the agreement was that the advances to be made to the principal were to be limited to $600, but were in fact over $1,700. See, also, Manufacturing Co. v. Brown, 65 Wis. 99, 25 N. W. 427, and 26 N. W. 564. In Sage v. Strong, 40 Wis. 575, Mr. Justice Lyon, in his opinion, says: “The rule is elementary, and of most universal application, that a surety for the performance of a contract or obligation is discharged if such contract or obligation be materially changed without his consent.” The same language is substantially repeated in Nichols v. Palmer, 48 Wis. 110, 4 N. W. 137. We have been led to make these quotations from the authorities, because appellant has asserted the rule to be that, if the contract “is varied in the least particular, the surety is...