Stuart. v. Carter

• Decision Date: 24 October 1916
• Docket Number: No. 3099.,3099.
• Citation: 79 W.Va. 92
• Parties: W. E. Stuart et al. v. E. E. Carter,
• Court: West Virginia Supreme Court

79 W.Va. 92

W. E. Stuart et al.

v.E. E. Carter,

No. 3099.

Supreme Court of Appeals of West Virginia.

Submitted October 11, 1916.

Decided October 24, 1916.

1. Indemnity Nature of Contract Intent.

Whether a contract of indemnity is one of indemnity against liability, as contradistinguished from indemnity against mere loss or damage, depends upon the true intent and meaning of the covenant. If it simply indemnifies and nothing more, the indemnity is against loss or damage only. If it binds the indemnitor to do a certain act or to pay certain sums of money and performance of such act or payment of such sum will prevent harm or injury to, or liability upon, the indemnitee, the contract is one of indemnity against liability. (p. 95).

2. Same Nature of Contract Right of Action.

On a contract of indemnity against liability, a right of action arises immediately on the non-performance of the thing the covenantor bound himself to do, or non-payment of the money he bound himself to pay for exoneration of the indemnitee, when it became due and payable. (p. 95).

3. Same.

If the covenant or agreement is to pay money to a third person, in discharge of the liability of the covenantee, or to prevent such liability, payment of the debt by the covenantee is not a condition precedent to his right of action, and he may sue and recover the full amount of the debt agreed to be paid, without having first paid it. (p. 95).

4. Same Nature of Contract Indemnity Against Liability.

A bond with a condition for performance of the covenants, conditions and agreements of a building contract, due and prompt payment and discharge of all indebtedness that may be incurred by the contractors in the execution thereof, completion of the building free from mechanics liens, performance of the covenants, conditions and agreements of the contract, at the time and in the manner therein prescribed, and payment of costs incident to enforcement of payment and collection of debts incurred by the contractors in performance of the contract, is a contract of indemnity against liability. (p. 97).

5. Mechanics Liens Indemnity Conditions Precedent.

The condition of such a bond is broken by the acquisition of a mechanics lien on the property, by a material man, and the obligee has an immediate right of action on the bond, for recovery of the amount of the lien and the costs incident thereto, as money recoverable by action on contract, (p. 97).

6. Bonds Action Becovery by Motion.

Money due on a bond with collateral condition may be recovered by motion, under sec. 6, ch. 121, of the Code. (p. 98).

7. Same.

Though the plaintiff's notice of a motion for judgment on such a bond constitutes his pleading in the proceeding, analogous to a declaration in debt, as well as his process against the defendant, he need not aver non-payment of the penalty of the bond. The proceeding being informal, it suffices to base the notice on the bond and advise the defendant of the nature of the breach and the amount of the plaintiff's demand. (p. 98).

8. Same A ctions Pleading Evidence.

If the bond upon which such a proceeding is based, is one given to insure faithful performance of a working contract and the date of the contract is wrongly stated in the condition, the error need not be averred in the notice, and, upon proof thereof, the contract is admissible in evidence. (p. 99).

9. Same Actions Admissibility of Evidence.

Upon an issue in such case, as to payment of the contract price to the contractors, leaving nothing out of which to discharge a mechanics lien on the property for materials used in the construction thereof, the owners may prove payments to them under an altered firm name, upon a representation by one of them that their firm name had been changed to that in which the payments were made. (p. 99).

Error to Circuit Court, Mercer County.

Action by W. E. Stuart and others against E. E. Carter. Judgment for plaintiffs, and defendant brings error.

Affirmed.

Sanders & Crockett and Alfred G. Fox, for plaintiff in error.

Harold A. Ritz, Ira J. Partlow and Anderson, Strother, Hughes & Curd, for defendants in error.

poffenbarger, judge:

The judgment complained of on this writ of error, was recovered by motion made under sec. 6, ch. 121, of the Code, upon a joint and several bond given to insure performance of the covenants, conditions and agreements set forth in. a certain building contract, and due and prompt payment and discharge of all indebtedness that should be incurred by the contractors in carrying out the same. The owners of the property and obligees in the bond were Hale and Stuart. The contractors were Carter Bros. and Bird. E. E. Carter, the defendant, was the surety in the bond.

After one continuance at the instance of the defendant and denial of another for which he moved, he challenged the sufficiency of the notice for judgment, by a motion to quash the same, which the court overruled. Thereupon he tendered three special pleas two of which, Nos. 1 and 3, the court permitted him to file, but rejected No. 2. To special plea No. 3, the plaintiffs filed a special replication and to the other one, replied generally. The defendant also entered a plea of nil debet and issue was joined on it. The case was submitted to a jury and a verdict rendered in favor of the plaintiffs, in the sum of $892.97, by direction of the court, on their motion.

The character of the instrument upon which the proceeding is founded, a bond with collateral condition, is not made the basis of any of the numerous objections taken and made.

A claim for mere damages for the breach of a contract is not within the statute under which the proceeding was instituted. Wilson v. Dawson, 96 Va. 687. The demand must be for money due upon a contract, as contradistinguished from damages arising from the breach of a contract. The remedy extends, however, to all cases in which a person is entitled to recover money by action on contract. Long v. Pence, 93 Va. 584. As a bond with collateral condition is proper subject matter of an action of debt or covenant, Supervisors of Jackson County v. Leonard, 16 W. Va. 470, it is a contract upon which money may sometimes, but not always, be recovered, wherefore, upon a proper showing, the remedy by motion under the statute is available. A demand for payment of money on it falls within the express terms of the statute. The mere form of the contract is immaterial. Not a word in the statute indicates purpose to limit the remedy by the form of the contract. It suffices that the money demanded is due on one.

It is urged, however, in support of the motion to quash the notice, that it does not show any right to a money recovery. After having set forth the substance of the bond and made the same a part of it by reference, the notice charges, by way of breach of the condition thereof, the acquisition of a mechanics lien on the property of the obligees, by the Welch Lumber Company, a corporation, for materials furnished by it to the contractors, for use in the construction of the building, and used by them in the construction thereof; but it fails to show payment of the amount due the Welch Lumber Co., by the plaintiffs, or the discharge of the lien in any way. In fact, it has not been paid. Notwithstanding the lack of an averment of payment, the defendants in error insist that the facts set forth in the notice constitute a breach of the condition of the bond, entitling them to a judgment for the amount of the lien.

The inquiry raised by the exception involves consideration of a distinction and principle not extensively discussed or applied, if at all, in the decisions of this court, but often adverted to and made effective in cases arising in other jurisdictions, namely, the distinction between a bond or other con-tract binding the obligated parties to do particular things; for prevention of injury and damage to the obligee, and a contract of mere indemnity, binding the obligors to make good an injury or damage, or compensate for it, after occurrence thereof. In the former case, the obligee or covenantee may sue for and recover the money the obligors or covenantors bound themselves to pay, by way of indemnity against liability, without having paid the same. In the latter case, he must have paid the money and so suffered actual loss, before he can sue for the breach of the contract. As has been stated, the distinction turns upon the form of the condition or covenant. In Lathrop v. Atwood, 21 Conn. 117, 124, the rule is stated as follows: '' When a condition was to discharge or acquit the plaintiff from a bond or other particular thing, non-damnificatus was not a good plea, but the defendant should set forth affirmatively the special matter of performance; but if the condition be to acquit from damage merely, such a plea is good." The following clear exposition of the doctrine is found in Ex parte Negus, 7 Wend. 499: "Whether an action lies or not, depends upon the true intent and meaning of the covenant; if it is simply to indemnify, and nothing more, then damage must be shewn before the plaintiff can recover; but if there is an affirmative covenant to do a certain act, or pay certain sums of money, then it is no defense, in such an action, to say, that the plaintiff has not been damnified. ***** Where indemnity alone is expressed, it has always been held, that damage must be sustained before a recovery can be had; but where there is a positive agreement to do the act which is to prevent damage to the plaintiff; then action lies, if the defendant neglects or refuses to do such act." Decisions interpreting contracts as providing for more than mere indemnity against damage, are numerous, and, in all of them, the intent, meaning and effect were discovered and demonstrated by the test or principle above stated. Holmes v. Rhodes, 1 Bos. & Pul. 638; Sheriffs v. Bradshaw, Cor. Eliz. 63; Loosemore v. Radford, 9 M. & W. 657; Warwick v. Richardson, 10 M. & W. 284; Lynn v. Yates, 8 Mod. 31; Mewburn...