Cobb, J.
1. The amendment should have been allowed. It was germane to the petition, and did not set forth a new- cause of action. See City of Columbus v. Anglin, 120 Ga. 785. One of the distinct terms in the contract was that Haigler and Frey were to find all material, labor, etc., necessary for the full completion of the building as set forth in the specifications. The. condition of the bond was that they should well and truly comply with all the terms and conditions of the contract. The petition alleged that they utterly failed to find material, labor, etc., which was necessary to complete the building, and that as a consequence the plaintiff was damaged in a stated amount, being the sum which he was-required to pay out in excess of the contract price; and the-amendment which was rejected alleges that this sum was necessarily expended for this purpose, and that the labor and materials, were secured at the lowest possible cost, a bill of particulars to-the petition setting forth each item that was thus procured'.. These allegations in the original petition and the amendment seem to set forth a complete cause of action upon the bond, and if there were no other allegations in the petition, the plaintiff would be entitled to recover upon proof of the averments.
2. But it is said that under the 7th paragraph of the contract, the plaintiff had no right to take charge of the work except in the manner therein specified, that is, that it was necessary to give the contractors five days notice to continue the work, and, upon their failure, to obtain the consent of the architect to take charge of the [664]*664work. It is claimed that this provision in the contract was not complied with, that the risk of the surety was thereby increased, and that he is discharged from any liability on the bond. The contract of Haigler and Frey was to complete the work. The contract of Bazemore was to complete the work for them if they failed to do so; and in the event both failed, the contract of the principals and surety on the bond was to indemnify the plaintiff against loss on account of such failure. The purpose of the 7th paragraph of the contract was the protection of the plaintiff against the failure of both Haigler and Frey, the plaintiff thereby being given the right under certain conditions to have the work completed by other persons. It would seem from the allegations of the petition that while the contract was a joint one of Haigler and Frey, the work was first begun and carried on by Frey alone; and if he had completed the work, this would have been a compliance with the contract, for performance by either of the joint obligors would have been a sufficient compliance with the contract. When Frey abandoned the contract, it seems that Haigler was willing to undertake to comply with the same, that his willingness to complete the contract was not only known to Bazemore, but that it was at Bazemore’s instance and request that Haigler took up the unfinished work of his co-obligor, which he had a right to do. It was during the time that Haigler was undertaking to comply with the contract that he failed, certainly at one point, and possibly at others; that is, he failed to find the material necessary. The plaintiff did not take the work completely out of the hands of both Haigler and Frey, as he would probably have had a right to do, after service of the notice and the consent of the architect, but Haigler was allowed, with the knowledge of Bazemore, the surety, to continue the work which Frey had failed to complete. Both Haigler and Frey were under an obligation to complete the work, and it' was immaterial to the plaintiff which one actually did the work. Bazemore, the surety, was surety for both, and he was alike responsible for the failure of either. Haigler’s taking the place of Frey in the actual conduct of the work, at the instance of the plaintiff, with the knowledge of Bazemore, was in no sense a novation of the contract. Haigler was simply doing what-he was under an obligation to do; and we do not see how the risk of Bazemore was in any sense increased by the work [665]*665being shifted from one of the contractors to the other one, when he was bound under the bond for the faithful performance of the contract by each and by both. The condition of affairs contemplated by the 7th paragraph of the petition 'does not seem to have arisen, that is, where the plaintiff would be compelled to secure the services of some one not connected with the original contract to complete the work. If the allegations of the petition were that both Frey and Haigler had entirely abandoned the contract and failed to perform its conditions, and that the plaintiff had made a new and independent agreement with Haigler to complete the work, without reference to the old contract, an' entirely different question would have been raised; and it is probable that the right of the plaintiff to recover would have been dependent upon his compliance, either literally or in substance, with the stipulations of paragraph 7. But,- as we interpret the petition, this was not the case. Frey attempted to perform, and failed. Haigler took his place, and he likewise failed at the point where the contract required him to find the material. But each was attempting to ■carry out the original contract, and Bazemore was bound as surety for them on the original contract, and was liable for the failure of each to perform the contract, as he would have been liable if both of them had together failed to perform.
3. The contract provided that the house should be completed on a given day. It was distinctly alleged that the house was not completed on this day, and there were allegations showing the damage which resulted from this failure. The failure to complete the contract on the day named was a breach of the bond. But it is said that thé plaintiff is not entitled to recover this damage, for the reason that paragraph 8 of the contract requires the damage to be determined by arbitration, and there could be ,no recovery of such damage until there had been an arbitration in the manner provided. It is unquestionably true that parties may stipulate in a contract that the amount of damage in case of a breach shall be fixed, by arbitration. But such a stipulation would not bar a party damaged by the breach from recovering the damages by suit, even though there were no arbitration, unless the provision for arbitration amounted to a condition precedent to the right to resort' to the courts, or arbitration was made the only mode by which the amount of damages should be ascertained, Liverpool [666]*666Ins. Co. v. Creighton, 51 Ga. 110. See also Cole v. Mfg. Co., 91 Tenn. 525. The language of paragraph 8 of the contract is, that, if the parties are unable to agree as to the amount due for delay, etc., “ the same shall be referred to arbitrators.” The question is whether the mere use of the word “shall” makes the submission to arbitration a condition precedent to suit. We do not think so. In the case of Hamilton v. Insurance Co., 137 U. S. 370, a stipulation in an insurance policy, where the word “shall” was used in the same connection as it was in this contract, was held not to make the stipulation one which would require arbitration as a condition precedent to an action at law. See also, in this connection, Cole v. Mfg. Co., supra; Southern Fire Ins. Co. v. Knight, 111 Ga. 622 (1).
Free access — add to your briefcase to read the full text and ask questions with AI
Cobb, J.
1. The amendment should have been allowed. It was germane to the petition, and did not set forth a new- cause of action. See City of Columbus v. Anglin, 120 Ga. 785. One of the distinct terms in the contract was that Haigler and Frey were to find all material, labor, etc., necessary for the full completion of the building as set forth in the specifications. The. condition of the bond was that they should well and truly comply with all the terms and conditions of the contract. The petition alleged that they utterly failed to find material, labor, etc., which was necessary to complete the building, and that as a consequence the plaintiff was damaged in a stated amount, being the sum which he was-required to pay out in excess of the contract price; and the-amendment which was rejected alleges that this sum was necessarily expended for this purpose, and that the labor and materials, were secured at the lowest possible cost, a bill of particulars to-the petition setting forth each item that was thus procured'.. These allegations in the original petition and the amendment seem to set forth a complete cause of action upon the bond, and if there were no other allegations in the petition, the plaintiff would be entitled to recover upon proof of the averments.
2. But it is said that under the 7th paragraph of the contract, the plaintiff had no right to take charge of the work except in the manner therein specified, that is, that it was necessary to give the contractors five days notice to continue the work, and, upon their failure, to obtain the consent of the architect to take charge of the [664]*664work. It is claimed that this provision in the contract was not complied with, that the risk of the surety was thereby increased, and that he is discharged from any liability on the bond. The contract of Haigler and Frey was to complete the work. The contract of Bazemore was to complete the work for them if they failed to do so; and in the event both failed, the contract of the principals and surety on the bond was to indemnify the plaintiff against loss on account of such failure. The purpose of the 7th paragraph of the contract was the protection of the plaintiff against the failure of both Haigler and Frey, the plaintiff thereby being given the right under certain conditions to have the work completed by other persons. It would seem from the allegations of the petition that while the contract was a joint one of Haigler and Frey, the work was first begun and carried on by Frey alone; and if he had completed the work, this would have been a compliance with the contract, for performance by either of the joint obligors would have been a sufficient compliance with the contract. When Frey abandoned the contract, it seems that Haigler was willing to undertake to comply with the same, that his willingness to complete the contract was not only known to Bazemore, but that it was at Bazemore’s instance and request that Haigler took up the unfinished work of his co-obligor, which he had a right to do. It was during the time that Haigler was undertaking to comply with the contract that he failed, certainly at one point, and possibly at others; that is, he failed to find the material necessary. The plaintiff did not take the work completely out of the hands of both Haigler and Frey, as he would probably have had a right to do, after service of the notice and the consent of the architect, but Haigler was allowed, with the knowledge of Bazemore, the surety, to continue the work which Frey had failed to complete. Both Haigler and Frey were under an obligation to complete the work, and it' was immaterial to the plaintiff which one actually did the work. Bazemore, the surety, was surety for both, and he was alike responsible for the failure of either. Haigler’s taking the place of Frey in the actual conduct of the work, at the instance of the plaintiff, with the knowledge of Bazemore, was in no sense a novation of the contract. Haigler was simply doing what-he was under an obligation to do; and we do not see how the risk of Bazemore was in any sense increased by the work [665]*665being shifted from one of the contractors to the other one, when he was bound under the bond for the faithful performance of the contract by each and by both. The condition of affairs contemplated by the 7th paragraph of the petition 'does not seem to have arisen, that is, where the plaintiff would be compelled to secure the services of some one not connected with the original contract to complete the work. If the allegations of the petition were that both Frey and Haigler had entirely abandoned the contract and failed to perform its conditions, and that the plaintiff had made a new and independent agreement with Haigler to complete the work, without reference to the old contract, an' entirely different question would have been raised; and it is probable that the right of the plaintiff to recover would have been dependent upon his compliance, either literally or in substance, with the stipulations of paragraph 7. But,- as we interpret the petition, this was not the case. Frey attempted to perform, and failed. Haigler took his place, and he likewise failed at the point where the contract required him to find the material. But each was attempting to ■carry out the original contract, and Bazemore was bound as surety for them on the original contract, and was liable for the failure of each to perform the contract, as he would have been liable if both of them had together failed to perform.
3. The contract provided that the house should be completed on a given day. It was distinctly alleged that the house was not completed on this day, and there were allegations showing the damage which resulted from this failure. The failure to complete the contract on the day named was a breach of the bond. But it is said that thé plaintiff is not entitled to recover this damage, for the reason that paragraph 8 of the contract requires the damage to be determined by arbitration, and there could be ,no recovery of such damage until there had been an arbitration in the manner provided. It is unquestionably true that parties may stipulate in a contract that the amount of damage in case of a breach shall be fixed, by arbitration. But such a stipulation would not bar a party damaged by the breach from recovering the damages by suit, even though there were no arbitration, unless the provision for arbitration amounted to a condition precedent to the right to resort' to the courts, or arbitration was made the only mode by which the amount of damages should be ascertained, Liverpool [666]*666Ins. Co. v. Creighton, 51 Ga. 110. See also Cole v. Mfg. Co., 91 Tenn. 525. The language of paragraph 8 of the contract is, that, if the parties are unable to agree as to the amount due for delay, etc., “ the same shall be referred to arbitrators.” The question is whether the mere use of the word “shall” makes the submission to arbitration a condition precedent to suit. We do not think so. In the case of Hamilton v. Insurance Co., 137 U. S. 370, a stipulation in an insurance policy, where the word “shall” was used in the same connection as it was in this contract, was held not to make the stipulation one which would require arbitration as a condition precedent to an action at law. See also, in this connection, Cole v. Mfg. Co., supra; Southern Fire Ins. Co. v. Knight, 111 Ga. 622 (1). Parties have a right to appeal to the courts for the assessment of damages to which they may be entitled, growing out of a breach of a contract into which they have entered; and while the law authorizes them to make a binding agreement that the damages shall be assessed in other ways and by other tribunals, either provided by law, or created by themselves for this purpose, before any one will be deprived of an appeal to the courts it must appear from clear and unequivocal language in the contract that such was the intention of the parties. There may be cases where a party would be liable to an action for damages for a failure to submit the controversy to arbitration upon an agreement to do so, when such agreement could not be pleaded in bar of the action. Hamilton v. Ins. Co., 137 U. S. 385.
4. It is also said that the petition should have alleged that the delay was not due to alterations. and additions being made as provided by the contract; but we think this is matter of defense and should be made the subject of a plea. The petition was sufficient to call for an answer from both of the principals and from the surety.
Judgment reversed.
All the Justices concur, except Simmons, C. J., absent.