Board of Education v. Chaussee

177 N.W. 975, 211 Mich. 61, 1920 Mich. LEXIS 657
CourtMichigan Supreme Court
DecidedJune 7, 1920
DocketDocket No. 49
StatusPublished
Cited by5 cases

This text of 177 N.W. 975 (Board of Education v. Chaussee) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Board of Education v. Chaussee, 177 N.W. 975, 211 Mich. 61, 1920 Mich. LEXIS 657 (Mich. 1920).

Opinion

Sharpe, J.

This case was tried by the circuit judge without a jury. We summarize the facts as found by him. The defendant Chaussee, on July 1, 1915, entered into a contract with plaintiff for the construe[63]*63tion of a high school building and boiler house. The defendant company is the surety upon his general construction bond. The contract price was $106,863. This price was modified by additions, changes and omissions so as to amount to $118,259.95. The total amount plaintiff was required to pay to secure the completion of the work was $119,599.33. In this suit, the plaintiff seeks to recover the overpayment of $1,-339.38.

The contract provided for completion of the work by June 10, 1916. On March 27, 1916, the date of completion was extended by written agreement to August 1, 1916. The work was not completed until after January 8, 1917, but on December 2, 1916, the plaintiff, under a written agreement with Chaussee, but without notice to the bonding company, took possession of the second and third floors of the building and occupied the same for school purposes. Each was to pay a part of the expense of heating. Plaintiff took full possession on January 8, 1917, although there was still some work to be done. The agreement provided that the contractor should pay as liquidated damages $25 per day for each day after June 10, 1916, until the completion of the work and delivery of the building to plaintiff.

The plaintiff expended $187.95 for the services of Architect Chubb in auditing the accounts of the contractor with subcontractors and others in order to determine the status of his account with plaintiff. This service was performed at the request of the bonding company. It also expended $754.91 for the services of one Koehl as supervisor of the work from August 1st to November 8, 1916, and from January 8th to March 19, 1917, under instructions and directions of the architect in charge. Both of these items were audited and certified by the architect.

There was a considerable delay, owing to the neees[64]*64sity of changing the plans and specifications of the foundation, due to unexpected soil conditions. Such changes accounted largely for the increased cost.

The trial judge concluded, as matter of law, that the defendant company was liable to plaintiff in the following amounts:

For overpayments ........................... $1,339.38
For liquidated damages for delay............ 3,450.00
For Chubb's auditing ............. 187.95
For Koehl’s supervision ..................... 754.91

He allowed to defendant for damages caused by the delay in furnishing modified plans for the foundation $690, and awarded judgment to plaintiff for the difference. of $5,042.24 and interest thereon, in all $5,-541.45. The findings will be further alluded to in consideration of the questions presented. The defendant bonding company has appealed.

1. It appears from the findings that, owing to changes and modifications in the plans, the contract price was increased nearly $12,000. The last paragraph of the bond reads as follows:

“It is also understood and agreed, that the surety hereto expressly waives whatever right it may have to be notified of any * * * additions, * * * under the terms of this contract, and also waives whatever right it may have to be notified of or to consent to any extension of time, for the performance of said contract, * * * and acknowledges itself to be bound for all * * * additions * * * and extensions of time, as though proper notice thereof had been given to it provided no additions, omissions or changes shall be ordered which may cost to exceed the sum of eight thousand dollars ($8,000.00) over and above or below the net contract price of one hundred and six thousand eight hundred and sixty-three dollars ($106,868.00) as mentioned in said attached contract.”

The bonding company claims that the increase in the contract price of more than $8,000, without notice [65]*65to it, was such a violation of this provision in the bond as discharged it from liability. The plaintiff contends that the effect of this condition was. simply to provide that, if such increase should exceed $8,000, notice must be given to the surety; notice, if the excess did not exceed $8,000, being expressly waived. No claim is made that the neglect to give such notice in itself relieved the surety.

The contract anticipated that changes and additions would probably be made. In the clause wherein the price is fixed, it is provided:

“The total amount of this contract, as above mentioned, is also subject to any and all further additions and omissions as before mentioned in this contract as may be so ordered by the owner or the architect during the progress of the work.”

The trial judge, while expressing the opinion “that the bond is fairly susceptible of either construction,” held that under the rule by which such instruments must be most strongly construed against the surety the construction given by plaintiff should apply.

The paragraph preceding the one in question ends with the usual concluding words in a bond: “Then this obligation to be void, otherwise to remain in full force.” After the bond was thus completéd in form, this paragraph was added. What was its purpose, and for whose benefit was it inserted? If the purpose was to release the surety in case the excess in the contract price should be more than $8,000, much simpler language would have sufficed and waiver of notice need not have been mentioned. But, if the plaintiff desired to obviate the necessity of giving notice of changes or additions which would exceed the contract price, its purpose is plain and easily understood. In it the surety waives the right to be notified of additions or extensions of time provided that such additions or changes shall not cost to exceed $8,000. Stripped [66]*66of legal phraseology, it says that if the plaintiff shall make alterations in the plans to increase the cost by more than $8,000 it must notify the surety. Up to that amount, it waives all notice thereof.

Counsel for the surety company say:

“If plaintiff’s contention is correct, the clause permitting additions and alterations in the original contract would leave the whole matter open so that the architect and owner could call for additions without limit and impose any liability upon the surety that it chose. It cannot be reasonably assumed that a surety company would undertake such risks.”

Such reasoning but adds force to the suggestion already made that by a few apt words inserted in either the contract or bond the company could have limited its liability to the contract price unless it be given notice of and consent to changes which would cause any increase thereof. The absence of any such limitation in the contract or in the other parts of the bond but strengthens our conclusion that this paragraph was inserted for the benefit of the plaintiff and that defendant was not released by its violation. In view of the conclusion thus reached, we find it unnecessary to consider the authorities cited by counsel as to the rule of construction which should be followed.

2. It appears from the findings that soon after the work was begun it was discovered that, owing to the condition of the soil, wider footings would be required.

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Cite This Page — Counsel Stack

Bluebook (online)
177 N.W. 975, 211 Mich. 61, 1920 Mich. LEXIS 657, Counsel Stack Legal Research, https://law.counselstack.com/opinion/board-of-education-v-chaussee-mich-1920.