Bragg v. Shain

49 Cal. 131

• Court: California Supreme Court
• Decided: July 1, 1874
• Docket: No. 3,736
• Status: Published

Opinion

By the Court, Wallace, C. J.:

1. No point in argument is made by counsel as to the constitutional validity of the Act of March 30,1868, entitled “ An Act for securing liens of mechanics and others,” and we are, therefore, not called upon to consider the question.

2. We are of opinion that the failure of the Congregational Society to retain in their hands twenty-five per cent, of the contract price, as stipulated in the contract with Shain, operated to release the defendant, Bonnet, as the surety of the latter.

The case is not distinguishable in principle from those of Taylor v. Jeter (23 Mo. R. 244) and Calvert v. The London Dock Company (2 Keen’s Chancery Reports, 639). In the latter case, the company, by its treasurer, agreed to retain in their hands one fourth of the contract price until after the full completion of the contract by Streather, the contractor, and Laycock and Warburton had become bound as sureties that Streather, the contractor, “should well and truly observe, perform and keep the promises and agreements contained in the contract, which on the part of Streather were and ought to be performed according to the true intent and meaning of the contract.” The work proceeded under the contract, but the company advanced to Streather from time to time during its progress more than seventy-five per cent, of the entire contract price, and did not retain in their hands the stipulated reserve of twenty-five per cent, thereof, Streather having subsequently abandoned the work, and left it in an unfinished state, it was held by Lord Langdale, Master of the Bolls, that the sureties had been thereby released from responsibility, and in this connection he observed: “What the company did, was, perhaps, calculated to make it easier for Streather to complete the work, if he acted with prudence and good faith; but it also took away that particular sort of pressure, which, by the contract, was intended to be applied to him. And the company, instead of keeping themselves in the situation of debtors, having in their hands one fourth of the value of the work done, became creditors to a large amount without any security; and, under the circumstances, I think that their situation with respect to Streather was so far altered that the sureties must be considered to be discharged from their suretyship.”

It results from these views that the decree of the Court below was erroneous in so far as it directed the satisfaction and discharge of the lien of Bonnet, and that the surplus moneys, if any, arising from the sale of the premises, be paid to the Congregational Society, to the exclusion of the claim of Bonnet. The cause must, therefore, be remanded at the costs of the Congregational Society, with directions to modify the decree in these respects. So ordered.

Neither Mr. Justice Rhodes nor Mr. Justice Niles expressed an opinion.