Chesapeake Transit Co. v. Walker

158 F. 850, 1908 U.S. App. LEXIS 4974
CourtU.S. Circuit Court for the District of Eastern Pennsylvania
DecidedJanuary 20, 1908
DocketNo. 34
StatusPublished
Cited by4 cases

This text of 158 F. 850 (Chesapeake Transit Co. v. Walker) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Eastern Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chesapeake Transit Co. v. Walker, 158 F. 850, 1908 U.S. App. LEXIS 4974 (circtedpa 1908).

Opinion

J. B. McP'HERSON, District Judge.

This is an action brought against Abram C. Mott (who alone was served with process), the surety upon a bond conditioned for the faithful performance by Walker & Son, his principals, of a contract to build and equip a railroad. The principals having failed to carry out the contract, and the road having thereupon been built and equipped by another contractor at a higher price, the surety is now called upon by the company to make good the loss that is said to have been sustained. Two defenses were set up at the trial: First, that a provision in the contract concerning the preliminary examination and approval of certain titles by the counsel for the surety and his principals had not been complied with, and, therefore, that the contract to build never took effect; and, second, that the agreement under which the road was afterwards constructed differed so materially from the first agreement that the surety was relieved from liability upon his bond. As will be observed, each of these defenses raises a question that is vital to the company’s case, and defeat upon either, therefore, would be as fatal as defeat upon both. They were submitted to the jury as questions of fact, and I believed at the trial, as I believe now, that the evidence offered concerning the first question was of such a character as to compel submission to that tribunal, and forbid determination by the court. But I had serious doubt whether the evidence upon the second question was similarly effective; and, if I had been obliged to decide upon its sufficiency after counsel had finished their arguments, I should have sustained the second defense, and should have instructed the jury then to find in favor of the defendant. In the hope, however, that the jury might settle the controversy by their verdict, I submitted the second defense also, but retained control of the subject by an appropriate reservation. After a prolonged effort the jury could not agree, and, in order to avoid what 1 then thought would be the useless formality of a second trial, I followed my -first impressions, and directed a verdict in favor of the defendant. I have now had an opportunity to consider the evidence at leisure, assisted by the able and exhaustive arguments and briefs of counsel, and I find that my opinion at the close of the trial has been fully confirmed. Laying the first defense aside, therefore, since it need not now be dwelt upon, I think that a brief statement of the undisputed facts relating to the second defense will show it to be sufficient of itself to prevent' the plaintiff from recovery. For this conclusion two reasons will appear: First, because the first contract was so materially altered by the second that the obligation of the surety was discharged; and, second, because, even if the plaintiff had a valid-claim to recover a part of the difference between the cost of construction under one, [852]*852and the o.ther, contract, the evidence'concerning this part was not sufficiently definite to justify its submission to the jury. The uncon-troverted facts will, I think, show clearly that the surety cannot properly be called upon in this action to respond in damages.

It is to be borne in mind throughout that the suit is against the surety alone, and,,therefore, that the established principles limiting a surety’s liability must be applied. In many of the decisions to be found in the-books, the surety has been relieved because, in the carrying out of the original contract, for whose fulfillment he was bound, the obligation of his principal had been materially changed-by agreement with the other contracting party. Where such a change has been made, it is familiar law that the surety is discharged, and that the courts will not inquire whether the change hurt him or helped him. Ziegler v. Hallahan (C. C. A.) 131 Fed. 205, 66 C. C. A. 1; Shelton v. American Surety Co. (C. C. A.) 131 Fed. 210, 66 C. C. A. 94. The sole question is, was the alteration material? And, if the answer is in the affirmative, it is then for the surety to decide whether he is willing to be bound by a contract to which he did not agree. Of course, he may waive the defense if he chooses, but, if he declines to submit to the changed agreement, he is discharged from the original obligation. It is, -perhaps, more exact to say that the original obligation does not become effective, so far as the surety is concerned, because a substantially new obligation has been substituted therefor, and that no recovery can now be had against the surety upon either; not upon the first, because the parties have, in effect, abandoned it; and not upon the second, because to this the surety did not agree. While the present suit does not arise in precisely this way, the situation is so closely analagous that the legal principles just referred to are still pertinent. The defendant here agreed as surety that a certain contract should be carried out as a whole by his principals; there was a complete failure to fulfill on the part of the principals, and, by their default, the' surety became immediately bound to make good whatever damage the other contracting party might suffer in an effort to have this particular engagement carried out as a whole by other persons. But, concededly, the first agreement, to which alone the engagement of the surety referred, was neither' undertaken nor actually fulfilled by the second contractor. A new agreement was entered into, differing in many particulars from the first; and manifestly, therefore, the surety cannot be affected by what was done under the-second contract, to which he did not agree, unless the differences between the two agreements are differences in details merely, and do not go so far as to make material and substantial changes. In order to determine how much, and how. importantly, the second contract differs from the. first, it will be necessary to examine both, and then to decide whether the differences that undoubtedly exist may be neglected as immaterial, or whether they are so great that the defendant has thereby been relieved from his obligation. He did not bind himself separately to the performance of each item among the number that are comprised in the agreement, but he promised that the whole engagement of his principals— although it was made up of many items- — should be- carried out-; [853]*853and therefore he cannot be affected by the execution and performance of another contract that is materially different as a whole from the agreement to which his obligation refers. Slight differences may not relieve him, but if, separately or in the aggregate, the changes are material, he cannot be bound by the action of other persons to which he did not consent.

The first contract is to be gathered from two writings, both signed by Walker & Son and the Chesapeake Transit Company. By the writing dated September 13, 1900, the contractors obligated themselves:

“1. To lay out and construct a standard gauge railroad, not exceeding 16 miles in length, from a point to be designated by the said company in or near the city of Norfolk, Virginia, by as straight a line as practicable, to Lynn Haven Inlet, and around Cape Henry, through and upon Atlantic avenue, and equip the same ready for operation, in accordance with the estimates and specifications compiled by J. Taylor Cleaves (a copy of which is hereto attached) but instead of laying 56 pound rails, it is understood and agreed that 65 pound relay rails shall be used, with an aggregate cost not to exceed the aggregate cost of 60 pound rails laid new for the same distance. Said work to be done within o months from the date said contractors shall commence work.
“2.

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Bluebook (online)
158 F. 850, 1908 U.S. App. LEXIS 4974, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chesapeake-transit-co-v-walker-circtedpa-1908.