City of Chester v. National Surety Co.

74 S.E. 37, 91 S.C. 17, 1912 S.C. LEXIS 187

• Court: Supreme Court of South Carolina
• Decided: March 13, 1912
• Docket: 8136
• Status: Published

Opinion

The opinioni of the Court was deliv' ered; -by

Mr. Justice; Hydrick.

Th'i-s action wa's brought on the bond given by defendant as -surety for the performance of a contract -made by 'the Greer Filter Manufacturing 'Company with the plaintiff to install a filter plant in connection with the plaintiff’s system, of waterworks. The contract provides ■that the filter plant shall “'be built in strict accordance with the city engineer’s 'Specifications hereto attached * * * and according to all the conditions and guarantee's as set forth ini said specifications.” The specification® provide that the successful bidder “roust agree to complete the work within ■six weeks after the date when he ha® been notified by the city that the filter building is complete and the foundations are ready.” The bond provides that if the principal shall default in the performance of the contract according to its terms, or s'hail abandon the work, “the obligee shall immediately notify the company,” and thereafter the company, shall have the right to assume and sublet the contract. The contract and bond were executed in August, 1909. On March 1; 1910, 'the filter manufacturing company wrote the city engineer asking for some definite information as to when they could go to work, saying that it would take “about three weeks to complete the plant and get it ready to' run.” On March 3d, the city engineer replied, “we will he ready for you to start the filter installation on March 15th.” On March 17th, he telegraphed the manufacturing company: “Filter building ready. When can you1 start installation? Answer mail.” On March 18th, the company answered: “We will not be ready to start work at the city of Chester before April 1st. We have been: delayed so many times in the delivery of our material that we stopped all our orders-, until we had definite information that you would he ready for u®. -It will probably require another week for the material to all be assembled in -tíre stop®, and a week for delivery. We trust this will not inconvenience you whatever, and assure you that we will be on hand' at that time.” On March 21s't, the city- engineer wrote the company: “We note that you will commence' the installation of the filters1 on April 1st, and beg to advise that same will be satisfactory to us1.” 'On April 5th, the company wrote the city engineer that it had discovered that it would be nearly May 1st before the material for the work could be gotten ready. On April 7th, the city engineer replied: “Filter plant must be completed according to contract, which is six weeks after notification that building- is ready. April 1st is date set by you, and agreed to by this city, as date of notification.” On April 13th, the company replied1: “We will endeavor to ship tine remainder of the material necessary to complete your work promptly, and will try to have the work completed by May loth.” On April 28'th, the company wrote that it would be between May 15th and June 1st before the material could be assembled at Chester, and' asked that 'the time for comple’tion of the contract be extended thirty days from June 1st. On April 30th, the mayor of Chester replied,' declining to grant the. extension, and saying that the city would expect the contract to be completed on May 15th. On the same day (April 30'tJb), thie city attorney notified defendant of the “impending default,” stating the facts, and that the city would look to defendant for the completion of the contract according to its terms, and hold defendant responsible for all damages resulting from the failure to so complete it. On May 14th, the city attorney gave defendant formal notice that the manufacturing company had' defaulted in the performance of the contract, that the time limit had expired, and the company bad done n'o work at all on the filter plant, and asked whether defendant intended to assume the contract and carry it out. After some further correspondence, both sides reserving their rights, the defendant declined 1» assume the contract. The Court directed a verdict for plaintiff for the damages proved, about which there was no dispute.

Appellant correctly states the issues' raised by the appeal as follows: “1. Whether the surety is discharged by extension of time of performance of the contract without its knowledge or consent; 2. Whether time was of the essence of the contract; -and if so, was there a waiver of same; 3. Whether immediate notice was given to the surety of the default of the principal obligor, as provided in the contract; and, from these considerations-; 4. Whether the Circuit Judge erred -ini refusing -to grant a nonsuit and in directing a verdict, taking' from the jury the questions1 of fact involved.”

1 In answering' the first is-sue, the first question- is: Was there any extension’ of time ? For, obviously, if there was no extensión of time, the question whether -defendant was discharged thereby, does not arise. We cannot accept appellant’s contention that the telegram of March 17th definitely fixed the time frond which the six weeks provided in the contract for the completion of the work should begin to- rum. The testimony shows that several letters had previously passed between the -city- -engineer and the filter manufacturing company relative to- the time when the filter building would be -camipleted. The company was apparently seeking this information for -it-s own benefit and convenience in determining when to order tine- materials for the plant to be shipped. By the terms of the contract, the time did not begin to run, until- the city gave notice that the filter building' was complete- -and the foundations were ready. The question asked in the telegram of March 17th, “when can you start installation-?” -shows clearly that that telegram was- no-t intended, -and the answer shows equally clearly Jhat it was- not -accepted, as the notice required 'by the contract to fix the time from which the six weeks should begin to run. The letter of the company of March 18'th, a-nd the reply -of the- city of March- 21st, definitely fixed that time as April 1st, -and the correspondence -shows that it was so understood and acted upon afterwards by b-oth parties to the contract. There was no extension of that time by the city.

2 Whether time is of 'the- essence of a contract is- ordinarily to be determined by the construction of the contract in the light of the settled- principles of law upon- that subject. A's in all other questions of-.construction, the intention of the parties should! prevail, and it should be ascertained, if if cam be, from the language which they have used, which may be read .in the light of the character and purpose of the contract and the facts and circumstances under which it was made, and- the construction put upon it by 'the parties themselves. Applying these principles to the construction of this contract, it is clear that the parties intended, that -time should 'be of the essence of it,—at least to the extent of making the principal and surety responsible for all damages occurring to the city 'by reason of the failure of the principal to perform the contract within! the time limit agreed upon, and1 to- that extent alone, did 'the Circuit Judge hold that time was of the essence of it.

3 The next question is1: Was there a waiver by the city of the time limit provision of the contract? Appellant contends 'that such a waiver must be implied from the failure to insert the provision with regard' to' the time in the body of the contract, instead of adopting it 'by a mere reference to the specifications. T'he same might be said of any other provision of the specifications. The agreement to perform the contract according to' the specifications adopted the several provisions of the specifications as effectually as if each had been written1 into the contract, itself. In fact, the specifications were adopted- as the contract—they specified it. So far from waiving the provisions. a-s> to time, the evidence shows that compliance with it was- persistently insisted upon.

4 The condition of the bond that “die obligee shall immediately so notify” the defendant of its principal’s default was strictly and literally complied with. Appellant is mistaken ■in supposing that the city was- under obligation to notify the surety of any- -default, until the time limit had expired; because the principal had -every moment of that time to perform 'the contract, and until that time had elapsed1, the contract being still unperformed, there was- no default. Nevertheless, as soon as the city ascertained from i'ts correspondence with the filter manufacturing company that it could not or would not complete the work within1 the time limit agreed upon, it notified the defendant of the “impending default,” notwithstanding the principal still had two weeks tO' complete the job-; and -on the very day that the default actually occurred—that is, the day that the time limit -expired,—the contract being still unperformed,—the defendant was notified of the- default.

5 There was no issue as to any matter of fact—at least a® to any fact about which more than one reasonable inference -could be drarwn. Therefore, the Court properly directed the verdict. Judgment affirmed.

Only Mr. Chief Justice Gary and Mr. Justice Woods participate in this opinion and concur.