Massachusetts Bonding & Ins. Co. v. John R. Thompson Co.

88 F.2d 825, 1937 U.S. App. LEXIS 3256
CourtCourt of Appeals for the Eighth Circuit
DecidedMarch 30, 1937
Docket10735
StatusPublished
Cited by17 cases

This text of 88 F.2d 825 (Massachusetts Bonding & Ins. Co. v. John R. Thompson Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Massachusetts Bonding & Ins. Co. v. John R. Thompson Co., 88 F.2d 825, 1937 U.S. App. LEXIS 3256 (8th Cir. 1937).

Opinion

SANBORN, Circuit Judge.

This appeal is from a judgment for the appellee in an action at law brought to recover upon a bond executed by the appellant to insure the performance of a construction contract.

John T. Peek, on December 8, 1932, contracted with the John R. Thompson Company (hereinafter referred to as the plaintiff) to remodel the first floor and connecting basement of the Sexton Hotel Building in Kansas City, Mo., which premises the plaintiff had leased under a 25-year lease, at a rental of $1,000 a month. The remodeling was to be done for the purpose of adapting the premises for use by the plaintiff as a restaurant. This work, by the terms of the contract, was to be in accordance with certain drawings and specifications made a part of the contract, and was to be completed within sixty working days, for a price of $29,400. One of the provisions of the contract was: “It is further agreed that said party of the first part [plaintiff] may at any time during the progress of said work make any additions to, or alterations or deviations from, said drawings and specifications, without invalidating this agreement; but a fair value of the same shall be added to or deducted from, as the case may be, the moneys herein agreed to be paid by the said party of the first part, * *

On December 13, 1932, Peek, the contractor, as principal, and the Massachusetts Bonding & Insurance Company, as surety, executed and delivered to the plaintiff a bond for $15,000, conditioned as follows: “Now, Therefore, the condition of this Obligation is such that, if the Principal shall faithfully perform the Contract on *827 his part and shall fully indemnify and save harmless the Owner [plaintiff] from all cost and damage which he may suffer by reason of failure so to do and shall fully reimburse and repay the Owner all outlay and expense which the Owner may incur in making good any such default, and * * * if the Principal shall pay * * * for labor or materials * * * then this Obligation shall be null and void, otherwise it shall remain in full force and effect. * * * ” The bond also contained this provision: “And Provided, that any alterations which may be made in the terms of the Contract, or in the work to be done under it, or the giving by the Owner of any extension of time for the performance of the Contract, or any other forbearance on the part of either the Owner or the Principal to the other shall not in any way release the Principal and the Surety or Sureties, or either or any of them, their heirs, executors, administrators, successors or assigns from their liability hereunder, notice to the Surety or Sureties of any such alteration, extension or forbearance being hereby waived.”

The contractor commenced work on December 18, 1932, and continued until December 29, 1932, when the work was suspended to permit the plaintiff to alter the drawings. On or about that date, the contractor and the plaintiff agreed, by “Contract Change No. 1,” to eliminate the ventilating and steam fitting from the contract, and that this elimination should reduce the contract price by $3,824. On April 20, 1933, “Construction Order No. 2” was executed by the plaintiff and the contractor. This order canceled the original drawings and specifications, and substituted new ones. It fixed the value of extra labor and materials required by the new drawings at $13,987.84. The construction order expressly made the new drawings and specifications a part of the original contract. The important change in the work brought about by the changed drawings was the relocation of the kitchen. This relocation, together with changes incidental thereto, accounted for $9,000 of the increased cost. Other extras were a dumb waiter, a platform lift, additional electrical work, and more expensive material for the toilets. On April 20, 1933, the contractor commenced work under the revised or substituted plans.

The bond in suit had been procured through Thomas McGee & Sons, general agents of the surety, and was executed by a Mr. Eisenman, head of the general agents' bond department and attorney in fact for the surety. About May 22, 1933, Eisenman was notified by the contractor of the changes in the drawings and in the contract price. Thereupon he sent the contractor an invoice calling for an additional premium on the bond of $152.45, accompanied by the following letter:

“Thomas McGee & Sons
“Insurance and Surety Bonds
“Third Floor
“Title and Trust Bldg. 10th and Walnut St.
“Kansas City, Mo.
“May 22nd, 1933.
“Mr. John T. Peek,
“c/o Peek Construction Co.
“404 Victor Bldg.
“City.
“Re: Contract Bond — John T. Peek, doing business as Peek Construction Company to John R. Thompson Company $15,000.00 — guaranteeing completion of contract for remodeling of storeroom at 15 West 12th St., Kansas City, Missouri.
“Dear Sir:
“Referring to the additional premium of $152.45 charged under this bond, wish to advise that a premium charge on a contract bond is always figured on the estimated contract price subject to adjustment at the completion of the work on the actual amount paid to the contractor. This premium charge applies in connection with all contract bonds unless the amount of the contract bond is less than 20% of the contract price.
“In view of the fact that there was a radical change under this contract with regard to the amount of work to be done and very considerable increase in the contract price, we have billed you for this additional premium at this time instead of waiting until the job was completed; therefore, the reason for this premium charge.
.“We further wish to advise that under the contract bond it is provided that alterations may be made in the terms of the contract, or the work to be done under it, or the giving by the owner of any extension of time for the performance of the contract, and the doing of these things shall not in any way release the principal and the surety or sureties, or either of them under the bond, and notice to the surety or sureties of any such alteration, extension or forbearance is waived. Therefore, the surety company is entitled to this *828 additional premium under the conditions of the contract and the bond, and on the completion of the work there will be an adjustment of premium according to the actual total amount received by you for the work done under this contract, and as before stated, this additional charge is made at this time because of the very radical changes in the contract and bond and the large increase in work to be done.
“Yours very truly,
“Thomas McGee & Sons
“By: E. F. Eisenman.
“EFE :MB
“Enc.”

The contractor received the letter and invoice in due course of the mail, and forwarded it to the plaintiff’s architect.

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Cite This Page — Counsel Stack

Bluebook (online)
88 F.2d 825, 1937 U.S. App. LEXIS 3256, Counsel Stack Legal Research, https://law.counselstack.com/opinion/massachusetts-bonding-ins-co-v-john-r-thompson-co-ca8-1937.