National Surety Co. v. Price

172 S.W. 1072, 162 Ky. 632, 1915 Ky. LEXIS 138
CourtCourt of Appeals of Kentucky
DecidedFebruary 10, 1915
StatusPublished
Cited by17 cases

This text of 172 S.W. 1072 (National Surety Co. v. Price) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Surety Co. v. Price, 172 S.W. 1072, 162 Ky. 632, 1915 Ky. LEXIS 138 (Ky. Ct. App. 1915).

Opinion

Opiniok op the Court by

William Rogers Clay, Commissioner

Affirming on original and cross-appeals.

In February, 1912, W. B. Price contracted with Nicholas Collett to build for him a residence in Audubon Park, a suburb of Louisville, for the sum of $9,200. To insure the performance of the contract Collett executed and delivered to Price a bond with the National Surety Company as surety. Work on the building was begun in the month of March. About the first of September Collett began to default. The local agent and representative of the bonding company was notified. On September 26th formal written notice was sent to the bonding company that Collett had defaulted in the contract, and that the work would be eompléted under the supervision of the architect, as the contract required. Meyer was the architect, and had full authority to represent the owner.

This action was brought to enforce certain mechanics’ liens on the property, and to determine the liability of the surety. The case was referred to the master commissioner to hear evidence and report. Several liens, aggregating $4,066.87, were allowed. The commissioner further reported that Price, the owner of the building, was entitled to a judgment for the amount of these [634]*634claims, subject to a credit of $1,928.82, tbe balance of tbe contract price in bis bands. Tbe lien claim of Henry J. Scboo was disallowed. Judgment was entered in conformity with tbe commissioner’s report. From that judgment tbe National Surety Company and Henry J. Scboo appeal, and W. B. Price, tbe owner, prosecutes a cross-appeal.

We shall first discuss tbe liability of tbe surety company. Sections 2 and 4 of tbe bond are as follows:

“2. Tbe obligee shall, at tbe times and in tbe manner specified in said contract, perform all tbe covenants, matters and things required to be by tbe obligee performed; and if tbe obligee default in tbe performance of any matter or thing in this instrument, or in said contract agreed or required to be performed by tbe obligee, the company shall thereupon be relieved from all liability hereunder.”

“4. If at any time during tbe prosecution of tbe wort specified in said contract to be performed there come to tbe notice or knowledge of tbe obligee tbe fact that any claim for labor performed or for materials or supplies furnished tbe said principal in or upon said work remains unpaid or that any lien or notice of lien for such work, materials or supplies has been filed or served, tbe obligee shall withhold payment from the' principal of any moneys due or to become due to the principal under said contract until tbe payment of such claim or tbe cancellation and discharge of such lien or notice of lien, if any, and will so notify tbe company, giving a statement of tbe particular facts and amount of each such claim, lien or notice of lien.”

It is tbe contention of tbe surety company that it was released from all liability under tbe bond by reason of tbe fact that Price, tbe obligee, after having notice of unpaid claims, not only failed to withhold payments to the contractor, but also failed to give reasonable notice of such facts to tbe surety company. To determine this question it will be necessary to give a somewhat detailed statement of the evidence.

A!s before stated, Meyer was Price’s agent for tbe purposes of tbe contract. The work on tbe contract was begun in March, 1912. The Corey-Scheffel Lumber Company delivered $75.24 worth of lumber on April 9th. Ob April 12th that company wrote to tbe architect that that much lumber bad been delivered. Tbe letter also contains the following statement:

[635]*635“Mr. Seheffel advised that you will protect us on all material we notify you about. We hope that you will keep this matter confidential, as we do not care to have the matter get to Mr. Collett.”

On May 15th a second letter was sent to Meyer, notifying him that $312.75 worth of lumber had been delivered up to that date. On May 20th a third letter was sent notifying Meyer that the firm had delivered $335.64 worth of lumber. Each of the letters contains a paragraph similar to the one above quoted. On May 21st Meyer wrote to the Corey-Scheffel Lumber Company, telling them that some time prior thereto he had written them that the matter would have to be brought to the notice of Mr. Collett, and that he could not make settlement unless he received an order through him. The letter also suggested that the firm get a settlement from Collett without troubling the writer. Mr. Scheffel testifies that he wrote the letter above referred to. Before 'he furnished the lumber he went to Meyer and told him that he would expect him (Meyer) to protect him. On June 10, 1912, he received $200 on his account. He possibly had four or five conversations with Meyer about getting his money. Meyer said that there would be enough to settle his claim. . For this reason he was not uneasy about it until towards the end. Both before and after the credit he tried to get money from Meyer. When he received the $200 Collett gave him an order for it. When the payment was made it was satisfactory and he accepted it. He was in Meyer’s office every two or three weeks after the payment and discussed the account with him. He was not looking to Collett for his moneyhe was looking for the architect and builder to protect him.

J. Huy Everet, who had a claim for the tin work and roofing, which was begun in April or May and,not completed until the fall, testified that he received an older for $500 on July 20th. His whole debt was only $672. The $500 was all he asked for. The work was not entirely completed, and he was not in the habit of asking for full payment until the work was completed. The payment was satisfactory to him.

E. L. Hughes, a member of the Hughes-Byron Company, testified that after he had furnished about $200 worth of material, he asked payment on account, and was given an order by Collett on May 28th, for $150. [636]*636This order was presented to Meyer and 'paid. The only interview that he had with Meyer was at the time of this payment. The payment of the $150 on May 28th was entirely satisfactory. Thought that prior to that time he had talked to Meyer, and that after that time he also talked to Meyer about getting money, but was not positive as to this. Was not able to state any conversation he had had with Meyer, because practically he had had none about the money.

Henry Schoo testified that a day or two before he filed his mechanics’ lien, during the month of September, he had a talk with Meyer in regard to his claim, and that Meyer promised that if he would go ahead and complete the work he would see that he was paid. On the question in controversy Mr. Meyer, the architect, testified on cross-examination as follows:

‘ ‘ Q. Mr. Meyer, when did you first learn that Collett was not paying his sub-contractors, or any of them? A. The first part of May, as a protection both to the owner and people — to protect one side as well as the other, we tried to keep track of the contractor — whether they were paying out to the materialmen the money we were paying out on the contract; and from time to time we noted any default with these people, and, as a matter of fact, Mr. Collett himself would tell us of different bills he had not paid, and promised to pay these bills. Q. When did that first begin? A. So far as they were not paid constantly, I heard from his contract — different bills he had n'ot paid. Q. Along in April and May — as early as that? A.

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Bluebook (online)
172 S.W. 1072, 162 Ky. 632, 1915 Ky. LEXIS 138, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-surety-co-v-price-kyctapp-1915.