Reissaus v. Whites

106 S.W. 603, 128 Mo. App. 135, 1907 Mo. App. LEXIS 560

• Court: Missouri Court of Appeals
• Decided: December 17, 1907
• Status: Published

Opinion

NORTONI, J.

The suit is on a builder’s bond. Plaintiff recovered in the circuit court against both the builder and his sureties. Defendants appeal. The plaintiff, Reissaus, entered into a contract with the defendant, W. Vas Whites, a contractor ami builder, whereby Whites undertook to do certain excavating, furnish all the material, labor, etc., and erect for plaintiff a certain brick building, etc., in St. James, Missouri. For the same consideration, and at the same time, defendant Whites, the builder, executed and delivered to plaintiff a bond conditioned for the faithful performance of the building contract and defendants J. S. Williams, N. Whites and O. W. Pace became jointly and severally obligated with the contractor, W. Vas Whites, in this bond. The builder failed to comply with several stipulations of the contract with respect to the payment for materials used by him in constructing the building. These accounts being lienable in their nature, plaintiff proceeded, under competent provisions of the contract to that effect, to pay the same and relieve his building from the liens. Plaintiff having expended several hundreds of dollars in excess of the amount due the contractor in discharging these accounts, prosecutes this suit against all of the obligors in the bond, assigning the breach above mentioned. The case was referred in the circuit court. The referee having heard the evidence, made a finding of fact and recommended judgment for the plaintiff against all of the defendants. The court overruled defendants’ exceptions to the report of the referee and entered judgment in accordance with the finding of fact and recommendation therein given. The record discloses an appeal on the part of all . the defendants. However this may be, there is no argument advanced here seeking to reverse the judgment of the circuit court insofar as defendant W. Vas Whites is concerned. All of the arguments advanced in this court are in favor of those defendants other than the contractor himself, upon the theory that they are sureties in his bond and as such, are released from its obliga.tion because of certain changes made in the original contract by the principal parties thereto without their consent.

In support of the judgment, it is argued on behalf of the plaintiff, first: that the several defendants last mentioned are principals and not sureties in the bond, and are therefore not entitled to the ordinary rights and equities accruing to sureties. And second, that even though they are sureties in the bond, the several admitted changes in the contract were made with the consent of such sureties given by them at the time of the execution of the contract, as is manifested by the express terms of the instrument, which, it is asserted, contemplated by competent provisions, that changes from its original terms might be made by the principal parlies. If this latter proposition of fact be true, the sureties remain liable as a matter of course, notwithstanding such changes, for the reason it is so nominated in the bond. The circuit court gave its judgment upon the theory that the defendants, other than the contractor, were principals with him, and not sureties in the bond. The first inquiry is, are the defendants other than the contractors, sureties? In order to reach an accurate solution of this question, it is important to ascertain, first, with precision, just what a contract of suretyship is and how such a contract may be identified and determined from that of the principal. Now a surety, as we understand it, is a person who, being liable to pay a debt or perform an obligation, is entitled, if it is enforced against him, to be indemnified by some other person, who ought himself to have made payment or performed the obligation before the surety was required to do so. Or, in other words, it is the established law that whenever, as between two or more debtors liable to the creditor, to pay the same debt or perform the same obligation, it is the debt or obligation of one of them, the others may be said to be and are sureties for him who, as between themselves, should have first paid the debt or performed the obligation. [Smith v. Shelden, 35 Mich. 42; Wendlandt v. Sohre, 37 Minn. 162; Cassan v. Maxwell, 39 Minn. 391; Brandt on Suretyship (3 Ed.), sec. 1; 27 Amer. & Eng. Ency. Law (2 Ed.), 431, 432; Stern’s Law of Suretyship, secs. 1-6.]

It is argued on behalf of the plaintiff, however, that because the obligors are not expressly denominated or pointed out in the bond, the one as principal and the others as surety, they all became principals by executing the bond Avhich, in express terms, declares itself to be a joint and several obligation. Now while it is very true that one who is in fact a surety may, by the express terms of a contract, obligate himself as a principal so as to exclude the idea ’ of surety-ship and thus waive the rights and equities which accrue to him as incident to the contract of suretyship (Picot v. Signiago, 22 Mo. 587; McMillan v. Parkell, 64 Mo. 286; Beers v. Wolf, 116 Mo. 179, 22 S. W. 620; Wood v. Motley, 83 Mo. App. 97; Brandt on Suretyship [3 Ed.], sec. 51) it is not true, in the absence of some express words signifying as much, that several persons by merely becoming jointly and severally bound to pay a debt or discharge an obligation which, as between themselves, is the debt or obligation of one of their number, thereby become as principals in such a sense as to forego the rights and equities incident to suretyship. The fact that those of the obligors other than the principal debtor are not mentioned or identified in or upon the writing as sureties is entirely without influence. This is true for the reason if it appears that there is a principal contract which, in the first instance, is the obligation of one of their number (Brandt on Suretyship [3 Ed.], sec.19) and that this' principal obligation is assumed in the full measure of its scope by the joint and several obligors under such circumstances as will permit them, in event they are required to pay the debt or any part thereof, to recover so much as they have discharged from the obligor whose duty it was to first discharge the entire obligation, then the contract is one of suretyship, notwithstanding the precise form of the words employed. The form of words is wholly immaterial unless the obligors expressly signify a purpose to waive their rights as sureties and become bound as principals, and if this intention is not signified, the ordinary rights and equities incident to suretyship arise, not from the particular words, but from the position the parties have assumed toward each other with respect to the debt or obligation assumed. [Brandt on Suretyship (3 Ed.), sec. 1; Smith v. Shelden, 35 Mich. 42; Clark v. Turk, 50 S. W. (Tex. Civ. App.) 1070; 27 Amer. & Eng. Ency. Law (2 Ed.), 432.]

The bond in suit is, by express provision, a joint and several obligation whereby all of the defendants, without denominating any one as principal, or any one as surety, firmly bo'und themselves, their executors, etc., to pay the plaintiff, Charles Reissaus, etc., conditioned as follows: “The condition of this-obligation is such that if the above bounden, W. Vas Whites, his executors, . . , shall in ail things stand to and abide by and well and truly keep and perform the covenants, conditions and agreements in the above mentioned contract, entered into by and between the said Charles Reissaus and the said W. Yas Whites,” etc., etc., and shall fully perform the contract, etc., then the obligation to be void; otherwise to remain in full force. There appears in this a joint and several undertaking on the part of the obligors other than the contractor himself, to respond for the default of the contractor and indemnify the obligee, Reissaus, to the extent of loss entailed upon him by reason of the default of Whites, the contractor. It thus appears that Whites, the contractor, is the principal obligor and therefore it was his duty to first discharge whatsoever obligation had accrued to Reissaus on the bond because of his, the contractor’s, default- and thus "save harmless his co-obligors, the other defendants. Not having done so, it was the privilege of Reissaus to proceed against all of the defendants and if he shall recover, it is certainly beyond cavil or controversy that the several defendants other than the contractor, have a right, to demand and enforce indemnity and not contribution from the contractor, Whites. This being true, there is present every element of suretyship in the undertaking before us and the defendants, J. S. Williams, N. Whites and O. W. Pace are adjudged to be sureties and as such, entitled to the rights ordinarily incident to such relation.

2. It is insisted the sureties are released from the obligation of the bond because the parties made numerous changes in the principal contract without their consent. The argument predicates upon the familiar proposition that a surety being a favorite in the law, has a right to stand upon the strict terms of his contract and that any change therefrom' by the principal parties, without his consent, will operate his release for the reason such changes destroy the identity of his contract and substitutes another and distinct undertaking for that assumed by him in the first instance. In accord with this doctrine, it has frequently been determined there is no implied obligation on the part of the surety that he has undertaken more or other than that expressed in his contract, for it is only to the extent and in the lhanner and under the circumstances pointed out in the obligation, he is bound, and no further. [Stewart v. Miller, 9 Wheat. 681; s. c., 4 Wash. C. C. 26; Nofsinger v. Hartnett, 84 Mo. 549; Oberbeck v. Mayer, 59 Mo. App. 289; Bauer v. Cabanne, 105 Mo. 110; Brandt on Suretyship (3 Ed.), sec. 106; 27 Amer. & Eng. Ency. Law (2 Ed.), 489-496; Martin v. Whites, ante, p. 117, 106 S. W. 608.]

Invoking the principle referred to, the sureties point out numerous changes by the principal parties from the stipulations of their contract as manifested by the plans and specifications which Avere made parcel thereof, and that these changes were made Avithout their consent. In respect of this matter of defense, the referee found the facts as follows:

(a) That under the west storeroom, a stone wall was substituted by the contractor at the request of the owner and architect instead of a wood girder mentioned in the specifications, and this change was Avithout the consent of the sureties. It appears the contract required the builder to remove the dirt excavated and not permit it to remain under the building. The contractor failed to carry out this provision. The owner and architect determined that to permit the dirt to remain under the building would cause decomposition of a wood girder called for in the specifications and insisted upon the contractor removing the same. They proposed as an alternative, however, that he might permit the dirt to remain if he chose and erect a stone wall as a support for the floor joists in lieu of the wood girder, the wall to be paid for at the price provided in the. contract for other rubble masonry. Nothing appears tending to show the value of the wall or the amount paid therefor. Suffice to say it was paid for at the same rate provided in the contract for certain other rubble masonry which was authorized and called for in the specifications, and from this fact it may be gathered that no loss was entailed upon the contractor thereby. However that may be, enough appears to show a new and additional stipulation was engrafted upon the principal contract by the. principal parties without the consent of the sureties. This new stipulation operated to change the terms of the contract between the parties from those assumed in the bond.

(b) The referee found that certain concrete work was laid along the foundation walls and that this work was not contemplated or specified in the contract. The contractor failed to remove certain refuse dirt as required and as it was feared the dirt would injure the brick walls because of its communicating dampness thereto, the owner and architect insisted upon its removal. As an alternative, however, they agreed upon and permitted the contractor to build a line of concrete around the Avails, Avhich they accepted in lieu of removing the dirt. The sureties were not consulted and did not consent thereto. The concrete work mentioned was paid for by tbe owner presumably at a fair price. However this may be, the fact remains that the principal parties, in proposing and accepting the alternative mentioned, engrafted an additional stipulation upon the principal contract without the consent of the sureties, which operated to change its terms from those assumed in the bond.

(c) The referee also found that by the agreement of the architect, who' was plaintiff’s agent, and the contractor, and without the consent of the sureties, a skylight differing from the one described in the specifications was selected and installed. No extra expense was entailed on this account. The cost of the skylight installed was about the same as would have been that specified. This change was at the instance of the contractor. It Avas a concession made to him without the consent of the sureties. It nevertheless engrafted a stipulation upon the contract between the original parties which operated to change its terms from those assumed by the sureties at the time of executing the bond.

(d) The referee further found that the contractor, at the request of the owner, put in a door not specified under a stairway, and the extra cost entailed upon him thereby was $5.00. That on the order of the owner, a door was substituted in one place where a AvindoAV was called for in the specifications and this change entailed an extra cost of $5.75 from the contract. That at the instance of the OAvner, the contractor put in wainscoting in the kitchen which was not specified in the contract, and this change entailed an extra cost of $8 upon the contractor. None of these changes were consented to by the sureties. There is nothing in the record tending to show the contractor received extra pay for any of these items. The record discloses that he received only the amount due him under the provisions of the contract as it was written. However this may be, each of the changes above referred to engrafted a new stipulation upon the principal contract without the consent of the sureties, which operated to change its terms from those assumed by the several sureties when they executed the bond.

It is suggested that if some of these changes made by the owner «and contractor entailed no additional expense and the extra expense of others was fully paid to the contractor by the owner, then the liability of the sureties was in no sense enlarged thereby and such changes should be treated as immaterial deviations, etc. Now it is proper to say here that the doctrine with respect to immaterial deviations from the contract in respect of acts of omission and commission in matters of performance is not pertinent to the case in judgment at it was to that of Martin v. Whites, ante, p. 117, 106 S. W. 608, for the reason here the matters complained of are not alone mere deviations in performance from provisions, such as those designed to regulate the mode and manner of payment, etc., nor are they alone deviations in the matter of performance from the plans and specifications after which the building should be fashioned, but on the contrary, the complaint is that new and additional terms and stipulations have been added by agreement of the principal parties to the principal contract without the consent of the sureties, which new stipulations so completely change the principal contract by deducting from and adding to its terms as to entirely destroy its identity. There is a noticeable distinction in the cases dealing with the two propositions suggested, although it is not often pointed out, and the law is somewhat confused by reason of the distinction being overlooked at times. The one class of cases, those dealing with mere permissive deviations in acts and omissions of performance without any agreement, express or implied, between the owner and the contractor thereabout, turn upon the question of the materiality of such deviations and the inquiry directs itself to ascertain whether or not the deviation was substantial or insubstantial, when considered with reference to the intention of the parties, as manifested in the contract when viewed from the standpoint of the surety’s risk. For example, see Smith v. Molleson, 148 N. Y. 241 and other authorities cited in Martin v. Whites, ante, p. 117, 106 S. W. 608.

The other class, of which the case at bar is one, where the original contract has been departed from; not merely a permissive departure, however, but a departure made in conformity to one. or more subsequent express or implied agreements; turn upon the question of whether or not the identity of the surety’s contract has been destroyed by the principal parties adding to or deducting one or more new terms or stipulations therefrom without his consent, and if so, the surety is discharged. In such cases it is wholly immaterial whether the surety’s risk is increased or diminished. The mere destruction of the identity of the contract without the surety’s consent is sufficient to operate his release. The reasoning of the law is, the surety is not bound by the old contract, for that has been abrogated by the new; neither is he bound by the new contract, because he is no party to it; nor can it be split into parts so as to be his contract to a certain extent and not for the residue; and therefore the surety is either, bound in tolo or not at all. [Beers v. Wolf, 116 Mo. 179, 22 S. W. 620; Warden v. Ryan, 37 Mo. App. 466; Evans v. Graden, 125 Mo. 172, 28 S. W. 439; Fullerton Lumber Co. v. Gates, 89 Mo. App, 201; Bethune v. Dozier, 10 Ga. 235; Prairie State Natl. Bank v. U. S., 164 U. S. 227, 17 S. C. Rep, 142; Burnes Est. v. Fidelity, etc., Co., 96 Mo. App. 467; Leavel v. Porter, 52 Mo. App. 632; Brandt on Suretyship (3 Ed.), sec. 427.]

Whatever may appear with respect to the cost of several of the changes above mentioned, the referee’s report shows clearly the following items entailed extra cost upon the contractor by reason of the changes mentioned: on account of the door under the stairway, $5; on account of a door being substituted for a window, $5.75; and on account of wainscoting in the kitchen, $8. All of these were changes from the specifications which were parcel of the original contract. It appearing the contractor received from the owner only the amounts due under the contract, therefore no additional compensation was allowed him on account of these changes. In such circumstances they were certainly not immaterial deviations for they actually increased the burden of the contractor to the amount of $18.75, as found by the referee, and thereby enlarged the obligation on which, it is now sought to charge the surety. These •changes of themselves are sufficient to operate the sureties’ discharge. [Beers v. Wolf, supra.]

3. It is argued on the part of plaintiffs that the contract contemplated changes should be made from its original terms as the building progressed, and for that reason the sureties are not entitled to be discharged. It is very true that when the building contract authorizes variations and changes from the specifications to be made, such changes may be made in conformity thereto without discharging the sureties. This proposition rests upon the fact that the sureties have consented in the first instance to the changes in the prescribed manner. [Fullerton Lumber Co. v. Gates, 89 Mo. App. 201; Eldridge v. Fuhr, 59 Mo. App. 44; Burnes Est. v. Fidelity, etc., Co., 96 Mo. App. 467, 70 S. W. 518; Beers v. Wolf, 116 Mo. 179.] In this connection, after providing the money shall be paid out only on certificates of the architect as the work progressed and on a basis of seventy per cent of its value, the only provision of the contract referring to future changes, is as follows: “subjected to additions and reductions as may be hereinafter provided.” Now it is argued from this the parties contemplated additions and reductions should be made to the terms of the contract. The language quoted certainly goes no further than to authorize, the per cent mentioned, to be ascertained with reference to the estimated value of the labor and matearíais in place under the original contract and such “additions and reductions” as might be “hereinafter provided.” There is no provision thereafter in the contract nor thereinbefore for that matter,- providing for changes from the original stipulations and the words above quoted which are invoked in aid of this argument, cannot be reasonably construed to confer the consent of the sureties and authorize the principal parties to change the original contract.

For the reasons given, the judgment will be reversed and the cause remanded with directions to the trial court to enter judgment for the plaintiff: against the principal defendant, in accordance with the finding of the referee, and discharge the defendant sureties. It is so ordered.

Bland} P. J., and Goode, J., concur.