Welch v. Hubschmitt Building & Woodworking Co.

38 A. 824, 61 N.J.L. 57, 32 Vroom 57, 1897 N.J. Sup. Ct. LEXIS 40

• Court: Supreme Court of New Jersey
• Decided: November 15, 1897
• Status: Published

Opinion

The opinion of the court was delivered by

Van Sycicel, J.

This is a case certified by Mr. Justice Dixon under section 247 of the Practice act. Rev., p. 887.

The questions certified, and all the facts which are before this court relating to said case are contained in the certificate hereto annexed. The first question submitted to this court is whether the decisions of the architect, made during the progress of the work, that any portions of the workmanship or materials were not according to the drawings and specifications are final and conclusive. The fifth clause of the contract reads as follows: “ Should any dispute arise respecting the true construction or meaning of the drawings or specifications, the same shall be decided by the said architect, and his decision shall be final and conclusive.”

Part, only, of the specifications is contained in tbe certificate before us, and in that part is the following language: “ The entire work to be done and finished in every part in a good, substantial, workmanlike manner, according to the accompanying drawings and these specifications to the full extent and meaning of the same, and the entire satisfaction, approval and acceptance of the owner and architect.”

In Chism v. Schipper, 22 Vroom 1, it was conceded that parties to a building contract are legally bound by a provision that the decision of the architect shall be final and conclusive on questions whether work done in the course of the erection of the building are within the specifications or not, subject, however, to the implied condition that the decision shall be an honest one.

The case as certified does not advise us whether the architect’s certificate relates to matters within the contract clause, or to those within the specification clause above recited. These clauses must be construed together, proper effect being given to each clause. The contract clause applies, by its terms, to disputes respecting the true construction and meaning of the drawings and specifications; it limits the finality of the architect’s certificate to the construction of the drawings and specifications. The utmost effect that can be given to this certificate, under this language, is, that it shall be conclusive as to the plans, the style, the measurements and the way in which the building shall be constructed. But the workmanship and materials, with respect to their character and quality, must, according to the specification clause, have the approval and acceptance of the owner and the architect.

The defendant cannot be concluded as to these matters by a certificate of the architect. :

Whether, in the exercise of a fair and reasonable judgment, the owner and architect should approve and accept the work and materials, is a question which the defendant has a right to submit to a jury.

In answer, therefore, to the first question, the Circuit Court is advised that if the certificate of the architect relates to matters within the contract clause as above interpreted, it is final and conclusive, otherwise it is not final.

The second question to be answered is, “ Whether, by paying part of the second installment before it was due, the owner discharged the surety from all obligation, or only from obligation with respect to the work which the contract required to be finished in order to render the installment due ? ”

It is well-settled law that a surety, on paying a debt, is entitled to stand in the place of the creditor and be subrogated to his rights, and he is entitled to the benefit of the securities received by the creditor from the principal -debtor. King v. Baldwin, 2 Johns. Ch. 554; 2 Am. L. Cas. 244; De Coly. Prin. & S. 438, 439, and cases cited.

In Calvert v. London Dock Co., 2 Keen 638, the court, after stating the rule to be that if the surety pays the debt he is entitled to all the securities possessed by the creditor, says the question always is, whether what has been done lessens that security.

The second payment, as appears by the contract, was to be $785, to be paid when the house was enclosed, verandas finished, excepting outside steps, and the blinds hung.

So far as appears in the certificate, the work to be done before the second payment was earned never was done by the contractor. The owner held in his hands a sum representing the value of that work, so far as it had been completed by the contractor, which sum was in effect a security in the hands of the owner that the contract work would be completed for the price agreed upon. The owner could have held and applied it to paying for the completion of the building. The payment of it to the contractor, when he had no legal claim to it under his contract, operated to the direct prejudice of the surety. It diminished the security which the owner had, and which he should have availed himself of in ease of the surety, and thereby the surety was discharged from all obligation.

Any material alteration in the terms of the contract will release the surety without regard to the extent of the injury to the surety. He has a right to stand upon the very terms of the contract. Warden v. Ryan, 37 Mo. App. 466 ; Judah v. Zimmerman, 22 Ind. 388 ; Mayhew v. Boyd, 5 Md. 102; Johnston v. May, 76 Ind. 293; Brandt S. & G., § 397.

A surety on a building contract, where the principal is to be paid by installments, is discharged if the principal is paid faster than the contract provides. General Steam Navigation Co. v. Rolt, 95 Eng. Com. L. 550; Calvert v. London Dock Co., 2 Keen 638.

And a discharge will be created by a departure from the terms of the contract respecting payments, though no injury is shown. Simonson v. Grant, 36 Minn. 439; Ryan v. Morton, 65 Tex. 258.

In this state it is held that a valid agreement between the holder of a note and the maker, to extend the time of payment, will discharge the. surety who is not a party to such agreement, and this rule in nowise depends upon the extent to which the surety may be prejudiced. Nightingale v. Meginnis, 5 Vroom 461.

The third question submitted is, “Whether, if the contractor refused or neglected to supply, &c., and on that account the owner, after three days’ notice, prevented the contractor from proceeding with the work, and himself completed the building, he can recover from the surety the reasonable expense of completion above the unpaid part of the contract price, in view of the express provision that he may deduct the expense from the price ? ”

The provision to which reference is made in this question was manifestly inserted to permit the owner, in case he could complete the building for a sum equal to or less than the contract price, to deduct the cost from the contract price • it was not intended to deprive the owner of the right of recourse to the surety for any excess of reasonable cost over the contract price.

The remaining question certified is, “ Whether, this being a suit on the bond, the contractor can legally claim a judgment against the owner for damages occasioned by the owner’s wrongfully preventing the contractor from completing the work ? ”

The right of the defendant contractor to set up such a claim in the same suit is given by the act of 1896 (Pamph. L., p. 185), in cases where that act applies, provided a notice of the particulars of such claim be annexed to the plea and filed therewith.

The pleadings are not contained in the ■ certificate, and as it does not appear that the required notice was filed by the defendant, this question must be answered in the negative.

The Passaic Circuit Court should be advised in accordance with the views hereinbefore expressed.