#### EDGEWOOD KNOLL APARTMENTS, INC., v. M. P. BRASWELL, SR., and M. P. BRASWELL, JR., Doing Business as M. P. BRASWELL & SON, and UNITED STATES CASUALTY COMPANY, a Corporation.

(Filed 13 October, 1954.)

Principal and Surety § 6—

Tbe surety on a contractor’s bond is not entitled to a credit for tbe sum required to be retained by tbe owner during the progress of tbe work when it appears from tbe surety's own pleadings and evidence that final payment to tbe contractor, including tbe percentage retained, bad been made under tbe contract and that tbe claim arose after final acceptance of tbe work and related to defects wbicb were undiscoverable when tbe work was approved by the PHA inspector, and wbicb under the terms of tbe contract were not waived by final acceptance and payment for tbe work in full.

Petition- to this Court by defendant, United States Casualty Company, a corporation, appellant, to rehear this case, reported in 239 N.C. 560, *76180 S.E. 2d 653, allowed on one question only, to wit: “Is defendant Surety Company entitled to credit in tbe amount of tbe sum retained by plaintiff during tbe progress of tbe work as provided by tbe contract and later paid to Braswell Bros. ?”

Tbe facts shown in tbe record on appeal are sufficiently stated in tbe opinion to wbicb tbe petition to rebear relates.

*Harkins, Tan Winkle, Walton & Buck for plaintiff, appellee.*

*Meekins, Packer •& Roberts for defendant, petitioner.*

WiNBORNE, J.

In tbe closing paragraph of tbe opinion in tbe case reported as above set forth it is stated: “Tbe appellant, Casualty Company, brings forward in its brief assignments of error based upon exceptions relating ... to tbe refusal to submit issues tendered, ... to tbe failure of tbe court to charge as requested, to denial of motion to allow this appellant credit for last payment of $7,960.00 made by plaintiff to defendant 19 December, 1950 . . . All these have been duly considered, and express treatment of each serves only to unduly extend this opinion, since no prejudicial error in them is made to appear.” And, after due consideration of arguments advanced and authorities cited in brief of petitioner, appellant Casualty Company, tbe conclusion there reached is held to be correct.

At tbe threshold, it is seen that tbe United States Casualty Company, answering tbe complaint of plaintiff, makes no reference to any retained percentage, or to matter of over-payment to tbe contractor. Indeed, tbe only affirmative defense pleaded by it, in its further answer and defense, is that, under tbe provisions of paragraph two of the conditions of tbe bond, this action is barred for that it was not instituted within tbe time limit. And in this connection, it averred “that although tbe aforementioned contract between tbe plaintiff and tbe defendants . . . Braswell . . . specified no date for the completion of such contract, said contract was in fact completed on or about 15 August, 1950, and tbe work thereunder approved by tbe Federal Housing Administration and accepted by tbe plaintiff on or about said date.” This was tbe theory of tbe defense upon tbe trial in Superior Court. ' And upon such trial all tbe evidence tended to show, and appellant, Casualty Company, in original brief filed on tbe appeal to this Court, states, that on 19 December, 1950, final payment was made by tbe plaintiff to the defendants.

It is now pointed out that paragraph 4 of tbe contract provides that “tbe balance of tbe contract price shall be paid when apartment project has been completed and approved and final disbursement made under FHA loan.” Tbe date when this was done was 19 December, 1950.

*762Furthermore, this action grows out of a condition that came to light several months after it was thought that the project had been completed. Under the specification for plastering it was stipulated that, if desired, vermiculite might he used as aggregate in lieu of sand for the base coat of plaster in all spaces except baths. And when the plastering in all the bathrooms began to fall, it was ascertained that vermiculite had been substituted for sand. This violation was not known to the plaintiff, nor was it known to the EIIA inspector at the time he approved the project as complete. And the recovery of the consequent damage is the gravamen of the present action.

In this respect, the contract provides that: Braswell “guarantees . . . that the lathing and plastering shall he installed in a thorough manner . . . and shall be approved by the EHA project inspector; and shall be responsible for defects which develop due to faulty workmanship during the period of one year from date of final acceptance of the work at no charge to the party of the first part (the owner). Final acceptance and payment in full for such work will not waive any of this guarantee.” Hence the matter of balance of contract price had no connection with this case.

Therefore, in the light of these observations, the conclusion reached in the opinion as reported in 239 N.C. 560 in respect to the question here involved, is held to be correct. The petition to rehear is denied.

Petition denied- — Appeal dismissed.