Case Name: EUREKA HOMESTEAD SOCIETY VS NATIONAL SURETY COMPANY
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1921
Citations: 4 Pelt. 284
Docket Number: NO. 7933
Parties: EUREKA HOMESTEAD SOCIETY VS NATIONAL SURETY COMPANY.
Judges: 
Reporter: Peltier's decisions, Court of Appeal, Parish of Orleans (Peltier)
Volume: 4
Pages: 284–288

Head Matter:
NO. 7933.
EUREKA HOMESTEAD SOCIETY VS NATIONAL SURETY COMPANY.
STATE OF LOUISIANA COURT OF APPEAL PARISH OF ORLEANS

Opinion:
OPIHIOH,
By his Honor John St. Paul.
This is a suit hy an ovmar against the surety on a 'ilding oontraotor's Bond. The oontraotor agreed to Build a house for $4100, payable in five instalments of $820-each as the work progressed. After the first instalment had beooae due and Been paid, "a heavy windstorm Blew down the skeleton, frame superstructure which was the only completed work at the time." Thereupon the oontraotor at first promised to reoommenoe the work, But nevertheless did not do so; and the work was then done By the owner at (substantially) the price agreed upon, that is to say for #3900; exclusive however of the #820 already paid. Whereupon the owner now seeks the return of the aforesaid #820 paid to the alleged defaulting oontraotor.
I.
In Industrial Homestead vs Junker, No. 7402 of our docket, and in Levy vs Paquette, 144 La 244, it was held that where the /dork was paid for as it progressed and a part of the work (completed and paid for) was destroyed By aooident Before the oompletion Of the whole, the loss must fall upon the owner.
The dootrine in those oases is not questioned. But it is contended that in this case the oontraot Between the parties provided otherwise ; to wit, that the work should he at the risk of the contractor until accepted as a whole, 'Phe clause relied upon reads as follows;
"I (the contractor) also agree to take out Insurance x x x on said works and to keep the same fully insured, at my expense, ur to the final delivery of said works and their acceptance by you: and at the time when the above payments are made to me I will transfer an amount of said insurance corresponding with the amount of the payment then made, to indemnify you (the owner) from loss in the event of fire before delivery to you of the works complete; it being understood that the works shall be at my risk until accepted by you as a whole."
How it is clear that if the works had been destroyod by fire instead of by storm (or if there had been storm insurance on the works) the above clause wpuld have needed no interpretation. For the insurance having been transferred uro tanto as the payments were made, it' is clear that the contractor was no longer protected, having been divested of his interest in the policy; and it is equally clear that the owner was not protected for want of insurable interest, unless the works were at his #£ (the owners) risk: Ror it cannot Re pretended that the owner was entitled both to oolleot insurance money and also to demand replacement by the contractor. Hence follows one of two things; either the insurance was for the benefit of the contractor who alone oould suffer loss, or else it was for the benefit of the owner because the work stood at his risk. To this it is said, that the transfer of insurance was only "additional security"; but the contract says the contrary, viz, "to indemnify you (the owner) from loss by fire." Moreover it is difficult to see wherein the security could consist, if the contractor were entitled to the insurance when collected by the owner.
The fact is that there is simply a conflict between the first part of the clause, which clearly contemplates that the completed parts shall be at the risk of the owner and protected by insurance in his (the owner's) name, and the second part of the clause saying that the work shall be at the contractor's risk until completed.
TJnder the circumstances the conflict must be resolved against the plaintiff; for although in form the contract purports to emanate from the contractor, nevertheless it shows on its face that it was wholly prepared and confected by plaintiff. 0. C. 1968.
The simple truth is that the parties did not think of, and provide for, storm insurance. Henoe the loss must fall where both law and nature place it, that is to say upon him to whom the property belongs unless it he clearly shown that it mUBt fall on another; and we find no such showing here.
IX.
Apart from this our reading of the record convinces us that the plans and specifications under which the house was actually built were so materially altered, without the consent of the surety, as to discharge him in any event. Blaintiff's own inspector testifies that roof, foundation, and structure generally, were all changed materially, the building being constructed under "revised", plans; so much so that "it wasn't the same house."
It is claimed that the changes were simply "extra work", oovered by the original contract; but the doctrine that slight changes in a building contract, which do not increase the surety's risk or liability, do not discharge the surety, can not apply "where the change# in the contract was so important as to constitute a new and independent contract". Ketteringham vs Eureka Homestead 140 la 176 (179)
The judgment appealed from is therefore reversed and it is now ordered that plaintiff's demand be rejected at its dost in both courts.