Court Opinion

ID: 6736768
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:04.424785+00
Date Added: 2024-06-11T16:01:48.673993
License: Public Domain

On Rehearing.
Bruce, J.
It is urged on motion for rehearing that this case should be sent back for a retrial, rather than that a judgment non obstante veredicto should be ordered. This should be done if it appears, “from the nature of the case and the circumstances connected with it, that there is no reasonable probability that upon another trial the defects in, or objections to, the proof . . . may be remedied.” Meehan v. Great Northern R. Co. 13 N. D. 432, 441, 101 N. W. 183; Richmire v. Andrews & G. Elevator Co. 11 N. D. 453, 92 N. W. 819; Houghton Implement Co. v. Vavrosky, 15 N. D. 308, 109 N. W. 1024; Kerr v. Anderson, 16 N. D. 36, 111 N. W. 614; Welch v. Northern P. R. Co. 14 N. D. 25, 103 N. W. 396. As far as the question of damages is concerned, we think it possible that the missing proof might be furnished, and if this were the only question in the case we would be inclined to order a new trial.
In addition to the reasons given in the principal opinion for ordering a judgment non obstante veredicto, there are, however, two others which, in themselves, appear to us to be conclusive, and which were not mentioned before, as the question of damages appeared to us to be the main and controlling feature of the case. These are furnished by *502the fact that plaintiff himself undoubtedly defaulted in the terms of his contract with the surety company to such an extent as to release them from their liability. The bond required that “notice of any default in the performance of any of the terms, covenants, and conditions of said contract shall be given to the surety company.” Though it is true that there was no specific covenant, term, or condition to proceed with the work with reasonable diligence, there certainly was a covenant and agreement to complete the work by January 1st, and to enter upon and proceed with the work in some manner. It seems to be undisputed that early in the month of November the subcontractor, Gentry, abandoned the work. It is true that he left, in the ditch, a subcontractor, Twitchell, but it is also clear, from the evidence, that this subcontractor had no authority from Gentry to complete the remainder of the work, except the particular job on which he was working, and that, in order to induce him to do so, a separate and new contract would have had to be made between him and Long. There was, therefore, to all intents and purposes, an abandonment of the work by Gentry, which occurred early in November, and within fifteen days of which no notice was given to the surety company as required by the terms of the bond. It is true that the contract was not required to be completed until January 1st, but surely a complete abandonment may be considered as a refusal to complete by such date. A distinction, indeed, must be made between an abandonment as a basis of a suit for a breach of a contract, and abandonment which would require a notice to the surety company. It is well established that provisions in bonds for notice to the surety are inserted for the protection of both parties, and to give the surety an opportunity for self-protection. “The object of requiring notice to be given of a contractor’s default which may involve loss,” said the supreme court of Minnesota in the case of George A. Hormal & Co. v. American Bonding Co. 112 Minn. 288, 33 L.R.A. (N.S.) 513, 128 N. W. 12, “was to enable the surety company seasonably to take such practicable action as might prevent or minimize the loss by reason of the default; and it is not to be strictly construed for or against either party, but reasonably as to both. So construing it, it is clear that the provision for immediate notice does not require notice to be given instantly upon learning of the default, but that it should be given within a reasonable time in view of all the circumstan*503ces.” In that case the bond required that “immediate” notice should be given, and the court construed that word to mean within a reasonable time. The rule certainly should operate both ways, and a bond which required a notice of default should certainly be construed to require a notice of an abandonment, even though the time for the completion of the contract had not expired.
The other reason for ordering a judgment non obstante veredicto is even more conclusive. It is that plaintiff absolutely failed to either allege or prove compliance on his part with the terms and conditions of the bond. The bond required that “the obligee (Long) shall retain not less than 15 per cent of the value of all work performed and materials furnished in the performance of such contract until the complete performance by said principal of all the terms, covenants, and conditions thereof on said principal’s part to be performed, and that the obligee shall faithfully perform all the terms, covenants, and conditions of said contract on the part of the said obligee to be performed.” There is no pretense in the evidence that Long retained this 15 per cent, but it is candidly admitted that he paid the subcontractor, Gentry, in full for what work he had performed, so that when Gentry abandoned the work he lost nothing except the profits which he might have made by the completion of the remainder. If plaintiff’s evidence as to the cost of completion is to be relied upon, there would have been no profits, but rather a loss, so that there was every incentive for Gentry to abandon the work. If, on the other hand, the balance required by the contract and the bond had been retained by Long, he might have hesitated in abandoning the job for fear of losing the amounts so reserved. That such payments in violation of the conditions of a bond will release the surety is abundantly sustained by the authorities. Simonson v. Grant, 36 Minn. 439, 31 N. E. 861; George A. Hormal & Co. v. American Bonding Co. 112 Minn. 288, 33 L.R.A.(N.S.) 513, 128 N. W. 12; Brandt, Suretyship, § 245; Leeds v. Dunn, 10 N. T. 469; Farmers’ & M. Bank v. Evans, 4 Barb. 487; Miller v. Stewart, 9 Wheat. 681, 6 L. ed. 190; Morgan County v. Branham, 57 Fed. 179; United States use of Heise, B. & Co. v. American Bonding & T. Co. 32 C. C. A. 420, 61 U. S. App. 584, 89 Fed. 925; First Nat. Bank v. Fidelity & D. Co. 145 Ala. 335, 5 L.R.A.(N.S.) 418, 117 Am. St. Rep. 45, 40 So. 415, 8 Ann. Cas. 241; International Cement Co. *504v. Beifield, 173 Ill. 179, 50 N. E. 716; United States Fidelity & G. Co. v. Thaggard, 130 Ga. 701, 61 S. E. 726; Cowdery v. Hahn, 105 Wis. 455, 76 Am. St. Rep. 921, 81 N. W. 882; Backus v. Archer, 109 Mich. 666, 67 N. W. 913; Shelton v. American Surety Co. 66 C. C. A. 94, 131 Fed. 210; Welch v. Hubschmitt Bldg. & Woodworking Co. 61 N. J. L. 57, 38 Atl. 824; National Surety Co. v. Long, 79 Ark. 523, 96 S. W. 745, 107 S. W. 384; Bragg v. Shain, 49 Cal. 131; Taylor v. Jeter, 23 Mo. 244.
We are not unmindful of the fact that a paid surety or bonding company is treated rather as an insurer than as a surety. 32 Cyc. 303. Bank of Tarboro v. Fidelity & D. Co. 126 N. C. 320, 83 Am. St. Rep. 682, 35 S. E. 588, 128 N. C. 366, 83 Am. St. Rep. 682, 38 S. E. 908. This fact, however, does make it less obligatory on the part of the beneficiary to perform his part of the contract.
We have also examined the case of Stanford v. McGill, 6 N. D. 536, 38 L.R.A. 760, 72 N. W. 938, and § 6105 and § 6092 of the Revised Codes, which have been called to our attention by counsel for respondent. As far as the case of Stanford v. McGill is concerned, we make a distinction between a state of facts which would justify the immediate bringing of an action, and one which would make it obligatory to give a warning notice to the surety. The sections of the Code referred to appear to have been construed adversely to the contention of the respondent in the case of the McCormick Harvesting Mach. Co. v. Rae, 9 N. D. 482, 84 N. W. 346, and seem to be hardly applicable to the case at bar.
The petition for rehearing is denied, and the order heretofore entered will stand.