Court Opinion

ID: 6544425
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:25.579403+00
Date Added: 2024-06-11T15:55:55.659564
License: Public Domain

Hughes, J., (after stating the facts). It is settled in this court, as well as elsewhere, that a material or substantial change in a contract releases sureties in a bond given to secure the performance of the contract. O'Neal v. Kelley, 65 Ark. 550. In Benjamin v. Hilliard, 23 How. 165, it is said, in reference to the release of sureties by alteration of a contract, that “there must be another contract substituted for the original contract, or some alteration in a point so material as in effect to make a new contract.” Was there an alteration in the contract in the case at bar ? The only deviation from it was that the proprietor . paid the contractors one day before the last payment should have been made according to the contract. The building had been com- pleted, and there were $333.34 due to be paid on the contract the day after it was paid to the contractors. Upon settlement the proprietor assumed several bills for materials that had not been paid, amounting 'to $140.45, thus leaving a balance due of $192.89, which was paid to the contractors while there was outstanding the unpaid bill of $445.75 for materials that had been furnished for the erection of the building for which the material man was entitled to have a lien declared upon the building. It follows therefore that the sureties were injured only to the extent that they were deprived by the premature payment of the $192.89 that should have been paid upon the lumber bill for $449.75. This amount the proprietor should have held as a security or protection pro tanto to them against liability upon their bond. The principle is that “when by the act of the creditor the surety has been deprived of the benefit of a fund for the payment of a debt, and the contract by which the surety is bound is not changed, he is only discharged to the extent that he is injured as in such case. It is the fact that he is injured that entitled him to a discharge.-” Foster v. Gaston, 23 N. E. 1095; Cochran v. Baker, 56 Pac. Rep. 641; Pickard v. Shantz, 12 So. Rep. 544. There was no alteration of the contract in this ease. This construction is in accord with reason and justice, and is supported by the decisions. We are of the opinion that it was optional with the proprietor to pay the contractor while there were claims for material and labor unpaid, and that this did not change the contract. ' “Nor were the sureties released by the fact that plaintiffs failed to retain money to pay liens' that might be filed, although authorized by the contract to do- so. One of the purposes of the bond was to relieve plaintiff from looking after such claims.” The court erred in instructing the jury peremptorily to return a verdict for the defendants. The judgment is reversed, and the cause is remanded for further proceedings not inconsistent herewith.