Court Opinion

ID: 7171480
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:26:53.966162+00
Date Added: 2024-06-11T16:15:44.660334
License: Public Domain

DAWKINS, J.
This is a suit upon a builder’s bond given by one E. R. Darrow, contractor, -in favor of plaintiff for the proper performance of the terms of a contract to erect and remodel certain buildings in the city of Shreveport, La., which contract was re*171ferred to and made part of the bond. It is charged in the original and amended petitions that Darrow agreed to do the work in question for a total -price of $28,000, but that plaintiff was compelled to expend' the sum of $4,002.15 oyer and above the contract price for labor and material, in addition to extras added by her, in order to have said job completed.
The defense is that defendant surety was released from its obligation under the bond because of the failure to comply with certain provisions of the contract by which all alterations and changes in the work should be preceded by a written order of the architect specifying the nature and price thereof. In the alternative, defendant pleads the prescription of 90 days, as for a failure to bring the action within that period after the completion of the work.
Prom a judgment in favor of plaintiff for the full amount claimed, defendant prosecutes this appeal. .
The Pacts.
Plaintiff and the contractor entered into a written contract, under the terms of which, for the total price and sum of $23,000, he was to erect a certain two-story apartment house, and to move and remodel a certain dwelling, in the city of Shreveport, all in accordance with plans and specifications furnished by plaintiff’s architect. To insure the performance of this contract, the contractor executed two bonds, with the defendant as surety, each in the sum of $23,000, one in favor of plaintiff for her own benefit, and the other in her favor and for the benefit of laborers and materialmen. The one sued on herein, is that in favor of plaintiff individually. It reads as follows:
“I, E. R. Darrow, builder and contractor, and Fidelity & Deposit Company of Maryland, as surety, are held and firmly bound to Mrs. Kate H. Wells, in-the sum.of twenty-three thousand and ’no/100 dollars,' for the payment of which we hereby bind ourselves firmly and in solido by these presents.
“Dated at Shreveport, La., ■ this 5th day of October, 1911.
“The condition of the above obligation is such that whereas if the said E. R. Darrow, builder and contractor, shall well and truly perform all of the obligations assumed by him in the above contract, then this obligation to be null and void, otherwise to remain in full force and effect.”
The two articles of the contract, which it is claimed were violated, are as follows:
“Art. III. No alterations shall be made in the work except upon written order of the architect the amount to be paid by the owner or allowed by the contractor by virtue of such alterations to be stated in said order. Should the owner and contractor not agree as to amount to bo paid or allowed, the work shall go on under the order required above, and in case of failure to agree, the determination of said amount shall be referred to arbitration as provided for in article XII.”
“Art. XII. In case the owner and contractor fail to agree in relation to matters of payment, allowance or loss referred to in articles III or VIII of this contract, or should either of them dissent from the decision of the architects referred to in article VIII of this contract, which dissent shall have been filed in writing with the architect within ten days of the announcement of such decisions, then such matter shall be referred to a board of arbitration to consist of one person selected by the owner and one person selected by the contractor, these two to select a third. The decision of any two of this board shall be final and binding on both parties hereto; each party hereto shall pay one-half of thé expense of such reference.”
Article VIII, mentioned in the last article quoted above, provides that each shall reimburse the other for loss resulting from delays caused by the other; but, since there is no such claim made in this case, we deem it unnecessary to quote it.
Work commenced shortly after the execution of the bond and contract, but there seems to be nothing in the record to show just when It was completed. Numerous changes and alterations were made, as the work pro-, gressed, but very few of these were preceded. *173.by written orders of the architect, fixing their values. Plaintiff expended a total of $34,420.87 on the job, of which amount she admits $7,418.72 was for “extras” not called for by the plans and specifications, but contends that there remains a balance due, in addition to this, of $4,002.15, which she was compelled to expend above the contract price for the work undertaken therein. The expenditures are established by the verified checks of the plaintiff, filed in evidence, and the value of additions and alteration have been fixed by the architect and another expert appointed by the court for that purpose, and is substantiated by other evidence in the record.
Opinion.
It is not disputed that the changes were made, that is, the greater part of them, without following the1 method provided in the contract, and the question is as to whether or not this had the effect of releasing the surety. Defendant is a corporation engaged in the execution of such bonds for a compensation, and its liability is to be determined in the light of the nature and purposes for which such bonds are given. Unless there is something in the Louisiana law different to the general law, as fixed by the jurisprudence of the country, defendant’s liability is not to be determined according to the strict rules applicable to an uncompensated surety. The contention is made that the very statute which first empowered surety companies to do business in this state expressly reserves to them all of the rights and obligations of personal sureties. And so it does. Act No. 41 of 1894. But it is rather with the nature of the contract or undertaking that the jurisprudence has dealt, than the mere technical relation of surety. In practically all jurisdictions, as far as we have been able to ascertain, the uncompensated ofi^personal surety is the “favorite of the law,” and his obligations are strictly . construed; while, in cases.where persons or corporations are engaged in the business of professional surety for a profit, in which the very purpose and nature of the contract is to guarantee the performance of work, etc., as stipulated in the case before us, they have been uniformly held as insurers, and their contracts have been construed most strongly against them. Cyc. vol. 32, p. 306; A. & E. Ency. of L. vol. 27, p. 452; Joyce on Insurance, vol. 1, p. 818 et seq., § 339 et seq.; Hormel v. American Bonding Co., 112 Minn. 288, 128 N. W. 12, 33 L. R. A. (N. S.) 513, and extended note; Victoria Lbr. Co. v. Wells et al., 139 La. 500, 71 South. 781, L. R. A. 1916E, 1110, Ann. Cas. 1917E, 1083.
Treating the defendant, therefore, as an insurer (and it should be borne in mind that in so doing we are not making, but merely construing, the contract in the light of the purpose and object for which it was entered into), we must determine whether or not the provisions of the contract which were violated were conditions precedent or warranties as to the surety, or mere promises or representations, or were they stipulations, for the benefit of one or the other parties to the original contract, which might be waived without affecting the liability of the surety. The object of the bond was to guarantee to the owner that the contractor would do the work and furnish the materials mentioned in the contract for a price which, together with his commissions of 5 per cent, should not exceed the sum of $23,000. That it was contemplated by all parties changes and alterations might be made is clearly indicated by the very provisions of articles III, VIII, and XII of the contract. In other words, under these provisions the owner and contractor were at liberty to make changes and alterations such as might double the price or cut it in half, without consulting the surety, but, of course, without' the power to Increase its liability beyond the amount of the bond, $23,-000. The purpose of requiring that a written order should be given- by the architect, in *175which the price of such alterations or changes were to be fixed, we think, was to prevent disputes between the owner and contractor. This is evidenced by the fact that article III further provides that, even if the price were not first agreed upon, the work involved in such changes and alterations should proceed merely upon the order of the architect, and, if the owner and contractor thereafter did not agree, the value should be fixed by arbitration. Under those circumstances, if the work were done on the order of the architect alone, and the parties failed entirely to select arbitrators, could it be said that the contractor could not recover for extra work so done, or that the owner could not claim a reduction because of portions eliminated, upon a quantum meruit? Could the surety complain when what was done had been done in accordance with the contract? We think not If the architect had declined to act, could not the owner and contractor have agreed upon the nature and value of the changes and alterations? It would seem so far it has been held that the owner may disregard the stipulation for an architect, entirely, and act in that capacity for himself, since the provision is for his benefit, without releasing the surety. Meyer et al. v. Bichow et al., 133 La. 975, 63 South. 487. It would hardly be contended that if the owner and contractor had agreed upon the nature and value of the changes and alterations which were actually made, and these had been embraced in written orders by the architect, with the same results as to an excess of expenditures over the contract price for the work contemplated thereunder, the owner could not recover, for that was the very thing which the surety guaranteed against. Yet is it to be released because of the failure to observe those stipulations, which, it appears, would have in no wise changed the results? Those were not provisions against increasing or diminishing the obligations of the contract, but of the manner of doing it, which the owner and contractor could waive. R. C. L, vol. 21, p. 1163 (Prin. and Surety) § 202.
We conclude, therefore, that the stipulations in question were not for the benefit of the surety, and that the failure to observe them has not prejudiced its rights under the bond.
There seems to be little dispute but that plaintiff has proven her case on the facts; that is, that she was compelled to expend the amount claimed, over and above the contract price for the performance of the work undertaken. We think the record fairly shows this to be true.
Nothing is said in the briefs about the plea of prescription of 90 days, and we are unable to find anything in the record to show when the work was completed. Regardless, therefore, as to whether or not the plea is applicable, there seems to be insufficient evidence to support it.
Eor the reasons assigned, the judgment appealed from.is affirmed, at the cost of appellant.
O’NIELL, J., concurs in the decree.
MONROE, O. J., and PROVOSTY, J., dissent.