Court Opinion

ID: 9827538
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:38:05.399478+00
Date Added: 2024-06-11T07:42:32.936787
License: Public Domain

On Motion for Rehearing.
The appellant, the bonding company, in its motion for a rehearing complains that we overruled its first assignment without specific reference thereto. Said assignment is as follows;
[11] “The court erred in its conclusions of law and in rendering judgment for Vincennes Bridge Company for $6,407.09, because: (1) The Vincennes Bridge Company and Hess & Skinner Engineering Company entered into a contract on the 28th day of May, 1914, by the terms of which Hess & Skinner Engineering Company agreed to purchase from Vincennes Bridge Company the steel for the construction of a bridge in road district No. 1, Bastrop county, Texas, trusses at $2.40 and cylinders at $2.10, one-half of which was to be paid for in cash upon delivery of the metal at shop, and the balance in warrants on Bastrop county, Texas, with 6 per cent, interest from dates of shipments; and Vin-cennes Bridge Company changed the contract, and failed to demand or collect the one-half in cash, and shipped out and delivered to Hess & Skinner Engineering Company all of said bridge material, and in this way changed the terms of the contract, and relieved the Lion Bonding & Surety Company from any liability as surety upon Hess & Skinner Engineering Company’s bond.”
*176We did not discuss this assignment because we thought it showed upon its face, when taken in connection with the undisputed 'evidence, that it was without merit. The appellant in its original brief cited a long list of authorities under this assignment, none of which, in our opinion, are in point, except the case of American Bonding Co. v. United States et al., 233 Fed. 364, 147 C. C. A. 300. The other authorities cited announce the proposition that where parties enter into a contract, and a third party becomes surety for its performance, any material change in the contract made by such contracting parties will release the sureties, without regard to whether such change is to the injury of the surety, and without reference to whether the surety became such for accommodation or for hire. This proposition is so well settled that it needed no citation of authorities to support it. This is so for the reason that the new contract is not the one the performance of which was guaranteed by the surety.
The assignment alleges that the contractor and the bridge company “changed the contract.” What contract? Not the one entered into between the county and the contractor, upon which appellant became surety, but a contract between the contractor and the bridge company. Did this change release the appellant? The case of American Bonding Co. v. United States et al., supra, cited by appellant, holds that it did not, unless the appellant was materially injured thereby. We quote from that case as follows:
“Companies that make a business of guaranty insurance * * * are not relieved ⅜ * ⅜ unless the change [in the contract] has done them harm.” 233 Fed. 369, 147 C. C. A. 305.
In that case the terms of the contract between the contractor and the Marble Company wore that the Marble Company was to be paid $75,000, ns the work progressed, for the marble furnished by it. The court says:
“These terms were not observed at all. * * * If the terms of this subcontract had been observed, the marble company would have been paid 80 per cent, in cash as the work went on, and, even if the retained 20 per cent, had not been paid at the end, the loss of the surety company would have been no larger than this percentage. In fact, however, it is confronted now with a judgment (in favor of the marble company) for $20,000, and with a contingent liability, which may or may not become an actual liability, of more than $30,000 in addition.”
The change complained of in the instant case was that the bridge company shipped the material without collecting one-half of the value of the same before making shipments. This worked no injury to appellants. M.ucli more than one-half of the value of such shipments was paid to the bridge company by the contractors as the work progressed, though not before the same was shipped from Vincennes, Ind.
There is neither pleading nor evidence to show where the “shop” mentioned in the contract was located.
In our opinion, the law in reference to releasing a surety by reason of a change in the contract which he had guaranteed has no application to a change in the contract between the contractor and a subcontractor .thereafter made. Such contract, where it provides for payments in advance, or as the work progresses, is in the nature of security to the subcontractor; and, if he consents to a change of the contract so as to impair his security, the surety will be released to the extent that he is injured thereby. In such case, in order to release the surety pro tanto, there must be both a change in the contract between the contractor and the subcontractor, and resultant injury to the surety.
It is apparent from the record that there was a clerical error in entering judgment for the Smithville Gin Company for $62.85, when it should have been for $78.85. The motion of said appellee to reform the judgment as above indicated is granted, and said judgment is so reformed.
Judgment was entered in the court below for Mrs. Susie McDaniel for $128.05. Mrs. McDaniel was not a party to this suit. Such judgment should have been in favor of D. W. Pohplatz, and the judgment of the trial court is here so reformed.
Appellant’s motion for a rehearing is overruled.
Motion overruled.