Court Opinion

ID: 6663914
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:04:44.275391+00
Date Added: 2024-06-11T16:00:16.649514
License: Public Domain

ON REHEARING.
1. The surety is relieved from liability by a substantial change in the plans made by the obligee of the bond without his knowledge and consent.
2. The surety is not bound beyond the extent of his engagement which appears from the very terms of the contract and his liability cannot, without his consent, be extended, enlarged or varied either by the obligee of the bond or operation of law,
ESTOPINAL, J.
Under stress of well established principles and authorities we feel constrained to reconsider our . original opinion and decree herein
In the application for a rehearing the defendant surety company urges first, that we erred in not sustaining the plea of prescription urged as a defense in the original hearing. The position assumed by the defendant that it was not liable beyond and could not be sued after the expiration of six months after the completion of the work, we repeat, is without merit under our appreciation of the tenor and purport of the bond. As said in our original opinion, “the bond and contract must be read together. The contract specifies that the work must be completed within ninety days, but there is a giiarantec in the contract that the pipe would remain tight for a period of one year from the completion of the work.”
Now the defendant became surety for the faithful performance of all the stipulations and agreements made by the Schaeffer-Gaiennie Company, Ltd. with the plaintiff. Would it be reasonable to pretend, and for any Court to hold, that the liability of the surety under the terms of the bond would be extinguished when the 'work was finished (i. e. within 90 days) and be absolved from further liability though the work under the contract was guaranteed for one year from its com*88pletion. We think not. The life of the bond was not shorter than that of the contract.
Both instruments must be read and construed together and are inseparable. We did not hold in our original opinion (as the defendant contends) “that prescription ran from , end of further period when repairs could be made,” but what we did hold is that the contract was binding on the contractor to maintain the pipes in good and tight condition for one year after completion, and the surety company, obligated itself to stand by and see that these conditions were carried out by the contractor, and the latter defaulting, said surety stood ready to make good for said default up to one thousand dollars.
The maintenance of the pipes in good condition for one year after their laying or installation, constituted, under our view of the matter, the completion of the %vork. Up to this point the bond furnished by the defendant surety companj'-has in no wajr become divorced from the contractor’s obligation. The surety was liable to be sued within six months thereafter. To specify in the contract a clause binding the contractor for a stated period is tantamount to imposing the same conditions, as to time, on the surety, unless the contrary is specially stipulated in the bond. We therefore adhere to the opinion that the prescription of six months specified in the bond begins to run. not from the completion of the work, (expiration of ninety days) but from the expiration of one year thereafter.
The serious ground urged for a reversal of our former decree is that the surety “has been condemned to pay, the cost of carrying out an entirely, new and different contract than that bonded.”
In our original opinion we assumed that because defendant, surety, remained inactive, took no steps to repair leaks when called upon to do so, that it was then the right and privilege of the plaintiff to make the repairs, and in so doing to exercise its discretion, and if it deemed necessary, to take up and relay the pipes, in a word to do anything and make the repairs in any way that would secure to it the service of the pipes. This assumption we are now convinced is.not sustained by law. The bond was intended to guarantee the contract according to written specifications.
The contractor having failed to repair certain leaks which *89occurred in the pipes within the year the obligation became the surety’s. The surety failing to do the work, manifestly it was plaintiff’s privilege to have the work done at the surety’s expense, conditional however, that the work should be done in accordance with the written specifications of the contract bonded by the surety. Defendant’s averments that the plaintiff arbitrarily advertised the contract for the repair of the original work and made different and other specifications from the original contract, and that the new work was done according to new and different specifications from the original contract all without notice to the surety, are fully sustained by the record, and not seriously denied by plaintiff.
It cannot avail plaintiff to urge that it acted in obedience to an order of the District Coui't then having jurisdiction and control in the matter of the Receivership of the Schaeffer-Gaiennie Co., Ltd. No action or order of the lower Court could in any way affect the well defined rights of the defendant surety company. The District Court might properly give plaintiff authority to do the work in which the Receivership was involved but we take it that the Court intended the work to be done according to the original specifications. If the order was not express in terms it must have been implied. The good faith of plaintiff is not questioned but there was an evident mistake on its part as to its rights.
The record shows that the pipes laid by the original contractor were defective in that they sprung several leaks; that the contractor and the surety both refusing or failing to have the repairs made, they were undertaken by the plaintiff under the original specifications. It is in evidence that these repairs were successfully completed, but, that intentionally or otherwise, plaintiff’s engineer put on a heavy back pressure, and said pipes being suction pipes used to bring water from the river, could not, nor were they intended to, resist such back pressure, and that in consequence, the leaks started anew and increased in number. The surety’s liability existed up to this moment and no longer, because it was then that plaintiff abandoned all efforts or attempts to further repair the pipes under the old specifications, but instead, undertook to take up and relay the pipes under entirely new and different specifications. Under the uniform jurisprudence of this country, a surety is relieved from liability by a substantial change in the plans made by the obligee of the bond without his knowledge. Man-*90ifestfy, if the surety had undertaken the work of repairs, it should have done so according to the specifications of the contract which it guaranteed. Plaintiff’s right to recover the cost of repairs, made by it in default of the surety, had these repairs, no matter how extensive, been made under and according to the specifications of the identical contract bonded by the surety, is undoubted, but plaintiff was without legal right to make, without notice to the surety and the latters, a new. contract, containing different conditions and specifications. This cannot bind the surety Cross vs. Allen 141 U. S. 537. Bessinger vs. Wren 100 Pa. 505.
“The surety is sponsor for one contract, and but one, and no one has the right to make another for him.” Fellows vs. Prentiss 3 Denio 521. Ward vs. Stahl 81 N. Y. 406. Barnes vs. Barrow 61 N. Y. 486. Nat. M. Banking Ass’n. vs. Conklin 90 N. Y. 116.
It cannot avail plaintiff to say that the repair work could not have been done under the original specifications, hence the change in these. This was through no fault of the surety’s. The specifications were not the surety’s but were the comfection of the plaintiff.
“A new contract containing specifications materially different from the agreement to which the undertaking of the suretyship related, relieved the surety from liability for the obvious reason that the identical contract to which alone his obligation attached had ceased to exist.” 131 Federal Reporter 208.
We have not the two contracts and specifications before us, but we find from the testimony and particularly from that of a Mr. Keily, a plumber by trade and the contractor who took up and re-installed the pipes, under the new specifications, that these were in many material particulars different from the original contract.
We are satisfied that there was such a variance in the two sets of specifications as to absolve the surety from all liability for the cost of the new work.
We do not however, think that the surety company (defendant) can escape liability for its default up to the time of the doing of the new work. The pipes as laid by the original contractor were guaranteed for one year. They leaked within that time. The contractor, Schaeffer-Gaiennie Co., Ltd., or *91the Receiver of the Company did nothing to correct the trouble and the surety was equally inactive. Plaintiff attempted to have the leaks stopped, and the persons employed to do the work testify that the leaks had been stopped, but the improper action of the plaintiff’s engineer destroyed their work. This repair work was done under the contract bonded by the defendant surety company. The record is silent as to the cost of this repair work. If the cost were shown we would tax the defendant with it, but in the absence of this information we deem it proper, just and equitable that the surety should be made to contribute towards the work of repair prior to mak_ ing of the new contract. A reasonable approximation of the cost is found in the record. We have carefully read the testimony of Mr. Keily who impresses us as being a competent mechanic and taking it that at the time he undertook to take up and relay the pipes he discovered only two very serious leaks, we are disposed to adopt his estimate of the cost of repairing these defects, as a fair approximation. In reply to a question Mr..Keily says, “I wouldn’t do it for less than one hundred dollars a piece,” or two hundred dollars for the repair of the two leaky joints. Under this reasoning we think the defendant is liable to the extent of two hundred dollars.
December 3, 1906.
It is therefore ordered, adjudged and decreed that our former decree herein be annulled and set aside; and it is now ordered adjudged that the judgment of the District Court be and the same is hereby amended so as to reduce the judgment of the plaintiff against the defendant from one thousand ($1000.00) dollars to two hundred ($200.00) dollars, costs of appeal to be paid by plaintiff and appellee, those of the lower Court by the defendant and appellant.