Court Opinion

ID: 9827801
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:51:50.947032+00
Date Added: 2024-06-11T07:42:36.957134
License: Public Domain

On Rehearing.
Appellant says that we are in error in holding that it could not recover liquidated damages against Lassig on the ground that it took the contract out of his hands before the expiration of the 160 days allowed him for performance. It is appellant’s proposition that Lassig was liable for such liquidated damages as flowed from his breach. Southern Pacific Co. v. Globe Indemnity Co. (C. C. A.) 21 F.(2d) 288, supports appellant’s proposition, but also cites a line of authorities supporting our legal proposition. If we concede the soundness of appellant’s proposition, the issue thus suggested was submitted to the *801jury as follows, and answered in the negative:
“Was any money paid by the plaintiff, American Construction Company, under its contract with the Herman Hospital Estate, as liquidated damages for delay in the completion of the building within the time required by the contract, as a direct and proximate result of the failure, if any, of defendant Lassig in the performance of his contract with the plaintiff?”
On this finding it is not necessary for us to decide whether appellant, as a matter of law, lost its claim for liquidated damages by taking the contract away from Lassig before the expiration of the time of performance. Therefore we withdraw what we said in our original opinion in construing the contract on this issue.
We agree with appellant that it sued for the cost of the setting drawings and models and the $10,000 not only on the theory of “debt” but also as items of “damages” flowing from the breach of the contract.
We are in error in our original opinion in our construction of the surety bond to the effect that “there was no obligation on the part of the surety company to indemnify appellant for the $10,000.00 nor for the setting drawings nor for the models.” Lassig was unconditionally bound by his contract to pay for the setting drawings and models. The following clause of the contract covered the $10,000 sued for:
“It is understood that this contractor has advanced to the sub-contractor the sum of ten thousand ($10,000.00) dollars, necessary to enable the sub-contractor to equip his plant to carry out this contract, the receipt of which sum is acknowledged by the sub-contractor, and it is agreed that the contractor shall be entitled to withhold out of each installment of eighty-five per cent (85%) to be paid this sub-contractor as above provided fifteen per cent (15%) and apply such fifteen per cent (15%) towards the payment of such advance, and the remaining seventy per cent (70%) of such installment shall be paid in cash to this sub-contractor, and the contractor shall continue to withhold fifteen per cent (15%) out of each eighty-five per cent (85%) out of each such eighty-five per cent (85%) installment, until said advance of ten thousand ($10,000.00) dollars is paid off. It being understood that out of the fifteen per cent (15%) withheld; that is the fifteen per cent (15%) remaining after the payment of said eighty-five per cent (S5%), said contract shall be entitled to pay itself for any balance, and in the event this contract is cancelled, any unpaid balance of said ten thousand ($10,000.-00) dollars advance shall then be immediately due and payable to the contractor.”
The condition of the bond was as follows:
“Now, therefore, the condition of the foregoing obligation is such that if the said principal shall well and truly indemnify and save harmless the said Obligee from any pecuniary loss resulting from the breach of any of the terms, covenants and conditions of the said contract on the' part of the said principal to be performed, then this obligation shall be void; otherwise to remain in full force and effect in law; provided, however, that this bond is issued subject to the following conditions and provisions.”
Maryland Casualty Co. v. Town of Wellston, 47 Okl. 417, 148 P. 691 and United States v. United States Fid. & G. Co., 236 U. S. 512, 35 S. Ct. 298, 59 L. Ed. 696, are direct authority that these items, excluded by us from the conditions of the bond, constituted part of “the terms, covenants and conditions” to be performed by Lassig under his contract, and therefore were within the conditions of the bond. As appellant, under our original opinion, is entitled to recover these items against Lassig, and, under what we are now saying, also against appellee the Southern Surety Company, unless the judgment in its favor was properly rendered on other grounds, it becomes aecessary that we review the counter propositions advanced by the Southern Surety Company in support of the judgment rendered in its favor in the lower court. On this point a .further statement from the record is necessary.
In the event Lassig failed in the performance of any of the terms of the contract, appellant, by its terms, was authorized to take the contract out of his hands and proceed to complete the work under its terms or relet it at Lassig’s cost and expense. The language of these 'Options was as follows:
“Should the sub-contractor at any time * * * fail in the performance of any of the terms, stipulations * * * then, in such event at the option of the contractor * ⅜ * the contractor may proceed thereupon to complete the work under the terms of said contract at the cost and expense of the sub-contractor, or at the option of the contractor the work may be re-sublet at the cost of the said sub-contractor, subject to the terms and conditions of Art. II hereof.”
Article II thus referred to related only to certain arbitration conditions.
On this language of the contract appellant insists that it had two causes of action against Lassig and his surety; one for damages, under the express terms of the contract, on the theory that it pursued the contract in relet-ting the work, and that Bedford-Carthage Stone Company, through its contract, completed the work according to the terms of Las-sig’s contract; and the other for damages flowing from Lassig’s breach, independent of the contractual remedies. United States v. United States Eid. & G. Co., supra, supports appellant in its construction of its contract and bond to the effect that relief may be sought for the breach of such a contract on either or both of the theories thus suggested. *802Appellees insist tliat appellant has based its cause of action, by its petition, solely upon the first ground; that is, that it relet the work and had it completed under the terms of Uassig’s contract. We are inclined to believe that appellees have correctly construed appellant’s petition, but it is not necessary, in the view we take of their counter propositions, to determine this point definitely, and therefore, without reviewing the petition further, for the purposes of this opinion, we assume that appellees are correct on this point.
Thus construing appellant’s cause of action, the Southern Surety Company seeks to have the judgment in its favor affirmed on the ground of material alterations or differences between the Lassig contract and the Bedford-Carthage Stone contract. This contention is based upon Mass. Bonding & Ins. Co. v. Davis, 274 S. W. 230, by this court, and, if sustained by the facts, the judgment of the lower court in favor of the surety should be affirmed. The following facts and circumstances constitute the basis of the contention: (a) The Lassig contract called for “Duval, Texas, limestone from Travis County, Texas.” The Bedford-Carthage contract called for stone by a different name and from a different quarry. The cost of these two classes of stone was the same, and in all material respects there was no difference between the stone called for in the Lassig contract and that called for in the Bedford-Carthage contract. Each was satisfactory to the architects, and complied with the conditions of appellant’s original contract. It follows that the difference in the two classes of stone did not constitute a material alteration, (b) The time for the delivery of the stone by Lassig is set out in the original opinion. Under the Bedford-Carthage contract the delivery was to be within four months and “to keep up with the progress of the work.” While the terms of the 'delivery were not the same, the difference was not material, and in no way entered into the cost of the contract as completed by Bedford-Carthage Stone Company. The difference in time between the two contracts is satisfactorily explained by the amount of stone that had already been delivered by Lassig. (c) Lassig was to be paid 85 per cept. of his monthly estimates, but Bed-ford-Carthage Stone Company was paid only 67⅝ per cent. This difference in the amount paid under the two contracts did not enter into the ultimate cost of the Bedford-Car-thage contract, and therefore was not a material alteration or difference, (d) Lassig had the right to deliver the stone at the building and to do the necessary carving after it was placed or installed in the building. Bedford-Carthage Stone Company was required to deliver the stone in a finished condition. It was not shown that this difference added a cent to the cost of completing the work, and therefore was not a material alteration, (e) The Lassig contract provided that he was to be paid monthly “85% of the value proportionate to the amount of the contract price of this contract, of all stone delivered.” Appellant’s president and Lassig testified that they agreed upon $4 per cubic foot as the proportionate value of all stone delivered by Lassig, and they settled upon that basis. The jury found that its proportionate value was $5. On the jury’s verdict, the Southern Surety Company insists that it was released. In our original opinion we have reversed this finding of the jury as being without support. It was not even raised by the evidence, and any finding of alteration or difference growing out of this agreement between appellant and Lassig would not only be against the great weight and preponderance of the evidence but wholly without any basis whatever, (f) After Las-sig had been in default for some months, appellant wrote him and sent a copy of the letter to his surety, notifying him that it was canceling the contract and was going to take the work out of his hands and complete it under the conditions of the • contract. This was not, in fact, done, but upon Lassig’s urgent request appellant, as it had a right to do under the terms of the contract, indulged him further in his efforts to deliver the stone, and did not cancel the contract and take it out of his hands until about three months after this letter was written. These facts do not support the contention of the Southern Surety Company that appellant, by writing the letter, had canceled Lassig’s contract and taken the work out of his hands and, by further indulging him, made a new contract.
As we understand the brief of the Southern Surety Company, the circumstances thus relied upon are all the facts brought forward by it to show an alteration in Lassig’s contract or a material difference between his contract and the one under which Bedford-Car-thage Stone Company completed the work. As thus reviewed, these facts do not bring the defense of the Southern Surety Company within the rule announced by us in the Davis Case, supra.
It follows that the judgment of the lower court in favor of the Southern Surety Company must be reversed. We do not here render judgment in favor of appellant against the Southern Surety Company, because we find in its last argument this statement: “That there should be an open reversal of the judgment in favor of the surety.” Therefore the cause is remanded to the lower court for a new trial on the issue of appellant’s demand against the Southern Surety Company. This ■order is also necessary because of the following additional proposition advanced by appellant: “The question of Ulrich’s agency for appellant might likewise, on the facts that develop on another trial, control our right to recover of the surety for the setting drawings, the models, and/or the advance.”
*803In all other respects, except as herein indicated, appellant’s motion for rehearing is overruled. Appellee Lassig’s motion for rehearing is also overruled.