Court Opinion

ID: 9682609
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:14:47.424562+00
Date Added: 2024-06-11T18:17:40.393744
License: Public Domain

On Rehearing
SIMPSON, Justice.
The appellant on application for rehearing suggests vociferously that the opinion in this case is wrong on all counts. Appellant again seeks to avoid liability under its bond upon three grounds: (1) that it violates the statute of frauds; (2) that it is void because executed in violation of Title 51, § 823 of the revenue acts of Alabama; and (3) because the prepayment of retainage operates an absolute release of the surety from all obligations under the bond. We again address ourselves to these points:
(1) In its argument that the agreement sued on violates the statute of frauds, the appellant points to the fact that no additional power of attorney was furnished authorizing Pollock to execute the rider attached to the original bond. The statute of frauds is not the issue here. That statute requires only that a memorandum in writing signed by the “party to be charged therewith, or some other person by him thereunto lawfully authorized in writing” be shown. In this case there is a memorandum in writing signed by the corporation authorizing Pollock to execute bonds on behalf of the corporation up to $250,000. The question is whether that power authorizes him to make corrections in bonds which he is admittedly authorized to execute for the corporation. The trial court found and the evidence supports the conclusion that the company issued to Pollock blank powers of attorney, limited only as to amount. The obligee was not shown on these forms, nor was the amount of the obligation. The company is in the awkward position of admitting Pollock’s authority to make bonds binding it up to $250,000, but insisting that he has no authority to make clerical corrections in bonds he has authority to make.
In this case the only contract Hankins & Sigars had was with W. S. Newell, Inc. This is the bond the company was called upon to write. Hankins & Sigars never had any contract with Newell Roadbuilders, Inc. Pollock was furnished a copy of the Hankins & Sigars contract. The name Newell Roadbuilders, Inc. appeared in that contract as “owner” because W. S. Newell, Inc. was a subcontractor of Newell Road-builders, Inc. This name was inserted as obligee in the bond. Surely it must have been the intention of the company to issue a bond in favor of the corporation with which Hankins & Sigars had a contract. We cannot assume that the wrong name was inserted other than by mistake, for to make such an assumption would mean that the company did it by design to avoid any obligation under the bond. Having accepted the premium, we cannot assume it never had any intention to enter into a valid and binding obligation.
When the bond was delivered to W. S. Newell, Inc. the mistake was noted and *383Pollock was asked to correct the bond. He did so by rider. The company now contends that Pollock had no authority to correct that mistake. It would presumably contend he had no authority to correct mistakes which might have been made in the amount of the bond. Here the contract and bond amount was $82,660. Suppose through typographical error the bond had been written for $182,660. Would the company contend that a rider correcting this figure to meet the contract figure was void because Pollock lacked authority to correct it? We think not.
As noted at 3 Am.Jur., Agency, § 28, in construing powers of attorney, “ * * * the first and foremost rule is that the intention of the parties as it existed at the time the power was granted is to be given effect”. We think the trial court correctly held that Pollock’s written authority extended to making corrections in bonds so as to effect the purpose of same. Surely he could do by corrective rider what he was authorized to do initially.
(2) It is next argued again by appellant that its bond is invalid because it was not countersigned by a licensed resident agent as provided by Title 51, § 823, Code. The appellant in brief in emphasized language stressed the fact that it does have licensed agents in Alabama qualified to countersign bonds issued in this state. It denies any obligation under the bond it issued in this case because it did not have the same countersigned by such agent. This statute was not designed to permit out of state companies to escape liability on bonds which they write in derogation of the statute. It is a revenue statute to facilitate the collection of privilege taxes and fees for agents. It provides for penalties for failure to comply with its terms, but it does not say that failure to comply relieves corporations from liability on obligations undertaken in defiance of the statute.
(3) Lastly, it is again insisted by appellant that this court is wrong in having held, as does a majority of courts in this country, that premature payment of retainage did not operate a complete absolute release of the surety from all obligations under its bond. We have again reviewed the authorities on this contention. Most cases hold that in order to work a discharge of the surety, the alteration of the contract must be material. To be material the alteration must change the-nature of the contract, either by imposing some new obligation or taking away some obligation originally imposed. The effect of the change must be to place the surety in a different position than the one occupied before the change was made. A change in the form of contract which does, not effect one or the other of these results is immaterial and will not discharge-the surety. See Sterne, The Law of Suretyship, Chapter 6, § 6.3. The trial court found, and we agree, that the premature payment of the retainage here did not amount to a material change in the contract, and hence did not work a discharge-of all obligations under the bond.
Opinion extended, and application for rehearing overruled.
LIVINGSTON, C. J., and COLEMAN,. BLOODWORTH, and McCALL, JJ., concur.