Court Opinion

ID: 8657251
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:17:13.008529+00
Date Added: 2024-06-11T16:56:47.203918
License: Public Domain

GIDEON, J.
(concurring in part). I bave no difficulty in agreeing with tbe reasoning and conclusions of Mr. Justice THURMAN on tbe questions discussed in tbe opinion of tbe court except tbe construction of subsection* XII of tbe contract with tbe elevator company. At tbe time of concurring in tbe original opinion I had grave doubt respecting tbe views of the court on that controverted question, I expressed that *489doubt to tbe writer of tbe opinion at that time. Tbe question has been again ably reargued in tbe petition for rehearing. I am now convinced that tbe judgment of tbe court as rendered should be modified.
In this brief memorandum I shall assume that tbe jury’s verdict' is conclusive of tbe question of fact that tbe defect in tbe elevators was known at tbe time of making tbe last payment to tbe elevator company. Payment with knowledge on tbe part of the appellant of a defective elevator is in and of itself failure to act in good faith toward tbe surety. By so doing tbe appellant lost the fund necessarily set aside by it for tbe installation of elevators in its building. Tbe surety company was entitled to have that fund preserved so that tbe same could be applied in installing such elevators as tbe contract called for. It is an elementary and fundamental principle in tbe construction of contracts that courts, in tbe absence of a contrary showing, will construe tbe language of such contracts upon tbe assumption and theory that tbe contracting parties bad intended to deal in good faith. Tbe terms of the contract and the language employed are presumed to be used with that understanding, not only in determining the rights of the immediate parties to a contract, but in determining the rights of other parties entitled to tbe benefits of a contract. "Whatever rule of construction may be controlling against tbe surety, whether it be tbe so-called liberal rule as against paid sureties, or tbe strict rule of construction in favor of voluntary sureties, there exists over and above and controlling this rule tbe further and primary rule that tbe intent of tbe contracting parties be ascertained and enforced.
This intent should, of course, be determined if possible from tbe language found in tbe contract. If not, resort is had'to tbe subject-matter under consideration and tbe relationship of the parties. No rule of construction can alter the fact that tbe relationship of tbe parties in this action is that of surety and beneficiary. Construing tbe contract in the light of that relationship, by these general rules can it be rationally held that the surety understood or contemplated it *490was obligating itself to a liability in tbe absence of good faith on the part of the beneficiary ? The very terms of that subdivision, in my judgment, negative any such conclusion. Admittedly the language of the subsection does not compel the construction given it by the court. However plausible the reasoning invoked to support the construction claimed for the contract, its unsoundness is demonstrated by the injustice which the result imposes on the surety company. The nature of the subject-matter of contract and the relationship of the parties are conclusive that it could never have been within the contemplation of the surety company that the appellant had the right to accept a known defective elevator, pay the full contract price therefor, and then demand full liability on the bond. The appellant, realty company, was entitled to have elevators placed in its building that would measure up to the standard- specified in the contract with the elevator company and for the amount named in the contract with the elevator company. The surety was obligated to see that the contract was complied with, assuming that the beneficiary under the contract would act in good faith. The surety Was bound for the fulfillment of this contract for the full amount of the penalty of the bond, to wit, $30,000. It was not released from that obligation by any act upon the part of the realty company, but it was released pro tanto, in my judgment, for any amounts paid to the elevator company for defective appliances within the knowledge of the appellant . at the time of making payment. • There is no reason for granting a rehearing in this case. In my judgment, however, the judgment of the court should be modified, and the case remanded. to the district court with directions to determine, by additional proof if necessary, the actual damages sustained by appellant by reason of the defective elevators, to credit upon that amount the $20,000 wrongfully paid to the elevator company, and to enter judgment against the surety company for whatever balance may be thus ascertained, provided such balance is not greater than the liability stipulated in the bond.