Hellman v. City Trust, Safe Deposit & Surety Co.

Majority

p. 879

Myer Hellman, Appellant, v. The City Trust, Safe Deposit and Surety Company of Philadelphia, Respondent.

First Department,

March 16, 1906.

Headnote

Suretyship — bond to secure proper performance of contract—when surety is bound by parol waivers of provisions of contract s- estoppel of surety.

Although the provisions of a contract of suretyship cannot be waived so as to hind the surety, except by an agreement in writing, yet where a surety has given a bond to secure the proper performance of a contract to excavate rock, and at the instance of the contractor the surety has consented that the time of the performance of the contract be extended, and that percentages which were to be retained be paid to the contractor to enable him to continue the work, such waivers of the terms of the contract inure to the benefit of .the surety and it is estopped from asserting that it is relieved from liability thereby, although the waiver as to the payments to thé contractor were made by parol.

Appeal by the plaintiff, Myer Heilman, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Hew York on the 19th day of May, 1905, upon the dismissal of the complaint by direction of . the court after a trial at the Hew York Trial Term, and also from an order entered in said clerk’s office on the 23d day of May, 1905, denying the plaintiff’s motion for a new trial made upon the minutes.

John A. Straley, for the appellant.

William R. Conklin, for the respondent.

The complaint shows that on the 7th day of December, 1898, the plaintiff entered into a contract in writing with one Blake, by which the latter agreed to do certain work consisting of blasting rock and excavating for sewer connections on premises at the northwest corner of Madison avenue and One Hundred and Seventeenth street on or before the 15th day of July, 1899, and other work consisting of blasting and removing rock from the same premises on or before the 15th of May, 1899 ; that Blake as principal and the defendant as surety duly executed a bond to the plaintiff in the penalty of $10,000, conditioned for .the faithful performance of the .contract by Blake; that the contract provided that partial payments

p. 880

should be made on account of the contract work every fifteen days on certificates of a -designated surveyor as to the amount earned, but that fifteen ,per cent should be reserved until the completion of the work; that the plaintiff kept and performed all of the terms and provisions of the contract except that “ with the full knowledge, approval and consent of the defendant” the provision with -respect to' reserving the fifteen per cent until final payment was waived and that with like knowledge, approval and consent of the defendant there was a substitution of surveyors and an extension of the time of performance from time to time, and that the provisions as to Strict performance thereof on the part of Blake and the plaintiff were wai/oed by the defendant; that Blake failed to perform and abandoned the contract and refused to proceed therewith as therein required and the plaintiff was obliged to proceed With the work and to expend in the performance thereof including the amount paid to Blake more than the penalty of the bond above the contract price.

Counsel for plaintiff, in opening the- case did not waive any right of his client to prove the-material allegations of his complaint or make any admission inconsistent therewith. He stated that. plaintiff would prove that during the progress of the work Blake was falling behind in paying for the labor and that Blake, plaintiff and plaintiff’s pounsel called" on defendant, and Blake requested the defendant to consent to the payment of the -full amount earned from time to. time without deduction in order that he might be able to perform the contract and that with full knowledge and consent of all .the- parties the provision with, respect to withholding -the fifteen per cent was waived arid thereafter payments in full were made; that the time of performance was first extended forty-five days with the consent in writing of the defendant, and that thereafter when Blake was again in default with respect to the time of completion a conference was had between him, plaintiff and defendant, and with the full knowledge and consent of the defendant the time of performance was further extended from time to time and strict performance as to time was “ wholly waived by the defendant ;” that subsequently at a like conference between all the parties -a -substitution of surveyors Was agreed upon and that thereafter with full knowledge and approval of defendant Blake continued the Work receiving payments in full from time to time on the certificate

p. 881

of the substituted surveyors until the middle of May, 1900, when he abandoned the contract having a large part of the work uncompleted ; that after giving the notices required by the contract and continued default on the part of Blake and notice to defendant of his default and an opportunity to it to take charge of and complete the work, plaintiff completed it at an expense including the payments made to Blake over the contract price of more than the penalty of the bond. The judgment was granted and is sought to be sustained upon the theory that parol evidence is not admissible to show the facts alleged and offered to be proved.

The defendant’s contract being one of suretyship it is claimed that it could not he waived in any of the three particulars specified except by an agreement -in writing. Of course a valid new contract could not be made by parol nor could the liability of the surety be enlarged or extended by parol. Here, However, was an existing contract in the performance of which the surety was interested because it was liable therefor. In the circumstances disclosed it evidently appeared to be to the interest of the surety to have the provision with respect to reserving part of the amount earned waived and likewise with respect to the time of performance. Having consented to these modifications at the instance of its principal, and the plaintiff having acted thereon manifestly to his prejudice, if the consent and waiver were now to be repudiated, the defendant is estopped from contending that these modifications with respect to performance discharge it from all liability. (Thomson v. Poor, 147 N. Y. 408 ; Gallagher v. Nichols, 60 id. 438 ; Smith v. Wetmore, 167 id. 234; Blanchard v. Trim, 38 id. 225; Roberge v. Winne, 144 id. 709; Dodge v. Wellman, 1 Abb. Ct. App. Dec. 512 ; Klein v. Long, 27 App. Div. 158 ; New York, Life Ins. Co. v. Casey, 81 id. 92; Brandt. Sur. [3d ed.] § 439; Prairie St. Nat. Bank v. United States, 164 U. S. 227 .)

It follows that the judgment should be reversed and new trial granted, with costs to appellant to abide the event.

O’Bbieft, P. J., Iftgeaham, McLaughlin and Clabke, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellant to abide event. Order filed.

Cases cited

Klein v. Long 27 App. Div. 158 N.Y. App. Div. 1898-03-25 p. 881
Prairie State Bank v. United States 164 U. S. 227 SCOTUS 1896-11-30 p. 881