County of Glenn v. Jones

Action to recover damages against a contractor and his sureties for failure to build a schoolhouse according to contract.

Findings were filed, upon which judgment was entered against the sureties for the' penal sum of the bond. Prom the judgment they have appealed on the judgment-roll accompanied by a bill of exceptions.

The facts are in substance as follows: In October, 1902, defendant Jones entered into a written contract with plaintiff, by the terms of which Jones was to furnish all material and construct for plaintiff a high-school building in the town of Willows, in the said county, for the sum of $5,580, to be paid as follows: $1,860 when Jones shall have delivered all material for said building on the building-site; $1,860 when the roof is on; and the balance, $1,860, on full completion and acceptance of the building.

Plaintiff required and Jones gave' a bond in the sum of $2,500, with appellants as sureties. This bond referred to the contract, plans, and specifications, and was conditioned that Jones should “do and perform all things necessary to the erection of said high-school building according to the said plans and specifications above referred to, and according to the contract of even date herewith.” In November, 1902, Jones had delivered the rough lumber and a portion of the materials on the building-site, and he then applied to plaintiff through its board of supervisors and was paid the first payment, $1,860. This payment was prematurely made without

In our opinion the obligation of the principal was altered in a material respect without the consent of the sureties. The contractor was" under the obligation of placing all the materials on the building-site before he was entitled to any money under the terms of his contract. By the payment to him before he had done so, he secured the money before performing his obligation. The pressure which would have been exerted upon him to continue in the performance of his contract and place all the materials on the site, was removed when he received the money. He received it before he was entitled to it, without the consent of the sureties. The sureties had bound themselves upon the assumption that the plaintiff would keep its contract in good faith. We can see no difference in principle if the whole of the contract price had been paid before any of the materials were placed on the ground. In such case could any one doubt that the sureties would have been exonerated % The risk of guarantying the construction of a building to be paid for when completed and accepted, is quite different from the risk of guarantying its construction, if the whole contract price should be paid in advance. In the one case the contractor can only get the money by performing his contract, while in the other he would only pay out tie money already received, in performing it. In this ease the sureties agreed and guaranteed that Jones would place all the materials on the building-site, on condition that he was to receive no money until he had done so; they did not agree that if paid in advance he would place such materials on the site. By the payment, the hope of reward for further performance was lost, the temptation to act dishonestly was increased.

It is said in Brandt on Suretyship and Guaranty (2d ed., vol. 2, sec. 397): “A surety for the completion of work to be performed by the principal, when, by the terms of the contract the principal is to be paid by installments, is discharged if the principal is paid faster than the contract provides. The surety is thereby deprived of the inducement which the-principal would have to perform the contract in due time.”

■ The cases of Calvert v. London Dock Co. and Taylor v. Jeter were followed and quoted with approval by this court in Bragg v. Shain, 49 Cal. 131 , where it was held that a payment of more than seventy-five per cent of the contract price, where the contract provided that twenty-five per cent should be paid when the work was completed, had the effect to release

The case of Leonard v. County Court. 25 W. Va. 52 , is cited, but it does not sustain respondent’s position. On the contrary, it is said in the opinion: “A surety is discharged by any dealings by the creditor with the principal which amounts to a departure from the terms and conditions of the contract. Thus where the contract is for work or improvement to be paid for by installments, if the principal is paid faster than the contract provides, the surety shall be discharged.”

Finally, respondent contends that if the rule be applied as we have endeavored to show it should be, the sureties could only be released to the extent of the premature payment. We do not think the facts of this ease warrant the application of such rule. The contract might have been fully performed by Jones if the plaintiff had not given him money before it was due. After he had received more money than he. could possibly have made as profit by continuing his contract, the pressure that should have continued to keep him honest was entirely removed and he was left without compass or rudder to follow his own dishonest inclinations. We think it the better rule in a ease like this to hold that the sureties are entirely released. Where plaintiff willfully departed from its contract, and gave the contractor money not due him, and the damages occurred by reason thereof, we do not feel called upon to enter the field of conjecture as to whether or not the loss should be shared by the parties.

The judgment should be reversed.

Harrison, C., and Gray, C., concurred.

For the reasons given in the foregoing opinion the judgment is reversed. McFarland. J., Lorigan, J., Henshaw, J.