Killip v. Metzen

Headnote

This was an action to compel defendants to deliver up and cancel a mortgage given by plaintiffs under the following circumstances : Defendants contracted to furnish the materials and to build a house upon plaintiffs’ premises for a specified sum, to be paid by installments as' the work progressed. Defendants proceeded with the work until they had earned two. installments, but upon plaintiffs refusing to make the

payments they abandoned it. Subsequently it was agreed between the parties that plaintiffs should execute and deliver to defendants a bond and mortgage for an amount equal to the original contract-price, and for certain expenses for insurance, etc., payable six months from date. Defendants agreed to complete the building according to the plans and specifications of the original contract, provided the title to the mortgaged premises should, upon examination, prove satisfactory. If not they were to hold the bond and mortgage for the work already done. The bond and mortgage were executed, and defendants proceeded to complete the building; but before it was finished it was blown down and destroyed by a violent storm. Defendants declined to erect a new building. The court below decided that plaintiffs were' entitled to have the mortgage delivered up and canceled. Held (Allen and Folgee, JJ., dissenting), that by the new contract defendants did not reinstate the original contract or resume its performance and risks; that there was no express or implied surrender of the absolute right acquired by plaintiffs’ default, and that defendants were entitled to hold the bond and mortgage as security for the work performed under the original contract.