Summary
Hearing on appeal by the defendants from a judgment of the Supreme Court of the District of Columbia, in an action on a bond against the principal and surety.
The Court in the opinion stated the case as follows :
This action was begun in the supreme court of the District on June 6, 1900, by the Harrison Granite Company, a corporation created by the State of Michigan, against the Guilford Granite Company, as principal, and the Fidelity & Deposit Company of Maryland, as surety, upon a bond, in the sum of $4,000, given to secure the performance of a contract.
Both defendants are corporations created under the laws of the State of Maryland: the surety company having a resident general agent in the District of Columbia, where the contract between its principal and the plaintiff was made and to be wholly performed.
The contract between the plaintiff and the Guilford company was for the construction of certain portions of the pedestal of the monument to Gen. W. T. Sherman, to be erected in the city of Washington, and bears date September 13, 1898. The parts of the work to be performed consist of certain distinct items, namely, concrete foundations, brick work, setting of granite blocks, and furnishing fillings, for each of which a certain sum is promised to be paid. Provision for extra work in the matter of the items for foundation and brick work is made, and certain time limits are stipulated. It is also stipulated that, in the event the contractor should fail to prosecute the work with diligence, or in the performance of any of its obligations, the plaintiff shall have the right, upon three days’ written notice, to provide the necessary labor and materials and deduct the cost from the sum duo the contractor; and further, that the owner shall also be at liberty to terminate the employment of the contractor, take possession of and complete the work, and that- the contractor shall pay any cost thereof in excess of the contract price for the same. The bond of the Fidelity company to secure the performance of this contract on the part of the contractor bears date September 1C, 1898, but the premium therefor was not paid until October 2G, 1898, when it was delivered to the plaintiff. The bond is in the sum of $4,000, and secures the faithful performance of the contract by the Guilford company, which is referred to and made a part of the same. The bond recites, among some others not important in this controversy, the following conditions precedent to the owner’s right to recover thereon:
“If the said principal shall abandon said contract, or fail to comply with any or all of the conditions of said contract, to such an extent that the same shall be forfeited, then said surety, upon the notice above stated, shall have the right and privilege, in its option, to sublet or complete said contract, whichever said surety may elect to do, provided it is done in accordance with said contract, and, if said contract shall be sublet or completed by said surety, then the reserve in the hands of said owner, together with any other moneys due or to become due, shall be paid by said owner to said surety, at the times mentioned in said contract, on account of any loss or expenses arising out of said contract and any loss or expenses sustained by said surety in subletting or completing said contract; and if said owner shall complete or re-let the said contract, then all reserves, deferred payments, and any and all other moneys and properties at that time due and payable or that thereafter may become due and payable to the said principal, under and by virtue of said contract, shall be credited upon any claim the said owner may make upon said surety because of the failure of said principal to comply with tíre terms of said contract.
“The said surety shall be notified in writing of any act on the part of the said principal, or its agents or employees, which may involve a loss for which the said surety is responsible hereunder, immediately after the occurrence of such act shall have come to the knowledge of said owner, or his duly authorized representative or representatives, whoever shall have the supervision of the completion of said contract, and a registered letter mailed to the president of said surety, at its principal office in Baltimore city, Maryland, shall be the notice required within the meaning of this bond.”
The declaration set out the terms of the contract and bond, alleged performance on the part, of the plaintiff, default by the defendant, abandomnent of the work, etc., and claimed the penalty of the bond. Subsequently, by order of the court, the plaintiff filed a bill of particulars of the cost of the work done after the contractor’s default, the first item of which bears date January 31, 1899, and the last, November 29. After allowing credits, the balance claimed to be due is $1,825.62.
The Fidelity company appeared specially, on June 26, 1900, and filed a demurrer denying the jurisdiction of the court, “because upon the allegations of said declaration it appears that this suit ought, if brought in a court of the United States, to be brought in the district of the residence of the plaintiff, that is to say, in the eastern district of Michigan, or in the district of the residence of the defendants, that is to say, in the district of Maryland, and not in the District of Columbia, of which neither the plaintiff nor either of the defendants is a resident.” This was overruled, with leave given to plead within twenty days, and exception was duly taken. Not waiving the question of jurisdiction, the defendant surety company then filed twelve pleas. These deny indebtedness as alleged, or that the plaintiff has performed its obligations under the contract of September 13, 1898, or the conditions of the bond, or has been damnified. The twelfth plea alleged that the contract of September 13, 1898, “was, on or about October 26, 1898, without the knowledge, privity, and consent of the said defendant, altered in a material part, by an agreement entered into between the parties to said contract bearing date the 20th day of October, 1898, whereby it was mutually agreed to cancel and rescind the portions of the said contract relating to the excavating and concrete work and to release each other from all liability on said contract so far as the same related to concrete and excavating work.” The Guilford Granite Company, without raising the question of jurisdiction, filed substantially the same pleas, and one additional in the nature of set-off, asking judgment thereon for the sum of $2,350.60 claimed to be due. The plaintiff joined issue upon the pleas of the Fidelity company, and replied to the twelfth plea, denying that the contract had heen altered without the consent of said surety, and alleging that the change was one by which the work and labor of the Guilford Granite Company was lessened, and was in tbe interest of said Fidelity company, and was made with the full knowledge, consent, and privity of the Fidelity & Deposit Company. Substantially the same replication was made to the like plea of the Guilford company, and the following added: “By consent and agreement of all the aforesaid parties, all the other conditions and terms of said contract were to remain in full force, and it was not intended to release, and did not in any manner release, the defendants or either of them from their obligations under said contract.” The bill of exceptions, purporting to give the substance of the evidence introduced on the trial,, is confused and unsatisfactory, owing to the fact, it is said, that it was settled after a long trial wdthout the aid of a stenographer. It appears therefrom, and from agreed statements on the argument, that Carl Kohl-Smith, a sculptor, had a contract with the United States for the erection of the entire Sherman monument. That plaintiff, a dealer in cut granite, undertook with him to erect the granite pedestal for the statue, and sublet to others certain parts of the work, the Guilford Granite Company undertaking those stated in the contract hereinabove mentioned.
The entire work was greatly delayed owing to many causes, and the government was urging completion. Among other things, it was discovered that the location was upon ground that had been filled years before, and before the concrete could be laid for the foundation it became apparent that the excavation must be made deeper than had been contemplated and that piles should be first driven for security. This extra work, it seems, was a burden to be borne by the chief contractor, the sculptor, and Congress afterward made an appropriation to compensate him therefor. This circumstance seems h> have no bearing upon the issues in the case further than that it accounts for much of the delay and some of the difficulties between the plaintiff and the defendants, concerning which there was mueh correspondence. As a result of the difficulty attending the foundation work, the character of which was to be so materially altered, the plaintiff ¿nd the Guilford company entered into a1 written agreement October 26, 1898, to cancel and rescind the portions of the contract between them relating to excavating and concrete work, “and to release each other from all liability on said contract as far as the same relates” thereto. The bond in question, though dated September 16, 1S98, was then in the hands of the agent of the Fidelity company in the city of Washington undelivered.
Plaintiff introduced evidence tending to show that J. Sprigg Poole was the agent of said company for all purposes relative to the entering into performance, and fulfilment of said agreement between plaintiff and said company to complete the said contract in the place of the Guilford company.
Plaintiff’s evidence further tended to show “that at the time the plaintiff, through its agent Harrison, took the said Poole the contracts and tire specifications referred to in the bond in suit for his information and to become a part of said bond, and as a basis for the responsibility of said bond, and the scope thereof was then and there discussed between them; -that in pursuance «of said contract the defendant, the Gnilford Granite Company, began work under the said contract of September 13, 1898, in anticipation of the bond in suit; and that the bond in suit was furnished and paid for on or about the 26th day of October, 1898, being delivered by said Poole and the payment thereof being made to him.” The Guilford company proceeded under the amended contract until May 12, 1899, when plaintiff took the work out of its hands. Touching this tlio plaintiff’s evidence tended to show, as recited in the bill of exceptions:
“That- on May 12, 1899, the Guilford company ivas in default under its contract; that plaintiff then orally notified the Fidelity company’s agent Poole, at his office in Washington, of such default; that then and there it was orally agreed by said agent and plaintiff’s representative that plaintiff should pay the Guilford company for the ‘fillers’ that had been furnished by it; that the contract should he completed by plaintiff; that, in event the cost of its completion should exceed the unpaid balance of the contract price, the Fidelity company would pay plaintiff such excess. That, in pursuance of said agreement, plaintiff paid the Guilford company $508.-14 for the ‘fillers;’ and $115.95 for the current pay roll of the Guilford company; that it, plaintiff, took charge of the work May 12, 1899, and completed it December 9, 1899, at a cost of $1,825.62 in excess of the contract price of tbe unrescinded part of the contract of September 13, 1898, as shown by the plaintiff’s bill of particulars.”
Plaintiff gave no notice in writing to the Fidelity company as stipulated in the condition of the bond, but communicated with the Washington agent in person.
The testimony relating to the agency of the said Poole was given in part by him as a witness. Following tbat, which has been set out above, the bill of exceptions further recites that the plaintiff’s evidence tended to show:
“That plaintiff’s representative called upon said. Poole and stated the inability of the Guilford Granite Company to perforin the contract of September 13, 1898, and that the War Department was pressing the plaintiff to hasten the work, and something must he done immediaiely; that said Poole stated that said the Fidelity & Deposit Company had no facilities for doing such work, and inquired if plaintiff could not perform such work, it being in its line of business. That said plaintifE’s representative stated that plaintiff bad in its employ Mr. Heidenreich, who could superintend the work; that said Poole inquired as to the probability of a loss occurring; that plaintiff’s representative in reply stated that the Guilford Granite Company had, according to his judgment, a fair contract, and that it was. his belief and hope that the same could be performed without substantial loss. That thereupon said Poole, in behalf of the said the Fidelity & Deposit Company of Maryland, requested plaintiff to proceed with the work.
And further evidence tending to show that at said time it was agreed between said Poole, as agent for said defendant, the Fidelity & Deposit Company of Maryland, and the plaintiff’s representative, that defendant, the Guilford Granite Company, should have every facility for seeing and examining the work as it progressed, and that statements and vouchers of the expenses thereof should be rendered from time to time, by the plaintiff to the said Guilford Granite Company; that the defendant, the Guilford Granite Company, also insisted upon such an arrangement; that in pursuance of agreement among the said three representative parties, the following agreement was executed:
Washington, D. C., May 12, 1899.
The Guilford Granite Company.
Gentlemen: — In completing the work on the Sherman monument in pursuance with our contract with you, we agree to allow you the privilege of having a representative on the ground who shall have access to the accounts and pay rolls at all times; and we agree further to procure vouchers as far as practicable for all sums of money expended in connection with the said monument in completing the same under our contract with you, which vouchers shall represent materials supplied and labor performed in connection with said contract for said work.
íonrs truly,
Harrison Granite Co.
W. H. Harrison.
Plaintiff’s testimony also tended to show that it proceeded to complete the contract after May 12, 1899, keeping an account of the several items of expenditure, and the excess above the contract price amounted to $1,825.62, as stated in the bill of particulars ; that upon completion the bill and vouchers were shown to J avenal and Brunner, officers of the Guilford company, and to their attorney, who admitted that after the allowance of all credits there was a balance due plaintiff of $1,825.62.
Also that on December 19, 1899, plaintiff sent a letter to the Fidelity company by registered mail reciting the facts relating to the default of the Guilford company, and the performance of its contract by plaintiff, with the consent, approval, and constant knowledge of its Washington agent, and stated the gross amount, expended.
One Heidenreich, who superintended the monument construction, including the part contracted for by the Guilford company on behalf of the plaintiff, testified that he kept a record and account of every item of expenditure for materials and labor and the same was introduced in evidence.
“Upon cross-examination said Heidenreich testified that he provided labor and materials necessary to complete the contract between plaintiff and the Guilford company, and also provided other labor and materials necessary to complete tbe monument under tbe contract between plaintiff and Kohl-Smith; and also cut and repaired some stones furnished for said monument by the Fletcher Granite Company, under a contract between that company and plaintiff. That lie did not keep separate accounts of the expenses incurred by him under the said three contracts, but kept an account of tbe expenses incurred by him under all three said contracts.
“That said witness testified that the account kept by bim for tlie work done on the monument was so designated thereon that the plaintiff was enabled to pick out the items therein which related to tbe contract of September 13, 1898 ; and that the plaintiff’s bookkeeper could pick out tbe said accounts so that the plaintiff might pick out therefrom tbe items which related to said last-named contract. That he could tell from said memoranda on what stones work was done. That all of said memoranda were received in evidence. That the cost of cutting and repairing the stones furnished by the Fletcher company was set down separately on his said account; that the cost of labor and materials used by him in completing the monument under plaintiff’s contract with Hohl-Sinith, and not included in plaintiff’s contract with the Guilford company was blended on his said account with the cost of labor and materials used by him in completing plaintiff’s contract with the Guilford company. That he charged himself on said account with all moneys received by him from plaintiff for the completion of the monument, and credited himself on said account with all expenses incurred by him in completing the monument, that T (Heidenreich) kept those accounts as accounts between me (Heidenreich) and the Harrison Granite Company. I (Heidenreich) had nothing to do with the Guilford Granite Company.’
“Thereupon, defendants moved the court to strike out Heidenreich’s said account, and to direct the jury to disregard the same; the court overruled the motion; defendants duly excepted to said ruling.
“Said Heidenreich also testified that he did not keep the accounts as such, but sent the company statements or memoranda so that the company’s bookkeeper could make up the account and malee proper charges against the persons to whom such charges should be made, and the bookkeeper testified that he made up the accounts from said memoranda.
“Said Heidenreich further testified upon cross-examination that while superintending said work he kept a Time-book’ and a Tog;’ that the Time-book’ showed the Time’ of the men employed by him in the monument, and the Tog’ showed, among other things, on what work the men were employed; that he had been unable to find the Tog,’ and did not know where it was.”
Defendants offered evidence tending to show that there was difficulty with the foundation which led to the agreement rescinding that part of the contract, which agreement (heretofore referred to) was read in evidence. They produced considerable correspondence between plaintiff and the Guilford company relating to carrying on, giving up the work, and charges therefor, which tended to show that the Guilford company did not admit the indebtedness claimed by the plaintiff, etc. (It is otherwise of no consequence.) Other evidence by the witnesses Jouvenal and Brunner was introduced, denying the admission of the balance as testified to by the plaintiff, and tending to show that plaintiff had, instead, offered at one time to settle by exchanging receipts in full; also that plaintiff had rendered an erroneous bill at first, which it afterwards admitted. Further evidence tended to show that the Guilford company was entitled to certain credits for extra work, etc. which should come off the account of Heidenreich. The sum of tírese does not clearly appear; the plaintiff having controverted them, and the jury having accepted Ms statement as true, their exact statement is of no importance. Defendants’ evidence also showed that the bond was applied for to the Fidelity company’s agent in Washington, wbo forwarded tbe same to the office of the company in Baltimore, where it was executed and returned to the Washington agent who delivered the same to the Guilford company’s agent.
The following recital of the Dill of exceptions sets forth a special ground of exception:
“Plaintiff’s counsel, in response to defendants’ request to produce the aforesaid ‘log,’ stated that it was unable to produce tbe same, and did not know where it wa.s. Said Brunner then testified that said Harrison showed to him the aforesaid ‘log,’ and gave Mm permission to copy the same; that he made a true copy of part of said ‘log,’ and hired an employee of the Raleigh Hotel (where the said ‘log’ was handed to him by Harrison), whose name he did not remember, to complete tbe copying of said ‘log.’ That he subsequently received the copy of the ‘log’ but has never since seen said ‘log’ and does not know where it is. That, after Hie copy was made, he was informed by said Harrison that said Tog’ was left for him, Harrison, at the office of ‘The Raleigh.’ Defendants then offered in evidence that part of the copy of said ‘‘log’ made by said Brunner, for the purpose of showing that part of the labor and materials charged against the Guilford company on plaintiff’s statement of its claim hereinbefore set forth bad been used by Heidenreich upon work not embraced within the contract between plaintiff and the Guilford company; that no counter-credit to part of said charges is allowed the Guilford company in plaintiff’s said statement of its claim, and that the. counter-credit to part of said charges allowed to the Guilford company on plaintiff’s said statement of its claim was less than the counter-credit to which tire Guilford company was entitled and to show further that part of the expense incurred by said Heidenrich in cutting and repairing stone furnished hy the Fletcher Granite Company under the contract with plaintiff had been charged against the Guilford company in the aforesaid statement of plaintiff’s claim without any counter-credit for such part being allowed to the Guilford company on said statement of account. The court refused to permit said part of said copy to-be given in evidence for the reason that it was a copy of only a. part of the Tog;’ defendants duly excepted to said ruling. Defendants then offered in evidence for the purpose aforesaid the-whole of said copy of said Tog;’ the court refused to permit said copy to be given in evidence for the reason that, except as to t.h * part of the copy made by Brunner, said copy had not been shown to be a true copy; to said ruling defendants duly excepted. After said rulings were made, plaintiff’s witness testified that-the statement That he informed said Brunner that said log was left for him, Harrison, at the office of the Raleigh, was denied by plaintiff’s witness, Harrison. Said Harrison also testified that he had never seen said log after he gave it to said Brunner at said hotel to he copied, and did not have possession of it and did not know where it was.’ ”
The court after refusing defendants’ request to direct the jury to find a verdict for each of them, stated the case to the jury and gave them certain instructions prayed by the plaintiff over the-objection of the defendants, who excepted thereto. These are substantially:
1. That under the terms of the contract the plaintiff had the right, if the work being done was unsatisfactory, and had reason to believe that the Guilford company was not performing the same as agreed, to go into possession and do the work at the latter’s expense.
2. That whilst the bond required notice of default [by registered letter] to be given the Fidelity company in writing, still if it “had actual notice of such default, and through its agent in Washington, duly authorized thereunto, arranged with the plaintiff to complete the work embraced in said contract, then the absence of such registered letter is no defense to the action on said bond, and said Fidelity & Deposit Company will be deemed to have waived said requirement in the bond.”
3. That under said contract the Fidelity company had the right- to take up and finish the work of the Guilford company, but said company, through its duly authorized agent, having, upon the default of its principal, arranged with the plaintiff to complete t-lie work, or, having approved the same, is estopped from setting up the want of notice by registered mail.
i. If the jury find from the evidence that said Guilford Granite Company failed or were about- to fail, and make default, in the performance of the -work under said contract, and that immediately thereupon the plaintiff notified said Fidelity & Deposit Company of such default by calling upon its agent in Washington at his office, who was then and there duly authorized to act for said company, if you so find from the evidence, and that then and there the agent of the said Fidelity & Deposit Company told the plaintiff’s representative that the said Fidelity & Deposit Company had no one it could engage to do the work under said contract, and asked the plaintiff’s representative to do the work thereunder, -which the plaintiff’s representative thereupon agreed to do; that the plaintiff, in pursuance of said agreement, undertook to do said work under said contract to be performed by the Guilford Granite Company, and did perform and finish the said work under said contract; that the said agent of said Fidelity & Deposit Company inspected said work from time to time as the same progressed; and that when the work was thus completed the plaintiff notified said Fidelity & Deposit Company of its completion and the cost thereof by registered mail notice to said Fidelity & Deposit Company’s office in Baltimore, in compliance with the agreement with said Fidelity & Deposit Company’s duly authorized agent in Washington, and that said Fidelity & Deposit Company did not then, and at no other time, prior to commencement of this suit, raise the objection to the same, — then and in such case said Fidelity & Deposit Company will be deemed to bave waived the requirement of the bond to serve a registered mail notice on said Fidelity & Deposit Company in Baltimore as required by said bond and to have acquiesced in the doing of the work by the plaintiff and in the necessary expenses of completing the same.
5. This instruction carefully stated the correct measure of damages in event the jury should find for the plaintiff against the Guilford company.
6. That if the Fidelity company arranged with plaintiff to complete the work upon default of its principal, and the same was completed, then plaintiff was entitled to recover from it the same amount found against its codefendant.
6y2. The jury are instructed further that the so-called contract of October 26, 1898, between the plaintiff and the defendant the Guilford Granite Company is in legal effect a completion of the underground or foundation work on the pedestal of the Sherman monument embraced in the contract of September 13, 1898, so far as both the defendants are concerned; and that it in no wise affects the work done, or the cost thereof by the plaintiff for the defendant the Guilford Granite Company under the alleged agreement between the Fidelity & Deposit Company through its Washington agent with the plaintiff’s agent; and that the responsibility of the defendant, the Fidelity & Deposit Company, to secure the performance of the said contract of September, 1898, in said bond is not affected thereby.
The defendants offered a series of prayers. These were, in substance, — to return a verdict for defendants; that the bond does not secure the performance of any contract save that of September 13, 1898, referred to therein; to strike out all evidence relating to parol waiver of the conditions of the bond; that the plaintiff could only recover nominal damages; that the burden is upon the plaintiff to prove the indebtedness of the Fidelity company; that, if subsequent to the delivery of the bond, the plaintiff and the Guilford company changed the contract relating to the foundation, the verdict should be for the Fidelity company ; that, if the contract was changed in a material particular, the verdict should be for the Fidelity company; that a failure to comply with the condition of the bond for notice by letter would entitle the Fidelity company to a verdict; that, if the said written notice was not given until three months after default of the Guilford company, the verdict should be for the Fidelity company; that notice to the agent of the Fidelity company was not a compliance with the condition of the bond; that notice not in writing was not compliance with the condition.
These prayers were refused; but the record shows that the prayer relating to the burden of proof was not objected to by the plaintiff, and “was not intentionally refused by the court, but was an oversight. Counsel for both parties were present when said charge was given.”
The 23d special prayer of the defendants was to the effect that no act of the agent of the Fidelity company in the District bound said company unless the jury should find that he was authorized by said company to perform the act; this the court gave after adding the words, “or that the Fidelity company ratified or directed the act of the agent.”
The 24th special prayer was to the effect that if, after the default of the Guilford company, the plaintiff paid it the sum of $508.44 on account of labor and material, then their verdict should be for the Fidelity company. This was refused. Another prayer relating to the allowance of said item as a credit was given; hut it was then conceded by counsel on both sides that the same was not charged against either defendant in the bill of particulars.
The 25th special prayer was, in substance, that if the contract of September 13, 1898, between the plaintiff and the Guilford company was altered in the manner prescribed in the written agreement between said parties on October 26, 1898, then the verdict should be for the Fidelity company, unless tbe jury should find from the evidence that such change was made with “the privity, knowledge, and consent of the Fidelity company.” This the court- gave with the addition of these words: “And
unless it further appears from the evidence that the liability of the Fidelity & Deposit Company was thereby increased.” Ex-•eeption was taken to this amendment. The court then gave defendants’ prayers 26 and 27, which were, in substance, that the j>rivity, knowledge, and consent of the agent of the Fidelity company is not that of the said company, unless the jury should find .from the evidence that the agent had authority to consent, and that the burden of proof is upon the plaintiff to show, by a fair preponderance of the evidence, the authority of the agent to do any act necessary to be shown to entitle the plaintiff to recover.
The verdict, was for the plaintiff for the entire amount •claimed in the bill of particulars, namely, $1,825.62. From judgment entered thereon the defendants have both appealed.
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
