Simonson v. Grant

Vanderburgh, J.

Plaintiffs were sureties for the faithful performance by the defendants Thori & Malmberg of their building contract with the defendant Grant. They also furnished materials used in the building erected in pursuance of the contract, and claim a lien therefor in this action. Defendant Grant’s defence against the enforcement of the lien is rested on the claim that the engagement of the plaintiffs as sureties estops them from claiming any lien for materials furnished under the same contract. To this the plaintiffs reply that they had been released from the obligation of their bond beJore any materials were furnished by them.

The building contract in question contained a provision that Thori & Malmberg “would protect said Grant, and save him harmless from all claims and liens for labor and materials contracted by them on said building.” The contract price for the building, including labor and materials, was $6,300, to be paid in instalments as the work progressed. The contract is set out in full in the record, and is dated October 25, 1884. The first instalment of $500 was paid to the contractors Thori & Malmberg as therein provided. The contract provided that this instalment was to be paid “when all the lumber is on the ground, except siding and flooring, and the first floor laid; and, second, when the building is inclosed, sheathed, shingled, and back-plastered, the chimneys built,'and roof painted, $800.” It also provided that so much of each payment as shall be necessary to pay for materials and labor furnished shall be used for that purpose, and after the first payment, and before the others are made, said Thori & Malmberg shall furnish said Grant with a written statement from parties furnishing materials or labor, or other satisfactory evidence, that the money paid has been so used. After the payment of the *441 first instalment according to the terms of the contract, defendant Grant, having discovered that the greater part thereof had not been applied as required by the terms of the contract, thereupon refused to make any further payments directly to them, but thereafter, from time to. time, made payments upon their order to divers parties who had valid claims against them, and which, if not seasonably paid, might be enforced against the building by filing liens therefor in pursuance of the statute. The court also finds “that the contractors did not perform the work called for by said contract in the order provided for, and that such payments made by defendant Grant were made without reference to the state of the work at the time of such payments or conditions prescribed by said contract in respect to the progress of the work, but that said Grant made only such payments as were necessary to be made to protect the house from liens aforesaid.” And of these payments, and his object in making them, the plaintiffs had notice, but it does not appear that they ever authorized or consented to any departure from the terms of the contract, or any change or modification thereof.

The defendant Grant, therefore, as it appears, subsequent to the ■first payment of $500, with knowledge of the default of the contractors in respect to the application thereof, so far departed from the ■contract that he thereafter undertook to provide directly for the payment of the claims referred to, in disregard of the order or conditions of payment prescribed by the contract, or the progress of the work. The first departure from the terms of the contract was ■ so made by him in the acceptance and payment of an order of Thori • & Malmberg on the 6th day of January, 1885, on account of the contract, for $928.87 in favor of a third party who had furnished lumber to that amount and value for the building. At the time of the assumption and payment of this claim, no further payment had Leñóme due according to the terms of the contract. The plaintiffs’ claim is for materials alleged and found to have been furnished to the contractors, and used in the building, between the 4th day of March and the 18th day of July, 1885. The defendant Grant, doubtless feeling himself insecure in case the payments were made directly to the contractors, and being apprehensive that their unpaid bills would be en *442 forced as liens, as might legally be done by their creditors, undertook to protect himself in the manner stated. But it was dealing with the principals in the contract in a manner not provided for therein. In anticipating the instalments, and otherwise disregarding the conditions of the contract, they were practically so modified that it was not the contract to the performance of which the plaintiffs had bound themselves as sureties. In such cases the surety may be deprived of the inducement which the principals would have to perform the contract in due time as the contract requires. Brandt, Suretyship, § 245; General Steam Nav. Co. v. Rolt, 6 C. B. (N. S.) 550; Calvert v. London Dock Co., 2 Keen, 638; Leeds v. Dunn, 10 N. Y. 469 ; Farmers', etc., Bank v. Evans, 4 Barb. 487 .

The surety has a right to insist that he is bound to the extent, in manner, and under the circumstances pointed out in his obligation, and no further. “It is not sufficient, that he may sustain no* injury by a change in the contract, or that it may even be for his benefit. He has a right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal.” Miller v. Stewart, 9 Wheat. 681 , 703; Tomlinson v. Simpson, 33 Minn. 443 , ( 23 N. W. Rep. 864 ;) Birckhead v. Brown, 5 Hill, 634 .

The existence of unpaid claims against the contractors which might, in due time be enforced against the building was not in itself a violation of the indemnity clause in the contract. It is not claimed that any liens had been filed, or any legal proceedings taken to enforce the same, or that he might not have been saved harmless if he had himself stood by and insisted on the terms of the contract. Weller v. Eames, 15 Minn. 376 , (461;) Price v. Doyle, 34 Minn. 400 , ( 26 N. W. Rep. 14 .) The arrangements which he made to meet the payments under the contract must be regarded as voluntary on his part. He did not like to trust the contractors, and chose to make the new arrangements for payment referred to; but he had made no provisions in the contract to meet such contingencies, and it may be that, if they had been inserted, the plaintiffs would not have consented to become sureties. Upon the record, therefore, we think the plaintiffs were discharged as sureties, and are entitled to judg *443 ment for the enforcement of their lien to the amount found due. Bragg v. Shain, 49 Cal. 131 .

Judgment reversed, and cause remanded, with directions to render judgment for the plaintiffs in accordance with this opinion.