Commercial Casualty Insurance v. Durham County

Yaeseb, J. The contract provision that 85 per cent of the value of labor and material used during the previous month, as estimated by the architect, shall be paid by the owner to the contractor at the dates *61 specified during the progress of the work creates in the 15 per cent reserve balance an equity in which the surety has a substantial right. "While the owner also has an equity in this reserved balance, he has no right, without the consent of the surety to waive it, or to exceed the provisions of the contract in making payments to the contractor. The retained balance is well calculated to induce the contractor to complete the building, and it is valuable security against loss when a breach occurs. Clark defaulted 30 October, 1924. The excess payments were made 15 October, 1924. The contract as written, and not otherwise, fixes the rights and determines the liability of the "surety. Sureties have a right to stand on the terms of their contract, and, having consented to be bound to the extent expressed therein, their liability must be found therein and strictly construed. Glenn County v. Jones (Cal.), 80 Pac. Rep., 695; Morgan v. Salmon, (N. M.), 135 Pac. Rep., 553; Calvert v. London Dock Co., 2 Keen, 639; Prairie State Bank v. U. S., 164 U. S., 227; Kunz v. Boll (Wis.), 121 N. W., 601; Warehouse Co. v. Green (Ga.), 87 S. E., 826; Webb v. Lee (Wis.), 194 N. W., 155; Y. M. C. A. v. U. S. Fidelity & Guaranty Co., 90 Kans., 332; 133 Pac., 894; 55 L. R. A. (N. S.), 170; First National Bank v. Fidelity & Deposit Co., 5 L. R. A. (N. S.), 418; Greenville v. Ormand, 51 S. C., 121; Brandt on Suretyship and Guaranty, 578; Stearnes on Suretyship, 108; Kimball v. Baker, 62 Wis., 526; 9 C. J., 862; 32 Cyc., 223; Gray v. Putnam (S. C.), 28 S. E., 148; Fidelity Deposit Co. v. Agnew, 152 Fed., 956; Miller v. Stewart, 22 U. S., 680. Our own authorities proceed upon this principle. Cooper v. Wilcox, 22 N. C., 90; Bell v. Howerton, 111 N. C., 69; Purvis v. Carstaphan, 73 N. C., 575; Carriage Co. v. Dowd, 155 N. C., 307; Mfg. Co. v. Holladay, 178 N. C., 417. The defendant contends that these excess payments to Olark constitute an alteration in the terms of the contract, and that the plaintiff, therefore, is not relieved. The record discloses no alterations in the terms of the contract or in the work to be done under it, as contemplated by the bond. A violation of the contract is not an alteration. If this were true, no violation could occur when the contract provided as in the instant case, for the contract would alter itself to meet the breaches. Blackman v. Morel (Ga.), 79 S. E., 492. Guttenberg v. Vassel, 74 N. J. L., 553, is not in conflict, but in affirmance of the rule herein declared. The sureties in that case were held liable on account of a provision in the contract that payments to the contractor,- “in advance or contrary to the terms of the contract,” would not render the contract void and would not relieve the surety. *62 The instant case is between the surety and the owner, and the material men and laborers are not parties. Hence, it is unnecessary and improper to determine tbeir rights. The checks which were not paid do not constitute payments. Graham v. Warehouse, 189 N. C., 533; 30 Cyc., 1265; 21 R. C. L., 60. "We are advertent to authorities that seem to hold to the contrary. Upon an examination, many of these are upon different facts, or openly accept a different view, in some instances this is in obedience to legislative enactments. We prefer to follow those authorities which uphold the right to contract and to abide by the terms thereof when made. Parties may then act in accordance therewith and in full appreciation of such rights and liabilities as are fixed by their agreements. Therefore, let the judgment appealed from be Affirmed.