Keel v. . Construction Co.

*432 Hoke, J\, after stating the case: When one contracts with the owner of a lot to furnish all the materials and build and construct a house thereon for a certain price, the contract being entire and indivisible, if the structure, before completion, is destroyed by fire, without fault on the part of the owner, and the contractor, being given the opportunity, refuses to proceed further: in such case, he is liable to refund any money which may have been paid him on the contract, and also for damages for its non-performance. Brewer v. Tysor, 48 N. C., 181; Lawing v. Rintles, 97 N. C., 350; Beach’s Modern Law of Contracts, sec. 232, citing Thompkins v. Dudly, 25 N. Y., 272. And this principle will not he affected by the fact that the money is to be paid by instalments, if the price is entire for a completed building and these instalments are arbitrary and fixed without any regard to the value or any distinctive portion of the work done. School Trustees v. Barrett, 27 N. J. Law. But if the contract is divisible and severable; if the price is not' entire for a completed building, but is payable by instalments, these instalments being fixed with regard to the value of the work done, or as certain portions of same are finished: in that event, if the structure be destroyed by inevitable accident, “the builder is entitled to recover for the in-stalments which have been fully earned,” but it seems that he has no claim for a proportional part of the next instalment which has been only partially earned. Brewer v. Tysor, 50 N. C., 173; Beach Modern Law, citing Richardson v. Shaw, 1 Mo. Ap., 234. In this well-considered ease, Laws, Judge, delivering the opinion, says: “The true principle which controls such a case as this is clearly stated in Addison on Contracts, 452: ‘If the contract price of the building is to be paid by instalments on the *433 completion of certain specified portions of tbe work, eacb instalment becomes a debt dne to tbe builder as tbe particular portion specified is completed; and if tbe bouse is destroyed by accident, tbe employer would be bound to pay tbe instalment then due, but would not be responsible for any intermediate work and labor and materials.’ ” It bas been further held tbat where tbe contract to build a completed bouse is not entire and indivisible, but only a contract to do a part of tbe work and furnish part of tbe material, tbe owner, or some independent contractor, having undertaken, or being bound, to do some substantial portion of tbe work: if tbe structure is destroyed by fire or other inevitable accident, before completion, in such case tbe parties are relieved from further performance, and tbe contractor is ordinarily allowed to recover for what be bas done, over and above tbe amount' which may have been paid him. Cook v. McCabe, 53 Wis., 250; Butterfield v. Byron, 153 Mass., 517. In tbe cases just cited and others of like import, by tbe nature of tbe agreement, both parties contracted with reference only to tbe one particular building, and evidently contemplated its continued existence. On its destruction, therefore, both sides are absolved from further obligation concerning it. Tbe methods of adjustment in such circumstance are not pursued, because tbe modification of tbe general rule suggested by these cases does not apply to tbe one we are considering, and tbe cases are only referred to because they are mentioned, and to some extent relied on, in tbe argument in chief of tbe defendants’ counsel. In tbe contract before us tbe stipulations for payment by instalments are clearly made with reference to distinct portions of the work as it progressed; and tbe contract, therefore, is not entire, but divisible; and applying tbe principles above stated and pertinent to this inquiry, we hold tbat when tbe *434 walls of tlie building bad reached the second story, by the express terms of the instrument the $950 was due and owing. This much had been earned, and plaintiff had no right to recover it back, nor any part of it; and the judgment, therefore, of $450 entered against defendant, being predicated upon a right to recover back the payment, is erroneous and must be set aside. Nothing is due the defendant, however, by reason of the verdict of the jury, to the effect that the walls, as they stood after the fire, were worth $500 to plaintiff. This is what the $950 was chiefly paid for; and being greater in value than the walls, nothing is due defendant on that account. The $1,000 to be due when the building should be covered has not been paid and was never earned, and no question about it is involved in this suit. The four notes for $1,000 each executed and outstanding, and now in the hands of the National Bank, were to be paid only after the building was completed. They were in no sense a payment, but by the express terms of the contract, and by the presumption of the law, they were only given in evidence of the obligation, and the mortgage, as security for these notes when they matured. The amount represented and evidenced by these notes has never been earned and was never due by the contract, and the plaintiff is entitled to have them, and the mortgage given to secure them, delivered up and canceled. Tirue they are in the hands of the bank as collateral for money advanced to defendant; but they are held without endorsement and are subject to defenses and equities available against the payee. Mayers v. McRimmon, 140 N. C., 640. The judgment, therefore, as to these notes' and the mortgage is correct, and the same is affirmed. Modified and Affirmed.