National Building & Savings Ass'n No. 2 v. Fink

Opinion by Mr. Justice Williams, This appeal is from an order of the court below opening a judgment entered upon a warrant of attorney accompanying a bond. Fink, one of the defendants, was a builder who had entered into a contract with the plaintiff for the erection of several dwelling houses in the city of Reading. Born and Yetzer the other defendants had been his sureties for the performance of the building contract. When the houses were completed it was found that Fink had not applied all the money he had received upon the contract to the cost of building, and that he was indebted to workmen and materialmen in sums amounting together to about $5,000. His sureties, as the evidence shows, were disturbed about the situation. They found that mechanics’ liens were about to be entered against the houses for the sums due from Fink, and they knew that they would thereupon become liable upon their undertaking as sureties for the default of their principal. The obvious way to relief was to secure a loan for Fink that would enable him to comply with his building contract, and that would give time in which to recover his losses and repay the loan. Negotiations were therefore entered 58 upon with the plaintiff and an arrangement made by the terms of which the association agreed to loan Fink $5,000 with which to free the building from lien or liability, upon his giving security for its repayment at the end of two years, and to provide him with further employment meantime. Born and Tetzer became his sureties upon the bond given for this money, and his building contract, upon which they had also been sureties, was complied with by the payment of the money upon the claims outstanding against the houses. This was in a certain sense an extension of their original suretyship, but it was not literally such. The original contract having been fully complied with by means of the money borrowed, the bond given for the money was a novation. This judgment was entered on the bond. "When it fell due according to its terms Fink had paid nothing upon it, and proceedings were instituted for its collection. The application to open judgment, now before us, was then made by the sureties in July, 1895. It was based upon three several allegations of fact: first, fraudulent representations made by Fink and plaintiff’s officers to induce the execution of the bond; second, the failure of the plaintiff to retain from Fink, pending the building contract, ten per cent of the sums due to him as the work progressed in accordance with the terms of the contract; third, the allegation' by Born that the plaintiff had released the real estate of Yetzer from the lien of the judgment whereby his right to contribution from Yetzer was defeated. After a full hearing upon the rule to show cause, the learned judge of the court below decided against the sureties upon the first of these questions, holding that neither by Fink, nor by the plaintiff, had they been misled in any particular. The second point turned out to be equally unfounded. The building contract had been finally settled with the knowledge and active co-operation of the sureties and the new bond given without objection on their part as to its amount or the application of the money obtained upon it. The time to have raised this question was at the settlement of the building contract. It could not be properly raised when the bond given to secure the borrowed money was payable. The relation of owner and contractor closed when the building contract was finally settled. The relation created by the bond was that of lender and borrower, and no reason is dis 59 closed by tbe evidence for relieving tbe borrower from tbe payment of tbe entire sum borrowed. The third reason is stated in an indefinite manner. The facts upon which injury to Born is alleged are not given. What real estate was released, and when, and how such release affected the right of contribution of the other surety, or the ability of Yetzer to respond to the plaintiff’s judgment does not appear. The order of the court below seems to us therefore to have been wisely made upon the showing then before it; but because of the uncertainty relating to the alleged releases, we are of the opinion that further opportunity might well be given to Born to show the exact facts in regard to the releases alleged to have been given to Yetzer. The order of the court below is reversed except as to the complaint made by Born about the release of Yetzer from the Ken of this judgment. The record will be remitted to afford opportunity to investigate this single question, and ascertain whether .the value of the right of contribution against Yetzer has been destroyed or seriously impaired, and if so, the court will make such order for the relief of Born, as the circumstances may require.