Allen Iron & Steel Co. v. Provident Iron & Steel Co.

Per Curiam, This action of assumpsit was founded in part on two bonds in the penal sum of $500.00 each, whereby National Surety Company, the appellant, became bound to Allen Iron & Steel Company, the appellee, as surety for Provident Iron & Steel Company for the performance by the latter of two contracts it had entered into with the appellee — one relating to the Meadville post office, and the other to the Hagerstown post office. Each of these bonds was drawn for execution by Provident Company as principal and by the appellant as surety, but was only executed by the latter. For present purposes it is sufficient to refer to only one of them; it being understood that what is said applies as well to the other. The bond contains this clause “Whereas, said principal has entered into a certain contract in writing, bearing date January 25,1909, with the said obligee, for furnishing, delivery and erection of ornamental iron work for the new post office at Meadville, Pennsylvania, according to plans and specifications of J. Knox Taylor, architect, a copy of which is hereto attached, and is hereby referred to and made a part hereof.” One of the — 465 — defendant’s contentions on the trial was that there had been an intentional alteration of the instrument, in a material part, after its execution and delivery by the appellant and without the latter’s consent. In support of this contention the defendants introduced evidence which may be summarized as follows: The Provident Company addressed and mailed to the appellee a letter dated January 23, 1909, which reads: “We propose to furnish, deliver and erect light and ornamental iron work for post office at Meadville, Pa., as per plans and specifications of J. Knox Taylor, for the sum of eleven hundred and sixty-three dollars ($1,163.00) as per schedule herewith attached. Same is to be paid for monthly as the work is erected.” There was sent with this letter a schedule showing the prices for each part of the work therein specified, the sum of the items being the total contract price. On January 25, 1909, the appellee wrote to the Provident Company as follows, — “We hereby accept your offer to furnish, deliver and erect, in time to avoid delay in building, all ornamental and light iron work, except vertical ladders, for new post office, Meadville, Pa., per plans and specifications of J. Knox Taylor, supervising architect. Contract price, $1,163.50, payable in monthly installments for the work done, as estimated by architect. We will give you a $500.00 bond guaranteeing payment. You to furnish us with a $500.00 bond guaranteeing completion.” Upon this .paper, subscribed by the appellee, the other party endorsed its acceptance in these words: “Accepted “Provident Iron & Steel Co., “by McCarty.” Arthur F. McCarty,- who was president of the Provident Company at the time, testified that when he applied to the appellant for the bond he delivered to that company, as evidence of the terms of the contract, for the performance of which the latter company was to become — 466 — surety, (1) a copy of the letter of January 23, (2) a copy of the schedule that accompanied it, (3) the letter of January 25th; that when the executed bond was handed to him by the appellant these three papers were securely attached to it by glue or mucilage; and that he exhibited the bond in this condition to P. M. Maloney, of the appellee company, who after examining it tore from it the letter of January 23d, and took the bond away, leaving the detached letter on McCarty’s desk. The bond declared on and offered in evidence by the plaintiff does not contain this letter. ' Two questions are raised by this evidence, (1) whether the letter of January 23d was physically attached to the bond when it was delivered to the appellee and was torn from it by the latter’s representative; (2) whether this was such an alteration of the instrument sued on as would invalidate it. The first was a question of fact depending for its determination upon the credibility of oral testimony relating to a transaction with a deceased person and therefore was properly for the jury (see Colonial Trust Company v. Getz, 28 Pa. Superior Ct. 619, and cases there cited). The second was a question of law for the court: Stephens v. Graham, 7 S. & R. 505. In determining it, it is proper to view the instrument as if it were before us in the condition in which it is alleged to have been at the time it was submitted to the obligee for its acceptance or rejection. It recited as the foundation of the obligation the appellant intended to assume, a contract bearing date January 25th, which by its terms, consisted of an acceptance by the appellee of a proposal made by the Provident Company, which acceptance was accompanied by stipulations which did not appear in the proposal, and an acceptance by the Provident Company of the proposed contract as thus modified. The Provident Company’s proposal was thereby merged in the completed contract, but it was not extinguished and rendered null for every purpose. On the contrary, it was not only competent and material evidence of what the — 467 — whole contract was (Holt v. Pie, 120 Pa. 425; Selig v. Rehfuss, 195 Pa. 200), but it was expressly preserved and made an element in the completed contract — an element that could not be ignored in the construction thereof. Viewing the instrument as a whole, in the condition it is alleged to have been, it is plain that the appellant deemed the accepted proposal a material part 'of the contract referred to in the recital as being attached to and made a part of the instrument, and was right in so doing. And the appellee must have known from the recital and the fact that the paper was securely attached to the bond that the appellant so deemed it. In other words, the instrument executed and tendered by the appellant was a bond conditioned for the performance by the Provident Company of a contract of which the accepted written proposal was a material part. If the appellee did not see fit to accept the security upon the terms which the recital and physical attachment of the papers therein referred to clearly showed the appellant intended to make the basis of its obligation, it should have rejected it or sought a modification of the terms. But it could not strike out what the appellant deemed, and was in law and in fact, a material part of the recited contract and then hold the appellant on the bond in its altered form. The rule of law as to the effect of the intentional alteration of a written instrument, in a material part, by one party without the consent of the other, is enforced with particular strictness in favor of sureties; as has been frequently declared a surety “has a right to stand on the very terms of his obligation and is bound no further.” But entirely apart from the consideration that the obligor was a surety the conclusion is irresistible that the alleged alteration of the instrument was material, and if made and not ratified by the appellant, avoided the bond. It results from the foregoing discussion that the court was right in submitting to the jury the question whether the alteration was made but was in error in submitting to them the question of the — 468 — materiality of the alleged alteration. Therefore the fourth and fifth assignments of error are overruled and the first assignment is sustained. In instructing the jury as to the obligation of the Provident Company to furnish and erect anchors, which are described in the testimony of Mr. Stoddart, the learned judge made the question turn on the jury’s finding as to whether they were “absolutely necessary in the erection of this building.” This left out of view the question whether the letter of January 23d and the accompanying schedule were attached to, and thus made part of the bond, at the time of its execution and delivery by the appellant. If they were a part of the contract, the expression “all ornamental and light iron work” would properly be construed to mean the iron work specified in the schedule, and therefore would not include the anchors. It is thus seen that the question as to the alleged alteration was highly important in the determination of the question presented by the third assignment. Being a question of fact, as we have already said, the instruction should have been accompanied by the qualification that if the letter of January 23d and the accompanying schedule were attached to the bond at the time of its execution and delivery, they became part of the contract and there could be no recovery for the cost of the anchors. Therefore the third assignment of error is sustained. The appellant’s counsel argue correctly that in order to recover for labor expended by it, or employed by it, or paid for by it, in the doing of the work it was compelled to do in consequence of the Provident Company’s default, the plaintiff was bound to prove that the amount sought to be recovered was the reasonable cost of the labor. But we cannot agree with the learned counsel that there was not a word of evidence to show that it was the reasonable, usual or market price for the same. Wilford C. Soddart, the plaintiff’s treasurer, testified that his company did a certain number of hours’ “shop — 469 — work,” which computed-at 50 cents an hour amounted to a certain sum — the amount charged and sought to be recovered. On cross examination he admitted that his company did not pay the workmen 50 cents an hour, but that this sum was arrived at by adding to what was actually paid in wages to these men, a proper percentage of overhead expenses. We quote from his testimony: “The shop work is 50 cents an hour, which includes only the shop supervision and office expenses, things of that kind. Q. — From your experience in the business that is what it actually cost you? A. — That is the market price at that time. Q. — If you wanted to add a profit you had to add it above that? A. — Yes. We were doing that on all our work at that time.” In view of the statement of the witness that the charge of 50 cents an hour did not include a profit on the wages paid the workmen, and that it was the market price at that time, the court committed no error in refusing the defendant’s motion to strike out the testimony as to the items of labor. The second assignment is overruled. With regard to the sixth and last assignment it is sufficient to say that if the affidavit of defense was in evidence the comments of counsel were not irregular or inappropriate. But as the affidavit of defense was not in evidence we think the appellant’s counsel is right in saying that it was not the legitimate subject of comment. Judgment reversed and venire facias de novo awarded.