Leonard v. County Court of Jackson County

Snyder, Judge: The counsel lor the appellants, to sustain this appeal, has referred to and relies upon the following legal propositions: The contract of suretyship imports entire good faith and confidence between the parties in regard to the whole transaction. The creditor is bound to observe good faith with the surety. He must withhold nothing, conceal nothing, release nothing which may possibly benefit the surety. If any stipulations, therefore, are made between the creditor and the debtor, which are not communicated to the surety, and are — 52 — inconsistent with the terms of his contract or are prejudicial to his interests therein, they will operate as a virtual discharge of the surety from the obligation of the contract. 1 Story’s Eq. Jur. § 324. If a creditor does any act injurious to the surety, or inconsistent with his rights, or if he omits to do any act, when required by the surety, which his duty enjoins him to do, and the omission proves injurious to the surety, in all such cases the latter will be discharged, and he may set up such contract as a defense to any suit brought against him, if not at law, at all events in equity. Id. § 325. The liability of a surety is not to be extended by implication, beyond the terms of his contract. To the extent, and in the manner, and under the circumstances pointed out in his obligation, he is bound, and no farther. 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. If the contract has been altered in the slightest particular without his assent, he may say, “ Non in hose fondera veni.” Miller v. Stuart, 9 Wheat 680; Bonar v. Macdonald, 1 Eng. L. & Ch. 1; Holme v. Brunskill, 28 Eng. Rep. 401. A surety is discharged by any dealing by the creditor with the principal which amounts to a departure from the terms and conditions of the contract. Thus, when the contract is for a work or improvement, to be paid for by installments, if the principal is paid faster than the contact provides, the surety will be discharged. Mayhew v. Boyd, 5 Md. 102; General S. Nav. Co. v. Rolt, 95 Eng. Com. L. 550. These general principles of equity are not only based upon reason and justice, but they are fully sustained by the English and American adjudications on the subject. It is not intended by anything that may be said or determined in this cause to question or qualify these fundamental equity rules. All the material facts in this cause being matters of record and fully set out in the bill and the answer being simply a denial of the legal conclusions drawn by the bill from those facts, it seems to me, that a decision of the questions presented by the demurrer to the bill will dispose of the cause. In view of the averments of the bill, the counsel for the — 53 — appellants claims, that the supervisors, being aware of the condition of the bridge at the time they received it from George E. Leonard, the contractor, and seeing that it was defective and the north abutment “seemed to be cracking and settling,'"’ by receiving the bridge in that condition and then paying the last installment of the contract price for the bridge, thereby changed the contract and released the appellants as the sureties of said contractor. .This position assumes that the supervisors received the bridge from the contractor and paid him the last instalment for its construction before the bridge was completed according to the terms of the contract and, consequently, before said instalment had become due. The question thus presented, then is rather one of fact than of law. The important enquiry is, did the supervisors receive the bridge and pay said last instalment before the time contemplated by the contract? The answer to this enquiry must be drawn from the true interpretation of the contract and the consequent action of the supervisors in reference thereto. By the contract the contractor bound himself to furnish all the materials and build and complete “the bridge in a substantial and durable manner, so that the same shall stand the test of time and flood, and to have the whole structure finished and delivered to the public for use on or before the first day of December, 18G8.” It was also expressly stated in the contract that the contractor was “a bridge builder by trade” and that the commissioners “knew but little about bridges.” This stipulation was a material representation and was manifestly intended by the parties to operate as a guaranty on the part of the contractor that he would build a bridge of the character described and deliver it to the public and that the commissioners having but little knowledge of bridges, their judgment was not to be relied on by the contractor, but that he being a bridge builder by trade was to guarantee his work and complete and deliver it on or before the time designated. The plain meaning and effect of this provision is that the contractor and not the commissioners was to be the judge of the character of the bridge and to decide when it was completed according to the terms of the contract and he was then to deliver it to the public for pse, — 54 — There is not a word in the contract that the commissioners or the supervisors were to be the judges of the sufficiency of the bridge or that they had any legal right to refuse to receive it when delivered to them by the contractor. They did not reserve to themselves the right to decide when the bridge should be regarded by them as completed. They expressly stated that they knew but little about such matters and must necessarily have relied wholly upon the good faith and judgment of the contractor to complete and deliver the bridge, and in the event he should fail to do so'or deceive them, then he and his sureties were to bo liable on their bond. It would have been rather singular for the commissioners to have contended, in the face of the contract in which they had said that they were ignorant and that the contractor was an expert in such matters, that the bridge was not completed when the contractor decided and insisted that it was completed according to the contract. By the very terms of the contract they admitted that their judgment was of no value while that of the contractor was of the highest value. It is not at all remarkable, then, that when the contractor informed them that the bridge was completed and delivered it to them as completed, they should have acquiesced in his decision even though the north abutment “seemed to them to be cracking and settling” and that they, taking the judgment of the contractor in preference tc their own, should have recommanded the issuing of the certificates for the last payment on the bridge to be made “payable out of the county levy of 1869 as specified in the contract.” And to show more fully that such was the fact and the construction given by them and the contractor to the contract they further expressly state in their report that they “do not intend to release said contractor from any warranty, expressed or implied, in said contract.” Of course, if this reservation had not been implied in the contract itself, the insertion of it in this report would not bind the appellants, but inasmuch as it is justified by a reasonable construction of the contract, the appellants are bound by it as a part of the agreement entered into by them as the sureties of the contractor. I do not, therefore, think there was any variations or change of the obligation of the appellants by reason — 55 — of the acceptance of the bridge by the supervisors under the circumstances and in the manner they did, and that the appellants are not on that account discharged from the liability. The next question is did the supervisors anticipate the payment of the last installment of the price of the bridge? The contract, after fixing the time for the payment of the first $2,000 provides, that “the residue of $9,000, the whole contract price, shall be paid as follows, to-wit: $3,500 out of the levy of 1868, to be paid by certificates of indebtedness to be issued by said board of supervisors from time to time as the work progresses, or in cash if in the county treasury applicable thereto, and the residue, to-wit, the sum of $3,500 out of the county levy of 1869, which last payment shall be by certificates of indebtedness drawn by said board of supervisors, and to bear interest from the time when said bridge shall be completed and received.” After stating that said board shall, upon the estimates oí the commissioners pay the installments aforesaid as the work progresses, the contract concludes, “except said last installment which is not to be paid until the whole work is completed and received as aforesaid.” By their report dated November 10, 1868, the commissioners recommended and directed the president and clei’kof the board of supervisors to issue to the contractor “ the county certificates of indebtedness for $3,500, payable out of the county leey of 1869, with interest from date as specified in the contract.” In accordance with this recommendation the board of supervisors ordered that that the contractor “ receive certificates of indebtedness for $3,500, in denominations as follows,” then the number and amounts of the certificates, aggregating $3,500, are given. This order is dated November 16, 1868. There is no averment in the bill when these certificates were issued, but assuming that they were in fact issued on the day the order for their issuance was made, it does not appear that they were issued before the time the contract provided that they should be issued. It is not. pretended that they were made payable otherwise than out of the levy of 1869, and the contract provided that the bridge should be completed on or before December 1, 1868, and that the last — 56 — installment should “not be paid until the whole work is completed and received.” There is no averment when these certificates were paid, and as they were payable out of the levy of 1869, the legal presumption is that that they were not paid until the latter part of the year 1869. The bridge having been, in fact, as we have seen, properly received on the 16th day of November, 1868, the last installment could have been paid on that day without any variation of the contract, because it did not prohibit such payment after the bridge had been completed and received. It, therefore, seems to me, clear that there was no variation or change in the contract by the supervisors or the commissioners, either in accepting the bridge in the manner and at the time they did, or in making the order for the issuing of the county certificates for the last payment on the bridge at the time they did so. Prom this conclusion, it necessarily follows that the allegations of the bill show no ground for the discharge of the appellants from liability, and that the demurrer thereto should have been sustained. Por the reasons aforesaid, I am of opinion that the decree of the circuit court should be affirmed. Ahbtrmed.