French Market Ice Manufacturing Co. v. Landauer

ESTOPINAL, J. Plaintiff prays for judgment against the defendant to recover on a bond on which defendant became surety, Plaintiff’s action is based upon the allegation “that on or about the 25th day of October, 1902, it entered into a contract with the — 81 — Schaeffer-Gaiennie Company, Limited, for.the construction óf a pipe from plaintiff’s ice plant on Chartres street to the Mississippi River, for the price and sum of two thousand, five hundred dollars ($2,500.00), and that one of the clauses of the contract was to the effect that they guaranteed that the pipe would remain tight for a period of one year from the completion of the work; that the defendant became the surety for the faithful performance of all the stipulations and agreements made by the Schaeffer-Gaienne Company, Limited, under their contract with plain ■ tiff. Plaintiff avers that before the work under the contract was completed, the Schaeffer-Gaiennie Company, Limited, was placed in the hands of a Receiver, and that said Receiver completed the work and received the balance of the contract price agreed to be paid the Schaeffer-Gaiennie Company, Limited. Plaintiff then avers that the work, as performed by the Schaef-fer-Gaiennie Company, Limited, and the Receiver of said company, Elias Landauer, was not done according to the contract under which they were bound; that their agreement to keep the pipes tight for a period of one year was not complied with; that the Receiver informed the Court, which appointed him, of this undisputed fact, and secured an order of Court authorizing him to make the necessary repairs, so as to conform to the contract with plaintiff, but that the said repairs by the Receiver were unskillfully done, and that the pipes continued to leak, causing great loss and damage to it; that ¿daintiff took legal proceedings to compel the Receiver to carry out his contract, and that the Court ordered it to advertise for bids- to have the work done in accordance with the original contract; that it accordingly advertised for bids, and entered into a contract with John S. Kiely, the lowest bidder, to do the work for the price and sum of one thousand, five hundred dollars ( $1,500.00) ; that the work was done by said Kiely, for which he has been paid, and that plaintiff should recover from defendant and Landauer, the Receiver. The latter first filed an exception of vagueness, and. then answered, pleading the general issue. Defendant, the Fidelity and Deposit Company of Marjdand, by way of answer, filed a general denial, admitting, however, that — 82 — on the 25th of October, 1902, it signed as surety the bond of Schaeffer-Gaiennie Company, Limited, for one thousand dollars ($1000.00), conditioned for the carrying out of certain work undertaken according to prescribed specifications; that the bond was subject to special warranties made conditions precedent to any right of action on the part of plaintiff; that after the perfection and signing of the contract and bond, plaintiff, without the knowledge or consent of respondent, changed and altered the contract made with Schaeffer-Gaiennie Company, Limited,, and made other specifications for the work required, which action on the part of plaintiff vitiated its bond; that the original contract, which it became surety for, was to have been completed in ninety days, and that the work was so completed ninety days. Defendant in his answer further avers, that Schaeffer-Gaiennie Company, Limited, went into the hands of a Receiver, and "that the work was completed by the Receiver and accepted by the plaintiff, and that without the consent and knowledge .of defendant, plaintiff paid to the receiver the balance of the cofitract price; that it was not, under the contract bond, liable for one year’s guarantee, its obligation being for the completion of the work within ninety days and according to the original specifications. Defendant avers that plaintiff, having discovered defects in the work after the payment to the Receiver of one thousand, five hundred dollars ($1,500.00), balance of contract price, should have taken steps to have said fund retained in the hands of the Receiver until the latter had completed the contract according to its terms. Defendant makes the further averment that the plaintiff arbitrarily advertised the contract for the repair of the original work and made “different and other specifications from the original contract; that the work subsequu fly done and for which it is attempted to hold defendant liable, was done according to new and different specifications from the original contract, which prevents plaintiff from having any lega' cause of action against defendant,” and lastly, defendant pleads the prescription of six months under the conditions of the bond on which it became surety. Judgment below was for plaintiff and against defendant, con83 detuning the latter to pay one thousand dollars ($1000.00), from which judgment it prosecutes this appeal. At the outset we might lay down the proposition that the bond and the contract must be construed together, in other words, that the bond, as we find it here, is not intended to cover certain conditions in the contract and to be inoperative and without force as to certain other conditions, notwithstanding the, broad and far reaching terms of the bond. Again, before discussing the real issues in the cause it may be well to eliminate what to us, appears to be untenable defenses set up by the defendant company. We do not think there is any merit in the defense to the effect that “plaintiff should have taken steps, upon discovering defects in the contract work and after paying the balance on the contract price to the Receiver, to have had the same retained in the hands of the Receiver.” We do not think that plaintiff’s rights were at all prejudiced by its failure to assert a claim against the Receiver for the balance paid the latter by it. ' The Surety Company, defendant herein, had been made familiar with .the condition of the pipes, and the very unsatisfactory condition of the job as turned over to plaintiff, the latter having written the Fidelity and Deposit Company on January 12th, to this effect: “We are informed by our engineer that the pipes are leaking from levee to factory, and, therefore, we now call on you to repair same forthwith as per your guarantee.” The letter further recites that this notice is given in accordance with the terms of the bond given. The record discloses that not only did the Fidelity Company remain silent and inactive, taking no steps to protect itself while there were yet funds in the hands of the Receiver, paid the latter by plaintiff, but the defendant Surety Company made no reply to plaintiff’s letter of notification until some time in the month of March (12th, 1904). The Surety Company then wrote (March 12th, 1904), to plaintiff, saying: “They (Receiver et als) claim that all satisfactory repairs were made upon your (Surety Company’s) former request.” — 84 — This would indicate that though the defendant Surety Company had not acknowledged receipt of letters and notices from plaintiff, it had, nevertheless, been active in its efforts to get the Receiver to put the pipes in the condition stipulated under the contract. It) permit the surety on a bond of the character existing here to escape liability on the pretext that the plaintiff should have sought relief in the Courts against the Receiver while the surety remained passively by, would be to make useless the purpose of the obligation assumed by the surety. This cannot be - per-' mitted. Defendant Surety Company urges that they were not given timely notice of the defects in the work or else the defects would have been remedied while the Schaeffer-Gaiennie Company, Limited, went into the hands of a Receiver, and that about the same time the work done by this company was discovered to be defective. Whether or not the Fidelity Company of Maryland, was notified at this early date is not affirmatively shown, but the Receiver, it appears, went into Court and secured the necessary order from the Court to repair the defects. When plaintiff realized the inability of the Receiver to make the necessary and required repairs, it then notified the Fidelity & Deposit Company, asking it to undertake the work. This notice, though coming as late as eleven months or thereabouts, after the completion of the contract, was timely. The Surety Company instead of undertaking the work of repair, endeavored to point out to plaintiff how it should act to secure itself from loss. Plaintiff, who is shown to have suffered loss and to have been greatly inconveniened by loss of time and inadequate water supply, getting no attention, answer or relief, from the Surety Company, then applied to the Court, and obtained permission to advertise for bids for the repair of the pipes. The work was let to and undertaken by a contractor for the price and sum of one thousand five hundred dollars ($1,500.00). The defendant Surety Company complained that: 1st. That the work should not have been let. — 85 — 2nd. That the specifications for the repair work under this contract were different from the specifications in the original contract, and, 3rd. That the cost one thousand, five hundred dollars ($1,500).00), was unnecessary and excessive. We are of the opinion that plaintiff had the undoubted right, acting as it did, under the orders of the Court, to advertise for bids for the repair work. There is abundant proof that the only effective manner in which these repairs could be properly made was to remove the pipes and relay, them in some other way than they were originally laid. The best evidence of the imperfect work under the original contract, and perfect work under the last, or contested repair work, is that the former always leaked and could not be repaired, while the latter has stood all the demands made upon it without springing a single leak. From our appreciation of the evidence, we must naturally conclude that the work originally done by Schaeffer-Gaiennie Company, Limited, was improperly and unskillfully done, and that it was not possible to remedy the same except by taking it up and relaying the pipes as was finally done by plaintiff. The same material, pipes, etc., was used by the last contractor, and there was in consequence a difference of one thousand dollars ($1000) between the original contract price of two thousand, five hundred dollars ($2,500.00) and the price of last repairs, one thousand, five hundred dollars ($1,500.00). This does not appear to be exorbitant, and it does not lie in the mouth of defendant company to so claim, in view of the fact that it was given every opportunity to have the work done under its own supervision and direction. To now contend that it was possible to have the work done satisfactorily for one hundred and fifty ($*5°) or two hundred dollars ($200.00), is not deserving of serious consideration. But the defendant claims it is not liable as surety on the bond beyond ninety days, within which the work was completed, as specified in the contract. The bond and the contract must be read together. The con — 86 — tract specifies that the work must be completed within ninety days, but there is a guarantee in the contract that the pipe would remain tight for a period of one year from the completion of the work. Now, the defendant became surety for the faithful performance cf all the stipulations and agreements made by the Schaeffer-Gaiennie Company, Limited. Would it be reasonable to hold that the liability of the Surety Company, under the terms of the bond, would be extinguished when the work was finished, within ninety days, and be absolved from further liability, though the work, under the contract, was guaranteed for one year from its completion by the contractor? We think not. The life of the bond was not shorter than that of the contract. Both instruments must be construed together and are inseparable. We cannot therefore agree with counsel for defendant that “it is very questionable whether the bond given guaranteed this obligation (keeping pipes tight for one year), as it only in terms guaranteed the completion of the laying of the pipes.” We do not think it to be at all questionable. Defendant urges the prescription of six months, as stipulated in the bond, after which no action can lie on the bond, which stipulates as follows: “If any suits at law or proceedings in equity are brought against said surety to recover any claim hereunder, the same must be instituted within six months after completion of the work specified in said contract.” Were we to hold that the work was completed on the 25th of January, 1903, as contended by defendant, certainly the prescription of six months interposed by it must prevail, but having concluded that the work was guaranteed under the terms of the bond, for one year after the pipes had been laid, it is not only consistent, but it is but fair, and just, and reasonable, to hold that the work cannot be considered as complete and finished as long as the year has not expired. Prescription must begin to run from the expiration of one year after the completion of the contract work. This appears to be a reasonable interpretation of the contract and bond. — 87 — June 18, 1906. Rehearing granted Nov. 5, 1906. We do not think that there has been any breach of warranty on the part of plaintiff, and defendant alone appears to be responsible for its present misfortune. We do not think there is error in the judgment appealed from, and it is hereby affirmed.