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Contracts, § 457-building -destruction insurance.

1. That building contract provides that owner shall carry fire insurance and contractor pay pro rata of cost does not raise an exception to the rule that contractor must rebuild, if building, before completion, is destroyed by fire.

[See annotation on this question beginning on page 103.]

Reformation of instruments, § 10 error in name and date.

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Damages, § 143 building contract
loss of rents.
6. Where building is burned before
completion and contractor refuses to
rebuild, owner can recover of him for
loss of rents for such reasonable time
after the time the building should
have been completed under the con-
tract as will permit owner to complete
building, acting promptly.
Insurance, § 733-building contracts
right to surplus.

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7. Under building contract requiring owner to carry fire insurance on the building, contractor to pay his pro rata of costs, contractor and his surety, and not owner, held entitled to excess of insurance above costs of building destroyed before completion, and to have it applied to cost of new building demanded under the contract. Constitutional law, § 562 abridgment of rights benefit of bond. 8. Miss. Laws 1918, chap, 128, § 3, providing that when a contractor entering into building contract shall enter into bond with the owner, it shall inure to benefit of laborers and materialmen subject to obligee's rights, does not unduly abridge liberty of contract, in contravention of U. S. Const. Amend. 14, but is within the police power.

CROSS APPEALS from a decree of the Chancery Court for Warren County (Anderson, Sp. Ch.) in a suit on a building contractor's bond; defendant surety appealing from so much of the decree as overruled its general demurrer; and complainant appealing from so much as sustained a special demurrer of the surety. Affirmed.

The facts are stated in the opinion Messrs. R. L. McLaurin, A. A. Chaney, and William M. Hall for appellant.

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(Miss., 112 So. 469.)

McGowen, J., delivered the opin

ion of the court:

Appellee Mrs. Edna Earl Parsons, hereinafter called "owner," exhibited her bill against the defendant, the United States Fidelity & Guaranty Company, hereinafter called "surety," and J. W. McNeill, hereinafter called "contractor," and certain materialmen, to wit, the Vicksburg Lumber Company, Enterprise Plumbing & Metal Works, the Sanitary Plumbing Company, Cambre Brothers, Wright Brothers Hardware Company, Success Sand & Gravel Company, H. H. Ludke, and Jones Drug Company, the aggregate of whose claims in a certain building contract totals $4,140.84. The bill alleged that the building contract had been executed by J. W. McNeill and herself for the construction of a dwelling house on a lot owned by Mrs. Parsons, said contract being made exhibit A to the bill and a part thereof, by which instrument the contractor agreed to furnish all labor and material at his own expense, and within a reasonable time to construct, complete, and deliver to the owner a dwelling house as described in the specifications and contract. The bill further alleged that on or about July 7, 1924, the contractor applied to the surety company to make his bond as required of him by said contract, and that the contractor and surety company delivered to the owner, as if in compliance with said contract, a bond in writing, for the principal sum of $9,000, which bond was attached to the bill and made a part thereof. The bill further charged that by inadvertence, oversight, and mistake, on the part of respondents J. W. McNeill and the United States Fidelity & Guaranty Company, the name "W. H. Parsons" was inserted in the bond, instead of "Edna Earl Parsons," and that the bond was accepted by the owner with the error and mistake therein, and relied on, without noticing said error and mistake, until some time after a fire which occurred November 3, 1924; that it was the intention of the con

tractor and the surety company to name Mrs. Edna Earl Parsons as obligee, and not her husband, and it was the full intention and purpose of all the parties that Mrs. Parsons should be the obligee in said instrument. In like manner, the bill charged that, by mutual mistake, the date of the contract mentioned in the bond was set forth as July 7, 1924, when in truth and in fact it was the intention of said bond to guarantee performance of said contract, made exhibit A to the bill, June 19, 1924; that all parties intended so to do; and that neither mistake was noticed by the owner until as above stated. The bill further alleged that said bond should be corrected in these particulars so that it would conform to the mutual purpose and the mutual attempt and intention of said parties, owner, contractor, and surety company.

It was further alleged that the contractor undertook the performance of the contract, and that the owner, at all times and in every respect, promptly and faithfully observed, performed, and carried out to the letter and spirit each and every term, provision, agreement, condition, covenant, promise, or obligation made, assumed, and undertaken by her under said contract, as well as the conditions imposed on the owner by the bond, and that before the house was completed by the contractor and accepted by the owner the partly constructed and unfinished dwelling house was totally destroyed by fire on or about November 3, 1924, without any fault on the part of the owner; that up to the date of the fire the owner had, in strict accordance with said. contract, paid the contractor in prescribed installments for labor and material furnished in and about the erection of said house and the specified price therefor, the total sum of $9,185.26, leaving a difference of $79.74 due the contractor on the full amount of the contract price of said house completed, to wit, $9,265.

The bill charged the payment of

$9,185.26 in performance of said contract on the part of the owner; the payment of $463.75 for supervision of the construction of the destroyed house; $270 for the architect whose services were used in the construction of said destroyed house; $172 for insurance premiums on fire insurance issued by sundry companies for fire insurance; and for wiring said house $177, making a total of $1,083.25 expended by the owner on the house before its destruction.

The bill further alleged that as the construction of said dwelling house progressed, the owner duly effected insurance thereon against fire, aggregating $12,500, which had been collected by the owner, and that the contractor had been credited with $9,185.26, the total of the installment payments made by the owner to the contractor prior to the fire, and that the contractor is indebted to the owner for his pro rata part of the premiums paid to the insurance company, $126.76. It further alleged that the contractor should have completed said house before the date of the fire, and after the fire the contractor further and completely breached said contract in that he failed and refused to give the owner another bond as required by the contract, with unimpaired penalty, or to rebuild and complete said house.

The bill further sets up the amounts claimed to be due by the contractor to laborers and materialmen mentioned, supra, alleging that the owner knew of these claims, but setting up that they had a right to recover on the contractor's bond and were made parties for that purpose; that the surety has elected not to rebuild or complete said house, but at all times has failed and refused to make, as contractor, a bond with unimpaired penalty, or to deliver same to the owner, and likewise has failed and refused to pay the materialmen and laborers, and failed to pay the amounts mentioned as due to the owner; that November 15, 1924, was fixed as

the date of the extreme limit of a reasonable time in which to construct and deliver said house to the owner, which, if it had been so completed and delivered, would have cost the owner the total sum of $10,175.75.

The bill alleged, then, that the owner had been forced to contract with another person because of said contractor's failure and refusal to comply with his contract for the rebuilding of said house and delivery to the owner, in accordance with said contract, which said rebuilding had cost the owner the sum of $13,398; that this was a fair, reasonable value of the construction of said building; that, in addition thereto, the owner had expended in said rebuilding the sum of $660 for supervision, making a total of $14,058, and, in addition to that, the sum of $475.75, the fair rental value of the house from the time it should have been completed until rebuilt and completed. The owner sued the contractor and the surety company for sustained damages in the sum of $4,358, being the difference between the amount paid for the destroyed building and the total cost of the building as constructed by the owner, and also for the rental as stated, supra, and also for the pro rata part of the insurance premium. The prayer of the bill was for recovery of the above-stated sums, for the protection of laborers and materialmen, and for general relief.

The contents of the contract and bond, so far as material, will be referred to as the several points are disposed of.

The contractor answered the bill admitting the material allegations thereof. The several materialmen came in and answered and set up their claims.

Upon petition of the surety company, the chancellor ordered the case transferred or removed to the United States district court for the western division of the Southern district of Mississippi. From that court the cause was remanded to the

(— Miss. —, 112 So. 469.)

chancery court of Warren county. Thereupon the bill was amended by making W. H. Parsons, the husband of the owner, a party complainant, who adopted and reiterated all statements, allegations, and exhibits of the original bill, and alleged that he, at all times, in and about the negotiations of conducting and completing of said contract and specifications involved herein, acted as agent for the owner, and that it was the mutual intention of all that Edna Earl Parsons should be a party to the contract and bond, that everything he did was to that end, and that it was the intention of all parties that such should be the case, and he disavowed any claim to any interest.

The materialmen made their answer to the original bill a cross-bill against defendants, the contractor and the surety company, suing for the aggregate amount stated, as being due them by the contractor on the contract here involved. After which the surety company, having filed a demurrer before amending, filed its amended demurrer.

The surety company filed a general demurrer, containing 13 grounds, and also 3 special demurrers. The court overruled the general demurrer, and sustained special demurrer No. 1, and the surety company prosecutes an appeal to settle the principles of the case, having been refused an appeal by the lower court, and same having been granted by the chief justice of this court. The owner prosecutes an appeal from the decree of the court sustaining special demurrer No. 1.

In considering the many grounds of demurrer, we shall take them up in the order followed by counsel in their briefs:

First. The ninth ground of the demurrer challenges the right of the complainant, the owner, to reform the bond, because the bill shows that it was retained until after the time for completion and delivery of the constructed building under the contract, and therefore the owner and contractor were

charged with notice of the contents of the bond, and are estopped from asserting any reformation, because the original contract appears on its face to have been entered into by W. H. Parsons, and not Edna Earl Parsons. In short, the bill does charge that the complainant, the owner, did not notice that the bond was payable to her husband and not to her until more than four months after the execution of the bond, and that the error and mistake were not discovered until after the fire, which was four months from its date. During that time the bond and contract were in the possession of the


Our view of the bill is that it specifically charges that it was the intention of the owner, the contractor, and the surety company to execute the bond in favor of the owner, and that, by mutual mistake, the bond was executed in favor of W. H. Parsons, who, under the allegations of the bill, was clearly not the owner and had no interest in securing the bond, and no one else but the owner was in contemplation by the parties at the time of the execution of the bond.

The demurrer confesses these facts to be true, and the general rule is that, as to fire insurance policies and indemnity bonds, parties are not precluded from correcting a mistake, although the paper was not read over, or was carelessly read by the beneficiary, but if one has carelessly read or otherwise failed to read and moves promptly to have the mistake corrected so that the rights of the other parties to the contract will not be affected thereby, such mistake will be corrected; but there may be such gross negligence on the part of the parties seeking to reform the contract as to conclusively estop such parties from asserting a right to reform. No such gross negligence arises here.

We have read with interest the authorities cited from our own court and other courts on the question of estoppel, and the cases most relied on by appellant are not cases where,

on demurrer, the facts were admitted as is the case here, and we think that line of cases has no application to a case where all the parties confess that the mistake was made by a mere omission of the word "Mrs." from the bond and incorrect date of the contract. The demurrer admits this bond was given to protect this contract made by this contractor and this owner, and that W. H. Parsons had no interest therein. It is true that the specifications are headed, "W. H. Parsons," and that his name occurs two or three times, but it is also true that the contract shows that complainant was the party contracting, as shown by the signature-her name executed by W. H. Parsons. It was purely a clerical error, committed by the contractor and the surety and not promptly observed by the owner, such as equity has always corrected when shown to be a mutual mistake. It would be profitless to review each of the cases cited, because the facts here do not call for authorities, save only the application of the general rule that the intention of the parties will be carried out in a court of conscience and equity, where there can be no question as to what their real intention was and no question as to there being a mutual mistake. To hold otherwise would be to say that the surety in this case took no responsibility whatever when it undertook to execute this bond for this contractor, for the protection of this contract here involved. Simmons v. North, 3 Smedes & M. 67; Brimm v. McGee, 119 Miss. 52, 80 So. 379, and authorities there cited. We do not think there is any merit whatever in this contention.

Reformation of instrumentserror in name and date.

Second. The fourth and tenth grounds of the demurrer challenge the right of the owner to demand a completed building, because of the provisions of exhibit A as follows: "The owner is to carry fire insurance on the building and the contractor is to pay his pro rata of the cost." And the demurrer asserts that

this agreement in the contract for protection by fire insurance stands in lieu of the contract to erect a new building, and that this agreement for fire insurance relieves the contractor of the duty to rebuild, and shows that the contract was not breached by failure or refusal to rebuild, there being no express provision in the contract that in case of fire the contractor will rebuild. In other words, in the absence of an express provision, appellant contends that the provision for carrying fire insurance constitutes one of the exceptions to the general rule to the effect that the contract implies that the house shall be rebuilt in case it is destroyed by fire, and especially where the insurance has been carried and collected and retained by the owner, as shown in this bill.

On this question, the general rule is that where a house is destroyed by fire, and the contractor having agreed to furnish labor and material and construct a completed house for the owner, that he takes the risk of the incompleted house being destroyed by fire, unless he protects himself by expressly contracting that he shall not be held liable for an act of God, or other untoward circumstance, against which he is not willing to be bound.

The common-law rule is that where the duty is imposed on a party for performance, his nonperformance shall be excused if it be rendered by an act of God, but where by his contract the party engages to do an act, it is deemed to be his own folly and fault that he does not expressly provide against such contingencies and exempt himself in certain events. In the instance of an absolute and general contract, the performance is not excused by an inevitable incident or other contingency. Harmon v. Fleming, 25 Miss. 135. Destruction by fire would excuse the nonperformance of a duty created by law, but would not excuse a breach of that duty created by contract. The party must contract against such contingencies, or abide and suffer the loss

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