compelled to hold that the court below committed no error in overruling the demurrers to the 345 several pleas setting up the defense mentioned. The case of Fidelity & Deposit Co. of Maryland v. Robertson, 136 Ala. 379, 34 South. 933, in so far as it conflicts with this opinion, is overruled. The case of Saint v. Wheeler & Wilson Mfg. Co., 95 Ala. 362, 36 Am. St. Rep. 210, 10 South. 539, is not in conflict with this opinion, as in that case it is distinctly stated that the claim sued on was not in any way connected with the additional duties which had been placed on the agent, and which were distinct from the duties guaranteed; that, although the agent's salary had been reduced, yet the settlement in question was based on the original contract at the original salary; also that the allowing the agent to retain his wages out of weekly collections was not an alteration of the contract, as it did not provide the manner in which he was to be paid. Nor is there any conflict in the case of White's Admr. v. Life Association of America, 63 Ala. 319, 35 Am. Rep. 45; for that case announces the doctrine in all its strictness in regard to the discharge of the surety by an alteration of the terms of the contract, but merely states that mere indulgence does not constitute such a change. In the case of Perrine v. Fireman's Ins. Co., 22 Ala. 575, the defendant was surety on a note given by a stockholder to the bank, and the only point decided by the court was that the fact that the corporation had the power, under its charter to prohibit the transfer of the stock of the stockholders, who were indebted to it, did not make it obligatory on it to do so in order to protect the surety. The case of Stephens v. Elver, 101 Wis. 392, 77 N. W. 737 (referred to in the brief of appellant), really indorses the general doctrine hereinbefore stated and places its decision distinctly upon the ground that "the alleged advances were so inconsiderable and trifling in amount as not to constitute a material variation of the contract, and upon the further fact that the plaintiff is not in a position to insist upon release, because it was at his suggestion that Pickering made the request for an advance": Page 740. Without passing upon the question as to whether that court was right in undertaking to say that the alteration was not material, we only cited it to show that it does not militate against the position taken 346 in his opinion. We do not say that there may not be some slight deviation, so clearly immaterial as not to affect the liabilities of the parties, but that

is not this case. In the case of Smith v. Molleson, 148 N. Y. 241, 42 N. E. 669, which is greatly relied upon by appellant, the decision was really based on the construction of the contract; the court holding that, in making payments, the value of the stone, which had been quarried, but not placed in the building, should be taken into consideration, and under that construction there had been no overpayment. The court affirms the doctrine that the surety "has the right to insist upon the strict performance of any condition for which he has stipulated, whether others would consider it material or not": Page 670, second column. Allusion is also made to the special provisions in that contract to the effect that the owner was "at liberty to make any alterations, deviations, additions, or omissions from the said contract," but the court says "it is not important to consider the real scope of this clause."

Without subscribing to any intimations of the court on that point, it may be remarked that the corresponding provision in the contract now before this court differs from that in the important particular that, after referring to the alteration, etc., it goes on to state that it shall not "make void the contract, but the difference shall be added to or deducted from the amount of the contract, as the case may be, by a fair and reasonable valuation," showing clearly that the allusion is not to the manner of payment, but to the alteration in the work. While, as between the original parties to the contract, either party may waive any of its provisions, yet when a third party becomes interested in the contract by binding himself to its faithful execution, the contract becomes a part of his obligation, and its provisions cannot be waived so as to affect his interest without his consent. We hold that under the contract and bond in this case, which constitute one transaction, if the plaintiff did not pay for the work and the material in the manner provided by the contract, but instead thereof, by an arrangement made either at the time the contract was 347 made, or afterward, with the contractor, without the consent of the surety, permitted the contractor to overdraw his account, so that considerable amounts of money were paid to him before any certificates were issued by the architect, and the material was paid for, without any estimate and before delivery, and without any regard to the retention of the percentage required, trusting to the certificates and estimates to be credited on said general account, then this was such a deAm. St. Rep., Vol. 117-4

parture from the terms of the original contract as to release the obligation of the surety. The cases referred to by appellant's counsel, which hold that, where a collateral security has been released or lost, without the consent or fault of the surety, said surety is released only pro tanto, do not apply to a case like this, even as to the ten per cent reserve. Said provision in this case is one of the conditions of the contract, and it cannot be said that it is a mere security for the payment of such money; but it is reserved as much as a stimulus to insure the completion of the work by the contractor, as for a mere security of the amount of money.

Appellant next insists that by the terms of the bond the appellee waived so much of the construction contract as required payments to be made upon certificates and estimates, and he bases that construction on that part of the bond which recites that "whereas, under article 1 of chapter 71 of the Code of Alabama of 1896, certain liens are provided," etc., and concludes with these words, to wit: "But any such sum may be retained and paid such mechanic, laborer, or materialman, by the owner or proprietor, if he wishes, and shall be a credit on this contract as if paid to the contractors." Appellant claims that this was an authorization to the appellant to pay all said bills, without any regard to certificates or estimates and without reserving any per cent. We do not construe the bond in this way. The clause in question is really the conclusion of the first preamble, in which the writer of the bond is stating what he understands to be the statutes on the subject of liens of mechanics and materialmen. He goes on with another preamble, and then comes to the obligation of the appellee 348 to appellant, which is to "secure and hold it harmless" against all these demands, and to release it of the necessity of inquiring into these matters entirely, and from paying any such claims. It does not present a case where the parties have perfected their liens, which were guaranteed against, and where the appellant had to pay them to save his property. Again, the contract and the bond being one contract, all the guaranties in the bond were conditioned on conformity to the requirements of the contract, with regard to the manner of payments, and if appellant had disregarded these it could not claim anything of the surety. Even if the expression could bear the interpretation put upon it by appellant, authorizing appellant to pay such claims, it refers to

claims presented and brought forward in the manner provided by the statute; but the further provision of the bond shows clearly that the intention of it was that appellant was not to concern itself about these matters, but was simply to make payments to Hood & Co., in accordance with the contract, leaving it to the surety to hold it harmless against these.

In this connection appellant further insists that the words in the bond, "And to pay any claims of mechanics," etc., are a waiver of the requirements as to the particular manner of making payments, and an authorization to appellant to pay said items, without regard to certificates or estimates. The grammatical construction of the sentence will not admit of such an interpretation. The infinitive "to pay" is the object of the verb "agree" in the first line of the paragraph. In other words, the surety company (with Hood & Co.) "agree" to hold appellant harmless from all these contracts, claims, etc., to exempt it from making demands for lists of materialmen, "and to pay any claims of mechanics, laborers, and materialmen," etc. It is just as if it had read, "And we agree to pay," etc., and, as if to make it clearer still, they exempt appellant "from any demands or liability whatever to any other person than John W. Hood & Co." In other words, it is clear that the intention was that appellant was not to pay anything to anyone, except Hood & Co. If the materialmen said that they were not willing 349 to furnish material on the responsibility of Hood & Co., they could have secured themselves by perfecting their liens, or appellant could have notified the surety company that the work was in danger of being delayed by these matters, and then the surety company would have been obliged to make some provision for securing the parties. Appellant did not choose to resort to its surety, but undertook to attend to the matter itself, contrary to the provisions of the contract. It is not for the court to say why the parties provided for the manner of payment and the reservation of the ten per cent, though it is easy to suppose that it was for the purpose of having a continuous stimulus to the contractors to finish the work, thus operating as a security to the surety as well as for the security of the owner. However that may be, it would be utterly futile to make these requirements, and then provide in another clause that the owner might disregard it and pay for all the material furnished, without inspection or estimate.

Coming to the facts of the case: While it is true that the president of the bank denies that there was any agreement, at the time the contract was made, that the business should be conducted as it was, which is contradicted by two witnesses on the other side, yet the fact remains that it was conducted in that way, that the contract was not complied with in the manner of payment, nor in the reservation of the ten per cent, and the circumstances make it very evident that there was an understanding between the parties that the money should be advanced and that the certificates and estimates should be credits (as they were) on the general accounts. The transaction bears none of the earmarks of a separate, independent loan. There was no separate account, but merely the general account. We can judge of the intention of the parties only by their acts; and the manner in which the advancements were made, in excess of the certificates and estimates and of the ten per cent reserve, and the estimates subsequently credited thereon, changed the contractual relations of the parties, deprived the surety of the security which it had bargained for and released it from its obligations. It is 350 not for the court to say why these stipulations were valuable to the surety company, though very good reasons readily occur to the mind. and the result in this case illustrates them. It is sufficient that they were a part of the contract, and according to the authorities heretofore cited the surety company had a right to demand that they be complied with before it could be made liable on the bond.

The books show that the account was frequently overdrawn to the amount of several thousand dollars over the entire amount due. President Baldwin, in his letter of November 30, 1901, tells the contractors that at that time the bank had paid them more than the entire contract price. He testified that not a single estimate was paid in accordance with the contract, but that they were merely used in paying the checks drawn on said deposit account. He testified, also, that he does not know whether the items in any of the various accounts, which were paid for before the abandonment of the contract, had in fact been delivered before that time; also that all the payments for material, etc., were charged to Hood & Co. on the general account at the bank, on which the estimates were also credited as they came in. The payrolls were paid without any certificate, estimates or reservation.