Lawhon v. Toors , 73 Ark. 473 ( 1905 )

Riddick, J.,

(after stating the facts.) The only question presented by this appeal is whether Toors has been discharged from liability on the bond executed by Sims to Lawhon for the performance of a building contract, and upon which bond Toors was surety. Lawhon agreed to pay Sims- $5,835 for the erection of the building, but the contract for the performance of ■ which the bond was given stipulated that only two-thirds of this amount should be paid during the progress of the work. The contract provided that the remaining one-third, amounting to $1,945', should be paid within “fifteen days after this contract is fulfilled.” Now, the contract required that Sims should pay off all obligations incurred by him for labor and materials in constructing the building, and it was not fulfilled until he did so.

The court found, and his finding is not disputed, that, instead of reserving the $1,945 until the contract was fulfilled, Lawhon paid out all the fund except $480 before the building was completed, and that he paid out the remainder of -the price within fifteen days thereafter. But at that time there were obligations incurred by Sims for material used in the construction of the building still unpaid and outstanding. So the whole amount of the consideration was paid out by Lawhon before Sims had fulfilled his contract, although, as before stated, the contract expressly stipulated that one-third of the consideration should not be paid until after that time.- But if we treat the contract as fulfilled by the completion of the building, there.was still a breach of this provision of the contract, for, as before stated, the contract required that $1,945 should be reserved, while less than one-fourth of that amount was reserved until the building was completed.

Counsel for Lawhon contends with much earnestness that this provision of.the contract in reference to the reservation of a portion of the contract price until after the performance of the contract was intended solely for the protection of the owner, and that the failure to retain it did not affect the liability of the surety. If this was a new question, it might be worthy of some consideration; but it is now well settled that if a stipulation of that kind in a building contract be waived without the consent of the surety, it operates to discharge him from liability on his bond for the performance of the contract. Calvert v. London Dock Co., 2 Keen (Eng. Chan.), 644; Evans v. Graden, 125 Mo. 72; Simonson v. Grant, 36 Minn. 439; Bragg v. Shain, 49 Cal. 131; Board of Comrs. v. Branham, 57 Fed. 179; Stearns, Law of Suretyship, p. 112.

To quote the language of Lord Langsdale in Calvert v. London Dock Co., cited above, the payment of the money before the completion of the contract was calculated to make it easier for the contractor “to complete the work if he acted with prudence and good faith; but it also took away that peculiar sort of pressure which by the contract was intended to be applied to him.”

Under the" facts of this case the surety was directly interested in the retention of the portion of the consideration required by the contract, and the decision of the circuit court that the waiver of that provision without his consent operated to discharge him from further liability on his bond was in our opinion correct. There are other matters discussed by counsel, but it is unnecessary to consider them, for it follows-from what we have previously said that the judgment must be affirmed, and it is so ordered.