Crawford v. Owens , 79 S.C. 59 ( 1908 )

February 8, 1908. The opinion of the Court was delivered by The plaintiffs as obligees of a bond under seal brought this action against the defendant as surety for the faithful performance of a contract by J.G. Harmon to erect a dwelling-house for plaintiffs. The written contract between Harmon and plaintiffs was executed April 20, 1905, containing specifications, with stipulations as to payment by installments at certain stages of the work. In this contract, drawn by plaintiffs, Harmon makes reference to his bond, dated April 20, 1905, as binding him in the sum of $2,000.00 unto the plaintiff, "and secured by .... and .................. to erect," etc. It appears, however, that in June, 1905, the defendant, Owens, signed the bond in question and was, over objection, permitted to state the circumstances of his signing — that Harmon told him that he had gotten the contract and was going to build a house for plaintiff, who required a bond, and that Harmon wanted him to go on the bond with him, which he did; that he read the bond and supposed there was a second party signing it; that after signing the bond, he handed it to Harmon. Harmon delivered the bond to plaintiffs without signing. Plaintiff R.B. Crawford testified that when Harmon delivered the bond to him, he did not know anything about Owens' stipulating when he went on the bond that he was to have some one else to go on with him. Upon objection being made to this testimony, the Court ruled that it was admissible.

The bond in suit is as follows:

"Know all men by these presents, that we of the County of Richland, State aforesaid, are held and firmly bound unto ..................., of the State aforesaid, in the sum of two thousand 00-100 dollars ($2,000), good and lawful money of the United States, to be paid to the said Emma A. and R.B. Crawford, for which payment well and truly to be made, we bind ourselves, our heirs, executors and administrators, jointly and severally, by these presents. Sealed with our seal and dated this ............... day of ............., 1905.

"Whereas, the said J.E. Harmon has entered into a certain contract with Emma A. Crawford and R.B. Crawford for building complete, with all materials furnished by the said J.E. Harmon, said contract dated April 20, 1905.

"Now, therefore, the condition of the said obligation is such that if the said J.E. Harmon shall well and faithfully perform the duties and obligations in and by the terms of the contract according to its true intent and meaning, the above obligation to be void, otherwise to remain in full force and effect. (Signed) S.H. OWENS (L.S.)."

"Signed, sealed and delivered in the presence of:"

It was shown that Harmon abandoned the contract before completion of the building, after receiving nine hundred dollars thereon, a sum which Mr. Crawford states was a "little more" than he was required to pay at that stage of the work under the stipulations of the contract. The contract stipulated for payment of five hundred dollars when the foundation is laid, sills and sleepers; five hundred dollars when frame raised, house weatherboarded, etc. If the payment of nine hundred dollars was in advance of the work, the second stage of the work had not been completed. After notifying Owens of the fact that Harmon had abandoned the contract and Owens not taking any step to complete the building, plaintiffs undertook to complete the same, and in doing so, made expenditures to the amount of at least $1,604.03 in excess of the contract price, which was $3,100.00.

The plaintiff moved to direct a verdict for $1,604.03 and the defendant moved to direct a verdict in his favor. The Court directed a verdict for defendant for two reasons: (1) That the defendant surety is released because the plaintiffs took the bond without the signature of the principal, Harmon, with knowledge from the face of the papers that he was to sign the bond, citing Sullivan v. Williams, 43 S.C. 507,21 S.E., 462. (2) That the payment of installment before due in advance of the performance of the work, as stipulated, released the surety under the authority ofGreenville v. Ormand, 51 S.C. 125, 28 S.E., 147.

After careful consideration we find no error in the rulings of the Court.

The testimony admitted over objection was competent to explain the circumstances under which the bond in suit was executed, the terms of the bond not being thereby affected. Sullivan v. Williams, supra.

The testimony of plaintiff, Crawford, that he had no notice that Owens signed with the understanding that he was to sign with Harmon, as his surety, was immaterial, in view of the stipulation of the written contract drawn by him providing for a bond by Harmon with surety, and the form of the bond indicating that it was the intention that the principal Harmon should sign. Plaintiff was bound to take notice of all facts disclosed on the face of the papers.

This is not a case in which a surety places an instrument, perfect on its face, in the hands of the principal to deliver to the obligee, and seeks to avail himself of an agreement with the principal inconsistent with the obligation as expressed and of which the obligee has no notice; nor is this a case in which the surety signed an instrument, in form complete, in the mere expectation that another would sign, but it is the case of a surety signing a non-negotiable instrument incomplete on its face, on condition that the principal should also sign, and delivered by the principal to the obligee and accepted by him with the knowledge of circumstances which should have prevented his acceptance without the signature of the principal.

Under this view it is unnecessary to consider the applicability of the principle decided in Greenville v. Ormand, 51 S.C. 121,28 S.E., 157, that a surety on a builder's contract is discharged by the payment to the principal of money which should have been reserved under the terms of the contract.

The exceptions are overruled and the judgment of the Circuit Court is affirmed.