(No. 3916.) Dec. 30, 1922.) HOWE v. MOSS et al. (Supreme Court of Utah. Application for mandamus by Harry E. Howe against James E. Moss and others, as members of the Board of Education and Clerk of Granite School District. Writ granted. D. W. Moffat, of Murray, for plaintiff. the type, and the company contracted with an elevator company for elevators of a particular type and for maintenance and repair thereof, and the building contract by express reference was made a part of the elevator contract which was made a part of the bond for performance of the elevator contract, every material provision of the contracts and bond should be considered to ascertain the meaning and intent of the parties. O. W. Carlson, of Salt Lake City, for defend- 5. Principal and surety 136 - Owner of ants. THURMAN, J. This is a companion case of the one just decided by this court-Hill v. Moss et al., as Officers of the Granite School District, 211 Pac. 994. The cases, by stipulation of the parties, were argued and submitted together upon the understanding that the decision in one case should be controlling in the other. It is therefore ordered that the peremptory writ of mandate be granted, as prayed for in the application. building could enforce indemnity for breach of contract between building and elevator companies for installation and upkeep of elevators. Where, at the time the contract between a building company and an elevator company for elevators to be constructed in plaintiff's building was executed, it was known and understood that plaintiff was the owner of the site and of the contemplated building, and the elevator company guaranteed installation of a type of elevator capable of performing a certain service and conforming to a standard des CORFMAN, C. J., and WEBER, GIDEON, ignated in the elevator contract, and surety and FRICK, JJ., concur. M. H. WALKER REALTY CO. v. AMERICAN SURETY CO. OF NEW YORK. (No. 3768.) (Supreme Court of Utah. Sept. 15, 1922. Rehearing Denied Dec. 15, 1922.) company executed its bond guaranteeing faithful performance, and the elevator contract provided that installation and upkeep provisions should be covered by the bond, notwithstanding fact that building company had a right of action on the bond for failure of the elevator company to properly install the elevators, it was within contemplation of the parties that plaintiff had an interest in the performance of the elevator contract and was to be a benefi 1. Contracts 187(1)-Third person may en- ciary thereof and could enforce indemnity for force contract executed for his benefit. its breach. Whenever a contract shows a clear intent to benefit a third party, whether specifically named or not, such person ordinarily may sue in his own name for enforcement thereof or for benefits arising therefrom.1 6. Principal and surety 136 Owner of building not deprived of right to enforce contract between elevator and building companies because of precaution taken to be expressly named in bond. Where it was within contemplation of the parties to a contract for the installation of elevators and a bond given for its faithful per 2. Principal and surety 59-Bond given to secure contract construed with contract. Where a bond is executed to secure the performance of a contract, the bond and con-formance that the contract was for the benefit tract must be construed together.2 3. Contracts169-Intent of parties considered in light of conditions existing when contract was extended. To arrive at intent of parties to a contract, its terms must be considered in the light of conditions as they existed at the time the contract was entered into and not in the light of subsequent conditions. 4. Principal and surety 59-Intent of parties gathered from provisions of building and elevator contracts and bond. Where a building contract between the owner and a building company provided for installation of elevators, but did not specify 1 Thompson v. Cheeseman, 15 Utah, 43, 48 Pac. 477; Montgomery v. Rief, 15 Utah, 495, 50 Pac. 623; Brown v. Markland, 16 Utah, 360, 52 Pac. 597, 67 Am. St. Rep. 629; McKay v. Ward, 20 Utah, 149, 57 Pac. 1024, 46 L. R. A. 623; Cole v. Sugar Co., 35 Utah, 154, 99 Pac. 681; Blyth-Fargo Co. v. Free, 46 Utah, 233, 148 Pac. 627; Christensen v. Realty Co., 42 Utah, 70, 129 Pac. 412. 427. of the building owner, who was a third party beneficiary, the owner could not be deprived of rights under the contract because as a matter of precaution it attempted two years thereafter to make an effort to have it named as a joint obligee with the building company in the bond. 7. Limitation of actions ~46 (8)—Action for breach of warranty of elevator contract not barred by six years' statute. installation of elevators, provided that seller Where a contract of May 12, 1912, for the retained title to elevators until accepted and paid for, an action for breach of warranty begun November 4, 1919, was not barred by Comp. Laws 1917, § 6466, providing that such an action must be commenced within six years, when the elevators were paid for in January, 1915. Statute 8. Limitation of actions 46(8) In action for breach of warranty as to qualis a sale of the article warranted. Blyth-Fargo Co. v. Free, 46 Utah, 234, 148 Pac.ity, limitations do not begin to run until there For other cases seo same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes (211 P.) 9. Limitation of actions 46 (8)-Date for completion of contract was for owner's benefit and not so inflexible as to start limitations. Where a contract for the installation of elevators provided that the work was to be completed on date fixed in the contract but, if the company should fail to complete the work within the agreed time, it would pay a named sum for each day's delay and that title to the elevators should remain in seller until paid for, the date fixed for completion was not so inflexible as to set the statute in operation. 10. Appeal and error 882(14)-Plaintiff not estopped from asserting immateriality of issue merely because it made it an issue of fact in its complaint. 117-Elevator con 14. Principal and surety Where a contract for the installation of elevators provided that, if subcontractor fulfilled it, the contractor would pay him named sum for all work and material in place complete and accepted by an architect, but, if payment should be made and the work proved to be substantially defective and not according to contract, such payment should not be taken as an admission that the contract had been com plied with if the fact were otherwise, nor should such condition preclude a right of action, the stipulations were for plaintiff's benefit, and did not raise an equity in the surety company guaranteeing performance in the fund created. 15. Principal and surety 117-Payment for elevators after refusal of surety to consent not a discharge of surety. Where, by the terms of a contract for the Where, in an action against a surety company on its bond for performance of a contract for installation and upkeep of elevators, plaintiff alleged that when it paid the balance due, it believed that the elevators were a substantial compliance with the contract and it acted in good faith in making payment, it was not installation of elevators, the owner could make estopped from setting up the immateriality of sion that any part of the contract had been payments without them operating as an admisthat issue, since it could rely on the warran- complied with in case that fact should be othties made in the contract and expressly aver-erwise before completion, the owner did not red by the bond and, where it emphasized its position to that effect by requests for instructions, it cannot be contended that it did not raise the question in the court below. 13. Sales 288 (6)—Building owner did not waive right of action for breach of warranty in elevator contract by accepting elevators with knowledge of their defects. Where, at the time the owner of a 16-story building accepted and paid for elevators installed therein, the building was practically filled with tenants, all depending on operation of the elevator system, the owner's knowledge of defects at the time of acceptance was not a defense against a breach of warranty that covered both installation and upkeep for a fiveyear period.3 Mining Co. v. Supply Co. 36 Utah, 121, 103 Pac. 242, 140 Am. St. Rep. 815; Detroit H. & L. Co. v. Stevens, 16 Utah, 177, 52 Pac. 379; Christensen v. Hamilton Realty Co., 42 Utah, 70, 129 Pac. 412; Stephens v. Doxey (Utah) 198 Pac. 261. lose the benefit of this safeguard merely because at one stage of the work it sought the consent of the surety company to make a payment on the work, which consent was refused, and afterwards the owner, without the knowledge or consent of the surety company, paid for the work, although it was no more complete than when consent for payment was refused. 16. Principal and surety 117-Surety bound to keep informed of financial condition of principal during continuance of work. Where surety company executed its bond for the performance of a contract of installation and upkeep of elevators, the obligee owed no duty to the surety to keep it informed as to the financial condition of the contractor, it be ing to the interest of the surety, from the time of the execution of the bond insuring performcondition of its principal and keep informed in ance of the contract, to know the financial that respect throughout the continuance of the work. 17. Principal and surety 100(4)-Change of contract, where provided for by surety's contract, does not release surety. Changes and alterations in elevator installation contract did not release the surevided that changes should not release the ty thereon, where the contract expressly pro surety. 18. Principal and surety 100(1)-Changes not injurious to surety did not release it. Changes and alterations in an elevator installation contract did not release surety, where they worked no injury to the surety. 19. Appeal and error 1176(1)-On appeal in law action, Supreme Court cannot direct verdict if fact question should be determined by trial court. In a law action, the Supreme Court is without power to direct a verdict, if there is For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes any question of fact that should be determined ant. by the trial court. 20. Appeal and error ~1176(1)—Where only issue of fact submitted was immaterial, Supreme Court may direct verdict. Where in an action on a surety bond for performance of a contract for installation of elevators, the breaches and amount of damages were admitted by defendant, and under the pleadings there was no issue of fact submitted to the jury except the question of plaintiff's knowledge that the contract had not been performed when it made the final payment, which issue was immaterial, and the affirmative issues raised by defendant's answer were determined as questions of law, there were no questions of fact to be tried in the court below, and the Supreme Court could direct a verdict. The "4 worm traction elevators" contracted for were changed to "3 standard gearless one to one traction elevators and 1 two to one traction elevator for safe-lifting purposes." The first elevators were installed and commenced operation in the latter part of 1912. Difficulty in their operation was encountered at the very beginning. In 1913 a second set was installed, which also proved inefficient and unsatisfactory. Finally, in the summer of 1914, a third set was installed which the elevator company claimed was a substantial compliance with the contract. It demanded an acceptance by the architect and payment of the balance due, amounting to $20.000, $10,000 having been theretofore paid. On January 14, 1915, the architect Appeal from District Court, Salt Lake gave to the elevator company his written acCounty; M. L. Ritchie, Judge. Action by M. H. Walker Realty Company against the American Surety Company of New York. From a judgment for defendant, plaintiff appeals. Reversed with directions to enter judgment for plaintiff. T. Ellis Browne, Booth, Lee, Badger & Rich, and Van Cott, Riter & Farnsworth, all of Salt Lake City, for appellant. Cheney, Jensen, Holman & Stephens, of Salt Lake City, for respondent. THURMAN, J. Plaintiff brought this action to recover the penalty of a bond executed by the defendant to insure the performance of a contract to install and keep in repair certain elevators in the Walker Bank building, Salt Lake City, Utah. The case was tried upon plaintiff's second amended complaint, defendant's answer thereto, and plaintiff's reply. Before attempting to state the issues, we will briefly refer to some of the important features of the case. On October 28, 1911, plaintiff entered into a written contract with James Stewart & Co. of New York (hereinafter called the building company) for the construction of a bank and office building in Salt Lake City. Thereafter, on May 24, 1912, the building company entered into a written contract with the Van Emon Elevator Company of San Francisco (hereinafter called ceptance, whereupon the plaintiff paid the building company, and the building company paid the elevator company the amount demanded-$20,000. Thereafter, the elevators still proving inefficient and unsatisfactory, the plaintiff, in 1916, removed them from the building and substituted others instead at an expense of more than the contract price. Plaintiff made demand upon defendant for the indemnity, which demand the defendant refused. This action was commenced November 4, 1919. It is not necessary to state in detail the proceedings in court prior to filing the second amended complaint, upon which the case was finally tried. For convenience the second amended complaint will hereinafter be referred to as the "complaint." The complaint consists of two causes of action, in the first of which plaintiff sues in its own right. In the second it sues as assignee of the buildThe facts relied on in each ing company. cause of action are identical. One statement of the facts will suffice for both. The pleadings are voluminous. We will not attempt to state their substance in consecutive order, but will, in proper connection, refer to such as are deemed material. The causes of action are predicated upon breaches of the elevator contract in various respects, and especially in regard to the warranties above referred to. The warranties are expressed in subdivisions XXIV, XXV, and XXVI of the contract, but, in view of the contentions made several other provisions appear to be material to the issues involved. Omitting such provisions as are immaterial, we quote the following subdivisions of the contract: the elevator company), as subcontractors, for the installation of an elevator system in said building. The term "contract," as hereinafter used means the elevator contract above referred to unless otherwise stated. The American Surety Company (hereinafter called defendant), as surety for the elevator company, executed its bond for the faithful per- "Know all men by these presents: That formance of said contract to the extent of the whereas, on the 28th day of October, 1911, the contract price, to wit, the sum of $30,000. undersigned, James Stewart & Co., and M. H. Walker Realty Company entered into a certain Certain changes in the type of elevator contracted for were authorized in June and No- Stewart & Co. undertook to furnish certain contract in writing, whereby the said James vember of 1912 by the contracting parties, work and material required in the erection of with the knowledge and consent of defend- a bank and office building, corner Second South For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes < (211 P.) and Main Streets, Salt Lake, known as the Walker Bank building, in accordance with the plans and specifications prepared by Eames & Young (hereinafter referred to as the architect) and referred to in said contract and made a part thereof, and whereas, James Stewart & Co. has engaged with Van Emon Elevator Company, a corporation existing under the laws of the state of California, to furnish the portion of said material hereinafter set forth: "Now, therefore, this agreement made and entered into this 24th day of May, 1912, in the city of Salt Lake, by and between James Stewart & Co., party of the first part, hereinafter referred to as the contractor, and Van Emon Elevator Company, party of the second part, hereafter referred to as the subcontractor witnesseth: "I. That the subcontractor, its heirs, administrators, successors, or assigns, in consideration of the covenants and agreements hereinafter entered into by the contractor, hereby covenants and agrees to and with the contractor, that it will well and sufficiently furnish and provide all work and materials necessary or required to fully do, perform, and complete, and will completely furnish in place, four worm-gear traction electric passenger elevators, in accordance with specifications hereto attached; all in a good and workmanlike manner, in accordance with the plans and specifications referred to as a part of the firstmentioned contract, which, together with the general conditions of the specifications, are made a part of this contract; which plans, specifications and the site, have been examined by the subcontractor prior to the execution of this contract; the subcontractor hereby covenants and agrees to provide, at its own expense, all material of every kind of good and sound quality, and all tools, tackle, implements, scaffolding, and machinery of every sort which may be necessary to properly execute this contract and perform and turnish all other materials and things necessary or usual in the premises, and finish the said work in a good, substantial, and workmanlike manner, fully complete and perfect in every respect, to the satisfaction of the architect and contractor, on or before the 1st day of September, 1912, IV (in part). "The contractor may at any time during the progress of the work require any deviation from, addition to or omission in the specifications and plans, without giving notice to the surety and the subcontractor agrees to make such changes as a part of this contract, and such change or changes shall in no manner impair, affect or avoid this agreement, and this clause shall be construed without any limitations or restrictions whatsoever as to extent or character of such changes, omis sions or additions." X (in part). "The subcontractor agrees to fully do and perform this work and in all things execute and complete this contract within the time above limited for that purpose, or within said term as it may be extended by reason of delays, changes, additions or other reasons caused or allowed by the contractor or architect, and should such subcontractor fail to complete the work, or deliver its material within the time agreed upon, the subcontractor agrees to pay and will pay to the contractor for each and every day of such delay beyond the time of completion of work or delivery of material as above defined the sum of seventyfive dollars ($75.00)." "XI. Immediately upon the execution of this contract the subcontractor shall and will furnish the contractor with a bond made by the subcontractor as principal and a surety company as surety, both the form of the bond and the surety company to be satisfactory in every respect to the contractor, in the sum of thirty thousand dollars ($30,000.00) conditioned that the subcontractor will perform all terms and covenants of this contract, and will immediately pay to the contractor all expenses incurred by, or judgments entered against, the contractor, by reason of any injuries to persons or property caused as set forth in article V of this agreement. "XII. The contractor agrees that, if the subcontractor shall well and faithfully fulfill this contract to the satisfaction of said architect, and keep every covenant on its part herein contained, then the contractor will pay to the subcontractor the sum of thirty thousand dollars ($30,000.00) for all this work and material in place complete and accepted by the architect under this contract. "No payment made under this contract shall operate as an admission, on the part of the contractor or the architect that this contract or any part thereof has been complied with, in case the fact shall be otherwise, or so as to preclude any action for damages against the subcontractor, should the work and materials hereby required not be performed and furnished in a substantial and workmanlike manner, and of proper quality, or should this contract not be faithfully executed in every respect, or should the work so furnished and installed by the said subcontractor not meet with the written acceptance and approval of the architect. * "XXI. A copy of the proposition submitted by the subcontractor is attached hereto, and the work is to be furnished in accordance therewith, except where the proposition may conflict with some portion of this contract, in which case this contract is to govern. "XXII. The subcontractor agrees to supervise the operation of these elevators for a period of 90 days after their acceptance by the architects as part of the work required under this contract, if the owners require it to do so. "XXIII. Payments to be made as follows: On or about the 20th of the month after acceptance of the complete elevator installations by the architects, 50 per cent. of the amount of this contract. The remaining 50 per cent. within 60 days thereafter. "XXIV. The specifications hereto attached have been prepared by the subcontractor who guarantees that same covers all materials and labor required for the complete installation of the elevators herein contracted for, and it is further understood that this installation is guaranteed to equal in operation the Otis No. 17 gearless one to one traction elevators of the latest type, as to ease of stopping and starting, steady motion, economy of power and durability at the specified speeds, and includes the furnishing of all modern safety appliances equal to those used by the Otis Company in the latest installations of gearless traction elevators. "XXV. The subcontractor agrees that this contract includes everything necessary and requisite to the proper and efficient operation of the apparatus covered by this contract, and further includes the furnishing and maintenance in Salt Lake City of a full supply of repair parts, and further agrees to have available in Salt Lake City a competent elevator engineer for a period of five years after acceptance by the architects, for the purpose of making all repairs and replacements promptly; and the subcontractor agrees to make all repairs and replacements promptly, free of charge, during this period, provided such are not due to the improper operation of the apparatus included in this contract. The subcontractor further agrees to leave the apparatus in perfect condition and running order at the end of that time. "It being further understood and agreed that in case the Van Emon Elevator Company, Inc., should change hands on or before the expiration of the period of this guarantee, the obligations, guarantees, and maintenance requirements of this contract are hereby automatically transferred to the heirs, assigns, or purchasers of the Van Emon Elevator Company, Inc., for an additional period of five years, making the inaintenance and guarantees cover ten years period instead of five years. "XXVI. It is understood that the surety bond required under article XI of this contract, covers all of the provisions of this contract and especially the provisions of articles XXIV and XXV of this contract." "XXVIII. It is further understood that the installation of these elevators is to be the best of their respective kind, and where the specifications do not otherwise provide, the work done and materials furnished shall be in accordance with the best practice known to the trade." The bond given by defendant as provided in subdivision XI of the contract reads as follows: "Bond to James Stewart & Co. "Know all men by these presents: That Van Emon Elevator Company, a corporation existing under the laws of the state of California, as principal, and the American Surety Company of New York, a corporation organized and existing under the laws of the state of New York, as surety, are held and firmly bound unto the copartnership firm of James Stewart & Co. (contractors) in the sum of thirty thousand and 00/100 dollars ($30,000.00) lawful money of the United States of America, to be paid to the said James Stewart & Co., their certain attorney, executors, administrators, successors, or assigns; to which payment well and truly to be made and done, the said principal and said surety bind themselves and each of them, their and each of their heirs, executors, administrators, and successors jointly and severally, firmly by these presents. "Sealed with the seal of said principal and with the seal of the said surety and dated this 29th day of May, A. D. 1912. "Whereas, said principal has entered into a certain written contract, bearing date the 24th day of May, A. D. 1912, with said James Stewart & Co. for the performance of certain work, and the furnishing of certain materials in connection with the building of a bank and office building corner Second South and Main Streets, Salt Lake City, Utah, known as the Walker Bank building, which contract, together with all of its terms, covenants, conditions, specifications, and stipulations, is incorporated herein and made a part hereof as fully and amply to all intents and purposes as if said contract was recited at length herein. It being agreed that any deviations from, additions to, or omissions in, the contract, specifications, or plans of work, required by the said James Stewart & Co., may be made from time to time during the progress of the work, and as often as required, and such change or changes may be made without the consent or knowledge of the surety, and without in any wise releasing them or any of them from liability under this present bond: "Now, therefore, the condition of this obligation is such, that if the said principal shall well, truly, and faithfully keep and perform the above-mentioned contract, together with all of its terms, covenants, conditions, specifications, and stipulations on their part to be kept and performed according to the tenor and effect thereof, and shall keep harmless and protect the said James Stewart & Co. from and against all loss by reason of the nonperformance or nonfulfillment by the said principal of the terms, covenants, conditions, specifications, and stipulations contained in said contract, to be kept and performed by the said principal as aforesaid; and also against actual loss by reason of any and all delays, claims, defects, errors, obligations, liens, or incumbrances arising from nonperformance or nonfulfillment by said principal, then this obligation to be nuil and void, otherwise to be and remain in full force and virtue." It is alleged in the complaint that the bond was executed for the benefit of plaintiff as well as for the benefit of the building company. The warranties contained in the contract as shown in the subdivisions above set forth, together with the breaches thereof, constitute the basis of plaintiff's cause of action as stated in the complaint. The proposition referred to in subdivision XXI is the proposition of the elevator company to the building company in which, among other things, it stipulated that the elevators would lift a load of 2,500 pounds at a speed of 500 feet per minute, with a constant pressure at the motor of 220 volts direct cur rent. By subdivision XXI this proposition was made part of the contract. It is unnecessary to state at length the allegations of the complaint in respect to the breaches of the contract. It is sufficient to say in that regard that the defendant admits in its answer and orally admitted at the trial that the contract was breached by the elevator company, and also admitted that not only was the contract breached but that plaintiff was damaged thereby to the extent of the amount prayed for in its complaint. |