Summary
In Pacific Coast Engineering Co. v. Detroit Fidelity Surety Co. (Cal.App.) 293 P. 140, 141, the court said: "It is a familiar principle of suretyship that any act of the creditor, by which the principal is discharged from liability, will also discharge the surety."
Summary of this case from United States v. James McHugh SonsOpinion
Rehearing Denied Dec. 13, 1930
Hearing Granted by Supreme Court Jan. 12, 1931
Appeal from Superior Court, Alameda County; Warren V. Tryon, Judge.
Action by the Pacific Coast Engineering Company against the Detroit Fidelity & Surety Company. From a judgment in favor of plaintiff, defendant appeals.
Reversed.
COUNSEL
John Ralph Wilson, of San Francisco, for appellant.
George F. Snyder, of San Francisco, for respondent.
OPINION
PRESTON, Justice pro tem.
Plaintiff, Pacific Coast Engineering Company, had a contract for the construction of the Sacramento Memorial Auditorium in Sacramento. On November 25, 1925, plaintiff entered into a contract with W.H. Worswick, whereby Worswick agreed to furnish all of the labor and equipment, including staging, planking, machinery, rigging, etc., necessary to commence and complete the erection and field painting of all structural steel for said memorial auditorium. Defendant, Detroit Fidelity & Surety Company, a corporation, executed and delivered to plaintiff a bond for the faithful performance of the contract by Worswick. Worswick commenced work in January, 1926, and during that month erected 67 tons of steel. On February 3, 1926, plaintiff paid Worswick $200, on February 16th, $200, and on February 19th, $250. Worswick erected no steel subsequent to February 17, 1926.
On said February 17, 1926, Worswick abandoned said contract, and the plaintiff took over the performance of the work required by said contract and completed said work. After the work was completed, plaintiff brought this action against the defendant bonding company as Worswick’s surety. The case was tried by the court without a jury, and judgment was rendered in favor of plaintiff, from which judgment the defendant appeals.
Appellant’s first contention is this: "Worswick’s contract was cancelled by plaintiff; the contract was thereupon at an end and plaintiff could not, thereafter, maintain an action for its breach against Worswick or against defendant as his surety."
We think this contention must be sustained. The trial court found: "It is not true the said contract was cancelled or rescinded." This finding is not supported by the evidence. As above stated, Worswick abandoned his contract on February 17, 1926. Thereafter, and on March 1, 1926, after Worswick had abandoned the work, the plaintiff wrote him a letter as follows:
"Mr. W.H. Worswick, 444 California Street, San Francisco, California.
"Dear Sir: Inasmuch as you are in default in your performance of the agreement entered into between yourself and the undersigned, Pacific Coast Engineering Company, on the 25th day of November, 1925, for the erection of the steel work on the Sacramento Memorial Auditorium at Sacramento, and this default has continued for a period of more than ten days to our great damage, this will serve to notify you that your contract above mentioned is now terminated and cancelled (italics ours).
"Yours very truly,
"Pacific Coast Engineering Company
"By [signed] J.J. Coney, President."
It is a familiar principle of suretyship that any act of the creditor, by which the principal is discharged from liability, will also discharge the surety. Lamb v. Wahlenmaier, 144 Cal. 91-95, 77 P. 765, 103 Am.St.Rep. 66; Montgomery v. Sayre, 100 Cal. 182, 34 P. 646, 38 Am.St.Rep. 271; secs. 2819 and 2840, Civ.Code; Montgomery v. Sayre, 91 Cal. 210, 27 P. 648; 32 Cyc. 151; Holden v. Mensinger, 175 Cal. 300-304, 165 P. 950.
Therefore, if Worswick was discharged from his contract, appellant was discharged from any liability under the bond. In the letter above quoted, plaintiff notified Worswick that the contract was "terminated and cancelled." We see no escape from the conclusion that, by this act on the part of plaintiff, the contract was annulled and rescinded, and the parties were in the same position as though the contract with Worswick had never been entered into. Section 1688, Civ.Code; Hayt v. Bentel (Cal.App.) 126 P. 370; Lemle v. Barry, 181 Cal. 1, 183 P. 150; House v. Piercy, 181 Cal. 247, 183 P. 807; Pearson v. Brown, 27 Cal.App. 125, 148 P. 956.
The law is also well settled that it is not necessary that the notice to rescind shall be in any formal or explicit language. It is sufficient that the notice shall be given to the other party which clearly shows the intention of the person rescinding to consider the contract at an end. McNeese v. McNeese, 190 Cal. 402, 213 P. 36; Dyer Bros. Golden West Iron Works v. Central Iron Works, 72 Cal.App. 202, 237 P. 386.
Plaintiff’s intention to cancel the contract with Worswick is further manifested by the fact that plaintiff took over the work and actually completed it.
It is therefore clear to us that said finding of the trial court is not supported by the evidence.
Plaintiff insists that the president of the plaintiff corporation had no authority to write the above letter of cancellation and rescission. We see no force to this contention. It is admitted in the evidence that Mr. Coney was president of plaintiff at the time of the execution and cancellation of the contract. No by-laws were introduced by respondent showing any limitation upon his authority. It was obviously a matter within the scope of plaintiff’s business, and the evidence shows that, after the trouble arose, Mr. Coney actively endeavored to adjust matters, and that after March 1st the plaintiff treated Worswick’s contract as canceled by its president and completed the work. Under such circumstances, plaintiff is in no position to contend that its president had no authority to cancel the contract with Worswick. Furthermore, a prima facie case of his authority was made out, which plaintiff did not attempt to overcome by introducing its by-laws. Commercial Security Co. v. Modesto Drug Co., 43 Cal.App. 162, 184 P. 964; Grummet v. Fresno Glazed Cement Pipe Co., 181 Cal. 509, 185 P. 388; Reardon v. Richmond Land Co., 21 Cal.App. 358, 131 P. 894; International M. Co. v. National R. Co., 67 Cal.App. 498, 227 P. 918.
The other contention made by appellant need not be considered.
We think the judgment must be reversed, and it is so ordered.
We concur: NOURSE, P.J.; SPENCE, J.