Opinion
Argued February 3, 1897
Decided February 12, 1897
Clarence L. Barber and James A. Deering for appellants. Francis M. Scott and Terence Farley for respondent.
The defendants were held liable as sureties upon an indemnity bond executed to the plaintiff for the faithful performance of a certain contract.
On the 31st of August, 1883, a firm of contractors entered into a written contract with the plaintiff for the construction of a sewer in Ninth avenue between Eighty-first and Eighty-third streets. This contract contains elaborate provisions in which the obligations of the parties are fully specified. A brief reference to one or two of the stipulations will be sufficient for all the purposes of this case. The contractors were bound to so guard the work while in progress as to prevent accidents to persons using the streets or sidewalks in a lawful manner, and agreed to indemnify the plaintiff and save it harmless from all suits and actions brought against it for damages for personal injuries resulting from negligence in the performance of the work, or in guarding the same, or for or by reason of any act or omission on the part of the contractors.
The contractors also stipulated that the commissioner of public works, representing the city, might retain the whole, or so much of the moneys due on the contract until all suits or claims for damages for such injuries were settled and evidence of such settlement furnished to the commissioner, but the right to insist upon this was by the terms of the contract solely and exclusively at the option of the city.
By another provision of the contract the contractors consented that the commissioner might retain such amount of the contract price as might be necessary to pay all such claims for damages in favor of parties who had, before or within ten days after the completion of the contract, given written notice to the commissioner that such claims for damages were unpaid. The contract was completed and the work accepted July 29, 1884, and on the 28th August, 1884, the balance of the price of the work was paid by the plaintiff to the contractors.
The bond which the defendants executed to the plaintiff bears even date with this contract and refers to its terms, and was conditioned that if the contractors should well and truly perform the contract in accordance with its terms, and in every respect comply with its terms and conditions, then the obligation to be void, otherwise to remain in full force and virtue.
It appears that on the 17th of May, 1884, one Cruikshank brought an action against the plaintiff herein to recover damages for a personal injury sustained by him from an obstruction upon the sidewalk placed there by the contractors in the performance of the work. Both the contractors and their sureties, the defendants, had timely notice of this suit; that it was brought for the purpose of obtaining a judgment against the city for an act of the contractors, and they were notified to come in and defend the same.
No attention was paid to this notice by the contractors or the sureties, and the action resulted in a verdict against the plaintiff for $4,500, for which sum, with interest and costs, judgment was entered. The city paid this judgment and then brought this action upon the bond for reimbursement for the loss. On the trial the court directed a verdict for the plaintiff for the amount of the judgment paid and interest. There was an exception to this direction which raises the question here whether the defendants had the right to have the case submitted to the jury.
The judgment roll in the action brought by Cruikshank against the city was conclusive evidence against the defendant therein, and also against these defendants and the contractors, since they had notice of the pendency of the suit, and an opportunity to defend it, of the amount of the damages, the existence of the defect or obstruction in the street, and that the injured party was himself free from negligence. These propositions have often been decided in actions of this character where a liability over is sought to be established, and many of the cases have recently been reviewed and reaffirmed in this court. ( Vil. of Port Jervis v. F. Nat. Bank, 96 N.Y. 559; O.S.N. Co. v. Campania Trans. Espanola, 144 N.Y. 663; Carleton v. Lombard, Ayres Co., 149 N.Y. 137-152.)
The complaint in that action charged the city with negligence in permitting the obstruction on the sidewalk which had been placed there by the contractors to remain, and the plaintiff gave proof dehors the record that the negligent act for which the city was sued, and upon which the verdict passed, was that of the contractors, and not that of the city. When the proofs closed there was no evidence upon which a verdict could be rendered that the city itself, and not the contractors, was the party primarily liable for the injury. The case against the sureties was made out by the judgment record in the former action, and the undisputed proof that the issue tried and submitted to the jury in that case was based solely upon the act of the contractors in obstructing the sidewalk in the progress of the work. There was not, therefore, any question to submit to the jury, and the court was warranted in directing a verdict for the plaintiff on the bond of indemnity for the reason that it conclusively appeared that the city had been made liable in damages for an act of the contractors for which the sureties had undertaken to be responsible.
The only other question in the case that requires any notice arises upon the defendants' contention that they were discharged from the obligation by the act of the city in paying over to the contractors the balance of the contract price in its hands after the action by Cruikshank against it had been commenced, and when it knew that an outstanding claim for damages for the injury existed.
The stipulations of the contract on this point covered two distinct classes of cases. One where the claim was brought to the attention of the city by notice, in writing, to the commissioner, before the contract was completed, or within ten days thereafter. In such a case the obligation on the part of the city to retain the fund was absolute unless the claim had been shown to be discharged. There was no notice under this provision given by the defendants or any one, and hence it has no application to the facts of the case. The claim upon which this action was based does not fall within that provision of the contract. The other provision of the contract left it optional with the city, in cases where notice was not served upon the commissioner, either to retain the fund or to pay it to the contractor, and it could do either without any breach of the contract.
The stipulations of the contract in this respect were a part of the defendants' undertaking. They became bound as sureties for the faithful performance by the contractors of their contract, with full knowledge that the city could, at its option in such a case, pay the balance of the contract price to the contractors, and they cannot complain if the city exercised that option in the manner stipulated. The defendants, when they guaranteed performance, with knowledge of this provision, virtually consented that the city might do what it did, and hence they have not been prejudiced.
The contract was not changed in any of its terms, nor was there any departure from it in the performance. The city did nothing that it had not the right to do by the contract or that the defendants had not consented in advance that it might do.
The claim proved by the plaintiff fell directly within the conditions of the bond, and the defendants were not in any manner released or discharged from their obligation of indemnity against it, and so the judgment should be affirmed.
All concur.
Judgment affirmed.