Hamilton Common Pleas.

or complete the same, whichever said surety company may elect to do, provided it is done in accordance with said contract."

The said bond contained also the following provision: “Provided further, that any suit at law, or proceeding in equity brought against this bond to recover any claim hereunder, must be instituted within six months after the breach of said contract and that said surety shall not be liable for a greater sum than the penalty hereof."

Two other provisions of said bond are set out in the third defense of said answer and are as follows:

"Payments will be made as the work progresses, but not oftener than once a month. The contractors will be allowed 90 per cent. of the value of the work set in place and 50 per cent. of the value of material delivered on the grounds. Upon acceptance of the entire work one-half of the balance due will be paid and the final payment will be made thirty days after acceptance of the entire work embraced in this contract.

"Provided further, that the obligee shall retain full performance of said contract, and until after limitation against lien shall have run, the percentages provided to be retained in said contract, and in the event of default by the principal in the terms of said contract this instrument shall operate from the date thereof as an assignment to said surety for its protection, indemnification and reimbursement for all moneys earned or due or to become due to the principal, which shall not prior to such default have been paid unto the said principal on account of said contract. And the surety shall be subrogated to all the rights and properties of the principal arising out of said contract, and all deferred payments and any and all moneys and properties that may at the time of default be due or payable, or that may thereafter become due and payable to said principal under a bid from said contract which shall not have been paid unto said surety, shall be agreed on any claim or claims the obligee may make upon said surety because of said breach."

The said Lillie I. Ellis entered upon the performance of said contract and so continued until about April 17, 1907, and this action to recover on the bond was brought March 21, 1908.

Monfort v. Surety Co.

The plaintiffs demur to the second and third defenses. stated in the answer of said surety company and contend that by the terms of said bond and upon notice to said bonding company of the breach of the contract by W. H. Ellis & Company the said surety company was bound to complete the said contract or to stand upon the words of its bond and refuse to complete it, and that by its designation of Lillie I. Ellis to complete the said contract, she did so as the agent or representative of the said bonding company; that no contract relation existed between Lillie I. Ellis and these plaintiffs; that a contract relation did exist between Lillie I. Ellis and the said Bankers Surety Company; that the request of the said bonding company that Lillie I. Ellis should perform said contract was an election by the said bonding company to assume said contract and a designation of the person that it desired to have complete the work for it.

The defendant contends that its bond provides. that suit must be brought within six months after a breach of said contract by W. H. Ellis & Company; that this breach occurred on May 9, 1905, and as this action was not commenced until March 21, 1908, almost four years after the breach of said contract, that it is not liable on its bond; that the plaintiffs did not retain from Lillie I. Ellis on the part of the contract performed by her the percentages the bond and contract provided should be retained, and for that additional reason it is not liable on said bond. It also contends that said bond should be strictly construed and that it can not be made liable under its obligation beyond the strict letter of its bond.

Counsel for defendant cite the case of State v. Medary, 17 Ohio 554, in support of their contention that the defendant company is not liable on its bond. The Medary case has been approved or followed in ten other cases by the Supreme Court of Ohio. It no doubt states the law of Ohio on the subject of the liability of bondsmen. On page 565 the court say:

"Sureties stand upon the words of the bond, and if the word will not make them liable, nothing can, there is no construction, no equity against sureties. If the bond cannot have effect according to its exact words, the law does not authorize

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the court to give it effect in some other way, in order that it may prevail."

The facts stated in that case are that Timothy G. Bates was appointed a member of the board of public works. He gave a bond reciting his appointment as such member of the board of public works, and the bond was conditioned that Bates should faithfully discharge the duties of his said office and account for all moneys intrusted to him as such officer. Some time after qualifying as a member of said board and giving bond, Bates was by said board appointed an acting commissioner thereof and as such commissioner received large sums of money for which he failed to account.

On page 564, the court say that there is a difference between being a member of the board and being an acting commissioner; that the duties and powers of a member of the board and the duties and powers of an acting commissioner are different and distinct, and the risk and liability of sureties for one and the other are also entirely distinct.

Counsel for the surety company also cite the case of Walsh v. Miller, 51 Ohio St. 462 [38 N. E. Rep. 381], in support of their contention that a surety can not be liable beyond the plain terms of the bond. The question made in that part of the Walsh case to which counsel referred was that the bond provided that John B. Mannix will faithfully perform all duties as said trustee, when he was in fact an assignee under a proceeding in the probate court of Hamilton county, Ohio, where he was made assignee in a voluntary proceeding by Archbishop Purcell. In the Walsh case the court was construing and determining the meaning of the two words, "assignee" and "trustee" and it was in that connection that it announced and applied the general principle of law in the following language:

"While it is undoubtedly the law that sureties are not liable beyond the plain terms of their engagement, the rules governing the construction of their contract in arriving at their terms and scope are not different from those which are applicable in the interpretation of all written agreements. It is enough in any written contract that the intent of the party clearly appear though it be not fully and particularly expressed.

Monfort v. Surety Co.

When the meaning and intention of the parties are perfectly plain, no grammatical inaccuracy or want of the most appropriate words shall render the instrument unavailing."

The court held that the terms trustee and assignee were, in law, for the same purpose and to the same effect and that the bond was liable.

It is also the law that the contract and bond executed contemporaneously must be construed together. Koppitz-Melchers Brew. Co. v. Schultz, 68 Ohio St. 407 [67 N. E. Rep. 719].

Counsel for defendant also cite the following cases in support of their contention that said bonding company is not liable by reason of the failure of the plaintiffs to bring suit thereon within six months as is provided in said undertaking. Marshalltown Stone Co. v. Construction Co. 123 Fed. Rep. 746; Lesher v. Fidelity & Guaranty Co. 239 Ill. 502 [88 N. E. Rep. 208]; Novelty Mill Co. v. Heinzerling Co. 39 Wash. 244 [81 Pac. Rep. 742]; Continental Trust Co. v. Surety Co. 80 Fed. Rep. 188 [25 C. C. A. 364]; Hartwell v. Express Co. 3 L. R. A. 342; Southern Express Co. v. Caldwell, 88 U. S. (21 Wall.) 264 [22 L. Ed. 556]; Union Ins. Co. v. McCookey, 33 Ohio St. 555; Prudential Ins. Co. v. Howle, 10 Circ. Dec. 290 (19 R. 621); Corn City Mut. Ins. Co. v. Schwan, 1 Circ. Dec. 105 (1 R. 192); Kettenring v. Aid Assn. 96 Fed. Rep. 177; Portage Co. Mut. Ins. Co. v. West, 6 Ohio St. 599, and a number of others. The facts in these cases which were before the court are not in any way similar to the facts in the case at bar. In none of the cases cited do we find an instrument executed subsequent to the breach of contract and within the time provided for the bringing of the suit as was done in the case at bar. If this case were heard on the bond and the contract, as originally signed and entered into, the authorities cited by the defense would apply, the demurrer would be overruled and judgment entered for the defendant.

It should be borne in mind that within three months after the default of W. H. Ellis & Company the defendant company executed the instrument quoted above, which must be considered in connection with and as a part of the bond of the defend

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ant company, and it must here be determined what that instrument was and what was its effect in law upon the provisions of the bond limiting the time in which an action should be commenced for the breach of the contract.

The building to be constructed by W. H. Ellis & Company was to cost $144,561. Ellis & Company began work on this building subsequent to March 4, 1905. They defaulted in their contract on May 9, 1905, about sixty days after beginning the expenditure of so large an amount of money in the construction of the building. It therefore follows that when the surety company, on July 15, 1905, requested that Lillie I. Ellis be permitted to complete the said contract, that it knew that she could not, under any circumstances, complete said building within six months from May 9, 1905. The question then presents itself as to what in law was the effect of the request of the Bankers Surety Company and the acceptance of the person designated by that company, by the plaintiffs on the bond of the defendant. If it can be said that the defendant intended to rely on the strict letter of its bond, then the law would apply, that sureties are not liable beyond the words of the bond; that the language of the bond must be strictly construed; that there are no equities against sureties; and that the court is not authorized to give effect to a bond in any other way than by the strict letter thereof. But the court must go beyond this one provision of the bond, namely, that action thereon must be brought within six months after the first breach of the contract, and determine whether or not the surety company, by its act, intended to assume the completion of the building and for that purpose designated its guarantor to perform the work for it or whether or not by the execution of the paper writing, set out in the amendment to the petition, by the surety company, it intended to and did waive the provision of the bond that suit thereon must be brought within six months after the first default in that contract.

"A waiver is an act showing impliedly or expressly that the party agreed to rely on something other than the strict letter of its agreement.' Boos v. Ewing, 17 Ohio 525 [49 Am. Dec. 478].