Appeal from Special Term, New York County.
Action by the City of New York against William P. Baird and the sureties on his bond as a contractor. From a judgment of dismissal as to the sureties, plaintiff appeals. Reversed, and new trial ordered.
[117 N.Y.S. 562] Terence Farley (Theodore Connoly, on the brief) and Francis K. Pendleton, Corp. Counsel, for appellant.
J. Woolsey Shepard (Woolsey A. Shepard, on the brief), for respondents.
Argued before INGRAHAM, LAUGHLIN, CLARKE, HOUGHTON, and McLAUGHLIN, JJ.
This is an appeal from a judgment entered upon a dismissal of the complaint at the close of plaintiff's case as against James Baird and James Everard, sureties on a general bond to secure the due performance of a contract made by William P. Baird with the city for laying water mains in Fifth avenue. Clause P of that contract provided that the contractor should properly guard and light the excavation-
" and that he will indemnify and save harmless the parties of the first part [that is, the city] against and from all suits and actions of every name and description brought against them, and all costs and damages to which they may be put for or on account or by reason of any injury or alleged injury to the person or property of another, resulting from negligence or carelessness in the performance of the work, or in guarding the same, or from any improper materials used in its prosecution, or by or on account of any act or omission by the said party of the second part or his agents. And the said party of the second part hereby further agrees that the whole or so much of the moneys due to him under and by virtue of this agreement as shall or may be considered necessary by the commissioner of public works shall and may be retained by the said parties of the first part until all such suits or claims for damages as aforesaid shall have been settled and evidence to that effect furnished to the satisfaction of the said commissioner."
A fireman, Kelly, driving up Fifth avenue to a fire, went into the excavation dug by the contractor with his horses and engine and was severely injured. He filed a claim against the city with the comptroller 30 days before February 18, 1898, for $50,000, on which day he began a suit against the city and Baird for that amount. Prior to February, 1898, the city had retained $25,000 money due to Baird under his contract, which provided that he should be paid from time to time, upon [117 N.Y.S. 563] progress certificates, 90 per cent. of the amount earned. Baird gave a bond in the sum of $10,000 to secure the city against any judgment which might be obtained by Kelly, which bond has been the subject of litigation. City of New York v. Baird, 74 A.D. 238, 77 N.Y.Supp. 446,reversed 176 N.Y. 269, 68 N.E. 364; Id., 117 A.D. 659, 102 N.Y.Supp. 915, affirmed 191 N.Y. 501, 84 N.E. 1110.After the giving of this bond, the $25,000 which had been retained was paid to Baird. Subsequently Kelly obtained a judgment against the city for $22,553.36, which was subsequently compromised by the city by payment of $17,500. The city then sued on the $10,000 bond alluded to, and has finally obtained a judgment.
This suit is on the original bond, given upon execution of the contract to insure due performance thereof, to recover the amount paid in compromise of the Kelly judgment. The city having recovered on the $10,000 bond, of course, the amount here in issue is $7,500, the balance of the amount paid. A verdict was directed for that amount against the contractor under his contractual obligation to hold the city harmless. In the case at bar the liability to Kelly was established by original proof precisely as if Kelly was suing. The respondents claimed that as the city was entitled to retain from the contractor moneys due to him sufficient to meet a claim founded upon negligence, and as matter of fact when Kelly's claim was filed against the city had retained $25,000, and thereafter had paid that $25,000 to the contractor upon taking a bond of indemnity for a less sum, to wit, $10,000, by such conduct upon the city's part, they, as sureties, were released from the obligation upon their bond, because security in the possession of the obligee applicable to the payment of the debt guaranteed, which was within the contemplation of the parties and entered into the bond and upon which they had a right to rely, had been given up. The learned trial court took this view of the case and dismissed the complaint as to the sureties.
The question involved centers upon the proper construction of clause P of the contract, heretofore quoted. In clause Q there is another provision that if a mechanic's lien should be filed-
" then and in every such case the said parties of the first part shall retain, anything herein contained to the contrary thereof notwithstanding, from the moneys under their control and due or to grow due under this agreement, so much of such moneys as shall be sufficient to pay off, satisfy and discharge the amount" of such lien. " The moneys so retained shall be retained by the said parties of the first part until the lien thereon created by the said act and the filing of said notice shall be discharged pursuant to the provisions of the said act."
If this cause of action was based upon a violation of the duty of the contractor to pay his materialmen, and the city had been compelled to pay them, and had not retained money sufficient to meet the liens, and had then sought to recover over against these bondsmen, I agree that it could not recover; for the positive provision of clause Q that the city shall retain a sufficient amount to meet such liens until finally disposed of was a part of the contract, within the contemplation of the parties when the bond was given upon which the sureties were entitled to rely. But the provisions of paragraph P are quite different. This [117 N.Y.S. 564] is not an agreement made by the city. A previous clause of the contract had required the city to pay 90 per cent. of the amount due for work done as shown by the progress certificates. This clause P does not begin as does clause Q, " And it is further agreed by and between the parties," but it begins, " The said party of the second part," to wit, the contractor, agrees to properly guard and light and hold the city harmless, and then, " And the said party of the second part further agrees" that so much of the moneys due to him " as shall or may be considered necessary by the commissioner of public works shall and may be retained by the said parties of the first part until all such suits or claims for damages as aforesaid shall have been settled." That is a provision for the benefit of the city, and it puts the determination of the amount, or of any amount, to be retained within the discretion of the commissioner of public works, and, when the discretion of the commissioner has been exercised as to the amount, within the further discretion of the city whether it shall order the amount to be retained.
Said provision did not create such a security as comes within the cases relied on by the respondents. The strongest case is Antisdel v. Williamson, 165 N.Y. 372, 59 N.E. 207.What was there before the court was an extension of time for the payment of a mortgage for three years after the time due, without notice to or consent from the guarantors for the ...