A departure from the terms of the contract by making payments on orders of the contractor without reference to the state of the work or the terms of the contract, or in excess of the installments or percentage due under the contract, is sufficient variation to discharge surety from his obligation. The provision that the last of several installments shall be paid when the structure is completed operates as a security to the owner, and the surety is entitled to the benefit thereof. If deprived of any part of such security he is discharged from liability to that extent. The contractor should not be overpaid nor should his compensation be increased."

The enforced payment or deduction of claims of creditors against the contractor held by the owner as attorney for said creditors is not such a breach of contract as will release the sureties on the contractor's bond.* It does not matter, it seems, that the overpayment was made on the fraudulent representations of the contractor that the work was half done, when the contract provides that the payments shall be estimated by the engineer. The sureties are discharged. If the contract stipulates that payments shall be made as the work progresses, on the estimates of the architect, payments must not be made without such estimates or in excess of them, without the consent of the surety. The payments may be made without the architect's certificates, it seems, if not in excess of what the architect's estimates would have been.'

If by the contract the architect's estimate is made conclusive and a certain per cent. of such estimate is reserved until completion, it is as much for the Indemnity of the surety as for the owner. If the surety has executed a written guaranty for the faithful performance of the contract by the contractor, the surety is bound by the engineer's estimate, and is not released by the fact that the owner has paid more than the agreed per cent. of the work done according to the contract price, but not more than the correct per cent. of the architect's estimate."

However it has been held that the making and giving to a materialman of an order by the contractor, and the acceptance of the same by the owner, for an amount greater than the estimate of amount due to contractor, did not constitute an advance payment which would release the surety.'

1 Simonson v. Grant, 36 Minn. 439 [1887]; and see 39 Minn. 493; Evans v. Graden (Mo.), 28 S. W. Rep. 439; Bell v. Paul (Neb.), 52 N. W. Rep. 1110; General S. Nav. Co. v. Ro't, 6 C. B. (N. S.) 550; Gordon v. Rae, 8 El. & Bl. 1065; but see Kauffman v. Cooper (Neb.), 65 N. W. Rep. 796.

* Pickard v. Schantz (Miss.), 12 So. Rep. 544.

2 Warden v. Ryan, 37 Mo. App. 466. De Mattos v. Jordan (Wash.), 46 Pac. Rep. 402.

5 Board of Commissioners v. Branham (C C.), 57 Fed. Rep. 179.

Bell v. Paul (Neb.), 52 N. W. Rep. 1110; Kane v. Thuener, 1 Mo. App. 725; Gato v. Warrington (Fla.), 19 So. Rep. 883, receipted weekly pay-rolls and materials delivered.

7 Smith v. Mo'leson (N. Y. App.), 42 N. E Rep 669; but see Brennan v. Clarke, 29 Neb. 385.

Finney v. Condon, 86 Ill. 78 [1877].
De Mattos v. Jordan (Wash), 46 Pac.
Rep. 402.

When the obligation of the contractor was to furnish, prepare, and set granite, and the owner was to make monthly payments of a certain per cent. of the estimated value of the work" performed on the building," payment for granite prepared as well as granite actually put in the building was held not to release the contractor's sureties.'

Payment in full to a contractor upon completion of his contract, or partial payments when the work has been substantially completed to the required stages, or payment to contractors who have fraudulently concealed defective work,' will not discharge a surety even though the owner paid the contractor without retaining enough to cover the claims of lienmen, when his contract authorized him to do so."

6

Many changes made in a construction contract for a consideration and without the consent of the surety have been held to discharge or release him from liability-thus an extension of the time for completion. To obtain his discharge the surety must plead the extension in his answer and he must prove it at the trial. It has been held that an extension of time and overpayment did not release a surety on a bond providing that the contractor should pay for all labor and materials furnished him, as to the rights of laborers and materialmen. The extension of time of payment must be for a definite time, and on a sufficient consideration to discharge the surety." The act of materialmen in allowing a contractor thirty days in which to pay for materials furnished does not release a surety obligated to pay for all materials furnished."

13

Failure of the owner to insure property as agreed," or a change in the person of the architect without the surety's knowledge or consent; " or a refusal by the owner to have the price of alterations fixed as provided in the contract, by arbitrators; or if certain matters are to be determined by arbitration and certain other matters are afterwards included in the submission without the knowledge or consent of the surety," then the surety may be discharged.

Sureties are released by a departure from the terms of the contract in respect to plan and materials, without the knowledge and consent of the

1 Smith v. Molleson (N. Y. App.), 42 N. E Rep 669.

Duluth . Heney, 43 Minn. 155. * Stimson Mill Co. v. Riley (Cal.), 42 Pac. Rep. 1072.

Kingston v. Harding, 2 Q. B. 404 [1892)

Casey v. Gun, 29 Mo. App. 49.

Todd v. School Dist., 40 Mich. 294; and see 61 Mich. 426; Hall . Johnston (Tex.) 24 S. W. Rep 861; Samuell v. Howarth. 3 Mer. Ch. 272; Hill v. Witmer, 2 Phila. (Pa.) 72; Mayhew v. Cricket, 2 Swanst. Ch. 185.

'Hayden v. Cook (Neb.), 52 N. W. Rep.

3

surety. An agreement between the owner and contractor to add another story to a building; to substitute steam heat for stoves and a gravel roof for a tin roof; to increase the cost of plastering by $221, and adding to the expense a bulkhead for sewer connections, and changing the arrangements of the closets; an interlineation in the specifications and addition of the words, "sliding doors between hall and parlor" and "bath-room," have each been held to release the surety on the contractor's bond.

5

An agreement, endorsed on a building contract by the owner and contractor, providing for additional work for additional compensation, has been held not such an alteration of the contract as will release the contractor's sureties. A surety for a subcontractor between him and the contractor is not released by changes made in the specifications and plans by the subcontractor under an agreement with the owner and without the knowledge of the contractor;' and alterations without the knowledge or consent of the owner will not discharge the surety on the bond." If the contractor simply consent to certain changes in the minor details of the work but without binding himself to conform to such changes and without any agreement as to the modification of the original contract, it will not discharge the surety." Such agreements to change the terms of a contract, by which the surety will be discharged, need not, it seems, be in writing nor in any precise form of words, nor even in express language; they may be inferred from acts, declarations, circumstances, and facts."

If the contract provide that the contractor should make any alterations or additions required by the owner, the price to be subject to addition or deduction therefor as might be agreed on, the sureties cannot defend against liability, because the owner, in completing the building after its abandonment by the contractor, as was authorized by the contract, deviated from the specifications, nor because changes were made before the abandonment with the assent of the contractor."

21. Changes which Will Not Release the Surety. When the contract provides that the owner, at any time during the progress of the work, shall have the right to make alterations, changes, or additions to the structure, and that the same shall not invalidate the contract; changes and additions made by him will not release the surety on the contractor's bond." If

the owner refuses to have the prices of such changes determined in the manner provided by the contract, then the sureties will be released.' The changes must be reasonable, and not materially increase the cost of the structure beyond the contract price. A change in the plan of a building by moving the wall out two inches, and in the specifications by substituting walnut, cherry, and poplar, instead of pine, in certain parts of the building, has been held reasonable, and that the sureties were not released by reason thereof. A change from stone window-lintels to railroad iron has been held not to affect the obligation of the surety, nor a change of the fronting of a building when the sureties had never seen the original plans.*

When the contract provides that no new work shall be considered as extra work unless a separate estimate be submitted by the contractor, and signed by the engineer and owner, and that only such work shall be paid for as has been authorized in writing, the owner may waive compliance with the provision, and the sureties on the contractor's bond have been held not to be discharged because the provision had been disregarded. A different view seems to have been taken where the contract provided that the superintendent might make alterations without invalidating the contract; that any difference in the expense should be determined by him, and that in case of any such alteration the expense must be agreed on in writing, and signed by said parties and the superintendent before the work was done, and any allowance made therefor; it was held that the superintendent had no authority to make alterations without consulting the surety. A surety for the owner has been held to be entitled to the benefit of a provision in the contract that the final payment shall not be paid until thirty days after the work is completed, and only on the certificate of the engineer."

22. Surety Discharged by Other Causes.-A surety may be discharged from his obligation by the death of the contractor; but where the contractors make a partnership, the dissolution of the partnership does not release the surety on a bond to pay for all labor and materials furnished,' nor does the assignment of one contractor to the other joint contractor without notice to the surety release him." The fact that the performance of the contract has become impossible, without any neglect or fault of the contractor, will release the sureties. An instance of the latter case is where the particular subject-matter is dead, or has been destroyed, and cannot be rebuilt or replaced, as the delivery of an animal which has died."

PERSONS AS PARTIES.-WHO MAY CONTRACT.

23. Disabilities to which Persons are Subject.—The rights of parties to enter into and enjoy the rights of a contract are modified by the special condition or status of the parties. Natural persons may be affected by various private conditions: such as infancy, marriage, and conditions affecting the mind, or by their political and social status; while the powers of Artificial persons, known as corporations, are defined and limited by the law of their creation. The extent of the latter must be sought in the act of 30vereign power, by which they exist. The incapacities created by the private conditions of persons are subjects of greater practical importance than those of the political and social standing of the parties.'

They are based upon the fundamental principle that a contract cannot be created unless there is mutual consent of the parties and an intelligent understanding of its terms. Any mental infirmity of either or both parties that precludes the possibility of a just apprehension of the terms of the agreement, or of an intelligent assent to them, destroys one of the essential elements of & contract."

24. Infants.--Persons under twenty-one, and, in some states, women under eighteen years of age, commonly known as infants, are regarded by the law as lacking in judgment and understanding sufficient to enable them to guard their own interests, and the law protects them against their own improvidence, or the designs of others, by allowing them to avoid acts, contracts, or conveyances to which they are parties, and that are not manifestly to their interests. Before that age the law presumes their faculties to be immature and incompetent, and seeks to guard against the artifice and cunning of the world. This protection is afforded by allowing them certain privileges of avoiding their acts and agreements, or by declaring them voidable and not binding. The privileges are entirely personal, and the infant alone can take advantage of them. If the other party to the contract be an adult, the reason which permits the infant to escape its force does not apply to the adult, and he is bound thereby, despite the want of reciprocal responsibility on the infant's part. The adult is bound by the agreement, though the infant may avoid it. This may not seem strict justice, but it is founded upon the theory that the adult has entered into the contract with all the experience and knowledge requisite to avoid fraud and imposition which it is presumed the infant has not. For the same reason a third person not a party to the contract cannot take advantage of the infancy of one of the parties to avoid it unless it be void from the beginning.

An infant's contract is not necessarily void and without binding force; some contracts are voidable at the option and discretion of the infant, and

'Leake's Digest of Contracts, p. 537.

2 Story on Contracts, chap. 2.