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California and Florida decided that the owner of property who had made a contract with a builder to furnish the necessary work and material to erect and to complete a structure according to plans and specifications could not recover of a surety upon a bond for the performance of the obligations of the contractor the amounts which he was compelled to pay to discharge liens upon his property for the work and material which the contractor had agreed to furnish, upon the ground that, while the contractor agreed to furnish, he did not agree to pay for this work and material, notwithstanding the fact that the owner contracted to pay, and did pay to the builder a price commensurate with the value of the finished structure and of all the work and material therein. The effect of these decisions is that an agreement to furnish work and material to the owner of property for a price paid which is commensurate with the full value thereof is performed when the contractor furnishes the work and material at the expense of the owner, so that the latter is compelled to pay for them twice while the former gets the price for little or nothing. This view failed to commend itself to the Supreme Courts of Indiana and Kentucky, and they held that an agreement to furnish was an agreement to pay for such work and material, and that the owner of the property was entitled to recover of the surety the moneys paid to discharge liens there for under a similar contract and bond. Mackenzie v. Board of School Trustees, 72 Ind. 189, 196; Maves v. Lane (Ky.) 76 S. W. 399, 400. Which is the true construction?
Counsel call attention to the stipulations in the lease to the effect that the lessees would give a bond with a satisfactory surety for the performance of their obligations, and that they should pay for the work and material employed in the improvements they agreed to furnish, and to the fact that the bond in suit is conditioned for the performance of all the obligations of the lessees only, and does not contain the additional condition that they shall pay for the work and material. They invoke the rules that an express agreement relative to a subject-matter excludes any implied contract concerning it, and that every contract is presumed to contain the entire agreement of the parties, and from these premises they argue that no agreement by the lessees to pay for the work and labor other than the bond may be deduced from the lease, and that, inasmuch as the condition that the lessees shall pay for the work and labor is not found in the bond, the surety is not bound to indemnify against the failure of the lessees to make such payments. But the stipulation for the bond is a mere contract for additional security for the performance of obligations assumed by the lessees by the other terms of the contract. One who makes a written contract to pay money or to perform any act does not revoke his agreement or renounce his obligations thereunder by inserting in the contract a further agreement to give security for its performance. Moreover, the omission from the bond of the condition that the lessees should pay for the work and material is of no importance, because by the express terms inserted in the bond the surety guarantied the performance of every obligation which the lessees assumed under the lease. If one of their obligations thereunder was to pay for the work
and material, the surety agreed to indemnify the lessor for a failure of the lessees to perform this obligation. If this was not one of their obligations, the surety is not liable for their failure to perform. If no bond whatever had been given, and if the surety had merely indorsed upon the lease for a valuable consideration its guaranty of the performance by the lessees of their obligations thereunder, it would certainly have been liable for a default in the performance of any one of them, and this is the exact liability which it agreed to assume by the plain terms of its bond. The decisive question then recurs—did the lessees agree by the express terms of their lease to pay for the labor and material employed in the construction of the heating plant and in the renewing of the plumbing which they undertook to furnish as a part of their rent? The soundness of the rules of construction and of law which counsel for the surety cite is not denied. But the only purpose of rules of interpretation is to ascertain the intention which the parties to an agreement expressed by their writing, and, when that intention shines forth from the words of the agreement or is lawfully ascertained therefrom, rules of construction are unavailing to defeat its proper enforcement. The purpose of every agreement is to record the intention of the parties. The object of all construction is to ascertain that intention from the writing and to enforce it. Rules of construction more fundamental, more general in their application, and not less authoritative than those cited by counsel for the defendant are:
The court should so far as possible put itself in the place of the parties when their minds met upon the terms of the agreement, and then from a consideration of the writing itself, of its purpose and of the circumstances which conditioned its making, endeavor to ascertain what they intended to agree to do, upon what sense and meaning of the terms they used their minds actually met. Accumulator Co. v. Dubuque St. Ry. Co., 12 C. C. A. 37, 41, 42, 64 Fed. 70, 74; Salt Lake City v. Smith, 104 Fed. 457, 462, 43 C. C. A. 637, 613; Fitzgerald v. First National Bank, 52 C. C. A. 276, 281, 114 Fed. 474, 482.
That intention must be deduced, not from specific provisions or fragmentary parts of the instrument, but from the entire agreement, because the intent is not evidenced by any part or stipulation of it, nor by the instrument without any part or provision, but by every part and term so construed, if possible, as to be consistent with every other part and with the entire agreement. Jacobs v. Spalding, 71 Wis. 177, 188, 36 N. W. 608; Boardman v. Reed, 6 Pet. 328, 8 L. Ed. 415; Canal Co. v. Hill, 15 Wall. 94, 21 L. Ed. 64; O'Brien v. Miller, 168 U. S. 287, 297, 18 Sup. Ct. 140, 42 L. Ed. 469; Pressed Steel Car Co. v. Eastern Ry. Co., 57 C. C. A. 635, 637, 121 Fed. 609, 611; Uinta Tunnel, etc., Co. v. Ajax Gold Min. Co., 141 Fed. 563, 73 C. C. A. 35; U. S. Fidelity & G. Co. v. Board of Com’rs (C. C. A.) 145 Fed. 144, 148.
Where the language of an agreement is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that the contract is fairly susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would
not be likely to enter into, the interpretation which makes it a rational and probable agreement must be preferred to that which makes it an unusual, unfair, or improbable contract. Pressed Steel Car Co. v. Eastern Ry. Co., 57 C. C. A. 635, 637, 121 Fed. 609, 611; Coghlan v. Stetson (C. C.) 19 Fed. 727, 729; Jacobs v. Spalding, 71 Wis. 177, 186, 36 N. W. 608; Russell v. Allerton, 108 N. Y. 288, 292, 15 N. E. 391.
The intention of the parties when manifest, or when ascertained from the written agreement in accordance with the basic rules of interpretation, must control and be enforced without regard to inapt expressions and technical rules of interpretation, unless that intention is
tly contrary to the plain sense of the binding words of the agreement. Prentice v. Duluth, etc., Forwarding Co., 7 C. C. A. 293, 298, 58 Fed. 437, 443; Westervelt v. Mohrenstecher, 22 C. C. A. 93, 95, 76 Fed. 118, 121; Tillitt v. Mann, 104 Fed. 421, 424, 43 C. C. A. 617, 619; Salt Lake City v. Smith, 43 C. C. A. 637, 643, 644, 104 Fed. 457, 462; Uinta Tunnel, etc., Co. v. Ajax Gold Min. Co., 141 Fed. 563, 567, 73 C. C. A. 35; U. S. Fidelity & G. Co. v. Board of Com’rs (C. C. A.) 145 Fed. 144, 148; Witt v. Railway Co., 38 Minn. 122, 127, 35 N. W. 862; Driscoll v. Green, 59 N. H. 101; Johnson v. Simpson, 36 N. H. 91; Walsh v. Hill, 38 Cal. 481, 486, 487.
When this lease was made, the lessees were seeking the use and occupation of the hotel owned by the investment company, and the latter was trying to obtain compensation for that use.
The purpose of the lease was to record the extent to which each of these parties attained the object it sought. The investment company clearly agreed to grant the use and occupation, and the lessees plainly covenanted to put a heating plant and plumbing in the hotel in part payment for their use of these premises. These parties necessarily intended to provide by these stipulations that either the investment company or the lessees should pay for the labor and material necessary to make these improvements. The inference that they intended or agreed to defraud laborers or materialmen out of the value of their work or property is inadmissible. It is a settled rule of law that a lessee may not make repairs at the expense of the lessor unless there is a special agreement between them that he may do so (Sheets v. Selden, 7 Wall. 416, 423, 19 L. Ed. 166; Mumford v. Brown, 6 Cow. [N. Y.] 475, 16 Am. Dec. 440), and there was no such agreement here.
An agreement that the lessees should pay for the improvements which they agreed to give as rent for the premises is fair, rational, and such an agreement as prudent men would naturally make, while a contract that the lessor should pay for them is unreasonable, unfair, absurd, one that reasonable men would not be likely to enter into.
The maxim, “Noscitur a sociis," points in the same direction. The promise to put the steam heating plant and the new plumbing in the hotel is found in the covenants of the lessees among those things for which they promised to pay in lieu of a fixed rental, to wit, the taxes, the premiums on insurance, repainting, repapering, changing skylight, relaying tiling, recarpeting, furnishing an electric dynamo and an electric light plant, rewiring, constructing a stone curbing, repairing the
annex, renewing the sidewalk, grating the area ways, and making, as the lease reads, “what other improvements are needed in and about the hotel so that it may be first class in every respect—all work and material to be of its kind first class, and to keep the said hotel, annex, mineral well, the furniture and equipment in good repair at their own expense, paying the water rates and all license fees incident to the running of said property.” As the evident meaning of these covenants was that the lessees should pay the taxes, the premiums, and for the other improvements and repairs they agreed to make, these covenants must have signified that the lessees should also pay for the plumbing and the heating plant which are associated with the other improvements in them.
The stipulation in the lease for the bond to secure performance on the part of the lessees confirms this view. The argument of counsel that that portion of this stipulation which promises a bond conditioned that the lessees shall pay for the work and material demonstrates the fact that they did not otherwise undertake to pay therefor proves too much. The stipulation requires a bond to secure the performance of all the obligations of the lessees under the lease, and also their payment for the work and material. If the stipulation for a bond for the payment for the work and material proves that they had assumed no obligation by the lease to pay for them, then by the same mark the stipulation for the bond for the performance of all their obligations under the lease proves that they had never incurred any obligations thereunder. This provision of the bond is for security for the performance of the obligations assumed by the lessees by virtue of the other provisions of the lease, and it carries in itself persuasive evidence that by those other provisions the lessees had agreed to pay for this work and material because it promised the bond to secure this payment, “to the end that no liens shall be placed against the property by any creditor of the lessees.” If the lessor was to pay for this labor and material and the lessees were not, there would be no creditor of the lessees on account of them.
The situation and surrounding circumstances of the parties to this lease at the time of its execution, the purpose of the writing and of the parties who signed it, the entire body of the agreement and all its stipulations considered together, the fact that the promise to furnish the heating plant and the plumbing is found in the covenants of the lessees to do other things for which they were unquestionably to pay, the object of this promise, to wit, to compensate the lessor for the use of the premises in lieu of rent, the fact that this object may not be attained by an interpretation that the lessor itself was to pay for these improvements, that such an interpretation makes the contract irrational, improbable, unfair, absurd, while the construction that it expressed the promise of the lessees to pay for the improvements they agreed to furnish renders the agreement reasonable, equitable, probable, and such as prudent men would naturally make, and the fact that this meaning is consistent with every term of the lease—these considerations converge with compelling force to convince that the parties to this lease intended to agree, and did contract thereby, that the lessees should pay for the heating plant and plumbing which they covenanted • to furnish as a part of their rent, and that the lease, properly inter
preted, clearly expresses that agreement. The conclusion is that the true intent and meaning of the express terms of the lease is that the lessees agreed to pay for the heating plant and the plumbing which they covenanted to furnish to the lessor in lieu of rent. And, as the surety by its bond guarantied the performance of all the obligations which its principals assumed by the lease, it guarantied the performance of this obligation, and it was liable for the payment necessary to discharge the lien which occasioned this controversy.
Since the result is that a proper construction of the lease and bond discloses an express agreement therein by the lessees and the surety to pay for the heating plant and the plumbing to the extent necessary to discharge the property of the lessor of liens therefor, the arguments of counsel against the implication of such a stipulation become immaterial, and it is unnecessary to consider them farther. The question in this case is not a question of implication, but of construction, and the lessees and the surety were liable to pay for the discharge of the lien in controversy by the express terms of their contracts, legally interpreted.
The allowance of $107.60 which the lessor paid to relieve the carpeting in the hotel, which the lessees had laid in pursuance of their covenant in the lease, from a mortgage for its purchase price, was right, for the same reasons that sustain the allowance of the item of $5,175 and interest, which has been considered.
The lease was terminated by the surrender on December 27, 1904.
The lien for the $5,175 had been fastened upon the property as early as December 1, 1903, but the contractor had claimed in his recorded statement several thousand dollars in excess of this sum which the court on January 1, 1905, decreed to him, and his suit to foreclose the lien was pending when the surrender occurred.
The taxes for the year 1904, $2,279.31, were levied in that year and thereupon became a lien upon the property, but they were "due and payable, one-half on or before the last day of February, and the remainder on or before the last day of July of the year” 1905. 3 Mills' Ann. St. Rev. Supp. § 3802. The covenant of the lease was to pay these taxes “at the times the same shall become due and payable. Counsel for the surety objects to the allowance of either of these items on the ground that the claims for them had not matured and become actionable when the lease was terminated.
The termination of a lease during its term by surrender, by re-entry, or by eviction, without more, discharges the lessee from liability for rents that have not accrued, but leaves him liable for all the rents which have accrued and become due, and for the performance of all covenants whose fulfillment is due. The liability of the lessees and of the surety for the $5,175 accrued, and the performance of the covenant to pay it and to discharge the lien, was due when that lien was fastened upon the property more than a year before the surrender occurred, and therefore they were not relieved from this liability by the subsequent termination of the lease. The liability of a tenant for rent