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steadfastly maintained throughout the pro- in the business is not material. Whatever ceedings.

the amount of it may have been, it will go to defendants, as they are to have everything which remains in the business, after making payment of the amount which has been found to be due to plaintiff or to his legal representatives.

ants, with the statement that it was an amount due from the Philadelphia Toboggan Company, for which plaintiff would look to that company for payment. The reason for this finding is not apparent, but plaintiff has

[3, 4] On behalf of complainant it was strongly contended before the master, that Chester E. Albright, Jr., the present appellant, was not entitled to compensation for services rendered either before or after April 5, 1907. The master held, however, that In the account, an item of $15,524.35 was while he was not entitled to compensation for deducted from the balance due from defendservices after that date, yet the circumstances all indicated that he was an employé of complainant before that time, and was therefore entitled to compensation for services then rendered. He reached the conclusion that a fair measure of such compensa- not complained of it. Counsel for appellant tion would be one-third of the net profits earned in the business during that period, and, as such, allowed him credit for the sum of $29,897.40. This amount was deducted from the amount of the net profits found to be in the hands of defendants, and with which they were charged, up to April 5, 1907. Adding the profits for subsequent years until January 31, 1911, and interest thereon until that date, the master found that defendants were indebted to plaintiff, or to his legal representatives, in the sum of $45,899.56, and the court in its final decree directed that sum, with interest, to be paid by defendants to plaintiff's executors, on the transfer by them to defendants of all the property and assets of the Albright Purse Company.

suggest, however, that the deduction should have been made as of April 5, 1907, with a corresponding saving of interest. Upon the face of it, this objection seems to be well taken. But counsel for appellees reply that as to this item the master took his figures from the report of the experts which was agreed upon by both sides, and that the sum deducted included interest up to January 31, 1911. As the schedule in which this matter appears was not printed, we do not have it before us. Furthermore there was no specific exception, or assignment of error, which raised the question that appellant was charged with too much interest because this item was not credited sooner. Counsel for appellees also point out that other questions raised by In the second group of assignments, counsel appellant depend, in part at least, on the requestion the accuracy of the master's find- port of the expert accountants, which was ofing as to the amount of the credit which was fered in evidence, but which is not printed by allowed to appellant for services rendered in appellant. We think the point is well taken. the care and management of the business In the absence of this documentary evidence, prior to April 5, 1907, and incidentally, they as well as other evidence to which reference question the finding as to the amount of the is made, the contention that the master erred decree against defendants. But the findings in his calculations cannot properly be conof the master in these respects are findings sidered here. We will not undertake to reof fact, which have been confirmed by the verse the master and the court below, as to court below, and no clear error has been findings of fact, without having before us all shown. The argument of counsel for appel- the evidence, in these particular respects, lant seems to imply the fact of an accounting which was before them. The decree of the to him, for his share of the profits in the busi- court below deals most considerately with the ness. That was not the purpose of the ac- defendants. With the consent of complaincounting. It was ordered to be made by deant, it gives them, upon payment to the esfendants to the plaintiff. He was entitled to the net profits of the business, which had been retained by defendants and in ascertaining the amount of these profits a fair deduction was made for the services of appellant. The inquiry was not in any sense directed to ascertaining what appellant had done with the share of the profits which was allowed to him as compensation for services. Whether he withdrew it, or left it in the business, was not material to the inquiry being made. That question might have been important had plaintiff insisted upon the clear right which he had to take back the business; but, as he relinquished that right, the question as to what appellant may have invested lant.

tate of plaintiff, of the amount ascertained as the net profits for the period in question, all the assets and good will of the business. This was conceding to defendants much more than was their strict legal right, under the previous findings of the court. But as the master said, in recommending the form of decree which was entered, the proposition which was submitted by counsel for complainant, in response to a friendly suggestion by the court below, does substantial justice between the parties to this difficult case.

The assignments of error are all overruled, the decree of the court below is affirmed, and this appeal is dismissed, at the cost of appel

(255 Pa. 112)

from any pecuniary loss resulting from the

conditions of the said contract on the part of said principal to be performed."

W. H. HOFFMAN CO. v. TITLE GUARAN- breach of any of the terms, covenants and TY & SURETY CO. (Supreme Court of Pennsylvania. Oct. 2, 1916.) 1. PRINCIPAL AND SURETY 82(1) BUILDING CONTRACTOR'S BOND-ACTIONS.

The bond of a subcontractor who defaulted and caused the general contractor to default was conditioned to protect the general contractor from pecuniary loss. The owner by making payments to materialmen for work performed acquired a cause of action against the general contractor, but the financial condition of the general contractor was such that a judgment against it if obtained probably could not be collected. Held, that there could be no recovery by the general contractor on the bond, no pecuniary loss being shown.

[Ed. Note.-For other cases, see Principal and Surety, Cent. Dig. § 127; Dec. Dig. 82(1).]

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2. PRINCIPAL AND SURETY 82(2) BUILDING CONTRACTOR'S BOND-Default. Where the default of a subcontractor caused the general contractor to default so that the work was not completed and it did not receive commissions to which it would be entitled on completion, there can be no recovery on the subcontractor's bond conditioned to protect the general contractor from pecuniary loss without proof as to what extent the general contractor would have profited had the subcontractor performed and the building been completed.

PERFORMANCE

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[Ed. Note.-For other cases, see Principal and Surety, Cent. Dig. § 127; Dec. Dig. 82(2).] 3. PRINCIPAL AND SURETY —➡82(2) BUILDING CONTRACTOR'S BOND DEFAULTS. In such case where the general contractor assigned his claim to the owner and sued for the owner's use, no recovery could be had on account of the subcontractor's default; the cost of finishing the work having exceeded the contract price without proof as to what proportion of the excess cost was due to the subcontractor's de fault.

[Ed. Note. For other cases, see Principal and Surety, Cent. Dig. § 127; Dec. Dig. 82(2).] Moschzisker and Potter, JJ., dissenting.

Appeal from Court of Common Pleas, Philadelphia County.

Action by the W. H. Hoffman Company, to the use of George H. Earle, Jr., and others, against the Title Guaranty & Surety Company. From a final order denying a motion to take off nonsuit, plaintiff appeals. Affirmed.

Argued before BROWN, C. J., and MESTREZAT, POTTER, STEWART, MOSCHZISKER, FRAZER, and WALLING, JJ.

Morris Wolf, George H. Earle, Jr., and Horace Stern, all of Philadelphia, for appellant. R. Stuart Smith, John W. Graham, Jr., and Charles E. Morgan, all of Philadelphia, for appellee.

FRAZER, J. The William H. Hoffman Company, contractor, sues to the use of its surety, the Massachusetts Bonding & Insurance Company, and George H. Earle, Jr., and James F. Sullivan, owners, against defendant as surety on the bond of McGavern & Lytle, subcontractors, conditioned to "indemnify and save harmless the said obligee

On August 25, 1911, Earle and Sullivan, owners of a lot of ground in New York, entered into a contract with the Hoffman Company by which the latter agreed to erect and complete, on the New York property, on or before December 24, 1911, a moving picture theater, at a sum not to exceed $63,020 for a compensation of 8 per cent. of the maximum cost plus one-third the amount saved on that cost and to furnish the owners a bond in the sum of $30,000 conditioned for the faithful performance of the contract. On August 22, 1911, three days before the contract with Earle and Sullivan was signed. but in contemplation of its execution, the Hoffman Company entered into a subcontract with McGavern & Lytle, by which the latter agreed to do the excavating, structural, and carpenter work on the building for a consideration therein specified and complete their contract not later than December 1, 1911. The Hoffman Company procured the Massachusetts Bonding & Insurance Company as surety on its bond to the owners, but before this bond was executed the Massachusetts Company required McGavern & Lytle to furnish a bond with surety to the Hoffman Company for the completion of the work as per their contract. In accordance with this requirement at the time of executing the subcontract with McGavern & Lytle, the latter gave to the Hoffman Company a bond with defendant as surety, containing the conditions above recited, and on which bond the present action is founded.

McGavern & Lytle failed to prosecute the work with proper diligence, and finally, in November, 1911, because of lack of funds, abandoned the contract. Notice that the work was not proceeding as per contract was given by the Hoffman Company to defendant November 27, 1911. Following this action a number of conferences were held between the Hoffman Company and defendant as surety with a view to arrange for completing the work, defendant ultimately notifying the Hoffman Company it would do nothing further, and denying all liability for expense inIn the curred in completing the work. meantime the Hoffman Company also became financially involved, by reason of the loss sustained in connection with the work and was unable to proceed to complete the contract, and, as a result of such default its surety, the Massachusetts Company, settled with the owners of the theater for the sum of $7,500, a sum alleged to be less than the damages the company would eventually become liable for under its bond by reason of noncompletion of the premises. To secure the finishing of the building the owners entered into a new contract with another firm

to whom they were obliged to pay the sum of $2,000 in excess of the amount called for in their original contract. In addition to this sum there were unpaid claims of subcontractors amounting to $2,498.50 the owners were obliged to pay before the work on the building could be resumed under the new contract. The Hoffman Company brought this action for the use of the owners and the Massachusetts Bonding & Surety Company to recover the above amount, and, by subsequent amendment to the statement of claim, included the sum of $5,041.60, alleged loss of the Hoffman Company as the minimum profit or commission which it would have earned had McGavern & Lytle performed their contract. The trial judge sustained objection to offers to prove the various items of loss and entered a nonsuit on the ground that, as none of these items claimed in the original statement had been paid by the Hoffman Company, it had suffered no pecuniary loss within the meaning of that term as used in the bond, and, as the contract was never in fact carried out but a new one made with a new contractor, the Hoffman Company had no right against defendant for loss alleged to have been sustained by reason of unearned commissions or compensation.

court, and our ruling there is applicable to the present case. It was there held a judgment obtained against a mortgagor for a deficiency in the proceeds of foreclosure proceedings on land conveyed under and subject to the mortgage cannot be made the basis of recovery against the grantee of the land on his implied covenant for indemnity without showing payment of the judgment, or that an actual loss had been sustained. After stating the question before the court to be whether the plaintiff, who had neither paid the judgment nor shown other loss, could maintain the action, it was said by this court:

"Any apparent want of harmony in the decisions as to the right of a party indemnified to recover without proof of loss by the payment of the debt or otherwise disappears when the nature of the undertaking is considered and the distinction between an obligation to do a specified thing and one of indemnity against loss resulting from nonperformance is observed. Where the indemnity is against liability there is a right of recovery as soon as a liability is incurred; where it is against loss by reason of liability there is no right of recovery until a loss occurs."

Under this decision the court below was right in holding that no pecuniary loss on the part of the Hoffman Company had been shown.

[1] The three items of damages claimed in [2, 3] The amended statement claims $5,the original statement are sums paid out not by the Hoffman Company, the obligee in 041.60 alleged loss in commissions, sustained the bond. but by Earle and Sullivan, the by the Hoffman Company by reason of failure owners, and by the Hoffman Company's own of defendant's principal to carry out its consurety. No action was instituted on these tract which resulted in preventing the Hoffclaims against the Hoffman Company, and, man Company from completing its work. from the evidence as to its financial condi- The obstacle to this claim is the absence of tion, it does not appear that a judgment evidence tending to show to what extent the against it, if obtained, could be collected. A Hoffman Company would have realized profdiscussion as to whether these items were its had the building been fully completed una proper measure of damage for the breach der its contract. That company never comof contract by defendant's principal is un- pleted the work it contracted to do, but, on necessary. Assuming, however, they were a the contrary, abandoned it entirely necessinatural result to be anticipated by the par- tating a new contract between the owners ties as a consequence of the breach of con- and third persons. True, it claims the maktract, it does not appear the Hoffman Com-ing of the new contract was due to the depany has suffered "pecuniary loss" in the fault of McGavern & Lytle; assuming this matter. That company has paid nothing on to be correct and that the loss of profits its own account, and while its liability ex- would be the proper measure of damage, ists for the amounts paid by others in its what evidence have we from which the behalf, defendant has not undertaken to amount of such profits may be ascertained? indemnify against liability. Its contract is As in other matters, loss of profits must be one of indemnity against actual pecuniary shown with sufficient definiteness and cerloss, and the mere incurring of liability does tainty to warrant the jury in estimating their not give rise to a cause of action. The ex- extent and in absence of such proof as in Wilson v. isting indebtedness of the Hoffman Company this case, they will be rejected. may never be paid or enforced by the claim- Wernwag, 217 Pa. 82, 66 Atl. 242, 10 Ann. ants, or their claims may be compromised Cas. 649. The contract between the Hoffman for a considerably less amount than the face Company and the owners contains a proviof the obligations. In the former case no sion limiting the maximum amount of the loss is sustained, and in the latter the loss owner's liability to the sum of $63,020. The would be measured not by the extent of the liability of the owners was thus confined to obligation, but by the amount paid in settle the sum stated plus 8 per cent. as a commisment. In the case of Faulkner v. McHenry, sion or compensation to the contractor. If, 235 Pa. 298, 300, 83 Atl. 827, 828 (Ann. Cas. for any reason, the inability of the contractor 1913D, 1151), the distinction between in- to complete the undertaking for the sum statdemnity against liability and indemnity ed arose, he was still entitled to his commis

over and above the sum of $63,020 which | must be borne by him and would to that extent reduce his profit under the percentage clause, and, if the excess reached the sum of the commission provided for, his profit would be entirely eliminated. The measure of his loss of profits cannot therefore be determined until his contract is fully completed or he has at least offered proof that the completion of the building within the contract price was reasonably certain.

The case in question was properly decided, and the governing principle correctly stated; but, as before said, it is not analogous to the one at bar.

In Faulkner v. McHenry, if there had been a surety for the grantor, to the holder of the mortgage, and such surety had paid the judgment on his principal's account, then the cases would have been practically analogous; and, on such a state of facts, it could not have been said the grantor had merely incurred a liability, but had suffered no loss.

The amended statement of claim avers the loss of the $5,041.60 by reason of defendant's In other words, had the circumstances in default, but at the same time avers the addi- the Faulkner Case been as just suggested, it, tional cost to the owner of finishing the work like the present case, would have been an was $5,730. The proportion of this cost due instance where the plaintiff had not merely to the subcontractor's default and the amount suffered a liability by the entry of a judgdue to other causes do not appear. The offer ment against him, but where, through his of evidence on this point is also devoid of any-surety, he had actually paid the judgment thing tending to show the amount, if any, of and thereby incurred a loss which entitled the net profits the work would have realized him to sue and recover on the indemnity to plaintiff. Had he completed the contract covenant in his favor. Under such circuminstead of abandoning it altogether, his loss stances, the mere fact that the surety, inwould be readily ascertainable. In view of stead of the principal, had paid the judgthe course adopted it would seem he volun-ment, and the latter had thereby incurred a tarily relinquished the only practical method of determining the amount of loss. The judgment is affirmed.

MOSCHZISKER, J. (dissenting). It seems to me, to deny the plaintiffs a right of recovery on the ground that, under the circumstances at bar, the Hoffman Company incurred no loss, is not only wrong in law, but not required on principle or by the authority cited. Faulkner v. McHenry, 235 Pa. 298, 83 Atl. 827, Ann. Cas. 1913D, 1151, is not in any sense analogous to the present case. There a grantor of real estate created a bond and mortgage, and the grantee contracted to indemnify him against loss by reason thereof; a judgment was entered against the grantor for part of the mortgage debt, whereupon he instituted suit against the grantee on the contract of indemnity. We held that the grantor had no right of recovery until the judgment was paid, on the ground that, where the covenant for indemnity is against loss, there can be no recovery until an actual loss accrues, saying:

"Where the contract is strictly one of indemnity the indemnitee cannot recover until he has suffered actual loss or damage; the mere incurring of liability gives him no such right."

liability to the former, would not properly enter into a subsequent case between the grantor and the grantee on the latter's contract of indemnity, any more than if a friend of the grantor's had loaned him the money with which to make the payment, and he had thereby incurred a liability to his friend; for, in such an action, an inquiry into that liability would be entirely irrelevant.

In my opinion, we should view the case at bar as though the surety had handed the $7,500 to the Hoffman Company, and the latter had paid Earle and Sullivan that amount, and thereby incurred a loss. The mere fact that the surety, instead of handing over the money, paid it for the Hoffman Company's account, does not alter the situation; that is to say, this is not a case where the Hoffman Company has merely incurred a liability to Earle and Sullivan, but where, through its surety to whom it is liable, the Hoffman Company has actually paid its debt to Earle and Sullivan and thereby suffered a loss.

For the reasons stated, I cannot concur in the majority opinion, and therefore mark my dissent.

POTTER, J., Joins in this dissent.

(91 Vt. 83)

STANYAN v. SECURITY MUT. LIFE
INS. CO.

(Supreme Court of Vermont. Washington.
Jan. 3, 1917.)

H. C. Shurtleff, of Montpelier, for plaintiff. Edward H. Deavitt, of Montpelier, for defendant.

POWERS, J. [1] At the time of his death, Lyman Ramsay, of Wentworth, N. H., was 1. INSURANCE 292-WARRANTY-FAILURE carrying a policy in the defendant company TO FILL BLANK.

Where the printed form of an application for reinstatement contained a warranty that the insured had not received or required the services or advice of a physician since the date of his last payment, except, followed by a blank space, the writing in of three irregular marks in that space, was not equivalent to a statement that the insured had received no services from a physician, but was rather a refusal to answer the question completely, objection to which waived by the company's not insisting on a full

answer.

was

[Ed. Note.-For other cases, see Insurance, Cent. Dig. §§ 691, 692; Dec. Dig. 292.] 2. INSURANCE 365(1) POLICIES STRUCTION AGAINST COMPANY.

CON

An application for reinstatement of life insurance on a form prepared by the company must be construed against the company.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. § 932; Dec. Dig. 365(1).] 3. INSURANCE 291(3)- WARRANTY-CON

STRUCTION-GOOD FAITH.

In a warranty contained in an application for reinstatement, providing that the insured is to the best of his knowledge and belief free from any symptoms of disease and that there was no condition of his person or occupation tending to impair his health, the qualifying phrases as to knowledge and belief applies to the whole warranty, so that a condition impairing his health, not shown to have been known to him, does not avoid the policy.

[Ed. Note. For other cases, see Insurance, Cent. Dig. §§ 685, 686; Dec. Dig. 291(3).]

4. INSURANCE 646(3)—ACTIONS ON POLICY -BURDEN OF PROOF-WARRANTY.

To defeat a policy for breach of warranty that insured, when reinstated, was not in good health to the best of his knowledge and belief, the burden is on the company to show want of honesty and good faith of the insured in making the warranty.

[Ed. Note. For other cases, see Insurance, Cent. Dig. § 1653; Dec. Dig. 646(3).]

5. INSURANCE 365(1)-POLICY-CONSTRUCTION-UNDERSTANDING OF THE PARTIES.

An application for reinstatement of a life insurance policy must be construed in the sense intended by the parties, and the phrases and sentences given the meaning understood by them, though susceptible of a different meaning, and, in determining such meaning, consideration is to be given to the character and subject-matter of the statement and the end to be accomplished by it.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. § 932; Dec. Dig. 365(1).]

Exceptions from Washington County Court; Fred M. Butler, Judge.

Assumpsit by Annie W. Stanyan against the Security Mutual Life Insurance Company. Judgment for the plaintiff, and defendant excepts. Affirmed.

Argued before MUNSON, C. J., and WATSON, HASELTON, POWERS, and TAYLOR, JJ.

for the benefit of the plaintiff. This policy had been allowed to lapse on account of the nonpayment of premiums due in January and April, 1909, but it was reinstated under an application dated June 19, 1909. This application was signed by Ramsay, and read in part as follows:

"I hereby request that I may be restored to membership in said company and that the abovementioned sum be accepted in payment of my premium now past due, and as a condition of the same being accepted and my membership restored, and policy again put in force, I hereby warrant and declare that I have not received nor required the services or advice of any physician since the date of my last payment to said company, except.

"

After this word "except," there is a blank in the printed form used, in which three irregular marks appear, made with a pen, presumably at the time the application was filled out.

The defendant moved for a verdict, and the first question for our consideration arises under this clause of the application. That this statement, whatever it may turn out to be when properly construed, amounts to a warranty, which if untrue avoids the policy, is practically conceded by the plaintiff; so we proceed at once to the question of its scope and effect.

[2] It was held in Billings v. Metropolitan. Life Ins. Co., 70 Vt. 477, 41 Atl. 516, that the omission to answer a question in an application for insurance is not a warranty that there is nothing to answer, and that, in case of a partial answer, the warranty cannot be extended beyond the answer actually given. This rule, the logic of which is obvious, would require us to hold that, if the blank after the word "except" had been left wholly unfilled, there would have been no warranty that there was no exception to record. The defendant recognizes this, and insists that the insertion of the three irregular marks turns what would otherwise be nothing into an express negation. But an unbending rule requires us to construe the application against the company, and we cannot say that, as matter of law, these shapeless characters, which have no meaning of their own, are here equivalent to the words, "None," "No exception," or any such expression. On the contrary, the only meaning which they have or convey is that the exception contained in the answer is noted by the applicant and left unanswered. Manhattan Life Ins. Co. v. Willis, 60 Fed. 236, 8 C. C. A. 594, is directly in point. There the blanks left after certain questions in the application were left unfilled, except that

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