Brief in Opposition to Petition for A Writ of Certiorari — Prudence Co. v. Fidelity & Deposit Co. of Md.

_FILE COPY _

_—"

Supreme Court of the United States

October Term, 1935

: No. 270

THE PRUDENCE Company, INc.,

Petitioner,

against

FEO EM Re TRB RRR cae rates tt act eg one

SR See ee ee Ee NT

| ;

| Fmeuity & Deposrr Company oF Mary-

LAND and AMERICAN BonpING COMPANY

oF BALTIMORE,

Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION TO THE t

PETITION F OR A W OF CERTIORARI. '

/ Joun W. Davis, }

JosepH F. Murray, E

Txomas KE. Waite, §

Counsel for Respondents. :

4

‘

Gg,

SUBJECT INDEX

Statement of Facts Bi ios teccageadanpinl

As to the Alleged Reasons for Granting a Writ —......

ies ot Aree

" Argument “ , bie.

‘% Answering Point 4.

A. The decisions of Trainor v. Aetna Cas.

Co., 290 U. S. 47, and Kidd. v. McCormick, 83

N. Y. 391, do not warrant the allowance of in-

terest on a mortgage, taxes and insurance pre- |

‘“miums as damages caused by the failure to

complete a building:

- B. Interest on the mortgage loan and taxes

and insurance premiums are not recoverable as

damages from the respondents, because the only

default claimed against the respondents, failure

‘ to complete the building, was not a cause, either

direct, natural, proximate, concurring or other-

wise, of the loss by petitioner, but the sole, direct,

: natural and proximate cause of such.loss was

the default of the principal debtor on. the

mortgage is

C. Interest on the mortgage loan as dam-

ages is not recoverable from the respondents

because they assumed no obligation as to the

principal of the loan, and interest as damages

cannot be recovered apart from the principal...

II. Answering Point II. The respondents were not -

liable by contract for interest on the mortgage,

taxes and premiums, because their bond did not

guarantee the payment of such items. The

ITI.

IV.

_

respondents’ sole obligation was to make good

any default of their principal in constructing,

paying for and completing the building _.___

Answering Point III. Whether the respondents

were liable for interest on mortgage, taxes and

insurance premiums was ‘a question of law de-

terminable from a construction of -the respon-

dent’s bond, and the Trial Court made no finding

of fact in respect thereof.

Answering Point IV. The Circuit Court of Ap-

peals was not confused in its holding that the

provision in the bond for written waiver of strict

performance of the building loan ‘agreement

-could be waived by the parol consent of the

president of the petitioner to omissions and

substitutions -

Answering Point V. A provision in an instru.

PAGE

15

20

22

. 29

27

V.

ment requiring a written waiver may be waived

by parol, and the excluded evidence tended to

show such waiver

VI. The Circuit Court of Appeals was correct in

ordering a new trial.

Conclusion

Barnes v. Brown, 130 N. Y. 372, 381

Cases Cited.

Beatty v. Guggenheim Exploration Co., 225 N. Y. 380,

. 387

Bere v. Erie R. R. Co., 225 N. Y. 543, 546

Brady. v. Mayor, 14 App. Div. 152___..-. ae

Brewster v. Wakefield, 22 How. 118

28

13

25

20

14

14

ill

~

~

PAGE

- Cohens v. Virginia, 6 Wheat.'264, 399.____ 10

Comey v. United Surety; 217 N: Y. %6____________.... —

Cutter v. Mayor, 92 N. Y. 166, 170. 13

Dillon v. Barnard, 21 Wall. 430, 437 21

Finck v. Menke, 31 Mise. 748 13

General Electric Co. v. National Contracting Co., 178

- N.Y. 369, 375 - 26

Hamilton v. siemail. ete. Ins. Co., 136 U. 8. 242. 21

Hamilton v. Van Rensselaer, 43 N. Y, 244 : 14

Holden v. Trust Co., 100 U. S. 72. 14

Insurance Co. v. Norton, 96 U. S. 234, 240. 26

Kidd v. McCormick, 83 N. Y. 391.-.....-----------.--.---- 4, 5, 6, 8,9

Laidlaw v. Sage, 158 N. Y. 73, 98-102._.___-_-_--------.-------- 12

Langley v. Rouss, 185 N. Y. 201 _......-------- P 26.

Longfellow v. McGregor, 61 Be Hi cichecsinens ssiolasacnsvemahe 10

Matter of Hermance, 71 N. Y. 481, 487_......-..------------— 20

Matter of Trustees, 137 N. Y. 95, 98. 13 &§

McCauslan v. Zoar Holding Co.,.13] Misc. 148, 150.12, 18 §

Melick v. Knox, 44 N. Y. 676 _2...........------ 14

Milwaukee, etc., Ry. Co. v. Kellogg, 94 U. S..469, 475... 12

Northern Assurance Co. v. Grand View ete. Assn., 183

U. S. 808, 352, 361. , 26

O’Brien v. Young, 95 N. Y. 428 me ea ee 14

Pacific Co. v. Peterson, 278 U. S. 130, 136... 10

People v. Tax’ Commissioners, 174 N. Y. 417, 447_-- 10

Phillipe v. Curran, 218 Ill. App. 517- : 10

Province Securities Corp. v. Maryland Cas. Co., 269

' Mass. 75, 94 , 10, 15, 18

Smith v. Molleson, 148 N. Y. 241, 246-: 18

Southern Cent. R. R. Co: v. Moravia, 61: Barb. 180,188. 14

Steen v. Niagara Fire Ins. Co., 89 N. Y. 316, 327. 26

Swift v. iii Valley R. Co., 243 U.S. 281, 239 21

Teer v. George A. Fuller Co., 30 F. (2d) 30, 32... ro 26

Trainor Co. v. Aetna Casualty Co., 290 U.S. 47_..4, 5, 6,8,

9, 10, 18

‘United Real Estate Co: v. McDonald, 140 Mo. 605.10, 15, 18

Wakeman v. Wheeler, 101 N. Y. 205, 209... dD

Authorities =

et ee ee 13

Sutherland on Damages (4th Ed.), Secs. 300, 372... 13

Sutherland on Damages (4th Ed.), See. 725. i

Supreme Court of the United States

October Term, 1935 —

sa No. 270

“9

Tur PrupeNcE Company, Inc.,

Petitioner,

against

Froetity & Derostr Company or Mary-

LAND and AMERICAN Bonpina CoMPANY

or BALTIMORE,

( Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION TO THE

PETITION FOR A WRIT OF CERTIORARI.

Statement of Facts.

The statement of facts contained in the petition does

not contain certain material facts which are necessary to a

determination of the questions presented. For that reason,

we supplement the statement contained in the petition with

the following facts. *

The building loan agreement provided for the delivery

to petitioner of a bond and mortgage in the sum of

$6,650,000, which was to mature on Decémber 16, 1930,

on the same date fixed for the completion of the building, .

and this bond and mortgage was executed and delivered

(R. pp. 569, 592, 678).

2

Nowhere in respondents’ bond is there any provision

guaranteeing the performance of the provisions of the bond

and mortgage. Respondents’ bond guaranteed only the

performance of the provisions of the building loan agree-

ment (R. p. 596).

At the same time that respondents’ bond for the com-

pletion of the building was furnished, the petitioner re-

ceived from a third party, Lefcourt, pursuant to the

provisions of the building loan agreement, a guaranty of

performance of all the terms, conditions and covenants of

the bond and mortgage, including the payment of the prin-

cipal sum and interest (R. pp. 571, 679, 680).

On the date fixed for the completion of the building and

the satisfaction of the mortgage, there was a default on the

bond and mortgage (R. pp. 19, 722). Because of such de-

fault, a foreclosure action was started by petitioner two

days later, on December 18, 1930 (R. p. 19). On or about

January 6, 1931, the borrower signed an agreement giving -

the petitioner possession of the premises (R. p. 725). Judg-:

ment of foreclosure and sale was made and entered on |

January 19, 1931 (R. p. 19). The property was sold for |

$6,000,000 on March 17, 1931 (R. pp. 19, 20). A deficiency .

judgment was entered on April 3, 1934 (R. p. 20). _

The petitioner claimed the building was actually com-

pleted on October 1, 1931. No evidence was adduced by the

petitioner to establish what would have béen a reasonable

time within which to complete the building after the default.

The respondents, however, adduced uncontradicted testi-

mony that the work done to complete the building after the |

default cottd have been done in a period of from four to

eight weeks (R. p, 436). The petitioner claimed interest, |

taxes and insurance premiums for the whole period from

the date of the default up to the date it claimed the mneeng

was actually completed (R. pp. 18, + :

*

rat

a

3

The only defaults claimed in the complaint were defaults

in constructing, paying for and completing the building

(R. pp. 13-16, Paragraphs XXI-XXVII, XXXI#). Nowhere

in’the complaint was it alleged that there was any express

obligation to pay interest on mortgage, taxes or insurance

premiums, and in claiming for such items the theory was -

that they were damages flowing from the defaults in the

completion of the building, and not from any express obli-

gation to pay them. Paragraph XXXVII of the complaint

alleged that by reason of the defaults previously mentioned,

which were defaults in completion, the plaintiff had been

deprived of interest on the principal of the loan, not that

plaintiff had been deprived of the interest because of the

failure of the respondents to comply with an obligation

to pay (R. pp: 17, 18). |

The Cireuit Court of Appeals held that the measure of

damages was the difference between the value of the

building on the date of the default and the value the building

would have had on that date if completed strictly in accor-

dance with the plans and specifications (R. p. 885). No

evidence was introduced by the petitioner to show the value

of the building on the date of the default, or what the value

would have been if the building had been completed on that

date in accordance with the plans and specifications.

The Circuit Court of. Appeals held that the items of

omissions and substitutions claimed by the petitioner might

detract from the value of the building (R. p. 882), and

that such loss might be recovered (R. p. 884). The peti-

tioner, however, introduced no evidence to show to what

extent, if any, the value of the building: had been. diminished

by such omissions and substitutions. On the other hand, —

the respondents adduced uncontradicted testimony that the

value of the building was not lessened by the items of omis-

_ sion and substitution (R. pp. 359, 376, 377, 404).

i

4

In the petition (pp. 9 and 10), the ‘petitioner speaks of

interest lost by petitioner between December 16, 1930 and

October 1, 1931 on $6,575,000. As a matter of fact, peti-

tioner did not lose interest on $6,000,000 between March 17,

1931 and October 1, 1931, because it- sold the very same

premises for $6,000,000 on March 17, 1931.

As to the Alleged Reasons for Granting a Writ.

The first reason has no substance, because the decision

of the Cireuit Court of Appeals was in exact conformity

with the decision of this Court in Trainor v. Aetna Casualty

Co., 290 U. 8. 47. The only holding of this Court in the

case mentioned is that damages were

‘‘the amount of the difference between the value of

the unfinished buildings and their Value as it would -

have been if completed in accordance with the agree- ,

ment—see Kidd v. McCormick, supra, p. 398—but

exceeding neither the amount due on its debt nor

the amount of the bond.’’

In this case the Circuit Court of Appeals’ held:

. **We think, therefore, that the measure of dam-

ages was the difference between the value of the

building on December, 16, 1930, as the work had

progreésed, and the value it would have had an that

, day if completed strictly in accordance with the plans

y and specifications’’ (R. p. 882).

The second reason’has no substance, ‘because the aed

_ sion of the Circuit Court of Appeals was in exact conformity

with the law laid down in Kidd v. McCormick, 83 N. Y.

391. In that case the Court. stated in three different places

-that the measure of damage was ‘the difference in value

5

’ between the buildings unfinished and the buildings as they

would have been if completed according to the contract.

This is the same measure of damage followed in the-Trainor

case, supra, and the same measure of damage applied in

the instant case by the Cireujt Court of Appeals.

The third reason has no substance, because the cases

cited in the petition clearly state that any damayes recover-

able must not be remote or speculative, but direct and im-

mediate and resulting from the breach alleged. The breach

here was the failure to complete a building. The damages

claimed, to wit: interest on loan, etc., were lost because of

the breach of the borrower in failing to satisfy a mortgage.

The fourth reason has no substance} because, as above

pointed out, the Cireuit Court of Appeals has followed the

decisions in Trainor v. Aetna Casualty :Co. and Kidd vy.

McCormick. ’ ~

The fifth reason has no subsfance, because there was

no finding of fact that interest, taxes and insurahce were

proper items of damage, but these items were allowed by —

the Trial Court as-a matter of law, based upon‘a mistaken

understanding of the decisions in Trainor v, Aetna Casualty

Co. and Kidd v. McCormick.

The sixth reason Has no substance, because the question

is one dependent upon the interpretation of particular in-

struments and does not involve a.question of law of general

importance, af

The seventh and eighth reasons have no substance, be-

- cause they present a question which has been passed upon

times without number, and that is whether a provision in

a written instrument providing for a written waiver may

be itself waived by parol.

The ninth reason has no substance, because the amount

involved and the length’ of .the trial are not among the

reasons laid down for granting a writ of certiorari.

Summary of Argument.

1. |

ANSWERING Pornt I.

A.

The decisions of Trainor v. Aetna Cas. Co., 290

U.S. 47, and. Kidd v. McCormick, 83 N. Y. 391, donot

' warrant the atlowance of interest on a mortgage,

taxes and insurance premiums as damages caused by

the failure to complete a building.

B.

Interest on the mortgage loan and taxes and in-

‘ surance premiums are not recoverable as damages

from the respondents, because the only default

claimed against the respondents, failure to com-

plete the building, was not a cause, either direct,

natural, proximate, concurring or otherwise, of the

loss by. petitioner, but the sole, direct, natural and

proximate cause of such loss was the default of the

principal debtor on the mortgage.

C.

Interest on the mortgage loan as damages is not

recoverable from the respondents because—they }

assumed no obligation as to the principal of the loan,

and interest as damages can not be recovered apart

from the principal.

II.

ANSWERING Pornt II.

The respondents were not liable by contract for

interest on the mortgage, taxes and premiums,

a

7

because their bond did not guarantee the payment

of such items. The respondents’ sole obligation was

to make good any default of their principal in con- .

structing, paying for and completing the building.

ITI.

ANSWERING Point ITT.

Whether the respondents were liable for interest

on mortgage, taxes and insurance premiums was a

question of law determinable from a construction of

the respondents’ bond,.and the Trial Court made no

finding of fact in respect thereof.

BV.

ANSWERING Pornt IV.

The Circuit Court of Appeals was not confused in

its holding that the provision in the bond for written

waiver of strict performance of the building loan

agreement could be waived by the parol consent of

the president of the petitioner to omissions and

substitutions.

¥.

. ANSWERING Pornt V.

A provision in an-instrument requiring a written

waiver may be waived by parol, and the excluded

. evidence tended to show such waiver.

VI.

The Circuit Court of Appeals was correct in

ordering a new trial.

ARGUMENT.

I.

Answering Point I.

oe

~

-™

The decisions. of Trainor v. Aetna Cas. Co.; 290

U. S. 47, and Kidd v. McCormick, 83 N. Y. 391, do not

warrant the allowance of interest on a mortgage, taxes

and insurance premiums as damages caused by the

-failure to complete a building.

The opposition by the respondents in the Trial Court to

the allowance of interest on the mertgage loan, taxes and

insurance premiums were summarily dismissed by the Court

in these words:

‘‘The defendants’ contention would seem ade-

quately to be disposed of under the authorities

cited.’’ (Citing the above mentioned cases) (R. p.

907).

| No authority was cited to or by the Court in which such

items had ever been allowed. The Court depended entirely

upon words used in the opinions in those two cases which

were not necessary to their decision and were inserted only

to show why the measure’of darfages laid down in those

eases and which had always been previously applied was

the correct and only measure of damages in such tases.

_ Difference in value was applied in Trainor v. Aetna, as

- the proper measure of damage, this Court saying:

. ‘*Petitioner is entitled to be put in as good posi-

tion in respect of its debt as it would have occupied if

the buildings had been completed in accordance with

9

the terms of the undertaking; and this can be done .

here only by giving it the amount of the difference

between the value of the unfinished buildings and

their value as it would have been if completed in

accordance with the agreement—see Kidd v. Mc-

Cormick, supra, p. 398—but exceeding’ neither the

amount due on its debt nor the amount of the bond.’’

In that case the plaintiff was a third mortgagee with no

‘such rights as the plaintiff here, who was a first mortgagee.

Defendant had claimed that the value of the property on

the date of default was in excess of the debt to plaintiff and

all prior liens and that, therefore, plaintiff could have suf-

fered no damage. To show why that contention was not.

sound, the Court said:

‘‘Petitioner was then- (at the default) without

remedy against the property because its mortgage

was not in default. It was, therefore, obliged to

sit by and await the action of others over which it

had no control. In the meantime, the. uncompleted

buildings necessarily lay unrented, ‘subject to ex- |

pense in the way of taxes, insurance, accumulating

interest, ete., deteriorating in quality and steadily

declining in value.”’

Because of those circumstances the Court held that the

plaintiff would be compensated by giving it the difference in

value. Clearly, that language is no authority for the

' proposition contefided for by petitioner here. At best, it is

a reason why the difference in value is the true measure of

damage. ,

In the Kidd case the Court stated the rule to be the same

as was followed in the Trainor case. ;

The reasoning used by that Court to show why that was

-the- proper rule of damage was the same reasoning given

by this Court in the’Frainor case.

10

Since the Trainor and Kidd cases did not even assume

to decide that interest on mortgage, taxes and premiums

are proper items of damage in such a case, what-the Court

might have said arguendo is entitled to no weight.

Cohens v. Virginia, 6 Wheat. 264, 399;

Pacific Co. v. Peterson, 278 U. S. 130, 136;

People v. Tax Commissioners, 174 N. Y. 417, 447.

All the cases relied on in the Kidd case, all the cases

relied on in the Trainor case, and all other decided cases.

on the point are unanimous that the proper measure of

damages is difference in value at the date of the default,

and that may be shown by proving the actual cost of ~

completion.

The Trawmor case cited with approval Umited Real

Estate Co. v. McDonald, 140 Mo. 605, 612, in which it was

clearly stated.that the damages were to be assessed as of the

~ date of the breach of the bond and that the measure of

such damage was the difference between the value of the

realty without the building required and the value of the

property with-such building. © :

To the same effect are:

Longfellow v. McGregor, 61 Minn. 494;

Province Securities Corp. v. Maryland Cas. Co.,

269 Mass. 75, 94.

Other cases substantially to the same effect are

Phillipe v. Curran, 218 Ill. App. 517;

Comey v. United Surety, 217 N. Y. 268.

The plaintiff offered no evidence of difference in value.

The petitioner has injected into its argument under

Point I a theory which heretofore has not entered into the

ay

11

ease. It is that items of interest, taxes and insurance

entered into the determination of difference in values be-

tween the building contracted for and the building at the

time it should have been completed.

No claim was made either in the pleadings or on the |

trial that these claimed items ef damage entered into the

determination of difference in values. The complaint sought

interest as damages because the petitioner claimed it had

been deprived of interest. Taxes and insurance were claimed

and allowed as items of incompletion.

Throughout the trial the respondents eins that dif-

ference in value was the true measure of. damage. Peti-

tioner offered no evidence from ‘which the Court could or

did find what that difference, if any, was.

For the petitioner now, after its refusal throughout the |

case to be bound by the difference in value as the measure |

of damage, to attempt to bring the items claimed within

_the doctrine of difference in value is to present for the first

time a new theory. Neither of the Courts below had pre-

sented to it or decided any such question. !

Furthermore, as above pointed out, the measure of

damage is fixed as of the date of the default. In fixing

the damages as of that date, how can interest, taxes and

insurance premiums enter into the determination when

concededly the petitioner might have. let the building lie

forever uncompleted? It would be impossible then to

determine what the claimed loss of interest, taxes and pre-

miums might be.

Furthermore, petitioner is s contending for the right to

recover for the cost of incomplete items, the cost of omis-

sions and substitutions, interest, taxes and insurance pre-

miums although the premises as they stood on the date of

‘the default: might have been of a value in excess of the

amount of its mortgage.

° 12

Interest on the mortgage loan and taxes and insur-

ance premiums are not recoverable as damages from

the: respondents, because the only default- claimed

against the respondents, failure to complete the build-

| ing, was not a cause, either direct, natural, proximate,

concurring or otherwise, of the loss by petitioner, but

the sole, direct, natural and proximate cause of such

loss was the default of the principal debtor on the

mortgage.

The prjncipal assumed two separate and independent

obligations—the repayment of a*loan evidenced by a bond

and mortgage, and the completion of a building. A default

on the first obligation was bound naturally and directly to

result in loss of interest on the loan, taxes and insurance

premiums. That default would be the sole sufficient, effi-

cient cause of the loss. If there were no default in repay- -

ment, a default in completion in no event could result in the

losses claimed. And again, the performance of the obliga-

tion to complete would not prevent thé losses claimed if

the obligation to repay were not performed. It is obvious,

therefore, that there could be no connection of any kind

between the failure to complete the building and the losses

claimed.

The failure to complete the byilding under one obliga-

tion could not be the proximate cause of a loss from the

failure to repay a loan under anothér obligation.

Milwaukee, etc. Ry. Co. v. manee, 94 U. S. 469,

475;

Lotito V. Sage, 158 N. Y. 73, 98-102;

Wakeman v. Wheeler, 101 N. Y. 205, 209;

McCauslan v. Zoar, 131 Misc. 148, 150.

13

It is fundamental that a plaintiff cannot derive a greater

advantage from a breach than from a performance.

Finck v. Menke, 31 Mise. 748;

Barnes. v. Brown, 130 N. Y. 372, 381. ;

The petitioner seeks interest on a mortgage, because of |

respondents’ failure to complete -the building, which it

would not have received if the respondents had completed

the building.

- | C. °

| Interest on the mortgage loan as damages is not

recoverable from the respondents because they as-

sumed no obligation as to the principal of the loan, and

interest as damages can not be recovered apart from

the principal. — ;

Under Point II we show: in answer to petitioner’s:

Point II that there was no contract obligation upon the

respondents to pay interest on the mortgage loan. Here

‘we shall consider the interest as damages and establish that

there is no liability in respondents to pay the interest as

- such. |

We quote from Matter of Trustees, 137 N., Y. 95, 98:

‘‘Before interest can be allowed in any case it

must be by virtue of some contract express or im-,

plied, or by virtue of some statute, or on account of

the defdult of the party liable to pay, and then it is

allowed as damages for the default.’’

Sutherland on Damages (4th Ed.), Sees. 300, 372;

17 C. J. 814;

Cutter v. Mayor, 92 N. Y. 166, 170;

i

=

14

Southern Cent. R. R. Co. v. Moravia, 61 Barb,

180, 188.

All cases and authorities recognize the distinction

between interest payable by virtue of contract and that

payable as damages for breach of contract.

Brewster v. Wakefield, 22 How. 118;

Holden v. Trust Co., 100 U.S. 72; ©

O’Brien v. Young, 95 N. Y. 428;

Brady v. Mayor, 14 App. Div. 152;

Hamilton v. Van Rensselaer, 43 N. Y. 244;

Melick v. Knox, 44 N. Y. 676.

All of the above authorities and others too numerous

“to cite hold that in the absence of an express contract to

pay interest, interest as damages cannot be recovered apart |

from the principal of the debt. The interest, being only

incidental and accessory, cannot exist without the debt,

cannot be separated from the debt and sued for alone.

The case which approaches nearest to the instant case

is the Hamilton case (supra). There the creditor sought to

recover interest accruing after the maturity of the principal

debt from the third party who guaranteed the interest.

Here also the petitioner seeks to recover such interest but

from ones who did not guarantee interest. In the Hamilton —

case the creditor sought to recover because of the contract

guaranteeing the interest. If in that case interest after

maturity had been sought as damages, it would be more

akin to our case.

In that case it was held that in no event would the guar-

antor be liable for interest as damages because ‘‘he neither

agreed to pay the principal, nor to be liable for the conse-

quences of its non-payment’’.

—_—

15

United Real Estate Co. v. McDonald, 140 Mo. 605;

Province Securities Corp. v. Maryland Cas. Co.,

\ 269 Mass. 75, 94.

II..

Answering Point II.

The respondents .were not liable by contract for

- interest on the mortgage, taxes and premiums, because

their’ bond did not guarantee the payment of | such

items. The respondents’ sole obligation was to make ©

" good any default of their principal in constructing,

paying for and completing the building.

This claim of .the petitioner that the jae of the

respondents’ bond obligated the respondents to pay interest

on mortgage, taxes and insurance premiums would seem to-

be controverted by petitioner’s own prior, practical inter-

pretation of the instruments. The default in the completion

‘of the building occurred on December 16, 1930. The action

herein was instituted on or about February 18, 1932. Be-

tween these two dates there weré numerous nae

tions between the petitioner and the respondents. Detailed

lists of damages claimed were delivered to the respondents

by the petitioner. (Plaintiff’s Exhibits 60, 62, 66, 70, 71,

72, R. pp. 730, 732, 739, 744, 745, 752.) In none of these

communications was any claim made for interest on mort:

gage, taxes or insurance premiums, nor was any claim made

in the complaint that the respondents were obligated by

contract to pay interest, taxes or premiums. The long,

detailed complaint alleged the only defaults were defaults |

in constructing, paying for and completing the building.

When the concluding paragraph of the complaint claimed

16

interest, taxes and insurance, it claimed them only because

they were’damages flowing from the failure to complete

the building, not flowing from the failure to comply with an

- obligation to pay such items (R. pp. 13-18).

Under the circumstances, it is hardly open to the peti-

tioner to claim that there was any written obligation on the

part of the respondents to pay such items. But apart from

the practical construction placed upon the respondents’

bond by the petitioner, the only reasonable construction of

the instruments in suit is that respondents were not liable

by contract for the payment of interest, taxes and

premiums. .

All the instruments in suit which evidenced the relations

between plaintiff and Central Park Properties, Inc.; show

clearly that the latter assumed two separate obligations;

first, the repayment of the principal of a loan in the sum

of $6,650,000, with interest; second, the construction and

completion of a building in accordance with the terms of

the building loan agreement and plans and specifications.

~ That the petitioner fully understood that there were

two separate obligations is showri by the fact that it sought

_and obtained a guaranty of performance of the bond and

mortgage from one Lefcourt (R. pp. 571, 578, 679).

Lefcourt’s guaranty covered both of the obligations

mentioned,—payment of principal and interest and com-

pletion of the building,—while the surety bond executed by

these respondents covered only the latter obligation, the

_.completion of the building.

Lefcourt’s collateral bond (Plaintiff’s Exhibit 10) in

express terms guazanteed the performance of the provi-

sions of the bond and mortgage, —_— payment of

principal and interest.

17

- When we now turn to the respondents’ bond (Plain-

tiff’s Exhibit 2) we notice the absence of any language like

the language used ‘in the Lefcourt guaranty for the pay-

ment of principal and interest and for the performance of

the bond and mortgage. 7e

The condition of the bond was that it will be void: if

the principal shall proceed with the construction and com-

pletion of the building so that it shall be constructed and

completed in accordance with the building loan agreement

and the plans and specifications, and ready for occupancy

not later than December 16, 1930, free end clear of liens

(among which is not plaintiff’s mortgage) (R. pp. 595,

596) ; if the principal shall pay the cost of the erection, con-

struction and completion (R. p. 596) ; if the surety shall

indemnify the obligee from,loss or damage caused by the

: failure to construct, pay for and complete the building

_ (R. p. 596); if the surety shall make good any default 1

constructing, paying for and completing the building and

shall make good every other default by the principal in per-

forming any of the other terms set forth in the building

oan agreement to.be kept and performed by the principal

up to and including the completion of and payment for the

building in accordance with the building loan agreement

and plans and specifications, and shall indemnify-the obligee

against loss and damage suffered by the obligee in making

good any default of the principal (R. pp. 596, 597).

' There is no condition express or implied respecting pay-

ment of the principal of or the interest on the loan, taxes

or premiums. The building loan agreement specifically pro-

vided that the bond was to guarantee the completion of the

building, not the payment of principal or interest of the

loan, taxes or premiums. The recital in the bond itself

. 18

is-that it was to guaramee the completion of the building, .

not the performance of the bond and mortgage.

As said in United Real Estate Co. v. McDonald, 140 Mo.

605, cited with approval in Trainor v. Aetna Casualty, 290

U.S. 47:

‘‘The condition of the bond is not that MeDonald’s

notes should:be paid but that the house should be

built.’’

4 Province Securities Corp. v. Maryland Cas. Co.,

‘ 269 Mass. 75, 94;

: McCauslan v. Zoar Holding Co., 131 Mise, 148,

150.

It is well settled that the obligation of the surety is not

to be extended:to any other subject, person or period of

time or liability than is expressed or necessarily included

‘in it. |

Smith v. Molleson, 148 N. Y. 241, 246;

_ Sutherland on Damages (4th Ed.), See. 725.

Reading the building loan agreement and the bond to-

gether, only one reasonable conclusion is possible: and that

is that the respondents’ bond was a guaranty only of the

completion of the building. That is exactly what both the

- building loan agreement and the bond said.

- Petitioner has apparently now discarded the argument

- made by the Trial Court for the inclusion of interest, taxes

3 and insurance premiums in. the damages, and argues that 6

4- these items were payable because of provisions other than

those relied upon by the Trial Court.

Its first argument is, in brief, that since the respon-

-dents’ bond agreed to make good any default by the prin-

cipal in performing any of the terms, covenants or condi-

tions of the building loan-agreement, and the principal in

the - building loan agreement agreed to perform the cove-

<a

ESOL POLE 2-6 Pn LEHANE EN Se NN ERT AR DO BD ES AD LILLE TO My EAR T 8 4 SEI

19°

nants, terms and conditions of the bond and mortgage, the

respondents thereby became liable for the performance of

the covenants, terms and conditions contained in the bond ©

and mortgage. If such construction were possible, then the

~ respondents would have been:liable for the principal of

the loan up. to the amount of their bond, although the

amount of the bond was less than half of the amount of the

loan and was given for the purpose of guaranteeing the

completion of the building. If the petitioner intended to .

make the respondents liable for the performance of ‘the’

bond and mortgage, it should have used explicit language to

that-effect. When petitioner songht a guaranty not only of

the provisions of the building loan agreement but of the

- provisions of the bond and mortgage from Lefcourt, it did

so without any uncertainty in language. Lefcourt guar-

anteed the performance of the provisions of all these in-

struments. The respondents guaranteed. only the per-

formance of the provisions in the building laan agreement.

What the petitioner is endeavoring to do is to import

into the building loan agreement the covenants and provi-

sions of the bond and mortgage, so as to make the respon-

dents liable for the performance of the provisions of the

pond and mortgage, when they agreed only to be bound for

the performance of the provisions of the building loan

agreement. as

_ As to insurance, the petitioner relies on part of Para-

graph Fourteenth of the building loan agreement. Although

the petitioner states that this provision requires the prin-

cipal to pay premiums, it does nothing of the kind, as an

examination of the paragraph will disclose. The-paragraph

simply requires the borrower to place all insurance through

a designated insurance broker (R. pp. 580, 581).

As to taxes, petitioner claims that the respondents’ bond

guarantees completion free from all liens, that taxes are a

lien, and that, therefore, respondents are obliged to pay the

é

20

taxes. Again the petitioner has failed to call the Court’s

attention to the whole of the provision relied upon. The

provision apparently relied upon is contained in the con-

dition of the bond providing for the completion of the

building ‘‘free and clear of and from any and all mechanics’

or material men’s liens or other liens, claims of architects,

conditional sale contracts, chattel mortgages and charges

for work and labor performed or for materials, machinery, _,

fixtures, refrigerating units, appliances, or equipment used,

or installed in or about the said building, and any municipal :

violations against said premises and the improvements

thereon”’ (R. p. 596). It is apparent that the liens referred

to are liens arising out of the: performance of the work

necessary for the completion of the building. .Under well

settled rules of construction the ‘‘other’’ liens spoken of

are liens of the same nature as the specific liens mentioned.

Bers v. Erie R. R. Co., 225 N. Y. 543, 546;

Matter of Hermance, 71 N. Y. 481, 487.

a III.

_ Answering Point III.

Whether the respondents were liable for interest on

mortgage, taxes and insurance premiums was a ques-

tion of law determinable from a construction of the

respondents’ bond, and the Trial Court made no find-

ing of fact in respect thereof.

: —& -

Petitioner makes the unwarranted statement on page 31

that respondents on the trial did not dispute the fact that

these items were damages contemplated to result from a ©

failure to .complete the building. A reading of the Trial

- Court’s opinion will show that the respondents bitterly

contested the contention.

No evidence was adduced by the petitioner in respect

- of these items other than that it received no-interest on

aiias is 4 | |

21

the principal of the loan from the date of the default ; that.

it paid taxes covering the period after the date of the

| default; and that it paid insurance premiums for the same |

period. ~ .

The petitioner claims that when the Trial Court found |

from a consideration of the instruments that the respon-

dents were liable for these items, thereby the Trial Court

’ made a finding of fact, with evidence to support it. Ob-

viously, a conclusion reached from the construction of

written instruments is not a determination of fact. The

construction and effect of written instruments is a question

of law. |

Swift v. Hocking Valley R. Co., 243 U. 8. 281, 289;

Dillon v. Barnard, 21 Wall. 430, 437;

Hamilton v. Liverpool,.etc. Ins. Co., 136 U. 8. 242.

Therefore, the cases cited by petitioner which hold that

the direction: of a verdict is conclusive upon all issues of

- fact have no application. Necessarily, before such cases

‘could have application, there would have to be a dispute

of fact as to these items, and the only dispute was

one of law based upon the interpretation of the written

instruments. | |

The claim that the parties must have had in mind cases

' where interest én investment may be considered for the

purpose of arriving at a fair return on the money is with-

4 out force. , a

In this case the petitioner kept as far away as possible

_ from a determination of the value of the property and a -

determination of the capital investment in the property for

the purpose of determining loss. Even assuming that

interest and taxes might enter into a determination of the

investment of the petitioner, if the value of the property

was equal to the amount of that investment, the petitioner

\

22

. e

could under no circumstances recover damages. Respon-

dents did not guarantee anything other than losses sus-

tained. Therefore, the talk about capital investment and

the items entering into capital investment, when there js

nothing in the record to show loss of capital investment,

is to inject matters which were never before considered.

Again the claim is made that the parties must have

contemplated that when the building was erected it would |

rent for more than enough to pay interest, taxes and pre-

miums. It is sufficient to say in respect of rent and rent-

ability that such questions were not in this case, as was

pointed out by the Circuit Court of Appeals in its opinion

(R. p. 884). .

IV.

Answering Point IV.

The Circuit Court of Appeals was not confused in

its holding that the provision in the bond for written

waiver of strict performance of the building loan

agreement could be waived by the parol consent of

‘the president of the petitioner to omissions and

substitutions.

If we understand the argument of petitioner, it is that

the evidence excluded tended to show a waiver of the pro-

visions of the building loan agreement, and did not tend

to show a:waiver of the provision in the. bond’.that any .

waiver of the provisions of the building loan agreement

must be in writing, and that, consequently, when the Circuit’

Court of Appeals stated that the evidence excluded would

tend to establish a waiver of the requirement in the bond

for a written waiver, it misconceived the instrument which

Sted

ET SER, Oe ER ES Sey:

23

it is claimed was dneail This argument seems to lose

sight of the fact that evidence competent to establish a

waiver of strict performance of the building loan agree-

ment would be competent to establish a waiver of strict

- performance of the bond of the respondents, because the

bond guaranteed the performance of the provisions of the

building loan agreement.

The theory upon which the petitioner sought damages

for omissions and substitutions was that the principal had

made these omissions and substitutions contrary to the

terms of the building loan agreement. ‘Respondents pleaded .

in their answer that the omissions and substitutions claimed

as items of damage were made with the knowledge and.

approval of the petitioner, and that as to such items there

was a waiver of strict performance of the building loan

agreement (R. p. 55).

- The building loan agreement specifically recognized that

there might be a waiver of the strict performance of the

building loan agreement when it provided that the failure

to require strict performance in any one or more instances

of the terms of the building loan agreement should not be

construed as ‘a waiver for the future of any such terms

(R. p. 55). There was no provision in that agreement re-

quiring any such waiver.to be in writing. However, there

was a provision in the respondents’ bond to the effect that

any waiver of a default in complying with the building loan

agreement, the plans or specifications, or the bond itself

should be in writing signed by an officer (R. p. 604).

Naturally, if a waiver of strict performance could have

been established, no liability would attach against the re-

spondents for omissions and substitutions consented to, be-

cause their bond did not impose ary greater liability upon’

them than was imposed upén their principal. Whatever

acts of the petitioner would relieve the principal of liability

4

id

24

under the building loan agreement would likewise relieve

the respondents of liability under their bond as to the same

matters. .

Upon the trial the respondents endeavored to adduce

testimony that the president of the petitioner consented: by

parol to certain omissions and substitutions. As stated

. above, such consent, if effective, would accomplish a change

in the principal’s obligations under the building loan agree.

ment and the respondents’ obligations under ‘the bond.

- Objection was made to the offer of proof because the con-

sent or waiver to be proved was a parol one and not in:

writing, as provided by the bond. The testimony was ex- .

cluded because of that specific objection, the Court holding

that a parol- consent or waiver, could not be established

(R. pp. 213, 214).

Strictly speaking, -the evidence excluded was offered to

establish a waiver of strict performance of the building

léan agreement. That is the very faet which the respon-

dents would have to establish in order to aveid liability on

account of omissions and substitutions. Proof of a waiver

of the provision that waivers should. be in writing in and

of itself would be ineffective without proof of a waiver of

the building loan agreement. ©

The objection to the testimony offered was not the objec-

tion now raised, that it would not tend to show a waiver of

.the provision of the bond, but the objection was that a

waiver of the provisions of the building loan agreement

could not be proven by parol.

We are uncertain whether petitioner argues that the

provision for written waiver had greater weight because it

was contained in the bond rather than-in the building loan

agreement. If so, the argument would seem to be without

weight. If the provision for a written waiver had been in

the building loan agreement and not in the bond, the respon-

25 4

dents would have been bound by such provision in the same

manner as they were bound by all the other provisions in

the building loan agreement. If such a provision in the

building loan agreement could be waived, the same provi-

sion in the bond could be waived.

V.

Answering Point V.

A provision in an instrument requiring a written

waiver may be waived by parol, and the excluded

evidence tended to show such waiver. —

The respondents upon the trial endeavored to show that

the president of the petitioner was familiar with. certain

omissions and substitutions and consented thereto. Objec-

tion was made upon the ground that there could be no

waiver except in writing, and the Court sustained the ob-

jection (R. pp. 213, 214). No objection was made that there

was no preliminary showing of the general authority of the

president or that the testimony sought to be adduced would

not tend to show a waiver, the objections now advanced for

the first time. Objection was based solely upon the ground

that there could be no parol waiver, and respondents

were prevented from proceeding further because of that

objection. - ils alas

We submit that the Trial Court misconceived the law

and that the Gircuit Court of Appeals was correct in its -

determination that even a provision against parol waiver

_ might itself be waived. All recognized authority is to the

effect that a provision requiring any waiver to be in writing

may itself be waived by parol. As Judge Carpozo said in

Beatty v. Guggenheim Exploration Co., 225 N. Y. 380, 387 :

26

‘‘Those who make a contract, may unmake it,

The clause which forbids a change, may be changed

like any other.’ The prohibition of oral waiver, may

itself be waived. ‘Every such agreement is ended

by the new one which contradicts it.’ (Westchester

F. Ins. Co. v. Earle, 33 Mich. 143, 153). What is ex-

‘cluded by one act, is restored by another. You may

put it out of the door; it is back through-the window.

Whenever. two men contract, no limitation self-

imposed can destroy their power. to contract again

(Pechner v. Phoenix Ins. Co., 65 N. Y. 195, 204, 205;

Solomon v. Vallette, 152 N. Y. 147, 151; F. P. Ins, Co.

v. Norwood, 69 Fed. Rep. 71; McElroy v. B. A. Assur.

Co., 94 Fed. Rep. 990; Westchester F. Ins. Co. v.

Earle, supra; Ewart on ‘the Law‘of Waiver, p. 286).’’

Insurance:Co. v. Norton, 96 U.S. 234, 240;

Northern Assurance Co. v. Grand View, ete.

Assn., 183 U. S. 308, 352, 361;

_ Teer v. George A. Fuller Co., 30 F. (2d) 30, 32;

Steen v. Niagara Fire Ins. Co., 89 N. Y. 316, 327;

General Electric Co. v. National Contracting Co. is

178 N. Y. 369, 375.

\ ‘

Ip the very- Traitel Marble case cited by petitioner,

which had to do with alterations in the work, and in which ~

there was a written provision that no alterations should be

made except upon written order, the Court stated:

'**Unless compliance therewith was waived by the

defendant, the provision that there should be no

change in the work as fixed by the specifications,

except upon. the written order of the architect, was

controlling (Langley v. Rouss, 185 N. Y. 201). Such

waiver might have been by writing or by conduct.”’

When petitioner quoted from Langley v. Rouss, 185

N. Y. 201, it failed to quote that part of the opinion which

ke.

27

is applicable here. That case pointed out the difference in

a contract which limits the authority of the architect and a

contract providing that the contractor shall not be paid for

alterations unless the same are ordered in writing by the

owner. As to the latter type of contract, the Court said:

oe party to a building or other contract can

waive a provision therein inserted for his benefit.’’

VI.

The Circuit Court of Appeals was correct in order-

ing a new trial.

The petitioner makes the point that the only fact which »

would require a new trial was the exclusion of evidence, and

that if such exclusion was proper no new trial was required.

Without arguing the point as to when the Circuit Court

of Appeals may make a final determination, it is obvious |

from a reading of the 6pinion of the Cireuit Court of

Appeals that’a new trial was absolutely necessary in order

that any damages might be fixed in accordance with the

proper rules. . : | :

The Circuit Court of Appeals held that the proper mea-

sure of damages was the difference in value between an in- |

complete and complete building (R. p. 882). No evidence

was offered at the trial'ta show what that difference, if any,

was. e.. !

The Circuit Court of Appeals held that recovery might

- be had for any loss sustained by reason of omissions and

substitutions, but that such loss would be the amount by

which the value of the building was lessened (R. pp. 882,

884). There was no evidence offered upon the trial to show

that there was any such loss, although the respondents

t

28

offered evidence that the omissions and substitutions did

not decrease the value of the building, Under the circum.

stances, before petitioner could recover for omissions and

substitutions, it would have to adduce testimony to show

decrease in value of the building.

* ‘The items of omissions and substitutions were of im-

portance, as shown by the fact that the Trial Court allowed

as damages $160, 842, 28 for omissions and substitutions

(R. p. 516). Since these ‘items were never installed or cor-

rected, it wopld have been improper to allow recovery there-

for by showing what it would have originally cost to in-

stall them in the manner required. The true measure of

damege is, as pointed out by the Circuit Court of Appeals,

the decreased value of the building by reason of such omis-

sions and substitutions and there is no evidence in the

record of such decreased value.

Conclusion.

The petition should be denied.

Respectfully submitted,

* Joun W. Davis,

Josern F’, Murray,

Tuomas E. Waite,

Counsel for Respondents,

Lawress Pazss, Ixc., 165 Witiiam Sraxet, New Youn Cirr, N. Y.

-

Bin NEEL ANA

ome Court of the United States

October Term, 1935

? ia

Tun Prupence Company, Inc.,

XS 7 Petitioner,

pe oink

Fipeuity & Depostr Company oF MaryLanp. No. 270.

and AmeEricaAN Bonpinc'CoMPANY OF

BALTIMORE, aaa

Respondents.

3 BRIEF FOR RESPONDENTS.

——————————— 7 — siaiiiiaiiiieaii

Joun W. Davis,

~ Josepn F.Murray,,

| Tuomas E. Wuire,

Of Counsel.

Tomas E. WHITE, |

Counsel for Respondents.

PP

- INDEX.

PAGE

‘Scope of Review ° 1

- Damages Claimed by Petitioner___. 1

Statement of the Case 2

The Opinion of the Circuit Court of epee 13

Argument : ‘

° 4 Pot I—The measure of damages in such a case as

this is. the difference between the value of the

uncompleted building on the date of the default

and its value if it had been compl: ted.~___.>

Point I]—-Under the decisions in Kidd v. McCor-

mick and Trainor v. Aetna Casualty. Co, peti-

‘ tioner is not entitled to recover loss of interest

on ‘the mortgage loan, taxes or insuratice pre-

miums

a ort III—Neither under the terms of the respon-

dents’ bond nor under the law of damages are

the respondents liable to the petitioner for inter-

est on the mortgage loan, taxes or insurance

premiums a

A—Respondeits’ bond did not guarantee’ f pay-

ment of interest, taxes and insurance pre-

miums, but only guaranteed the completion

, “19

of a building

% :

B—Interest on the mortgage: loan as damages is

_ not recoverable from the respondents because

they assumed no obligation as to the principal

15

17

19,

of the loan, and interest as damages can net. *

be recovered apart from the principal...

ii

, net . PAGE

C—No evidence was offered by petitioner to

-show that it suffered any loss of interest o:

mortgage. joan, or taxes on insurance pre-

miums; by reasofi of failure to complete the

building —» ' 28

Point IV—Since petitioner concedes that it is en-.

' titled to recover damages suffered by. it only as

mortgagee and not as owner, it may not recover

interest on mortgage, taxes or insurance pre- —

miums, because the foreclosure of the mortgage

and the sale of the property terminated its status

‘as mortgagee , 34

Point V—The difference i in value between a building

with and without omissions and substitutions is

the proper measure of damages for such omis-

sions and substitutions and the petitioner offered

no evidence that the value of the building was

lessened by reason thereof. 35

Conclusion : 37

PAGE

American Surety Co. v. Woods, 105 Fed: 741. . 87

_ Barnes v. Brown, 130 N. Y. 372, 381 : 29

Bers v. Erie RB. R. Co., 225 N. Y. 543, 546 26

Brady v. Mayor, 14 App. Div. 152... sa

iba, Peaster it 22 ‘How. 118__ 27

Ciminelli v*Wenland, 236 App. Div. 154. - ss 37

Cohens v. Virginia, 6 Wheat 264, 399... eine ae

Comey v. United Surety, 217 N. 'Y. 268_ 17

Cutter v. Mayor, 92 N. Y. 166, esa SRE. ae 27

' Dillon v. Barnard, 21 Wall. 430, 437. oat eaetr ee - 32

Finck v. Menke, 31 Mise. 748. ‘ aii ae

Hadley v. Baxendale, 9 Exch.:341__.. Bait —

Hamilton v. Liverpool, etc. Ins. Co., 186 U.S. 242... =.32

Hamilton v. Van Rensselaer, 43 N. -Y. 244 27

pe ll OE, San eeemernenen 27

Howard v. Stillwell, 139°'U. S. 199... 29, 30

Hull v. Cronk, 55 App. Div. 83, appeal dismissed 166 .

N. Y. 606. _. 34

Jacob and Youngs v. Kent, 230 N. Y. 939, 2 Be siciieidiincesen a

Kanter v. New Amsterdam Cas. Co., 195 App. Div. 756

(aff’d 233 N. Y. 602) 17

Kidd v. McCormick, 83 N. Y. 391. 13, 14, 15, 16, 17, 18, 37

Laidlaw v. Sage, 158 N. Y. 73, 98-102 waicsae ae

Longfellow v. McGregor, 61 Minn. 494 36

Maloney v. Nelson, 144 N. Y. 182 _.23, 33

Matter of Hermance, 71 N. Y. 481, 487. 26

Matter of Trustees, 137 N. Y. 94, 98. 27

McCauslan v. Zoar, 131 Mise. 148, 150 23, 29

Melick v. Knox, 44 N. Y. 676 ) 27

abtecsia i’ etc. Ry. Co. v. ea eat 94 U. 8. 469, 475____. 29

& : -

Sw

iv

_ O’Brien v. Young, 95 N. Y. 428. a

Olsen v. Henderson, 113 App. Div. 676.

Pacific Cot v. Peterson, 278 U. S. 130, 136»

‘People v. Tax Commissionérs, 174 N. Y. 417, 447...

Phillipe v. Curran, 218 Ill. App. 517__.

Province Securities Corp. v. Maryland Cas. Co., 269

Mass. 75, 94 -z-—---16, 23,28,

Re Diamond T. Truck Sales Agendy, 282 Fed. 873, 875. 34

Smith v. Molleson, 148 N. Y. 241, 246. 23

Southern Cent. R. R. Co. v. Moravia, 61 Barb. 180, 188. 27

Stewart v.Barnes, 153 U. S. 456 34

Swift v. Hocking Valley R. Co., 243 U. S. 281, 289. 32

Trainor v. Aetna Casualty & Surety Co., 290 U. S. |

47 -_ 13, 14, 15, 16, 17, 18, 23, 37

United Real Estate Co. v.. McDonald, 140 Mo. 605,

612. ; 16, 23, 28

Wakeman v. “Wheeler, 101 N. Y. 205, 209 29

Walter v. Hangen, 71 App. Div. 40. a 8

Authorities Cited.

17 0. J. 814

34°. J.752, 755 . 2

Sutherland on Damages (4th Ed.) Sec. 725:

Sutherland on Damages (4th Ed.) Sec. 300.

Sutherland on Damages (4th Ed.) See. 372.

ee aaa Statute Cited.

N. Y. Civil Practice Act, Sec, 1079

hn Court of the United States

‘ October Term, 1935.

Tus PRUDENCE Compas, Inc. .

’ Petitioner,

against

ra . : No. 270.

Fieuiry & Depostr Company or MaryLanpD

and American’ Bonpina CoMPANY OF

BaLTIMoRE,

Respondents.

BRIEF FOR RESPONDENTS.

Scope of Review.

This Court has granted certiorari to cite the mea-

sure of damages to be applied in an action brought by a

mortgagee (here the petitioner) against sureties (here the

respondents) on the bond of the latter guaranteeing com-

pletion of a building, for damages arising out of failure

to complete the building, where the principal-mortgagor °

has also defaulted on the mortgage.

Damages Claimed by Petitioner.

The petitioner did not ask generally for damages, but _

asked specifically for three items of damage; First, ¢x-

penditures alleged to have beén made by it in completing

' the building though the greater part of’ the alleged period

used for completion was after petitioner had become owner

a