Facts
- A school district contracted with Cornelius Chambers to build and complete a schoolhouse on the district’s land by October 1, 1857.
- Dudley and other defendants executed a guaranty securing Chambers’s performance of the construction contract.
- By the deadline, the building was substantially finished but not fully completed; remaining items included painting, hanging blinds, and delivery of the key.
- The district had not taken possession, and the schoolhouse had not been delivered to or accepted by the district.
- On October 5, before completion and acceptance, the building burned down without fault of either party.
- The district had advanced progress payments to Chambers; after the fire, Chambers did not rebuild or complete the project.
- The district sued the guarantors to recover advanced payments and damages for failure to deliver a completed schoolhouse.
Issues
- Whether accidental destruction of the building before completion and acceptance excused the contractor’s nonperformance and discharged the guarantors.
- Whether the risk of loss before completion and delivery fell on the contractor rather than the owner absent a special agreement.
Decision
- The Court of Appeals reversed the judgments for the guarantors and ordered a new trial.
- The court held that the fire did not excuse Chambers’s duty to complete and deliver the schoolhouse.
- Because Chambers remained liable for nonperformance, the guarantors were not discharged and could be held liable on their undertaking.
Legal Principles
- A party who makes a positive promise to complete a specified act must perform or respond in damages unless performance is rendered absolutely impossible in a legally recognized sense.
- In a building contract requiring completion and delivery of a finished structure, accidental destruction before completion and delivery does not, by itself, shift the loss to the owner or excuse the builder.
- Risk of loss before completion is allocated by the contract; absent a contrary provision, the contractor bears the risk of casualty prior to completion and delivery.
- Questions of title to the partially constructed structure are not controlling where the contractor’s obligation is an entire duty to deliver a completed building.
- A surety’s liability on a performance guaranty is coextensive with the principal’s obligation; if the principal is not excused, the surety is not discharged.
Conclusion
The court held that a contractor who promised to complete and deliver a schoolhouse remained responsible when the unfinished structure was accidentally destroyed before acceptance, and the performance guarantors could not avoid liability on the theory that the casualty excused the contractor’s nonperformance.