this date, and, in case any part of said sum of $150,000 shall then remain unpaid, such part shall draw interest at six (6) per cent. from that date till payment.

"(7) Upon the completion of the work under the said contract with the war department, or whenever the war department shall make payment of its reservation, the said parties of the second part shall retain (and from the first portion of the reservation so paid) such amount of the reservation made by the war department under said contract as shall, at the date hereof, be due to the said parties of the second part for work already performed; but the said parties of the second part shall pay over to the said party of the first part all such portion of said reservation as shall be hereafter retained by the war department under its contract for work thereunder undertaken, and completed by the said party of the first part on and after the date of this contract.

"(8) The parties of the second part may receive from the government and retain the amount due for work done by them prior to the date of this agreement.

"(9) In case the party of the first part shall fail to perform this contract, so as to endanger the forfeiture of the contract with the war department, the parties of the second part shall have the right to proceed to the completion of the work in order to keep good their above-mentioned contract with the war department."

After the execution of this contract and the making of the bond sued on, the following supplemental contract was made:

"It is hereby mutually agreed by and between C. Amory Stevens, of the first part, and James A. Mundy, Joseph Busch, and William B. Johns, copartners trading under the name of James A. Mundy & Co., parties of the second part, as follows: The sixth section or paragraph of the agreement for the performance of the work of dredging Philadelphia harbor, made and entered into by and between the parties hereto, and dated the second day of February, 1892, is hereby wholly canceled and revoked, and the following is hereby substituted as and for the said sixth section or paragraph of said contract, and the whole thereof, to wit: (6) The party of the first part, in consideration of the premises, hereby agrees to pay to the parties of the second part the sum of one hundred and seventy-nine thousand dollars ($179,000) as follows: The parties of the second part shall be paid monthly, until the payment of all money becoming due to them under the provisions of this section, the sum of two and one-half cents per cubic yard for all material dredged during the month.' All the other terms and provisions of said contract of February second shall remain in full force and virtue. "Sealed with our seals and dated this "Witness:

"N. H. Rand.

"N. H. Rand.

"N. H. Rand.

"N. H. Rand.

day of June, 1892.

The bond sued on was as follows: "Know all men by these presents that we, James A. Mundy, Joseph Busch, and William B. Johns, composing the firm of James A. Mundy & Company, as principals, and John M. Sharp and Clarence M. Busch, as sureties, are held and firmly bound unto C. Amory Stevens in the penal sum of two hundred and fifty thousand dollars ($250,000), lawful money of the United States of America, to be paid to the said C. Amory Stevens, his executors, administrators, or assigns, for which payment well and truly to be made we bind ourselves, our heirs, executors, and administrators, firmly by these presents.

"Sealed with our seals. Dated the second day of February, one thousand eight hundred and ninety-two.

"The conditions of the above obligation are such that if the above-bounden James A. Mundy, Joseph Busch, and William B. Johns, composing the firm of James A. Mundy & Company, their heirs, executors, or administrators, shall well and truly pay or cause to be paid unto the above-named C. Amory Stevens, his executors, administrators, or assigns, immediately upon the receipt thereof by them from the department of war of the Unit

ed States of America, all and every sum or sums of money paid the said firm of James A. Mundy & Company by the said department of war for work of any nature whatsoever performed or done by the said James A. Mundy & Company or the said C. Amory Stevens, under and by virtue of an agreement for the improvement of Philadelphia harbor, made by and between the said firm of James A. Mundy & Company and the department of war of the United States of America, and dated the 21st day of April, 1891, as provided in the agreement of even date herewith by and between the said James A. Mundy, Joseph Busch, and William B. Johns, composing the firm of James A. Mundy & Company, and the said C. Amory Stevens; and, further, if the above-bounden James A. Mundy, Joseph Busch, and William B. Johns, composing the firm of James A. Mundy & Company,-in the event that the said department of war of the United States of America, or the representatives of the government of the United States of America, shall, by reason or on account of the execution of the said agreement between the said James A. Mundy, Joseph Busch, and William B. Johns, composing the firm of James A. Mundy & Company, and C. Amory Stevens, of even date herewith, and the rights and privileges acquired by the said C. Amory Stevens thereunder, or by reason of any act, omission, or negligence on the part of the said James A. Mundy, Joseph Busch, and William B. Johns, or the said firm of James A. Mundy & Company, during the existence of said agreements, or either of them, declare the said agreement between the department of war of the United States of America and the said James A. Mundy & Company for the improvement of Philadelphia harbor, dated the 21st day of April, 1891, forfeited or annulled, or shall take any proceedings to forfeit or annul said contract,―shall, immediately upon such agreement being declared forfeited, or proceedings thereunder so taken by said department, well and truly pay or cause to be paid unto the said C. Amory Stevens, his executors, administrators, or assigns, the sum of one hundred and seventy-nine thousand dollars ($179,000), or so much thereof as shall then have been paid unto the said James A. Mundy, Joseph Busch, and William B. Johns, in the manner and as provided for in the said agreement between the said James A. Mundy, Joseph Busch, and William B. Johns, and the said C. Amory Stevens, of even date herewith: Then, and in the event of all the aforesaid conditions being fully carried out and complied with, the above obligation to be void; otherwise, to remain in full force and virtue. James A., Mundy. [L. S.] "William B. Johns,

[L. S.]

"Sealed and delivered in the presence of "Edward Kent."

The plaintiff, Stevens, after entering upon the work under his contract, made but slow progress, and, on the expiration of the extended time, only about onethird of the required excavation had been made. Another extension, until July 31, 1892, was then procured, at the end of which time a final extension was granted by the government, until December 31, 1892. The evidence tended to show that, in the latter part of July, work was stopped by the plaintiff, but was begun again early in August, and that Mundy & Co. were then in default for payments. On August 16th they took possession of the plant, and put an end to their contract with plaintiff. The suit is brought to recover payments alleged to have become due at that time.

George L. Crawford, for plaintiffs in error.

John G. Johnson and Henry N. Paul, for defendant in error.

Before ACHESON, Circuit Judge, and GREEN, District Judge.

ACHESON, Circuit Judge. In treating this case, we will consider, first, the seventh assignment of error, which is based upon the following exception, namely:

v.61F.no.1-6

"Counsel for defendants except to so much of the charge as states that the verdict should be for the plaintiff unless the jury find that the defendants believed, on August 16, that the plaintiff would not finish the work by January 1."

This was the only exception to the charge, which was very full,covering every branch of the case. The exception, it will be perceived, does not quote any part of the charge, but goes only to the supposed general effect thereof in the one particular mentioned. It rests upon the following clause of the agreement of February 2, 1892, between Stevens (party of the first part) and Mundy & Co. (parties of the second part):

"(9) In case the party of the first part shall fail to perform this contract, so as to endanger the forfeiture of the contract with the war department, the parties of the second part shall have the right to proceed to the completion of the work, in order to keep good their above-mentioned contract with the war department."

The defendants below (the plaintiffs in error) did not ask the court to give the jury any special instructions with reference to this provision of the contract or its bearing upon the pending controversy. So far as the record shows, they did not present their views upon that subject to the court otherwise than by the brief and vague exception above quoted. Here, as the case is presented in the printed argument, two points are made, namely:

"(1) The real question was, had Stevens, August 16, 1892, endangered the forfeiture of the contract, the judge's charge rather conceding this, and treating it as waived? (2) The evidence is conclusive, requiring the court to say, as matter of law, that Stevens had then so endangered forfeiture as to justify Mundy & Co. resuming the plant under the contract."

But we think it would have been plain error had the court so instructed the jury. The contract of February 2, 1892, whereby Stevens agreed to perform the work which Mundy & Co. had undertaken to do by their contract with the United States government, expressly provided that Stevens was to do the work "within the times fixed by said contract and the extensions thereof, granted or to be granted." It is, then, very clear that Stevens was entitled to the benefit of the extension of the time of performance until January 1, 1893, which the government had granted in the first week of August, 1892. Hence Mundy & Co. had no right to oust Stevens at the very beginning of the extended time without good reason shown. The case, therefore, was not one for peremptory instructions. Whether Mundy & Co. had justifiable cause for taking possession of the plant and work on August 16th was submitted to the jury for their determination, the question being presented to them in two aspects. First, however, the jury were instructed that if, prior to that date, there had been an absolute or substantial failure by Stevens to comply with his contract, he was not entitled to recover any thing, and whether he had so failed was referred to the jury. Then the charge proceeded thus:

"The defendants further assert [and thus we approach the real subject of controversy between these parties, in the judgment of the court] that the plaintiff absolutely abandoned the work, voluntarily, in August; and that, even if he did not, he was then so far behind in its performance that he could not have completed it by the end of the year, when the government re

quired it to be completed, or, at least, that they were justified by past and existing circumstances in believing that he would not so complete it within the time. Herein is embraced the substance of the defense."

Now it is to be observed that the defendants below took no specific exception to this portion of the charge as misstating the real subject-matter of controversy or unduly narrowing the issues.

The court next proceeded to submit to the jury the question whether Stevens, the plaintiff, had abandoned the work when the defendants Mundy & Co. took possession, with instructions that, if they so found, the plaintiff could not recover. Finally, the court submitted to the jury the question whether the plaintiff was so far behind in his work on August 16th that Mundy & Co. were justified in believing that he would not complete the work by the end of the year. Here the court said:

"The only serious source of danger to the contract at the time referred to was from failure to complete the work by the end of the year. The efforts of the engineer in charge were intended principally, as it would seem from past experience, to hasten the work. I repeat that the only real source of danger was involved in the question whether the plaintiff would complete the work within the period named. If you find from the evidence that Mundy & Co. were justified in believing, from all the circumstances, that the plaintiff would not complete it within the year, then they were justified in turning him out, and resuming the work themselves; otherwise, they were not."

And the jury were further instructed that all the circumstances existing at the time the plant was seized by the defendants, and all past experience respecting the work,-the plaintiff's prior failures and his conduct,-were to be taken into account in determining the question whether or not the defendants were justified in believing that the plaintiff would not finish the work by the last of the year, and that if they so believed, or were justified in so believing, they were justified in turning the plaintiff out, and he could not recover. We are not convinced that the defendants below had any right to complain of the manner in which the case was submitted to the jury. From our examination of the evidence, we do not discover that on August 16, 1892, there was any real danger of the forfeiture of Mundy & Co.'s contract with the government other than from the possible failure to complete the work within the extended time. By the extension in August, presumably, the government had waived past delinquencies. Moreover, the uncontradicted testimony is that the extension was unconditional,-not dependent upon an increase of the plant. Our conclusion, then, is that the seventh assignment of error is without substantial merit, and, accordingly, it is overruled.

All the other assignments of error relate to the liability of the sureties in the bond of February 2, 1892, and they will be considered together. The bond was conditioned for the payment to Stevens by Mundy & Co. of all moneys received by them for work done under the contract with the government, "as provided in the agreement of even date herewith" between Mundy & Co. and Stevens. Turning to that agreement, we find that, by the fourth paragraph thereof, Mundy & Co. (parties of the second part) bound themselves to pay to Stevens (party of the first part) the contract price for all work done

by him as the moneys therefor were received by them from the government. The sixth paragraph of this agreement bound Stevens to pay to Mundy & Co. the consideration or sum of $179,000, as follows:

"The parties of the second part shall be paid monthly, until the payment of all money becoming due to them under the provisions of this section, the sum of three cents per yard for all material dredged during the month, and if subsequent to June 30, 1892, any such monthly payment shall not amount to at least nine thousand dollars ($9,000), the parties of the second part may deduct from the next payment falling due the party of the first part thereafter, under the provisions of the fourth section hereof, such sum as shall bring the payment for such preceding month up to the said sum of $9,000. The unpaid part of such $9,000 shall draw interest at six (6) per cent. from the date on which it should have been paid until paid or deducted as aforesaid; but no action shall be brought by the parties of the second part against the party of the first part for any such deficit below $9,000 in a monthly payment, unless said party of the first part shall fail to perform the work under this contract, and the parties of the second part shall be thereby compelled to complete the work. Said sum of $179,000 shall be paid within eighteen (18) months from this date; $150,000 thereof shall, if practicable, be paid within one year from this date, and in case any part of said sum of $150,000 shall then remain unpaid, such unpaid part shall draw interest at six (6) per cent. from that date till payment."

In the month of June, 1892, Stevens and Mundy & Co. entered into a supplementary agreement, whereby the sixth paragraph of the agreement of February 2, 1892, was canceled and revoked, and the following section was substituted therefor:

"(6) The party of the first part, in consideration of the premises, hereby agrees to pay to the parties of the second part the sum of one hundred and seventy-nine thousand dollars ($179,000) as follows: The parties of the second part shall be paid monthly, until the payment of all money becoming due to them under the provision of this section, the sum of two and one-half cents per cubic yard for all material dredged during the month."

Was this change material to the sureties? We are constrained to hold that it was. True, the bond is not conditioned for the performance generally by Mundy & Co. of their stipulations. Yet the payments to Stevens, for which the bond is conditioned, were to be made "as provided in the agreement," and the fourth and sixth paragraphs thereof are so related to each other that, with reference to the obligation which the sureties assumed, they must be read together. Now, the latter paragraph secured to Mundy & Co., after the month of July, 1892, the right to a monthly deduction of not less than $9,000 from the payments to be made by them to Stevens under the fourth paragraph. The benefit of this provision undoubtedly inured to the sureties, and without their concurrence they could not be deprived of this right of defalcation. Navigation Co. v. Rolt, 6 C. B. (N. S.) 550; Calvert v. Dock Co., 2 Keen, 638, 639; Bragg v. Shain, 49 Cal. 131; Dundas v. Sterling, 4 Pa. St. 73. The June agreement, however, did not merely reduce the rate of payment to Mundy & Co., but altogether canceled the provision securing a minimum monthly deduction of $9,000 from the payments to Stevens. That the position of the sureties was thus altered to their prejudice seems to us an unavoidable conclusion. Indeed, it materially affected their liability with respect to the identical fund (the August payment by the government), which is the subject-matter of this suit.