254 F. 54 | 9th Cir. | 1918
The appellant brought a suit to enjoin the city of Bellingham, Wash., from paying to the Bellingham National Bank certain warrants of the city. The city had made two contracts with Moran Bros, for street improvements, one of date July 29, 1916, for the improvement of Maryland street, the other of date September 22, 1916, for the improvement of Iowa street. On both contracts the appellant became surety on the bonds of the contractors; the ñrst bond being dated July 27, 1916, and the second September 20, 1916. The bank advanced to the contractors money to prosecute both contracts, and took assignments of warrants from them; one assignment on September 11, 1916, for advances on the Maryland street contract, and one on October 20, 1916, for advances on the Iowa street contract. At the time of the completion of the contracts no payment had been made by the city on either contract. The bank had advanced considerable sums on each contract, all of which were used in payment for labor, supplies, and material, in the improvements. Claims in considerable amounts for sums which had not been paid by the contractors were filed against the bonds; all the items thereof being valid claims against the bonds under the law of Washington. The contractors were insolvent. It was the contention of the appellant that its right of lien was superior to that of the bank, and the bank contended that, having paid various claims for labor, material, and supplies actually used in the construction of the improvements, its equity was superior to that of the appellant. The contract price of the improvements was not sufficient to pay all the sums so advanced by the bank and the claims presented against the bonds.
“We find no merit in the claim that the bonding company has a superior equity in this fund over that of the bank. It has-no equity in the fund as-against the bank, which paid its money on the strength of assignments of the-fund at a time when the contractors had full right to collect and dispose of the fund as they saw fit. Moreover, it is an admitted fact in this case that the money advanced by the bank was actually used by the contractors in the performance of the contract, thus diminishing the bonding company’s liability by just the amount advanced. The equities are obviously with the-bank.”
“That doctrine has become the settled rule in Washington, and the sureties on the contract in question had the right to rely upon it as the law of that state, and we may assume that they did so when they became sureties upon the contract. A federal court ought not to upset the rule thus established by the Supreme Court of a state for the guidance of its own citizens, unless that rule is against the very decided weight of authority”
—citing Detroit v. Osborne, 135 U. S. 492, 10 Sup. Ct. 1012, 34 L. Ed. 260, in which it was said:
“There should be, in all matters of a local nature, but one law within the-state; and that law is not what this court might determine, but what the Supreme Court of the state has determined”
—and citing, also, Equitable Life Assur. Society v. Brown, 213 U. S. 25, 44, 29 Sup. Ct. 404, 410 (53 L. Ed. 682), in which it was said r.
*57 “Tiie decisions of the highest court of New York are therefore binding upon this court as to the meaning and effect of the charter of the defendant, and as it is a New York company and the contract is a New York contract, executed and to be carried out therein, its meaning and construction, as held by the highest court of the state, will be of most persuasive influence, even if not of binding force.”
See, also, Claiborne County v. Brooks, 111 U. S. 400, 410, 4 Sup. Ct. 489, 28 L. Ed. 470; Snare v. Friedman, 169 Fed. 11, 94 C. C. A. 369, 40 L. R. A. (N. S.) 367; Keystone Wood Co. v. Susquehanna Boom Co., 240 Fed. 296, 153 C. C. A. 222.
The judgment against the appellant for $133.25 on the claim of Morse Hardware Company, having been entered inadvertently, as it is admitted, the decree below should be modified accordingly. As so modified, the decree is affirmed.