142 F. 329 | 8th Cir. | 1905
after stating the case as above, delivered the opinion of the court.
A jury having been waived and no special finding of facts requested or made, there is nothing -to review except the questions: Whether the judgment as rendered is supported by the pleadings? Whether there is any substantial evidence to support it? And whether error was committed in the admission or exclusion of evidence? Lehnen v. Dickson, 148 U. S. 71, 13 Sup. Ct. 481, 37 L. Ed. 373; Beuttell v. Magone, 157 U. S. 154, 15 Sup. Ct 566, 39 L. Ed. 654; Phenix Ins. Co. v. Kerr, 64 C. C. A. 251, 129 Fed. 723, 66 L. R. A. 569; York v. Washburn, 64 C. C. A. 132, 129 Fed. 564. Most of the important facts relied on by defendant city to defeat recovery appear in the pleadings. For this reason we are fortunately able to consider their merits unembarrassed by the rule just stated.
Does the complaint fail to státe a cause of action in this: that it fails to show that plaintiff, prior to the institution of the suit, presented to the common council of the city or some other municipal officer or body, its claim on whi'ch this action was based, for audit and allowance ?
Section 687 of the General Statutes of Minnesota of 1894 enacts as follows:
“Before any account, claim or demand against any town or county of tbis state for any property or services for which such town or county shall be liable shall be audited or allowed by the board of officers authorized by law to audit and allow the same, the person in whose favor such account, claim or ■demand shall be, or his agent, shall reduce the same to writing in items, and shall verify the same to the effect that such account, claim or demand is just and true; that the money therein charged was actually paid for the purposes therein stated; that the property therein charged was actually delivered or used for the purposes therein stated, and was of the value therein charged, and that the services therein charged were actually rendered and of the value therein charged.”
“When the whole work [referring to public improvements] has been completed by such contractor or contractors to the satisfaction of the board of public works, the amount or balance due him or them shall be audited or allowed by the common council of said city and shall be payable "out of the money applicable to the payment of such work.”
By the provisions of section 4, c. 3, of the charter, the council is required to bring to its assistance in the allowance of claims, the services of the recorder.
The Supreme Court of Minnesota, in construing section 687, has held that in all cases coming within its purview, the presentation of such a claim “to the officers who are vested with the power and authority to audit, adjust and allow the same” is a condition precedent to the right to maintain an action thereon. Bank v. Middletown, 67 Minn. 1, 69 N. W. 471; Board of County Commissioners v. Clapp, 83 Minn. 512, 86 N. W. 775. The controlling question, therefore, is whether the claim sued on in this case falls within the contemplation of the statute. Without expressing any opinion on the question debated at the bar, whether the language of the section “before any claim or demand against any town or county” is sufficiently comprehensive to include claims against cities, we assume from the reasoning of the Supreme Court in Odegaard v. City of Albert Lea, 33 Minn. 351, 23 N. W. 526, it to be so, and proceed to a consideration of the true meaning of the statute and the character of the plaintiff’s claim sued on. This statute first refers to “property or services” as alone forming the basis of the account, claim or demand, but the latter part of the section, by necessary implication, seems to provide that such property or services must consist either of money expended, property delivered or services rendered for the municipality, which may, in the usual and ordinary course be the subject of itemization. It obviously refers to “money, property or services” for which the city in the usual course of its administrative operations becomes indebted and for the payment of which it lawfully may and does assume a direct contractual liability. It does not comprehend claims for damages occasioned by the city for failure to perform its duty, like claims for negligence in failing to maintain proper or safe streets or in failing to abate nuisances when required. Such claims, in our opinion, cannot be the subject of itemization or treatment under section 687.
The present action, we think, does not sound in contract, but rather in tort. It is brought, not for the value of the property furnished or services rendered by the plaintiff to the city, but for failure of the city to perform its statutory duty to levy assessments. The complaint counts on a breach of that duty. There is no averment that defendant ever promised to pay the plaintiff for the work done and materials furnished by it. It could not lawfully do so and did not undertake to do so. The contract imposed no obligation upon the city to pay for the work done or for the materials furnished, ex
The fact that the measure of damages is the value of work and labor done and materials furnished does not determine the character of the action. Hitchcock v. Galveston, 96 U. S. 341, 24 L. Ed. 659. For another reason also, there was no legal necessity for the preliminary submission of plaintiff’s claim to the auditing board. The provisions of section 687 were “made in furtherance of a public policy to prevent needless litigation and to save unnecessary expenses and costs by affording an opportunity to amicably adjust all claims against municipal corporations before a suit is brought.” Bank v. Middletown, supra; Guthrie v. Olson, 44 Minn. 404, 46 N. W. 853. Prior to the institution of this suit, on July 16, 1903, the city and its officers had been perpetually enjoined from performing the contract of April 33d in whole or in part. The formal presentation of the claim would therefore not have served any of the purposes intended by the law making provision for it. The city could not have paid the demand and thus have saved trouble or expense. The presentation of the claim, in these circumstances, would have been an idle and useless act, and therefore was unnecessary.
Do the interlocutory and final decrees rendered by the state court in the Diamond Case defeat plaintiff’s right of recovery in this case? It is sufficient to consider this subject in the three general aspects argued at the bar. First: Was the contract of April 33d executed in violation of the temporary restraining order in the Diamond Case? •Second: Is the final judgment in the Diamond Case decreeing the invalidity of the contract of April 33d controlling upon this court? Third: Is the Barber Company by its knowledge of the pendency of the Diamond Case and its participation in the proceedings estopped by the final judgment in that case?
If the contract was made in defiance of the temporary injunction it was void and conferred no rights upon either party executing it with knowledge of the order. Union Trust Co. v. Southern Nav. Co., 130 U. S. 565, 9 Sup. Ct. 606, 33 L. Ed. 1043. It is conceded that defendant, though not a party to that suit, had full knowledge of the scope of the injunctive order prior to making the contract on April 33 d. The bill set forth generally all the grounds of complaint now urged against the validity of the executed contract and prayed for a temporary order restraining the city from entering into any contract for making the improvement in question "whereby the city should be required to pay any money therefor or whereby the city should be required to issue any certificates of indebtedness in payment thereof. The order as made followed the prayer. It enjoined the city and its officers “from entering into any contract for the boulevard
“The payment for said work to be made after the completion of the same and acceptance by the board of public works of said city out of money lawfully raised by special assessment upon real estate and property benefited by said improvement other than real estate belonging to said city of Mankato.”
Is the judgment of the Supreme Court of Minnesota in the Diamond Case, holding the contract of April 23d invalid, controlling upon this court ?
In so far as it construes a local law, the charter of the city of Mankato, under certain condition of facts, it is. This is settled by abundant authority, but in so far as it expresses the opinion of the state court on general principles of the law of contracts, or on the evidential value of facts* it clearly is not. As to such questions it is not only the privilege but the duty of this court which it owes to suitors entitled to invoke its jurisdiction, to exercise its independent judgment. Turning now to the opinion in that case, Diamond v. City of Mankato, 89 Minn. 48, 93 N. W. 911, 61 L. R. A. 448, we find very little said by way of interpreting the charter of the city. In fact, no new principle is enunciated. The court announced the generally accepted rule in which we fully concur, as follows:
“The law is well settled that where, as in this case, municipal authorities can only let a contract for public work to the lowest responsible bidder, the proposals and specifications therefor must be so framed as to permit free and*337 full competition. Nor can they enter into a contract with the best bidder containing substantial provisions beneficial to him, not included in or contemplated in the terms and specifications upon which bids were invited. The contract must be the contract offered to the lowest responsible bidder by advertisement.”
The court then proceeds to a consideration of the evidence and reaches the conclusion that in making the contract in question, the specifications were departed from in material respects. Such was the finding of the trial court, and the Supreme Court of the state concludes its opinion as follows:
“Upon the whole evidence, we are of the opinion that the finding in question is fairly sustained by the evidence and we accordingly hold that the contract was void.”
So it appears that the Supreme Court of the state was not concerned in the construction of a local statute but rather disposed of the case upon the evidence. Such a decision is not of controlling authority upon the federal courts. The plaintiff in the case was not a party to that action. It, a citizen of the state of West Virginia, availed itself of the right conferred upon it by law to submit its controversy to the federal court. We cannot shrink from the responsibility imposed upon us by blindly following the views entertained by any other court concerning the evidential value of some of the facts involved in the present case.
Another sufficient reason for holding that the Diamond Case, even if it were a construction of local law, is not of controlling authority in this case is found in the proof, which shows that all the facts which determine plaintiff’s right existed prior to the decision of the Diamond Case. Plaintiff entered into the contract in question on April 23, 1902, began work under it in May, 1902, and finished the work August 1, 1902. The Diamond Case was decided February 27, 1903. In such circumstances the federal courts do not hold themselves bound by the decision of state courts even in the construction' of local statutes. Louisville Trust Co. v. City of Cincinnati, 22 C. C. A. 334, 76 Fed. 296; Speer v. Board of County Commissioners, 32 C. C. A. 101, 88 Fed. 749, and cases cited; Burgess v. Seligman, 107 U. S. 20, 2 Sup. Ct. 10, 27 L. Ed. 359; Pleasant Township y. Ætna Life Ins. Co., 138 U. S. 67, 11 Sup. Ct. 215, 34 L. Ed. 864.
While a commanding sense of our duty to the parties in this case requires us to make an independent 'investigation into the facts, we take pleasure in saying that the high character and attainments of the Supreme Court of Minnesota well entitles its conclusion of fact or law to our most serious and respectful consideration. This we have conscientiously given in our deliberations over this case as will more at length appear when we reach a consideration of the merits.
Is the plaintiff estopped by the judgment in the Diamond Case from asserting the validity of the contract in question?
At the outset of the consideration of this question we must bear in mind that the Barber Company was neither a party nor in privity with any party to the Diamond Case. Certainly no recovery was sought against the city, for which, by reason of contract obligation, the Barber Company stood as indemnitor. While the evidence shows
“I have not been able to find any one who claims to have authority to appear for the Barber Asphalt Paving Company. Therefore I am unable to do anything.”
Not only so, but the attorney for Diamond testifies in this case as follows: That some time during the pendency of the Diamond suit before the trial began, “the quesion came up as to whether or not the plaintiff would make an application to the court to have the Barber Asphalt Paving Company interpleaded, * * * and it was decided by the attorneys for the plaintiff that, in view of the circumstances, they did not feel as though they were justified in having them inter-pleaded, and .1 called on Messrs. Pfau & Pfau with reference to getting them to stipulate to come into the case and to have (their client) the Barber Asphalt Paving Company brought in as a party. We talked the matter over several times and we thought it very likely
“They would take the matter up with the company and let me know later, and at a later conversation * * * they informed me that they did not wish to stipulate themselves into the case.”
From this evidence it is obvious that neither Diamond nor the city understood while the case was progressing, that the Barber Company was a party by representation or otherwise to that suit, but on the contrary both considered that it was not a party. The city desired to make it a party, but Diamond, who controlled the case, did not deem it wise to do so. To indulge the presumption now asked of us, that because the Barber Company agreed to pay for the services of some attorney whom the city counselor might select to assist him and did subsequently pay the same, it thereby became a party to the suit and is conclusively bound by the judgment rendered, would contradict the undoubted fact that the Barber Company was not, during the litigation, considered by either of the nominal parties to the suit as affected by it. But without the aid of contemporaneous construction placed upon it at the time by the parties, then and now interested, we have no difficulty in reaching the conclusion that there was no sufficient participation in that suit by the Barber Company to bind it by the judgment rendered. It took no .control of the litigation. It had no right or opportunity to do so. The assistant whom the city counsel- or had selected took no orders or instructions from it. He worked under and subject to the city counselor. The Barber Company was interested to have no unfavorable precedent established which would affect its right of recovery for work done by it, but it was in no sense a party to the case so as to be bound by the judgment rendered in it. The Supreme Court of the United States, in Stryker v. Goodnow, 123 U. S. 527, 540, 8 Sup. Ct. 203, 31 L. Ed. 194, considered a similar case to this and expressed itself as follows:
“We have not overlooked the fact that a brief was filed at the hearing in this court, on behalf of the railroad company to support the claim of Wolcott that the title of that company was the best. Such a proceeding did not make the railroad company a party to the suit or bind it by the decree. Being interested in the question to be decided the company was anxious to secure a judgment that could not be used as a precedent against its own claims in any litigation that might thereafter arise in respect to its own property. It is not an uncommon thing in this court to allow briefs to be presented by or in behalf of persons who are not parties to the suit, but who are interested in the questions to be decided, and it has never been supposed that the judgment in such a case would estop the intervener, in a suit of his own which presented the same questions. It could be used as a precedent but not as an estoppel in the second suit.”
In the case of Litchfield v. Goodnow’s Administrator, 123 U. S. 549, 550, 8 Sup. Ct. 210, 31 L. Ed. 199, the Supreme Court, in treating of a similar subject, says:
“The defense of prior adjudication is disposed of by the fact that Mrs. Litchfield was not a party to the suit in which the adjudication relied on was had. At the time of the commencement of the suit she was the owner of her lands, and they were described in the bill, but neither she nor any one who represented her title was named as a defendant. She interested herself in securing a favorable decision of the questions involved as far as they were*340 applicable to ber own interests, and paid part of tbe expenses; but there was nothing to bind her by the decision. * * * She was indirectly interested in the result, but not directly. As the questions affecting her own title and her own liability for taxes were similar to those involved in the suit, the decision could be used as a judicial precedent in a proceeding against her, but not as a judgment binding on her and conclusive as to her rights. Her rights were similar to, but not identical with, those of the persons who were actually parties to the litigation.”
In the case of Schroeder v. Lahrman, 26 Minn. 87, 1 N. W. 801, the Supreme Court of that state considered the present subject, and there says:
“The general rule is that a judgment operates as an estoppel only as between parties and their privies. There is a class of eases which hold that one not a party of record, but who is virtually the party in interest in the matter in controversy, and who, as between him and defendant, has the right or is under obligation to defend the action, and who does, in fact, conduct the defense, is to be regarded as a party, for the purpose of giving effect to the judgment as an estoppel. These have generally been cases where the person conducting the defense, without being a nominal party, was a master whose servant was sued for an act done by his authority, and in which he was bound to indemnify him, or a creditor who was bound to indemnify a sheriff for ah act done by his direction. * * * The person not a party to the record nor a privy, against or in favor of whom it is sought to use a judgment as an estoppel, must not only, in fact, take part in the controversy, but must do so openly and to the knowledge of the opposite party, and for the defense of his own interests.”
In the case of Patterson v. Barber Asphalt Paving Company (Minn.) 101 N. W. 1064, the Supreme Court of Minnesota, having under consideration its own prior decision of the Diamond Case, and speaking with direct reference to it, says:
“Defendant asphalt company was not a party to that action and is not bound by the judgment therein.”
We have no doubt of the proposition that, however valuable the decision of the Diamond Case may be as a precedent, it does not operate as an estoppel upon the plaintiff in this action, or in any manner bind it to the conclusion there reached.
Is the Patterson Case such a lis pendens as subjected plaintiff to the judgment which might ultimately be rendered in it?
It was recently decided by this court in the case of Barber Asphalt Paving Co. v. Page Morris, United States District Judge, 132 Fed. 945, 66 C. C. A. 55, 67 L. R. A. 761, that the pendency in a state court of Minnesota of a prior action between the same parties for the same cause, furnishes no ground for abatement or stay of proceedings in a subsequent action brought by the same plaintiff in a federal court, where no conflict arises between the courts over the custody or dominion of specific property. The following cases are there cited fully sustaining its conclusion: Stanton v. Embrey, 93 U. S. 548, 554, 23 L. Ed. 983; Standley v. Roberts, 8 C. C. A. 305, 59 Fed. 836, 844; Merritt v. Barge Co., 24 C. C. A. 530, 79 Fed. 228, 233; Ogden City v. Weaver, 47 C. C. A. 485, 108 Fed. 564, 568; Green v. Underwood, 30 C. C. A. 162, 86 Fed. 427, 429.
In Merritt v. Barge Co., supra, Judge Thayer, in delivering the opinion of this court, makes use of the following language:
*341 “In the case of Sharon v. Terry (C. C.) 36 Fed. 337, 359, 360, 1 L. R. A. 572, it was conceded by Mr. Justice Field that a plaintiff has a right to sue on the same cause of action in different jurisdictions, where nothing more than a personal judgment against the defendant is demanded; and, if such be the law, we can see no sufficient reason for denying the right of a defendant who has been sued in one jurisdiction for the recovery of a personal judgment against him, to bring an action against the plaintiff in another jurisdiction, although that action is of such nature that it may require a determination of the same issue which is involved in the first suit."
Such appears to be the settled rule of law in cases not involving the care or disposition of property in custodia legis. In that class of cases, as will be presently seen, different principles are applicable. The justice of the rule when considered in connection with the facts of the present case abundantly appears. The present plaintiff was a party defendant in the Patterson Case. That case, for some unexplained reason, was allowed to sleep from June 30, 1902, till April, 1904. Plaintiff, after having fully completed its work, commenced this action and diligently prosecuted it to final judgment, which was rendered in the'court below October 25, 1904. Not till after this suit was begun was any activity displayed in the Patterson Case, and judgment on the merits was rendered in that case several months after plaintiff secured its judgment in this case. Application of any other rule than that just announced as is seen by the history of this case might not only deprive a nonresident suitor of his right to invoke the jurisdiction of the federal courts but might subject him to delay and embarrassment, which, without fault on his part, would seriously damage him, if not utterly defeat his right of recovery.
Our attention is called by defendant’s counsel to a line of cases represented by Tilton v. Cofield, 93 U. S. 167, 23 L. Ed. 858; Whiteside v. Haselton, 110 U. S. 296, 4 Sup. Ct. 1, 28 L. Ed. 152; Scotland County v. Hill, 112 U. S. 183, 5 Sup. Ct. 93, 28 L. Ed. 692; Minneapolis, etc., Association v. Canfield, 121 U. S. 295, 7 Sup. Ct. 887, 30 L. Ed. 962, and it is claimed that they afford authority for their contention. We do not so understand the doctrine of those cases. They represent a well-defined class universally excepted from the general rule which we have applied to the determination of the present question. Either title to real estate qr to some specific personal property which actually was in custodia legis or practically so by operation of an injunctive order restraining interference with them, is involved in them. In such cases the judgment sometimes operates as res adjudicata or the pendency of the suit subjects to its result, all parties who acquire an interest in the property pendente lite from the parties litigant. That doctrine, as already seen, is not applicable to a case like this where only a personal judgment is demanded even though it may require a determination of the same issue which was involved in the first suit. Merritt v. Barge Co., supra.
Did the departures and variations from the specifications on which bids were solicited and received, made in the contract as finally executed between the Barber Company and the city, avoid the contract on general principles of law governing the case?
When any public improvement is to be made the charter of the city of Mankato requires that “a plan or profile of the work to be
It is not contended that there was any want of power in the city to make the contract. All prerequisite steps were taken to that end. The only questions are whether there were such irregularities in the exercise of the power as to avoid the contract. It is conceded in argument by defendant’s counsel that there is no evidence of any actual fraudulent collusion between the city and the Barber Company to give the latter some advantage; in fact, a careful consideration of the record convinces us that both the city and the Barber Company acted in the utmost good faith. Their only purpose was to make a contract and have the work done according to law. The decretal orders which interested parties secured against either the city or the contractor were obeyed scrupulously and neither party appears to have had any reason to believe there were any legal obstacles to entering into the contract and performing the same until sometime after it was finally executed and its performance entered upon. Now did the contract of April 23d contain any substantial provisions beneficial to the Barber Company not included in or contemplated by the terms 'of the specifications upon which bids were invited? It is urged by counsel for the city that it did in three particulars. A careful consideration of the original specifications (see statement of case) shows that the' contractor after the expiration of 120 days from the completion and acceptance of the work, was to receive full payment for it, either out of money
“Tlie payment for said work to be made after the completion of tbe same and acceptance of the board of public works of said city, out of moneys lawfully raised by special assessment upon real estate and property benefited by said improvement other than property belonging to said city.”
This change, it seems to us, was clearly to the disadvantage of the contractor; most certainly not beneficial to it. It required it to surrender the contingent personal obligation of the city as contained in the original specifications and all recourse to any assessment against real estate or property of the city, some of which fronted on the proposed improvement. Moreover, the contractor gave up the assurance that it would receive compensation practically in 120 days after it had completed the work; and accepted, in lieu thereof, the obligation of the city to proceed with due diligence to make the necessary assessments. The uncontradicted testimony is that it had for a long time been the custom not to levy an assessment until after the work under the contract was finished. Accordingly, notwithstanding the provisions of the charter authorizing a levy of an assessment as soon as the contract is let, it is established as a fact, that, in the usual course of things, the contractor, under the amended specifications and contract as made, would certainly not have received payment for its work any sooner than it would if the work had been done under and subject to the original specifications. After a careful investigation of this question and deferential consideration of the opposite view entertained by the Supreme Court of Minnesota in the Diamond Case, supra, we are irresistibly brought to the conclusion that the change worked no such benefit to the contractor as within the rule of law already announced, avoided the contract. On the contrary, we are strongly impressed with the good faith of both parties. The city was embarrassed with litigation tending to prevent ,the desired improvement. In a spirit of conciliation the successful bidder, at the request of the city, renounced apparent advantages and made concessions which rendered the improvement possible. Moreover, the finding that this change was not beneficial to the contractor, on direct issue joined, in accordance with the settled practice of this court in cases submitted to the trial judge without a jury, when there is a general finding only, is conclusive upon us.
The other two departures from the language of the specifications remain to be considered. The specifications contained a provision
Did these modifications of the original specifications avoid the contract containing them? The learned trial judge, whose findings of fact in cases like this, as before stated, are conclusive upon us, determined that neither of them worked any substantial benefit or advantage to the contractor. We might properly, therefore, end this discussion by the application of the rule adverted to, but as this is an important case,* and as the Supreme Court of Minnesota, after diligent and faithful consideration, has reached a conclusion different from that which our judgment dictates, we feel inclined to express more fully the reasons for the conclusion reached by us. We- recognize to the fullest extent the necessity for holding municipal corporations to all the limitations imposed upon them by law. We also recognize the necessity of rigidly subjecting them to the observance of all safeguards provided by law for the purpose of securing honest and fair administration of public affairs; and we fully agree with the reasons assigned by the Supreme Court of Minnesota for requiring a strict enforcement of the rule laid down by that court for the guidance of municipal authorities in making contracts for public improvements. But the rule itself, heretofore quoted in full, is not a fast and unyielding rule. It does not prohibit all variations from the specifications. The charter of the city requires the execution of a formal contract after the “lowest reliable and responsible bidder” is ascertained, and it must be such as is approved by a two-thirds vote of the city council. The phraseology of the contract is left to be determined by the council. The Supreme Court of Minnesota, construing the charter provisions on this subject, has declared that the contract must not contain substantial provisions beneficial to the contractor which are not included in or fairly contemplated by the terms of the specifica
The addenda to the effect that the city would not enforce the penalty of $20 a day for delay in the event of such failure came about through “unavoidable causes” when considered in the light of the specifications which were in effect written into the contract, does not, in our opinion, materially affect the obligation assumed hy the contractor. “Unavoidable” causes, literally defined, are inevitable causes; such that no human power could prevent. It would be an inequitable and unwarrantable application of the law, to enforce a penalty against any person because acts of God or the public enemy, over which such person in the exercise of the highest degree of care could have no control, had produced a breach of the condition which nominally incurred the penalty. We think this addenda is nothing more than a reasonable construction placed by the parties themselves upon the terms of the specifications as they originally stood, and may be said to have been fairly contemplated by them. The • same views might dispose of the addition of the word “preventable” in the guaranty clause, but there are additional reasons why the introduction of this word does not vitiate the contract. The original specifications after the clause providing that the contractor should keep the street in repair for 10 years read as follows:
“If during that period it is found that the pavement is defective from over-burning or improper mixing of material, or any other cause, or that the work has been done in an unskillful manner,” the contractor shall, etc.
This language clearly imports an obligation to do something, the necessity for which should arise from some act of commission or omission by *the contractor, which in its nature is preventable by him. The general words, “or any other cause,” by a familiar rule of construction expressed by the maxim noscitur a sociis, do not enlarge the scope of the particular words in the midst of which they appear. The addition of the word “preventable” therefore has relation to causes of the same kind as those particularized, namely, to over-burning or improper mixing of material, and do not diminish or affect the scope of the contractor’s obligation. But if the words “or any other cause” are not limited by the context as just indicated, the language of the specifications in our opinion did not impose upon
The foregoing constitute all the alleged departures from the specifications which counsel for the city rely upon to avoid the contract upon its merits. We have given them a consideration commensurate with the fact that a majority of the Supreme Court of Minnesota, for whose opinions we entertain high respect, reached a result different from that reached by us, but we cannot conscientiously agree with them. We think Brown, J., who dissented from the opinion of the majority in the Diamond Case, expressed the correct view when he said:
“If tbe court is to be understood as holding that public authorities engaged in a lawful public improvement may not, as to such details as are here involved in the exercise of sound judgment, in good faith and without fraud or collusion, change and modify the terms and provisions of the contract under which the work is to be performed, from the specifications and conditions made part of the proposals and invitation to bidders, X dissent.”
Accordingly we conclude that the case, on its merits, is with the plaintiff and we cannot give our sanction to the refusal by the city to make the necessary assessments — the only thing, which in law it could do — to provide means for paying for the improvement which it is now enjoying.
'Is the contract in question void because it creates an indebtedness against the city in excess of a permissible limit fixed by statute?
An answer to this question necessarily involves a consideration of the nature and character of the relief sought in the present action, and incidentally, a consideration of defendant’s contention that no liability exists against the city for failure to make assessments in order to pay for plaintiff’s work. Section 3 of chapter 304, p. 334, of the General Laws of 1893, is as follows:
“No city in this state shall at any time be authorized to issue bonds or to incur any debt or liability of any kind for any purpose in excess of 5 per cent, of the assessed valuation of the taxable property of such city according to the last preceding assessment.”
There is much evidence tending to show that the contract price for making the improvement in question would cause the indebtedness of the city to transcend this statutory limit, but we do not feel called upon in the view we take of another question, to critically consider this evidence. In our opinion, the contract did not create a debt against the city within the meaning of the statute. -Nor is the cause of action in this case founded on a debt. The contract obligated the officers of the city to perform a duty which the law imposed upon them and nothing more.
In Peake v. New Orleans, 139 U. S. 342, 361, 11 Sup. Ct. 541, 35 L. Ed. 131, the Supreme Court of the United States dealing with a similar question, says:
“When a contract for local Improvements is entered into, the contractor must look to the special assessments, and to them alone, for his compensation, and if they fail, without dereliction or wrong on the part of the city, neither justice nor equity will tolerate that it be charged as debtor therefor.”
This court, in Barber Asphalt Paving Company v. City of Denver, 72 Fed. 336, 340, 19 C. C. A. 139, makes use of the following language:
“If a municipal corporation which has the power to make a contract for street improvements, contracts for them and stipulates in the contract that the agreed price of the improvements shall be paid to the contractor out of funds to be realized by assessments upon abutting property and the city has power to make the assessment but fails to do so or fails to make valid assessments and thereby to provide a fund out of which the contractor may receive the price of his labor and materials, the city is primarily and absolutely liable to pay the contract price itself.”
The Supreme Court of Iowa in a recent case involving substantially the questions before .us, Fort Dodge Electric L. & P. Co. v. The City of Fort Dodge (Iowa) 89 N. W. 7, citing many of its former decisions in support, very satisfactorily answers the contention of defendant’s counsel in this case. It says:
“The city did not attempt to become indebted for this portion of the improvement, nor did the contractor agree to take the obligations of the city therefor. The liability of the city arises from its failure to discharge a duty which it could constitutionally discharge, arising out of a particular relation between the parties. It has been fully settled that the constitutional limitation does*348 not apply to an Indebtedness arising out of a tort committed by tbe city. * * * Strictly speaking, an indebtedness cannot be created except by contract, either expressed or implied; and we feel constrained to hold that the indebtedness prohibited by the constitution is such as is created by the voluntary action of both the debtor and creditor. * * * It was not by any voluntary act of the contractor that the city became indebted to him; and it was not contemplated by the contract that in this respect the city should become his debtor; but, by its own negligence in failing to perform a duty which it had lawfully assumed, a claim against the city in favor of the holder of these certificates has arisen. * * * The liability of the city here is one growing out of negligent omission to do that which the city had the right to-do, and which, if done, would not have involved any creation of indebtedness, and therefore we think the constitutional limitation does not apply.”
In the case of Denny v. The City of Spokane, 25 C. C. A. 164, 79 Fed. 719, decided by the Circuit Court of Appeals for the ninth circuit, it appears that the city entered into a contract with a contractor for the making of a public improvement, to be paid for by levying and collecting an assessment against property benefited. For reasons unnecessary now to recite, the city was dilatory in levying a valid assessment. The court held that an action for damages by the contractor against the city for a delay in collecting the assessment was not within the purview of the prohibition against creating an. indebtedness beyond the statutory limit. See, also, Barber Asphalt Paving Co. v. City of Harrisburg, 12 C. C. A. 100, 64 Fed. 283, 29 L. R. A. 401; Hitchcock v. Galveston, 96 U. S. 341, 24 L. Ed. 659; Warner v. New Orleans, 167 U. S. 467, 477, 17 Sup. Ct. 892, 42 L. Ed. 239.
For the foregoing reasons we are of opinion that the contract of' April 23d created no debt against the city within the meaning of the statute limiting the amount of indebtedness and that a legal liability was created by the city in failing and refusing to levy assessments to pay plaintiff’s demand.
The conclusion reached on the questions last discussed is decisive-of the next question urged by counsel for the city, namely, that because a contract between the Barber Company and the city creates a debt against the city, it is void for the reason that there was no-money on hand or appropriated, levied or in process of collection when it was incurred, applicable to its liquidation, as required by the city charter. This contention likewise misconceives the obligation imposed upon the city by the contract as well as the nature of the demand sued for in this action.
The two following questions remain to be considered: (1) Was the contract void because the specifications prevented free and fair competition in that they limited the bidders to the use of Trinidad Pitch Lake or Bermudez asphalt? (2) Were the damages recovered excessive in that they embraced the cost of work done by plaintiff outside the limit of 30 feet fixed by the contract or beyond the reasonable scope of the contract as made?
Issues were joined on these questions, evidence was heard on them, and the trial court gave them careful attention. The general finding,, well supported by substantial proof, disposes of them in favor of plaintiff and we see no reason for disturbing the conclusions reached.
As a result of all we are satisfied that the judgment below was for the right party, and should be affirmed. It is so ordered.