192 Iowa 61 | Iowa | 1921
On May 1, 1917, the board of supervisors of Osceola County, by resolution, established Drainage District No. 26, containing lands in Horton and Fairview Townships and certain highways adjacent to the land. Thereafter, a tax was levied against the agricultural lands and highways. The drainage district was established on petition by the township trustees, asking that a drainage district be established for the purpose of draining highways surrounding certain described lands in Horton and Fairview Townships, Osceola County. About November 2, 1917, in pursuance of notices for bids, the board of supervisors entered into a contract with the Crowley Construction Company for constructing the improvement in said district, to furnish all labor and materials, excepting certain materials, for
Thereafter, on the 6th of August, 1919, before the work was to be completed under the contract, and while the company was doing some, but very little, work on the improvement, and while no part of the work was finished, and when, on a large part of the improvement, no work had been done, the board, on behalf of the drainage district, served notice on the defendant the Crowley Construction Company of intention to cancel all the rights of the construction company under the contract, and to hold the company liable for the forfeiture of all estimates due or to become due, as liquidated damages, and to make the cash deposited by the construction company for a bond, liable for the damages because of the failure to properly perform its contract. Thereafter, on about the 8th day of September, 1919, the board, acting on behalf of the drainage district, entered into a new contract with the defendant Crowley Construction Company, whereby the construction company was to finish the work of certain portions of the improvement upon which the company had already done some work, which work was specifically itemized in the contract, and amounted to $6,778, as itemized under the former contract, upon which the company had received in warrants upon estimates $4,458.40, leaving due the construction company, when it had finished its work under the new contract, the sum of $2,319.60. The construction company finished the work under the new contract; but, before payment had been made to it, this action was begun, to restrain the board of supervisors and county officers from making payments under the new contract.
The so-called “new contract” was entered into by the board of supervisors, acting for the drainage district, and the construction company, in compromise of 'the controversies pending between them. By the terms of the original contract, the construction company was to have cash for their work as they progressed with the work, under certain estimates to be made by the engineer. A bond issue was authorized by the board, and bonds issued and sold. The bonds were legally defective, and
At the time the board entered into the new contract, this situation confronted the board: The Crowley Construction Company would complete the work on the segment of the improvement provided for in the contract, at the prices of the original contract, amounting to $6,778, and credit thereon warrants which had been issued to it in the amount of $4,458.40, leaving due it $2,319.60, to be paid upon completion of the job. It would cost from $8,000 to $10,000 to secure another contractor to complete the work started by the company and not completed by it up to the point then reached, — the work provided for in the new contract. The Crowley Construction Company, a corporation, was insolvent, and recovery against it for anything in addition to the cash bond of $4,620, plus the' deferred 20 per cent, which amounted to $1,114.60, aggregating $5,734.60, was impossible. The board had served notice on the company of intention to cancel the original contract. The time for completion of the work under the original contract had not expired, and the company might recover for the work they had done, quantum meruit. The construction company had not received pay for the work done, as provided in the original contract. Scarcity of labor, caused by the World War, would be urged by the company as an excuse for not having progressed with the work, as provided in the contract.
The record shows that the board made full investigation of. facts affecting the issue involved, before entering into the compromise or new contract. It is conceded that the board acted, in the execution of the compromise or new contract, in perfect good faith.
Such was the situation under which the board entered into the new contract, whereby controversies between the board and the construction company were compromised, and whereby the
The issues presented to the lower court were whether or not the board of supervisors, having let the original contract upon notice, and as a result of competitive bidding, then had authority to release the Crowley Construction Company and its cash bond from all liability for failure to complete the original contract, by entering into the new contract; and whether or not the board acted ultra vires when, without notice to the appellant taxpayers, it entered into private negotiations, and attempted to sublet, by the new agreement, a portion of the work provided for in the original contract. The court held that the board had authority, without notice to the township trustees and to the taxpayers within the district, to enter into the second or new con-ract, — -that is, that no notice as to the second contract was required; that Section 1989-alO, of Title X, Supplement to the Code, 1913, providing for completion of work, does not, in terms, require notice to the taxpayers. In this holding, the court was correct. The notice prior to an original contract relates to the character and extent of the work proposed, and not to the terms of the contract. Bids are made and the original contract drawn after the notices, without knowledge or notice to the landowners as to the particulars regarding such matters. Section 1989-alO.
Appellees cite Humboldt County v. Ward Bros., 163 Iowa 510, in support of their contention that notice to them and to the trustees of the townships was required and mandatory. We think nothing contrary to the court’s holding is held in that case.
Then we come to the remaining and important question to be determined: Whether or not the board was in default on the first contract, or rather, whether there was siifficient doubt
It is a general rule that the law favors compromises; and if the board had authority to make a compromise, — it being conceded that the board was acting in good faith, — will the court attempt to control the discretion of the board in making a compromise contract? In this case, the good faith of the board is conceded. The first contract called for the payment of cash, and the company did not, in terms, agree to accept improvement certificates or warrants not backed by cash. Cash could be raised in two ways: (1) By sale of bonds, or (2) by the levy of assessments. It was not for the company, under the contract, to determine which course should be adopted. The contractors were entitled to be paid in cash, at the times and in the manner provided by statute. It appears from the record that the board, in issuing its bonds, pursued a legally defective method of raising the cash, and thereby delayed payment beyond the time in which the contractors had.the right to expect payment in cash; and there seems to be at least some question as to whether the board had not thereby breached the contract. True, plaintiffs claim that the contractors had waived any such breach. But if there was a breach, it might have been regarded as continuing. The board, in good faith, believed that its rights under the contract, and also the rights of the contractors under the contract, were not free from doubt. Under that situation, the court below was not disposed to overturn the action of the board in entering into the new contract which compromised the controversy between it and the contractors, and provided for the finishing of the work on the improvement, so far as any work had been done upon the portion of the improvement which the new contract covered, and relieved the contractors from completing the portion of the improvement on which they had done no work.
This drainage district was petitioned for and established under Chapter 2-B, Title X, of the Supplemental Supplement to
Under this chapter, the board was not required to advertise for bids, or to let a contract, but they could do the work in any way they thought was for the best interests of the district. The board entered into the compromise contract with the contractor in good faith, and under the advice of the county attorney and the county engineer.
It seems clear to us that the district was established under Chapter 2-B. The appellants make some contention that, because of the character of the land, and because the landed interest is far greater than the highway interest, the district was, in fact, established under Chapter 2-A of Title X of the Supplement to the Code, 1913. However that may be, it is provided in Chapter 2-A that, upon the failure of the contractor to complete his contract, the board may either readvertise for bids and relet the work by separate contract, or the board may take the work over and complete the work without readvertising for bids, or without reletting the work to any contractor.
Appellants’ contention that notice must be given to the taxpayers and trustees within the district priór to entering into a new contract, if a new contract is necessary to the completion of the improvement, we think is not well taken. Section 1989-all relates entirely to changes in the dimensions or location of the improvement, and not to the procedure to be followed in constructing such improvement or drain. This section does not require a notice to taxpayers, unless some change is- made in dimensions or location of improvement of the district.
The Iowa drainage law provides for a notice to property owners of the proceedings for the establishment of a drainage
As before mentioned, it is contended by appellee that the proceedings and establishment of the district were under Chapter 2-B, Title X; while appellant contends that the district was established under Chapter 2-A, Title X. The parties, in their stipulation of facts, agree that the proceedings were under Chapter 2-B. As we view it, it makes little difference under which chapter the district was established, in determining the authority of the board to make the compromise or new contract. Under Chapter 2-A, the board, in letting the original contract, must advertise for bids, and let the contract to the lowest responsible bidder. Chapter 2-B does not require letting of the contract by competitive bidding. There is no manner specified in which the board shall let the contract or do the work. Chapter 2-B (Sec. 1989-b11, Suppl. Supp., 1915) provides:
“Improvements herein contemplated shall be constructed by the board of supervisors under the supervision and expert knowledge of the county engineer. ’ ’
This is the only provision in Chapter 2-B relative to the construction work. The board of supervisors, under whatever chapter they assumed to proceed, let the work under the original contract by competitive bidding. The board, having been given
The power to institute and prosecute a suit on behalf of the district for damages for failure to perform a contract would seem to include authority and the right to settle the same by compromise contract. Grimes v. Hamilton County, 37 Iowa 290; Town of Petersburg v. Mappin, 14 Ill. 195; Mills County v. Burlington & M. R. R. Co., 47 Iowa 66; Collins v. Welch, 58 Iowa 72; Allen v. Cerro Gordo County, 34 Iowa 54.
The conclusion is warranted, under the record, that this new contract was not improvidently made. We do not have before us whether an improvident contract of compromise would be upheld, and we do not pass upon.that question.
Supporting the authority of public corporations to compromise claims, see Agnew v. Brawl, 124 Ill. 312 (16 N. E. 230); State v. Martin, 27 Neb. 441 (43 N. W. 244).
A controversy between the parties was sufficient to con
We conclude that the trial court was right in permitting the compromise or new contract entered into by the board with the construction company to stand, and in denying plaintiff’s prayer for injunction, and in dismissing petition. Accordingly, decree and judgment of the trial court are affirmed. — Affirmed.