237 S.W. 182 | Mo. Ct. App. | 1921
This is a suit in equity, instituted in the circuit court of Ripley county. On change of venue the cause went to the Cape Girardeau Court of Common Pleas where a trial, before the court sitting as a Chancellor, resulted in a decree in plaintiff's favor, from which the defendant prosecutes this appeal.
It is alleged that the contractor, as required by law, executed a bond, upon which this plaintiff, the Massachusetts Bonding Insurance Company, became surety for the faithful performance on the part of said contractor of the covenants and agreements contained in the contract aforesaid, which bond is likewise set out in the petition; that the contractor fully completed all of the work to be done by him under the contract, and turned the building over to the district, which accepted the same, but that the contractor failed to pay all of the bills for labor and material furnished on said building; and that plaintiff, "as it was compelled to do by having signed said bond," paid all bills for material furnished *563 and labor performed on the building remaining due and unpaid, amounting in the aggregate to $4136.21. It is alleged that of said contract price, to-wit, $22,592, the school district paid to McCully, and to this plaintiff and upon its orders, the sum of $18,995.12, leaving a balance of $3596.88 remaining due and unpaid on said contract.
And it is alleged that by reason of the payment by plaintiff of the said bills for material and labor, plaintiff was "in equity subrogated to all the rights, equities, securities and monies which the materialmen, whose bills it had paid, had in and to all of the rights, equities, securities and monies which W.J. McCully had and all of the rights, equities, securities and monies which said Doniphan School District had, and which constituted a part of the twenty per cent so retained by it as aforesaid," by reason whereof plaintiff was entitled to have paid to it by the district, out of the money so retained by it, the sum of $3596.88.
The petition further alleges that on April 6, 1913, the Board of Education of said district, wrongfully, and without authority of law, and in disregard of the rights of plaintiff, and before the contractor had submitted receipts showing payment in full for all such material and labor or the certificate of the architect showing such payment, paid out of the said funds retained by it, as aforesaid, the sum of $2279.58 to the defendant bank, in payment of an individual debt of said contractor to defendant; and that defendant bank was neither a laborer on nor had it furnished any material to said building; that the defendant, at the time of the payment of said money to it, knew the purpose for which said fund was reserved by the school district, that the same was not subject to the payment of the individual debts of the contractor, knew of plaintiff's said right of subrogation and knew that the school district had no authority to pay defendant's claim out of said fund. And it is averred that the said payment to defendant was a wrongful and unlawful diversion of the funds so held by the school district, and a fraud upon the rights of plaintiff; *564 and that by reason thereof plaintiff has been damaged in the sum of $2279.58, and the defendant has become and is indebted to plaintiff in said sum, with interest from April 6, 1913. Judgment is prayed accordingly.
The answer then alleges that on April 1, 1914, the school district was made acquainted with said assignment by McCully to defendant, and on April 6, 1914, the district accepted the same and agreed to and did pay to defendant out of the fund above mentioned the sum of $2279.58, being the amount remaining in the hands of the School Board of said district due defendant by virtue of said assignment.
The answer further alleges that to secure this plaintiff against loss by reason of any of the facts pleaded in the petition, McCully has assigned and transferred to plaintiff securities and property of various kinds which in the aggregate "exceed in value any obligation or indebtedness that might arise and be owing from said McCully to this plaintiff growing out of any obligation that it might be compelled to pay by virtue of the bond set out herein;" and as a result thereof McCully has become insolvent, whereby defendant is deprived of any remedy at law or in equity as against him, whereas plaintiff is amply protected against any loss that it may sustain in the premises.
And the answer further alleges that on October 8, 1914, the plaintiff, with full knowledge of the facts pleaded in the petition and in the answer, brought a suit in the circuit court of Ripley county, Missouri, against said school district, for the sum of $3596.88, based upon the same facts upon which plaintiff now asks judgment against this defendant, which suit was prosecuted to a final judgment, which was affirmed on appeal; and that plaintiff thereby "elected to pursue the trustee of the trust alleged in plaintiff's petition, instead of pursuing the alleged trust fund therein mentioned;" and that such election precludes plaintiff from pursuing the alleged trust fund and operates as a bar to the prosecution of this suit.
Attached to the answer are exhibits consisting of the pleadings and the findings of fact and conclusions of law in the case of Massachusetts Bonding Insurance Company v. The School District of Doniphan, referred to *566 in the answer, together with the judgment and mandate of the Springfield Court of Appeals in that case.
To sustain the averments of the petition, not admitted by the answer, plaintiff read in evidence the testimony of a number of witnesses as contained in the bill of exceptions in said cause of Massachusetts Bonding Insurance Company v. The School District of the City of Doniphan. This testimony, so far as it need now be noticed, shows that under said contract of June 26, 1913, work was begun upon the building in July or August of that year; that while the contractor completed the building, in January, 1914, he did not pay all of the bills for material used therein; and that plaintiff paid bills for such material totalling, in face value, $4136.43. However, it appears that plaintiff did not pay all of these bills in full, but obtained certain deductions from quite a number of them; the total thus paid by plaintiff appearing to be approximately $3849.21, *567 this being the amount which, it appears, on the trial of the case of this plaintiff against the school district the court found to have been paid out by plaintiff on account of such bills.
In defense defendant likewise read in evidence the testimony of a number of witnesses contained in the bill of exceptions in said suit against the school district, and adduced other evidence as well. The testimony of the cashier of the defendant bank contained in said bill of exceptions was read in evidence and he was also called as a witness. From his testimony it appears that McCully first came to the bank about July 10, 1913, and stated that he had the contract for the erection of a new high school building, but did not have money to pay the bills that would arise in the course of the construction thereof, and wanted to arrange for a loan; that McCully stated that the only security he could offer was the contract which he had, under which the school board would retain twenty per cent of the contract price which would be "abundant margin" to protect the bank.
It appears that the first loan made to McCully was on the date last mentioned, and was for $300. According to the testimony for defendant other loans were made to him in August, September and October of that year; and on December 29, 1913, McCully executed a note to the bank for $1000, and a note on January 6, 1914, for $1500. He had an account at the bank, and, according to the testimony for defendant, all of his notes were paid by him, either by checks given by him against his account or by charging the notes to his account, except the amount due on the last two notes, and upon these was ultimately credited the balance in his account, leaving due thereon $2279.58. The evidence is that the bank notified the school board that it looked to the Board for the payment of its claim against McCully from the twenty per cent of the said contract price retained by the school district. The cashier admitted that no written assignment was made by McCulley *568 to the bank of any interest claimed by him in the fund so retained by the district.
The testimony of members of the school board, and records of that body introduced in evidence by defendant, show that on April 3, 1914, at a meeting of the school board, a representative of this plaintiff, one Schermerhorn, presented a written assignment, of date April 2, 1914, executed by McCully purporting to assign the rights of the latter in his said contract to this plaintiff, and insisted that the school board pay plaintiff the balance of the contract price remaining in its hands, but that the board refused to do so "because said contractor had failed to produce receipted bills showing payment of all sums for work and labor done and material furnished in the erection of said high school building." And the record of this meeting recites that "the Board insisted said company (plaintiff) should pay the indebtedness due the Ripley County Bank, being two notes aggregating $2500, as well as all other bills that had not been paid." And on April 6, 1914, the school board ordered that from the funds remaining in its hands as aforesaid, defendant bank be paid said sum of $2279.58, by warrant drawn by the clerk, upon the assignment and surrender to the board of said notes and the giving of a bond by the bank, in the sum of $5000, to protect the district against liability by reason of such payment; all of which things were done.
It appears that prior to making this payment, the school board had on hand a balance remaining out of the said contract price of $3596.88, as alleged in the petition herein, not taking into account, however, $320 which the board claimed it was entitled to deduct for delay in the completion of the building, at the rate of $10 per day, as provided in the contract. The testimony of McCully was that certain "extra work" had been done by him, and that it was agreed that "the extra work and the penalty (for delay) would offset each other." This testimony, however, was disputed, and the records of the meetings of the Board, introduced in evidence, though showing *569 that this matter was discussed, show no action taken thereon. In the suit of this plaintiff against the school district, the court, in its findings of fact, found that there was no agreement "by which the penalty of $320 was released," and consequently rendered judgment against the district for $3276.88, instead of $3596.88. In the instant case the court made no finding on the facts, but simply rendered a judgment for plaintiff against the bank in the said sum of $2279.58.
Such further reference to the evidence as may appear necessary will be made in the course of the opinion.
The argument advanced by defendant, appellant here, that the facts in evidence show an equitable assignment by McCully to the bank of a portion of the fund reserved by the district, sufficient to secure the payment of McCully's notes to the bank, might be well enough, indeed, if the matter were one between the immediate parties, not affecting the rights of anyone having a superior claim, in law or equity, against such fund. But while McCully might have made a valid assignment of his contingent interest in or right to such fund — an interest or right contingent upon the satisfaction by him of the *570
rightful claims of all persons for whose protection the fund was so reserved — he had no power to make any assignment of such fund, or any part thereof, however formally executed, which would have any validity as against either the right of the school district to look to such fund, if need be, for its protection, or plaintiff's right to look thereto, if need be, for reimbursement for any sums that it might be compelled to pay for labor or material furnished to the building, in the performance of its contract of suretyship. The contractor could not transfer to the bank any greater right in or to the fund than he himself possessed; and his right in respect thereto was subordinate to the equity which arose in favor of plaintiff by virtue of, and at the time of the latter's execution of the contract of suretyship. [See: Prairie State Bank v. United States,
Plaintiff adduced no testimony touching this matter, and this testimony of McCully stands uncontradicted in the record. And it is argued for defendant that the amount actually paid by plaintiff, out of its own funds, in settlement of material bills, was not $3849.21, the amount paid out by it, but $2549.21. In response to this plaintiff's learned counsel says that there is no presumption that the bills involved in this suit were the same as those paid by plaintiff out of McCully's money, but that, on the contrary, the presumption prevails that all men are honest. This, we think, does not reach the *573 point. Plaintiff is not entitled to reimbursement for sums expended by it in the payment of material bills out of funds supplied by McCully, or for which it has been reimbursed by McCully. And the burden was upon plaintiff to show that it had paid out funds of its own, in the performance of its contract of suretyship, entitling it to follow the fund received by defendant from the school district, that it may be reimbursed for such loss. It may be noted that this record discloses no testimony whatsoever, in behalf of plaintiff, that the material bills shown to have been paid by it were paid with its own funds. No representative of plaintiff testified in the case. Plaintiff merely adduced the testimony of persons who had furnished material to the building, or who were representatives of corporations or firms who had done so, whereby it was shown that payment or settlement of the material bills due such persons, firms or corporations, was made by plaintiff. There is no suggestion in the record that plaintiff paid any bills for material or labor other than the bills above mentioned, which were the same bills shown to have been paid by plaintiff in its suit against the school district. And, as said, there is uncontradicted testimony for defendant that plaintiff obtained from McCully $1300 which it used, for the most part, in paying bills of this character in the City of St. Louis, retaining the remainder thereof.
Under these circumstances, we think that plaintiff's total claim to be here reckoned with, as for monies paid by it in settlement of the contractor's bills for material, must be reduced by the amount of $1300, i.e. reduced from $3849.21 to $2549.21.
The record of the suit of this plaintiff against the school district in evidence in this case, shows that in said former suit the district admitted that of the original contract price the sum of $997.30 remained in its hands, and offered to let judgment go against it for that amount. In arriving at this sum, the district took credit for said sum of $320 which it claimed was due it for delay in the completion of the building; and we cannot say that it was not entitled to make such deduction. And it may be inferred *574 that the district still has said sum of $997.30, remaining out of the contract price, which has always been available in satisfaction, pro tanto, of plaintiff's claim. Under the circumstances, we are of the opinion that plaintiff is not entitled to a recovery against this defendant in excess of the difference between $2549.21 and $997.30, or $1551.91. The assignment which McCully undertook to make to the bank for its protection, and which the school district has accepted and acted upon, operated, in equity, we think, to transfer to the bank such right as the contractor had, or which he might ultimately have in and to said fund. It is true that plaintiff was entitled to look to the fund, provided to be retained by the district, for reimbursement for any monies which it might be required to pay out as surety, as aforesaid, and to follow into defendant's hands the monies paid to the latter by the district out of said fund to the extent that plaintiff may be said to have been damaged or prejudiced by such payment. But we think that plaintiff was not entitled to more than this. Plaintiff alleges that it has been damaged, by said payment to defendant, in the sum of $2279.58; but, with plaintiff's claim reduced to $2459.21, the facts do not sustain such averment, since the original fund in the hands of the school district exceeded the amount of plaintiff's said claim, by $727.67. The contractor was entitled to any surplus in the original fund over and above plaintiff's total claim of $2549.21; and we think that the contractor's right thereto has, in equity, passed to the defendant bank. And in this view defendant should be allowed to retain such surplus, amounting to $727.67, if plaintiff, in seeking equity, is to be required to do equity; and plaintiff's recovery against defendant should be accordingly limited to the sum of $1551.91.
Other questions raised are not of controlling importance, and need not be discussed. The judgment below is accordingly reversed and the cause remanded, with directions to the trial court to enter judgment for plaintiff in the said sum of $1551.91, with interest from the institution of this suit. Becker and Daues,JJ., concur. *575