United States Fidelity & Guar. Co. v. HIGHWAY ENG. & C. CO.

• Decision Date: 04 September 1931
• Docket Number: No. 6201-6206.,6201-6206.
• Citation: 51 F.2d 894
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. HIGHWAY ENGINEERING & CONSTRUCTION CO., Inc.
• Court: U.S. Court of Appeals — Fifth Circuit

51 F.2d 894 (1931)

UNITED STATES FIDELITY & GUARANTY CO. v. HIGHWAY ENGINEERING & CONSTRUCTION CO., Inc.

No. 6201-6206.

Circuit Court of Appeals, Fifth Circuit.

July 23, 1931.

Rehearing Denied September 4, 1931.

Lucien H. Boggs, of Jacksonville, Fla., and Herbert S. Phillips, of Tampa, Fla., for appellant.

George C. Bedell, of Jacksonville, Fla., and A. G. Turner, of Tampa, Fla., for appellee.

Before BRYAN, SIBLEY, and HUTCHESON, Circuit Judges.

HUTCHESON, Circuit Judge.

By these appeals the United States Fidelity & Guaranty Company, defendant in the court below, hereafter referred to as appellant, seeks to have declared here what was denied there, that certain paving certificates issued by the county of Hillsborough, Fla., under chapter 9316, Acts of 1923, as extended and validated by chapter 10139, Acts of 1925, and chapter 12207, Acts of 1927, are not valid and enforceable liens within the meaning of their agreement with appellee, Highway Engineering & Construction Company, to take up and pay them in the event of default.

Each of the paving certificates, the payment of which appellant upon conditions assumed, is fair on its face, and taken in connection with appellant's agreement to take it up, with the evidence that default in its payment has occurred, and that appellant within the time limit in its agreement has failed to take it up, makes out a prima facie case.

This appellant admits, contending, however, that this prima facie case has been fully overthrown by the showing that the basic legislation on which the assessments rest and the assessments are void, and that they neither could have been nor were given life by the validating acts relied upon. Further, it declares that at any rate plaintiff has mistaken its recovery, which should have been not for the face value of the certificates, but for nominal damages, or, at most, the actual damages which must have been, but were not, pleaded and proven.

The contracts in suit were executed under the following circumstances:

Plaintiff, the paving contractor who laid the paving for which the assessments in question were levied, being the owner of the paving certificates based thereon, secured from appellant for the consideration agreed upon the execution and delivery of the instruments in suit. Each of these agreements was styled "Paving Certificate Bond," and each, after reciting the fact of the holding by plaintiff of the certain certificates of indebtedness thereinafter specifically described, and that it was the intention of plaintiff to sell them to other persons, declared that, if upon their maturity they should go unpaid, appellant "will pay to the lawful holders of said certificates of indebtedness or any of them, the amount of money then due." It was, however, in said agreement provided: "This bond is issued subject to the following conditions precedent to liability on the part of the United States Fidelity & Guaranty Company; (1) That the certificates have been issued as recited in the agreement in conformity with the laws of the State of Florida authorizing their issuance. (2) That each certificate, payment of which may be demanded, is a valid and prior lien upon the land described in it. (3) That prior to the payment the holder of the certificate shall have done all things required by the laws of the State of Florida to be done to entitle payment from the owner of the land securing it. (4) That notice of default must be given appellant, and that it shall then have sixty days within which to take up the certificate."

Appellant makes no question upon the fourth condition, default notice and demand, but contends that conditions 1, 2, and 3 in effect making its liability to pay dependent upon the validity of the assessment liens has not been and cannot be complied with so as to fix its liability to plaintiff. It declares that the legislative journals show that chapter 9316 was invalidly enacted. That chapter 10139, which repealed it, did not purport to validate the assessments made under it, but merely undertook to validate and continue in force the act itself for the purpose of continuing proceedings already begun under it. That, having been invalidly enacted, it could not be validated. Horton v. Kyle, 81 Fla. 274, 88 So. 757.

Further, that the proceedings in this case were not taken under chapter 9316, but under chapter 10139, itself an invalid act, and that chapter 12207 has not effected a validation of the assessments, first because it did not purport to validate assessments made as these were, under the authority of chapter 10139 but only those made under chapter 9316; and, second, because, if it may be construed as attempting to validate the proceedings on which the certificates in question rest, it could not, because of the essential invalidity of the chapters in question, under which they were levied, do so. Horton v. Kyle, 81 Fla. 274, 88 So. 757.

Plaintiff, appellee here, insists that, the defendant having, with full knowledge of the state of the law and facts out of which the assessments grew, and upon which they rest, executed the paving certificate bonds after the Supreme Court of Florida, in Moore v. Hillsborough County, 86 Fla. 514, 98 So. 505, had declared chapter 9316 a constitutionally valid enactment, cannot put upon the conditions any other meaning than that when payment was demanded of appellant, there must be a showing as to each certificate that it had been issued in accordance with the provisions of the governing law, and that it was still due and unpaid. That to permit defendant to collaterally raise in this suit a constitutional question which is personal to the certificate payors was not intended by the agreement, nor is such right granted by its terms.

Plaintiff stoutly maintains further that the law under which the certificates were issued is valid, and the certificates always have represented valid obligations. Finally, however, it plants itself upon the proposition that, the assessments which the certificates in question represent having been validated by the Legislature of Florida by chapters 10139 and 12207 of the laws of Florida, appellee should have had its judgment below, and that judgment should be here affirmed.

We do not agree with appellee that defendant could be made to pay for invalid certificates. We think it clear that the conditions of the...