Board of Education of Salt Lake City, Utah, v. Leary

• Decision Date: 13 October 1916
• Docket Number: 175,4708,4709.
• Citation: 236 F. 521
• Parties: BOARD OF EDUCATION OF SALT LAKE CITY, UTAH, et al. v. LEARY (three cases).
• Court: U.S. Court of Appeals — Eighth Circuit

236 F. 521

BOARD OF EDUCATION OF SALT LAKE CITY, UTAH, et al. v. LEARY (three cases).

Nos. 175, 4708, 4709.

United States Court of Appeals, Eighth Circuit.

October 13, 1916

A. L Hoppaugh, of Salt Lake City, Utah (E. A. Walton, Benner X Smith, M. E. wilson, and T. D. Walton, all of Salt Lake City Utah, on the brief), for petitioners, appellants and plaintiffs in error.

J. D Skeen, of Salt Lake City, Utah (D. A. Skeen and W. H. Wilkins, both of Salt Lake City, Utah, on the brief), for respondent, appellee, and defendant in error.

Before CARLAND, Circuit Judge, and TRIEBER and VAN VALKENBURGH, District Judges.

VAN VALKENBURGH, District Judge.

July 1 1912, the Board of Education of Salt Lake City, Utah, contracted with Wright-Osborn Company, a corporation, to install a heating and ventilating system in the Salt Lake High School Building for the sum of $53,789. The contractor furnished to the Board of Education a performance bond with Fidelity & Deposit Company of Maryland as surety. The written contract between the parties contained the following among other provisions:

'Should the contractor at any time refuse or neglect to supply a sufficiency of properly skilled workmen, or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence, or fail in the performance of any of the agreements herein contained, such refusal, neglect, or failure being certified by the architects, the said second party shall be at liberty, after three days' written notice to the contractor or to any of his agents, to provide any such labor or materials, and to deduct the cost thereof from any money then due or thereafter to become due to the contractor under the contract, and such certificates of the architects, together with the action of the board thereon, shall be final and conclusive; and if the architects shall certify that such action be taken, the said second party shall also be at liberty at once to terminate the employment of the contractor for the said work, and immediately to enter upon the premises and to take possession of all materials thereon, together with all tools, machinery, apparatus, and conveniences, and in case of such discontinuance of the employment of the contractor, he shall not be entitled to receive any further payment under this contract until the said work shall be wholly finished, at which time, if the unpaid balance of the amount to be paid under this contract shall exceed the expenses incurred by the said second party in finishing the work, such excess shall be paid by the said second party to the contractor, but if such expense shall exceed such unpaid balance, the contractor shall pay the difference to the said second party. The expense incurred by the said second party, as herein provided, either for furnishing materials, or for finishing the work and any damages incurred through such default, together with the value of the use of tools, machinery, materials, and conveniences that may be taken by the said second party, shall be audited and certified by the architects, and the decision of the said second party thereon shall be final and conclusive. And this shall be construed to mean, not only the completion of the heating and ventilating system for the buildings, but the removal of all rubbish from the same, as well as from the grounds.'

The Wright-Osborn Company entered upon the work, took materials and tools to the grounds, installed the boilers, and received the sum of $7,083 as partial payment on account, which was credited on the contract price. The company continued its work, under the contract, until on or about January 17, 1913, on which date, upon certificate of the architects in charge, the Board of Education terminated the employment because of various alleged breaches of the contractor, among which was the furnishing of material certified to be defective and not in accordance with specifications. The Board, under the provisions of the contract, completed the work at an alleged loss of $23,410.56, which included payments theretofore made to the contractor. It retained possession of and used some of the tools and materials which it took over upon assuming the completion of the work. On or about August 24, 1914, it brought suit in the state court within and for Salt Lake county, Utah, against the Wright-Osborn Company and its surety to recover its loss aforesaid. October 23, 1915, judgment, in the sum of $17,041.55, was entered in its favor. The Board, at all times since January 17, 1913, had retained in its possession certain materials and tools which had been placed upon its property by the contractor, and upon which it claimed a lien under its contract and in equity for the partial satisfaction of the contractor's indebtedness to it. Respecting such materials and tools the state court made the following provision in the judgment entered:

'And it further appearing to the court that upon the payment to the plaintiff by the defendant, Fidelity & Deposit Company of Maryland, of said judgment, and interest thereon and costs, that it should be subrogated to the rights of the plaintiff in and to said materials and tools. Now, therefore, it is hereby ordered, adjudged, and decreed that upon the payment to the plaintiff by the defendant, Fidelity & Deposit Company of Maryland, of the amount of said judgment and interest and costs, that it shall be subrogated to all the rights of the plaintiff under said contract for the repayment by the said Wright-Osborn Company of the moneys so paid, and as security for said payment, it is entitled to the said materials and tools and that said defendant shall thereupon be entitled to the possession thereof, and that the plaintiff shall thereupon deliver to said defendant, Fidelity & Deposit Company of Maryland, the possession thereof.'

This judgment still remains unsatisfied. Meantime, on April 5 1913, a petition in bankruptcy was filed against the Wright-Osborn Company, and an adjudication followed on June 12, 1913. On July 20, 1915, more than two years after the adjudication, and during the pendency of the proceeding in the state court, William H. Leary, trustee, filed in the District Court of the United States at ...