City of Seattle v. Stirrat

• Decision Date: 06 November 1909
• Citation: 55 Wash. 560,104 P. 834
• Parties: CITY OF SEATTLE v. STIRRAT et al.
• Court: Washington Supreme Court

104 P. 834

55 Wash. 560

CITY OF SEATTLE v. STIRRAT et al.

Supreme Court of Washington

November 6, 1909

Department 1. Appeal from Superior Court, King County; R. B. Albertson Judge.

Action by the city of Seattle against James R. Stirrat and another copartners as Stirrat & Goetz, and another. From a judgment for plaintiff, certain of the defendants appeal. Reversed with directions.

C. A. Riddle and Peters & Powell, for appellants.

Scott Calhoun and Bruce C. Shorts, for respondent.

CHADWICK J.

This is an action brought by the city of Seattle against Stirrat &amp Goetz and the United States Fidelity & Guaranty Company, to recover the sum of $400. In making local improvements in the city of Seattle certain preliminary expenses are incurred to cover cost of surveys, advertising and list of owners of property to be affected by the improvement, as well as all other expenses incidental to letting the main contract. The city advances the money to meet these expenses from its general fund, and the amount so advanced is known as the 'fixed estimate,' and is charged against the proposed improvement to be thereafter laid against the property benefited, together with the actual cost of the work. To insure the repayment of this advance the city requires that the amount thereof be repaid by the contractor. In August, 1901, defendants Stirrat & Goetz were awarded a contract for the improvement of certain streets, all as provided by the terms of ordinance No. 6818, creating local improvement fund district No. 403, wherein it was provided that payment should be made by the issuance of local improvement bonds chargeable upon district No. 403. It was also provided that, from time to time as the work progressed, payments should be made, up to 70 per cent. of the whole contract price. It was further expressly provided that no bonds or warrants should be issued in any event for the 30 per cent. reserved, until Stirrat & Goetz should have paid in coin the par value of enough bonds or warrants to cover the initial cost advanced from the general fund, which in this case was $400. The 30 per cent. retained to cover possible liens, etc., was, after a certain time, paid to Stirrat & Goetz, but it is now asserted by the city that the $400 due from them was never paid, and this action is brought to recover it. The admitted facts show that, during all the times the contract was under way, one John Riplinger was city comptroller of the city of Seattle, and that it was his duty to keep in charge and deliver the bonds to cover the 'fixed estimates' to the contractor; that at the time Stirrat & Goetz received the 30 per cent. balance due on their contract, they drew a check to the city comptroller, and received bonds of the par value of $400. A copy of the check and its indorsements follows: '$400.00. No. ___. Seattle, Wash., March 24, 1902. The Washington National Bank, United States Depository: Pay to City Comptroller or order Four Hundred 00/100 Dollars. Final on Thirteenth Ave. Stirrat & Goetz.' Stamped on the face thereof: 'Paid R Apr. 17, 1902. Washington National Bank, Seattle, Wash.' Indorsed thereon: 'Jno. Riplinger, City Comptroller.' This money was never paid into the treasury by Riplinger, but, so far as the record in the present case shows, was appropriated to his own use. In July, 1907, the city made demand on Stirrat & Goetz for the payment of the $400, which being refused, this action was instituted against them and their bondsmen. The bond company defaulted, but to the complaint Stirrat & Goetz made answer, setting up various defenses, asserting that for a long time the mayor and council had otherwise than by resolution or ordinance put the matter of dealing with these 'fixed estimates' under the exclusive direction and control of the comptroller; that the contract under which they operated required that the warrants received by them in payment of the fixed estimates should be immediately indorsed payable to the city comptroller, and that such was the exclusive custom; that during 12 years they had, in all of a large number of contracts, been authorized, directed, and permitted to pay to the city comptroller the amount of the 'fixed estimate,' and that the custom prevailed with all other contractors; that the comptroller was the financial agent of the city, and it was his duty to keep and countersign all bonds issued by the city, and that the only manner in which a contractor for local improvements could obtain such bonds was to receive them from the comptroller, paying to him the excess of the moneys due to cover the 'fixed estimate.' They also pleaded other defenses, setting up the knowledge of the city of this custom during all the time intervening between the appropriation of the money by Riplinger and the commencement of this action; and, by way of a further defense, they pleaded an estoppel. Demurrers were sustained to the several defenses, and defendants have appealed.

It will be seen that the pith of this case lies in the legal authority of the comptroller to receive the money from these appellants. The city contends, and the trial court held, that the duties of the comptroller and treasurer being defined by the city charter, and it nowhere appearing that the comptroller had any authority to receive any money for or on account of the city, and the contract having provided explicitly that the money for the 'fixed estimate' should be paid into the city treasury, this case falls within that line of cases holding that one who deals with a public officer is charged with a knowledge of his duties, and the limitations upon his powers and authority, and cannot, by any act of his own, make the officer an agent of the public in any transaction, unless it is put upon him in virtue of some statute or the fundamental law; that the payment of money, if made to an officer who has no authority to receive it, is voluntary; and, while there may be a moral obligation on the part of the person receiving it to pay it over to the proper custodian, it is not a legal obligation, and that the agency, if any exists, is between the individuals, and the city is not bound. There are, of course, many cases holding to this rule, although it is not universal. It is most frequently invoked in embezzlement cases, of which respondent suggests the following: Sherrick v. State, 167 Ind. 345, 79 N.E. 193; Hartford Insurance Co. v. State, 9 Kan. 211; State v. Spaulding, 24 Kan. 1--as decisive of this case. In the first of these cases--and it is but a type of all the others--it was held that money paid to a state auditor by insurance companies for license fees was not a payment to the state within the terms of the law that provided that all such moneys should be paid to the State Treasurer.

Without committing ourselves to this doctrine--it may be admitted so far as this case is concerned--the question before us strikes deeper, and depends upon other consideration. It involves an inquiry into the authority and power of the city in the...