City of St. Louis v. G. H. Wright Contracting Company

• Decision Date: 28 March 1907
• Parties: CITY OF ST. LOUIS v. G. H. WRIGHT CONTRACTING COMPANY, and CITY TRUST, SAFE DEPOSIT & SURETY COMPANY OF PHILADELPHIA, Appellants
• Court: Missouri Supreme Court

101 S.W. 6

202 Mo. 451

CITY OF ST. LOUIS v. G. H. WRIGHT CONTRACTING COMPANY, and CITY TRUST, SAFE DEPOSIT & SURETY COMPANY OF PHILADELPHIA, Appellants

Supreme Court of Missouri, First Division

March 28, 1907

Appeal from St. Louis City Circuit Court. -- Hon. Horatio D. Wood Judge.

Reversed.

Seddon & Holland and Fidelio C. Sharp for appellants.

(1) The petition fails to state a cause of action in this: that the city sues as the trustee of an express trust for third persons, abutting lot-owners, for the breach of a bond entirely between the city and the defendants, to which the third persons are not parties. (a) Where an action is brought by a trustee for the benefit of third persons, they are the real parties, and the trustee has no individual interest in the action unless he is a co-beneficiary, expressly or of the same class, and then he has no greater or other interest than the other members of the class. Natl. Bk. v. Ward, 100 U.S. 195; Lewis v. Land Co., 124 Mo. 672; Rogers v. Gosnell, 58 Mo. 589; School v Lewis, 147 Mo. 580; Crone v. Strude, 156 Mo 262; Ammonet v. Montague, 75 Mo. 43; St. Louis v. Von Phul, 133 Mo. 561. (b) The lot-owners not being mentioned as parties to the contract, can only become so by implication. There is no necessary implication to bind the defendant Trust Company, which is a mere surety. Myers v. Parks, 6 Ohio St. 501; Harrisonville v. Porter, 76 Mo. 356; State v. Boon, 44 Mo. 354; State v. Johnson, 55 Mo. 80. (c) The city in making the contract was not acting as agent of the lot-owners or any third persons. Thornton v. Clinton, 148 Mo. 663; Sweeny v. Kansas, 50 Mo.App. 265; Steffen v. City, 135 Mo. 144; Heft v. Payne, 97 Cal. 108; Scott v. Springfield, 81 Mo.App. 312. (d) The city in making the contract was not acting as the trustee of an express trust for the lot-owners or others. Burton v. Larkin, 36 Kan. 246; Wright v. Terry, 23 Fla. 160; Smith v. Brown, 68 N.Y. 355; Porter v. Woods, 138 Mo. 539; Street v. Goodale, 77 Mo.App. 318; Devers v. Howard, 144 Mo. 671; State v. Loomis, 88 Mo.App. 500; Anderson v. Fitzgerald, 21 F. 294; Barbour v. Railroad, 49 La. Ann. 1608; Loeber v. Railroad, 41 La. Ann. 1157; City v. Westar, 35 Pa. St. 427; Emery v. Bradford, 29 Cal. 83; Himmelman v. Spargel, 39 Cal. 389; City v. Pecot, 38 Mo. 125; Howsmon v. Trenton, 79 Mo. 304; Berker v. Water Works Co., 79 Iowa 419. (2) The petition fails to state a cause of action because it does not show that any valid taxbills were ever issued or that any liens were ever created. Reed v. Bott, 100 Mo. 62; Burnham v. Boyd, 167 Mo. 185; Vieth v. Planet, 64 Mo.App. 210; St. Louis v. De Noue, 44 Mo. 137; Kansas v. Surety Co., 71 Mo.App. 315; Mallinckrodt v. Nemnich, 169 Mo. 507; North St. Louis v. Obert, 169 Mo. 507; Hoester v. Sammelman, 101 Mo. 619; Wilson v. Polk County, 112 Mo. 126. (3) The petition is defective in this: that it fails to set out the names of the third parties. In making a contract for the benefit of another, he may be either named or may be identified by description as one of a class. But this is not true of an action at law. The third party is the real plaintiff, and has a right to control the proceeding in court. The lot-owners could not have sued directly describing themselves as "lot-owners," against Wright Construction Company. The statement of the name of the real plaintiff in an action is of the essence of the cause of action, and a failure to state his name is a failure to state a cause of action.

Charles W. Bates and Benjamin H. Charles for respondent.

(1) The law itself, i. e., the charter of the city, requires the giving of a bond, not for merely nominal damages, but for a substantial thing, namely, compliance with the provisions of the contract. "No contract shall be made . . . . without a bond for its faithful performance." Chart., art. 6, sec. 27. (2) While the power to assess the cost of a public improvement upon private property is referable to the taxing power, its foundation rests, nevertheless, in the special benefit resulting to such property from the improvement. Prior v. Construction Co., 170 Mo. 339; Meier v. St. Louis, 180 Mo. 391; Barber v. French, 158 Mo. 545, 181 U.S. 324. A special assessment is a tax on the benefit rather than on the property. Newby v. Platte Co., 25 Mo. 272; Garrett v. St. Louis, 25 Mo. 513. (3) The city, in the matter of street improvements, is, however, not hostile to the property-owner, as defendants contend. (a) "The board of public improvements, in the discharge of its duties, in reference to street improvements, is as much the agent of the property owner as of the city." Barber Asphalt Pav. Co. v. Hezel, 76 Mo.App. 152, affirmed, 155 Mo. 391. (b) It is its "duty to see to it that neither the property-owner nor the city is cheated or wronged . . . . by its lettings and contracts." Barber Asphalt Pav. Co. v. Hezel, 76 Mo.App. 152, affirmed, 155 Mo. 391; St. Louis v. Von Phul, 133 Mo. 567. (c) City officials are, with respect to street improvements, the representatives of the property-owner. Bank v. Woesten, 147 Mo. 481; Barber, etc., Co. v. Hezel, 76 Mo.App. 152; St. Louis v. Von Phul, 133 Mo. 567; Bond v. Newark, 19 N.J.Eq. 383; Eno v. New York, 68 N.Y. 219; Lake v. Williamsburg, 4 Denio 523. They are "executing a statutory power of attorney from the property-owners." Louisville v. Ky. & I. Bridge Co., 70 S.W. 627. (d) The city is the trustee of an express trust. R. S. 1899, sec. 541; Snider v. Express, 77 Mo. 526; Ellis v. Harrison, 104 Mo. 277. (4) Defendants agreed with the city to perform the work. The question who was to be benefited thereby is therefore really immaterial. (a) But defendants knew the law: that property owners are presumed to be benefited; that liability on the taxbills to be issued to defendant would rest on such presumption; and that the basis for such liability is this benefit. (b) Compulsion of the law upon the property-owner, and consequent liability on the special taxbill, stand in lieu of consent to, or ratification of, the contract by him. (c) It was not essential that he should be expressly mentioned in the contract. St. Louis v. Von Phul, 133 Mo. 565; Snider v. Express Co., 77 Mo. 526. (d) The city owes him both a legal and a moral duty to enforce the contracts. St. Louis v. Von Phul, 133 Mo. 570. (e) The lot-owners are referred to in the contracts as the persons against whom the special taxbills were to be issued. (f) And, therefore, the defendants, by executing contracts containing such a provision, are estopped to raise this point. For, as one purports to bind himself, he shall be bound. (5) The basis of estoppels is fair dealing. St. Louis v. Davidson, 102 Mo. 154. See analogous cases of De Bernardi v. McElroy, 110 Mo. 657; Dair v. U.S., 16 Wall. 4. Defendants contend that they are to be held only to the strict letter of the contract; and that the obligation of sureties is not to be extended by implication or construction. To which we reply that their obligations are not to be evaded by implication and refinements of construction. (a) If defendants were right in their contentions, they would be liable to the city only in nominal damages; although they contracted with the city for faithful performance of the entire contract. (b) This would wipe out a part of the condition of their bonds, viz.: "If the said G. H. Wright Contracting Company should faithfully and properly perform the contract . . . . according to all the terms of said contract." Such trifling with their solemn undertaking is not to be tolerated. (c) Defendants in effect admit the breach; and make no defense on the merits. (6) If contractors doing construction work for cities are not liable to the city for damages occasioned by their default, then this is probably the only sort of contract and bond known where the law furnishes no adequate remedy for the breach. Sound public policy ought not to permit such an unjust result. He who occasions an injury ought to respond in damages therefor. (7) Recovery in this suit will bar any proceedings on the bond by beneficiaries of the trust. "The city will have to settle with the cestuis que trustent." Rogers v. Gosnell, 51 Mo. 469. It is only when the petition, in a suit by the city, does not state that it is brought for the beneficiaries that the suit is not a bar to further suits by them. Bethany v. Howard, 149 Mo. 504. (8) The evidence as to the issuance of special taxbills to other contractors establishes their validity in every particular. (a) These taxbills are not attacked by defendant's pleading. (b) They could not be introduced in evidence, because most of them at least had been receipted and were lost or scattered among a large number of lot-owners. (c) It was not a part of plaintiff's case to introduce them in a suit against a defaulting contractor. Proof that the subsequent contractor was paid as the former agreed to be paid, viz.: by the issuance of taxbills, was all that was necessary. (d) The measure of damages is the difference in the contract price. (e) The findings of the referee, confirmed by the trial court, as to the issuance of the taxbills, will not be reviewed. Steffen v. St. Louis, 135 Mo. 44.

OPINION

WOODSON, J.

The city of St. Louis, as trustee of an express trust, instituted this suit in the circuit court of that city against respondents, based upon twelve distinct bonds, each declared upon in a separate count of the petition, and each involving questions identical in principle. We will, therefore, notice only one count, and what is said regarding that one will apply equally well to the other eleven.

The facts of the case are, substantially, as follows:

The city of St. Louis on May 18, 1900, entered into a written contract with defendant G. H. Wright Contracting Company whereby the latter...