City of Winona v. Jackson
| Citation | 100 N.W. 368,92 Minn. 453 |
| Decision Date | 01 July 1904 |
| Docket Number | 13,926,13,927 - (106,107) |
| Parties | CITY OF WINONA v. M. S. JACKSON and Others |
| Court | Minnesota Supreme Court |
Action in the district court for Winona county to recover from defendants M. S. Jackson and Fred Bokorny, as principals, and Fidelity & Deposit Company of Maryland, as surety, $19,939.90 upon an indemnity bond executed by defendants in connection with a contract entered into by defendants Jackson and Bokorny for constructing a sewer for plaintiff. Defendant Surety Company alone appeared and answered. The case was tried before Snow, J., who made findings of fact, and as conclusions of law found that plaintiff was entitled to recover from defendant Surety Company $11,774.96 and interest, being the cost incurred by plaintiff in completing certain work abandoned by the contractors, but that defendant was not liable for any part of the liquidated damages provided for in the contract in event of delay on the part of the contractors. From a judgment entered pursuant to the findings both plaintiff and defendant company appealed. Affirmed on both appeals.
Contract with Municipal Corporation -- Liability of Contractor's Sureety.
The city council of the city of Winona caused plans and specifications to be prepared for the construction of a system of sewers, upon which bids were invited for the work. Defendants J. & B. submitted a bid in proper form, which was accepted by the city council. A contract was subsequently entered into by which J. & B. undertook and agreed to do a part of the work in the construction of such sewer, for which the city agreed to pay them a stipulated compensation. The contract provided, among other things, that the contractors should do the work strictly in accordance with the plans and specifications, under the direction of the city engineer, and provide suitable appliances for removing all water which might accumulate in the sewer trenches, and to keep the same entirely free therefrom during the work of laying the sewer pipe. During the progress of the work large quantities of water were encountered in one of the trenches, to avoid and remove which work and material not particularly specified in the contract or plans and specifications were rendered necessary; but the water could by practicable means and methods be removed therefrom and the bed of the trench made a suitable foundation for the pipe. The contract also contained a stipulation that if the bottom of the trench was found too soft, and not a suitable foundation, a foundation should be made by the contractors, under the direction of the city engineer, and paid for by the city as extra work. On the claim that the appearance of water in the trenches in question in such quantities as to render necessary, to avoid and remove it, work and material not specified in the contract, entitled the contractors to compensation for extra work, which the city refused to recognize, they abandoned the contract, refused further compliance therewith, and the city completed the portion of the work left undone by them. At the time the contract was entered into the contractors executed and delivered to the city a bond for the faithful performance of the contract, which defendant Fidelity & Deposit Company signed as surety. In this action to recover upon such bond for the default of the contractors, it is held:
1. That the contract so entered into was not in excess of the power or authority of the city council, nor a violation of any provision of the city charter prohibiting the council from entering into contracts whereby pecuniary liability against the city is incurred in excess of the limitations therein prescribed.
2. Under the terms and provisions of the contract, plans, and specifications, the contractors were under obligation to provide all appliances for the removal of, and to remove, all water which accumulated in the sewer trenches, and were not entitled to compensation for extra work and material for doing so.
3. The refusal of the city to recognize their claim to extra work and material in the removal of the water did not justify them in abandoning their contract, and they are liable in damages for their failure to perform the same.
4. The reasonable cost and expense necessarily incurred by the city in completing the work after the abandonment thereof by the contractors was the measure of plaintiff's damages, and recovery thereof may be had in this action against the surety.
5. The contract provided that the work should be finished on a date named therein, and, for a failure on the part of the contractors to complete the work within the time so fixed that they should pay to the city as liquidated damages the sum of $25 per day for each and every day the work remained unfinished thereafter. The bond contained no provision covering or including such damages, and the defendant surety is not liable.
6. The evidence produced on the trial held sufficient to justify the findings of the trial court.
W. A Finkelnburg and Brown, Abbott & Somsen, for plaintiff.
The contract is within the city's charter power. Sp. Laws 1887, c. 5; Laws 1897, c. 37; Brown v. Village of Heron Lake, 67 Minn. 146; Claiborne Co. v. Brooks, 111 U.S. 400; State v. Egan, 64 Minn. 331; Rodgers v. U.S., 185 U.S. 83. Defendant is estopped to assert the defense of ultra vires. Hunt v. Hauser Malting Co., 90 Minn. 282; Seymour v. Chicago Guaranty Fund Soc., 54 Minn. 149; City of Chaska v Hedman, 53 Minn. 525; City of Fergus Falls v. Fergus Falls Hotel Co., 80 Minn. 165. The contrivances to remove and keep the water from the trench were primarily for drainage purposes, required by and within the specifications. Cowley v. Davidson, 13 Minn. 86 (92); Stees v. Leonard, 20 Minn. 448 (494); Paine v. Sherwood, 21 Minn. 225; Nash v. City of St. Paul, 23 Minn. 132; Anderson v. May, 50 Minn. 280. The contractors were not entitled to extra compensation for appliances and work necessary to form a dry ditch. McCauley v. City, 83 Iowa 212; Fruin v. Crystal, 89 Mo. 397; Wilkin v. Ellensburgh, 1 Wash. St. 236; Gartner v. City, 131 Mich. 21; Mairs v. Mayor, 166 N.Y. 618. The actual cost to the city of completing the work is the measure of damages. Friedland v. McNeil, 33 Mich. 40; American Surety Co. v. Woods, 105 F. 741; Zimmerman v. Jourgensen, 60 Hun, 578.
The amount stipulated to be paid for delay must be treated as liquidated damages, and not as a penalty, and the city was not put to proof of actual loss. Taylor v. Times Newspaper Co., 83 Minn. 523; Brooks v. City of Wichita, 114 F. 297; Sun Printing & Pub. Assn. v. Moore, 183 U.S. 642. The contractors are answerable for liquidated damages, accruing both before and after their abandonment of the work. Watson v. DeWitt, 19 Tex. Civ. App. 150; Nichols v. City, 109 Wis. 643; Lamson v. City (Wis.) 95 N.W. 78. The surety is liable for liquidated damages resulting from the contractors' default. Locke v. McVean, 33 Mich. 473; Smith v. Molleson, 148 N.Y. 241; Mayor v. New York, 82 Hun, 553; Humboldt v. Wennerhold, 81 Cal. 528; Dunlap v. Eden, 15 Ind.App. 575; Watson v. O'Neill, 14 Mont. 197; Kimball v. Baker, 62 Wis. 526; Sather v. Briggs, 138 Cal. 724.
Webber & Lees, for defendant.
The contract between the city and the contractors was ultra vires and void. By entering into the contract in question, the city transgressed its organic law. It incurred a liability of over $38,000 to Jackson & Bokorny, together with an additional liability upon other contracts entered into at the same time for the construction of other portions of the sewer system amounting to $36,000, or a total liability of approximately $73,000. It had not the funds, neither had it made any provision to obtain them by taxation, with which to meet these liabilities. The case is not one where a city has merely exceeded its powers; it is one where its officers have violated a positive command of the legislature. They have done a thing which the charter in express terms prohibits. The contract is therefore void. Borough of Henderson v. County of Sibley, 28 Minn. 519; Starkey v. City of Minneapolis, 19 Minn. 166 (203); Bailey v. Austrian, 19 Minn. 465 (535); Tarbox v. Gotzian, 20 Minn. 122 (139); Kiichli v. Minnesota Brush Ele. Co., 58 Minn. 418; Roberts v. City, 10 N.D. 230; City v. Wann, 144 Ind. 175; Niles v. Mayor, 59 Mich. 311; City of Superior v. Norton, 63 F. 357; Kansas v. O'Connor, 82 Mo.App. 655; 1 Dillon, Mun. Corp. (4th Ed.) § 131; Fowler v. City, 85 Wis. 411; City of Ottumwa v. City Water Supply Co., 119 F. 315; Allen v. City, 107 Iowa 90. The promise of the city to pay for the work was not enforceable. It was not effective as a contract. The city was not estopped from denying its validity. Newbery v. Fox, 37 Minn. 141; State v. Torinus, 24 Minn. 332; Central Transp. Co. v. Pullmans Palace Car Co., 139 U.S. 59; McCormick v. Market Bank, 165 U.S. 538. It is elementary that if the principal is not bound by a contract, the surety upon his bond for its performance is not bound. The obligation of a surety is strictly accessory to that of a principal. Brandt, Sur. § 121; Eising v. Andrews, 66 Conn. 58; Henline v. Reese, 54 Oh. St. 599; Dole v. Cosmopolitan, 167 Mass. 481; Boone v. Jones, 54 Iowa 699.
The city impliedly warranted its plans and specifications to be sufficient. Bentley v. State, 73 Wis. 416; MacKnight v. Mayor, 160 N.Y. 72. The original plans and specifications did not permit the use of the crushed-stone system, and that system required extra labor and materials. If the contractors were entitled to treat this work as extra and the city arbitrarily refused to recognize it as such, they had the right to stop work as they did. Gearty v. Mayor, 171 N.Y. 71; Pope v Porter, 102 N.Y. 366; City of Milwaukee v. Shailer, 84 F. 106; ...
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