Crane & Ordway Company, a Corp. v. Sykeston School District No. 11
| Decision Date | 29 March 1917 |
| Citation | 162 N.W. 413,36 N.D. 254 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Wells County, Coffey, J.
Affirmed.
Lawrence & Murphy, for appellant.
It is the duty of a school board to take from a contractor who is to do building or repairs for the school district, a bond as security for the payment of all bills for materials furnished and labor done, and the failure of the members of such board to take such bond before entering upon such contract renders them individually liable to materialmen and laborers not paid. Comp. Laws 1913, § 6832.
The warrant issued in this case and assigned to plaintiff gives to plaintiff a valid right of action against the school district, and such warrant is subject only to equities which existed at the time it was issued. No equities existed in favor of the district at such time. Gregory v Bridgeport, 41 Conn. 76, 19 Am. Rep. 485.
School-district warrants shall be issued only in payment of indebtedness of the school district previously incurred. Comp. Laws 1913 § 1170; Castner v. Minneapolis, 92 Minn. 84, 99 N.W. 361, 1 Ann. Cas. 934.
The rule is well settled that the legislature is powerless to authorize the expenditure of public funds by a municipal subdivision of the state, except for a public purpose. State ex rel. Wheeler v. Foley, 30 Minn. 350, 15 N.W. 375; Henderson v. Sibley County, 28 Minn. 515 11 N.W. 91; Coates v. Campbell, 37 Minn. 498, 35 N.W. 366; Chaska v. Hedman, 53 Minn. 525, 55 N.W 737; Fergus Falls v. Fergus Falls Hotel Co. 80 Minn. 165, 50 L.R.A. 170, 81 Am. St. Rep. 249, 83 N.W. 54; Michigan Sugar Co. v. Auditor General, 124 Mich. 674, 56 L.R.A. 329, 83 Am. St. Rep. 354, 83 N.W. 625; United States ex rel. Miles Planting & Mfg. Co. v. Carlisle, 5 App. D. C. 138; Calder v. Bull, 3 Dall. 386, 1 L.Ed. 648; Citizens' Sav. & L. Asso. v. Topeka, 20 Wall. 655, 22 L.Ed. 455; Gregory v. Bridgeport, 41 Conn. 76, 19 Am. Rep. 485; Vincent v. Nantucket, 12 Cush. 106; Bell v. Manvers, 2 U. C. C. P. 507; Castner v. Minneapolis, 92 Minn. 84, 99 N.W. 361; 2 McQuillin, Mun. Corp. pp. 1112, 1113, § 514; Hotchkiss v. Plunkett, 60 Conn. 233, 22 A. 535; Gormly v. Mt. Vernon, 134 Iowa 397, 108 N.W. 465; Jenney v. Mussey, 121 Mich. 229, 80 N.W. 2; Weinberg v. University of Michigan, 97 Mich. 246, 56 N.W. 607; Owen v. Hill, 67 Mich. 43, 34 N.W. 649; Plummer v. Kennedy, 72 Mich. 295, 40 N.W. 433; Wells v. Board of Education, 78 Mich. 261, 44 N.W. 267.
No counterclaim arose in favor of the district and against plaintiff by reason of the misappropriation of school-district funds in discharge of the personal judgment against its officers. Long Beach School Dist. v. Lutge, 129 Cal. 409, 62 P. 36; Newport Wharf & Lumber Co. v. Drow, 125 Cal. 585, 58 P. 187.
An assignee for value of a school warrant is entitled to payment thereof as against a claim for material and labor, notice of which is not given to the school district until after the assignment and presentation of the warrant. 34 Cyc. 746; Bramblett v. Slemp, 32 Ky. L. Rep. 1329, 108 S.W. 339; Rem. & Bal. Code (Wash.) § 191; King v. West Coast Grocery Co. 72 Wash. 132, 129 P. 1081; Cochrane v. Hyre, 49 W.Va. 315, 38 S.E. 554; 2 Hill's Code (Wash.) § 806; Harrisburg Trust Co. v. Shufeldt, 31 C. C. A. 190, 59 U. S. App. 532, 87 F. 669; Goodwin v. Cunningham, 12 Mass. 193; Jenkins v. Brewster, 14 Mass. 291; Nesmith v. Washington Bank, 6 Pick. 324; Sylvester v. Crapo, 15 Pick. 92; Dyer v. Homer, 22 Pick. 256; Rev. Stat. 1889, § 8161; Barber v. Baker, 70 Mo.App. 680; Civ. Code § 1982; Stadler v. First Nat. Bank, 22 Mont. 190, 74 Am. St. Rep. 582, 56 P. 111; Michigan Sav. Bank v. Millar, 110 A.D. 670, 96 N.Y.S. 568, 186 N.Y. 606, 79 N.E. 1111; Horowitz v. Brodowsky, 24 Misc. 731, 53 N.Y.S. 815; Daviess v. Newton, 5 J. J. Marsh. 89; Small v. Browder, 11 B. Mon. 212; Jackson v. Holloway, 14 B. Mon. 140; Harrison v. Wilson, 5 Rob. (La.) 275; Freeland v. Man, 1 Smedes & M. 531.
A defendant who sets up by way of a counterclaim against plaintiff's assignor in favor of a third person must show that he owed the claim before he had notice of the assignment of the claim to plaintiff. Mead v. Gillett, 19 Wend. 397; Venable v. Harlin, 1 N.Y. Civ. Proc. Rep. 215; Code Civ. Proc. § 502, subd. 1; Norton v. McCarthy, 10 Misc. 222, 30 N.Y.S. 1057; Williams v. Pultze, 5 Ohio Dec. Reprint, 503; Thorn v. Meyers, 5 Strobh. L. 210; Frick v. White, 57 N.Y. 103.
The facts stipulated here do not constitute a counterclaim under the statute. Roney v. H. S. Halvorsen Co. 29 N.D. 13, 149 N.W. 688.
Defendant cannot offset or counterclaim for fraud. 20 Cyc. 13.
Fraud without damage, or damage without fraud, is not actionable. Einstein v. Marshall, 58 Ala. 153, 25 Am. Rep. 729; Kountze v. Kennedy, 147 N.Y. 124, 29 L.R.A. 360, 49 Am. St. Rep. 651, 41 N.E. 414; Childs v. Merrill, 63 Vt. 463, 14 L.R.A. 264, 22 A. 626; Nelson v. Grondahl, 12 N.D. 130, 96 N.W. 299; Alden v. Wright, 47 Minn. 225, 49 N.W. 767; London & L. F. Ins. Co. v. Liebes, 105 Cal. 203, 38 P. 691; Marsh v. Cook, 32 N.J.Eq. 262; Bartlett v. Blaine, 83 Ill. 25, 25 Am. Rep. 346; Danforth v. Cushing, 77 Me. 182; Hale v. Philbrick, 47 Iowa 217; Stetson v. Riggs, 37 Neb. 797, 56 N.W. 628; Bodkin v. Merit, 102 Ind. 298, 1 N.E. 625; Biglow, Fraud, p. 541; People v. Cook, 8 N.Y. 67, 59 Am. Dec. 451; Eastwood v. Bain, 3 Hurlst. & N. 738, 157 Eng. Reprint, 665, 28 L. J. Exch. N. S. 74, 7 Week. Rep. 90; Hemingway v. Hamilton, 4 Mees. & W. 115, 150 Eng. Reprint, 1366; 1 Story, Eq. Jur. § 202; Vernon v. Keys, 12 East, 637, 104 Eng. Reprint, 246; 9 Cyc. 431; Barber v. Kilbourn, 16 Wis. 486; Castleman v. Griffin, 13 Wis. 535; Freeman v. Venner, 120 Mass. 424; Ide v. Gray, 11 Vt. 615; Randall v. Haselton, 12 Allen, 412; Fuller v. Hodgdon, 25 Me. 243; Alden v. Wright, 47 Minn. 225, 49 N.W. 767; Marriner v. Dennison, 78 Cal. 202, 20 P. 386; Bailey v. Fox, 78 Cal. 389, 20 P. 868; Morrison v. Lods, 39 Cal. 381; Purdy v. Bullard, 41 Cal. 444; Wainwright v. Weske, 82 Cal. 193, 23 P. 12; Southern Development Co. v. Silva, 125 U.S. 247, 31 L.Ed. 678, 8 S.Ct. 881, 15 Mor. Min. Rep. 435; Smith v. Richards, 13 Pet. 26, 10 L.Ed. 42; Wainscott v. Occidental Bldg. & L. Asso. 98 Cal. 253, 33 P. 88; Huffman v. Long, 40 Minn. 473, 42 N.W. 355; Johnson v. Seymour, 79 Mich. 156, 44 N.W. 344; Armstrong v. Breen, 101 Iowa 9, 69 N.W. 1125; Beard v. Bliley, 3 Colo.App. 479, 34 P. 271; Nelson v. Grondahl, 12 N.D. 130, 96 N.W. 299, and cases cited; Sonnesyn v. Akin, 14 N.D. 248, 104 N.W. 1026.
Where misrepresentations are alleged, it must appear that the party relied upon them as being true, and that they were a material inducement for him to do the acts which are alleged to have resulted in his injury. 20 Cyc. 32, 39, 43, and cases cited in note 54.
John O. Hanchett, for respondent.
The defendant is not here claiming any offset or counterclaim, but is claiming a complete defense to the warrant in question, upon the ground or fraud and false representation, mistake of fact, and failure of a material part of the consideration. For these things the defendant rescinded the warrant. That there was actual fraud is clearly shown. Comp. Laws 1913, §§ 5849, 7936, subd. 3; Raymond v. Edelbrock, 15 N.D. 231, 107 N.W. 194.
To enable defendant to maintain such defense, it is not necessary that damages be shown. The gist of the matter lies in the fact that, because of the fraud, the assent of defendant to the contract, or issuance of the warrant in this case, was not given freely. Beare v. Wright, 14 N.D. 26, 69 L.R.A. 409, 103 N.W. 634, 6 Ann. Cas. 1057.
The defendant would have had a valid defense against such warrant in the hands of the payee named. It has the same defense for fraud and misrepresentation against his assignee. The warrant was invalid when issued. Comp. Laws 1913, § 7396; Long Beach School Dist. v. Lutge, 129 Cal. 409, 62 P. 36.
This is an action brought upon a warrant issued to the plaintiff by the defendant school district. By stipulation the action was tried in the district court of Wells county, without a jury, and upon an agreed statement of facts. A judgment was entered in the trial court, dismissing the action and ordering a surrender of the warrant for cancelation. From this judgment the plaintiff appeals.
The material facts are as follows: In May, 1913, one John Rude contracted with the defendant for the installation of a heating and ventilating plant in the school building owned by defendant, for the sum of $ 2,198. The contractor was not required to give the statutory bond conditioned for the faithful performance of the contract, including the payment for all materials and labor required in its performance. During the summer the defendant paid Rude one half of the contract price, and after the completion of the work, in March, 1914, upon the representation by Rude that his contract was fully completed and that all materials and labor were paid for, the defendant issued its warrant for $ 1,000. This warrant, which is the subject of this action was, at Rude's request, made payable to the plaintiff, the Crane & Ordway Company. Thereafter the Kellogg Mackay Company sued and obtained a judgment against the members of the school board of the defendant, on account of the materials supplied to Rude in connection with the performance of his contract with the defendant district, the action having been predicated upon the statutory liability of the defendants, who had failed to require of Rude that he furnish the statutory bond. The judgment debtors paid this judgment out of the school district treasury, and they seek to protect their own...
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