Equitable Surety Co. v. Board of Com'rs of Muddy Bottom Swamp Land Dist. No. 1, Tippah County, Miss.

• Decision Date: 20 March 1916
• Docket Number: 2780.
• Citation: 231 F. 33
• Parties: EQUITABLE SURETY CO. v. BOARD OF COM'RS OF MUDDY BOTTOM SWAMP LAND DIST. NO. 1, TIPPAH COUNTY, MISS.
• Court: U.S. Court of Appeals — Fifth Circuit

231 F. 33

EQUITABLE SURETY CO. v. BOARD OF COM'RS OF MUDDY BOTTOM SWAMP LAND DIST. NO. 1, TIPPAH COUNTY, MISS.

No. 2780.

United States Court of Appeals, Fifth Circuit.

March 20, 1916

C. L Sivley, of Memphis, Tenn., for plaintiff in error.

Lester G. Fant, of Holly Springs, Miss., and Thomas E. Pegram, of Ripley, Miss., for defendant in error.

Before PARDEE and WALKER, Circuit Judges, and NEWMAN, District Judge.

NEWMAN District Judge.

This case comes before this court for review of the judgment of the District Court of the Northern District of Mississippi in a suit by the board of commissioners of Muddy Bottom Swamp Land District No. 1 of Tippah County, Miss., against the Delta Drainage Company and the Equitable Surety Company. The suit in the District Court, which had been removed from the state court, was to recover on the bond executed by the Delta Drainage Company, with the Equitable Surety Company as surety, for the faithful performance by the Delta Drainage Company of a contract made by it with the commissioners of the Muddy Bottom Swamp Land District No. 1, for the digging of a canal through the district for which the commissioners were acting. Two bonds were given, and both are in suit; one for $5,000, executed on the 15th day of January, 1912, and the second for $2,500, executed on the 20th day of May, 1912. There was a trial of the case and a verdict and judgment for the plaintiff for $7,361.71. It is for errors alleged to have been committed in this trial that the case is brought here by the Equitable Surety Company.

The contract between the Delta Drainage Company and the commissioners is as follows:

'Whereas, Muddy Bottom Swamp Land District No. 1, Tippah County, Mississippi, through its duly authorized commissioners, W. L. McBride, Chairman, W. E. Pegram and W. T. Brumley, is desirous of having a canal cut in and for the said district, to be laid out by a civil engineer, approximately as shown by the map of said district, now on file, in the office of the clerk of the board of supervisors of the said county; and whereas, for the said purpose, the said board of supervisors of the said county has duly issued bonds, at the instance of the said district, in the sum of $25,000.00 (twenty-five thousand dollars), which bonds have been duly sold and the proceeds thereof now in the hands of the said commissioners; and whereas, the said commissioners, in session, in said county, on the 10th day of February, 1912, regularly rewarded the Delta Drainage Company of Memphis, Tennessee, a firm composed of John W. Buford, owning one-half, Charles B. Bright, owning one-fourth, and James M. Bridge, owning one-fourth, the contract of cutting the said canal; and whereas, it is proper for the protection of the parties to this contract, and interested in the said work, that contract is drawn entered into between them: Therefore, it is hereby agreed and solemnly bargained between the said Muddy Bottom Swamp Land District, by its said commissioners, hereinafter called the first party, and the Delta Drainage Company, hereinafter called the second party:

'First. The first party may audit all bills for labor, material, expense, freight, rent on machinery, salary and yardage, seeing that no bills are allowed, except in instances where said salary, labor, materials, expenses, rents on machinery, etc., on requisition from the said company, are actually for the use and proper benefit of the said proposed canal, however, the said commissioners may, at any time decline to honor any requisition, if in their judgment, a proper amount of work on the said canal has not been done and completed to warrant the issuance thereof. And in no event, is the aggregate of said bills to exceed the sum of $19,500.00, which is the price agreed upon to be paid for the service and work to be done by the second party, as hereinafter set out; said payments shall not be oftener than once a week.

'Second. That the first party is to secure and maintain for the second party a right of way of the width of fifty feet, the same being twenty-five feet from the center of the canal from each direction, during the time that the said work of the digging and clearing out of the said canal is progressing; all expense incident to the carrying out of this feature of the contract is to be borne by the first party.

'Third. The second party agrees to so clear the said right of way, as may be necessary to cut the said canal; the timber so cut in the clearing thereof is to belong to the second party, that is, so much of it as is needful for them in the carrying out the work of said canal as fuel, timbers, etc.

'Fourth. Said second party shall cut and remove, in addition to the clearing of the said right of way, to the right and to the left of said canal, the sum of one hundred and eighty-three thousand cubic yards of dirt in and from the said canal, as is shown by the aforesaid map, at and for the sum of $19.500.00. This canal is to be of the size and dimensions as to be determined by the civil engineer, who will hereafter specify grades, sections, etc. If it is found that the said civil engineer determines that there are more than one hundred and eighty-three thousand yards of earth to be removed from the said canal, or the commissioners decide that they want the canal larger so as to require more than the said one hundred and eighty-three thousand yards removed, it is agreed that the party of the second part is to have in addition to the $19,500.00 the sum of 9 1/3 cents per cubic yard, according to the general terms of the contract.

'Fifth. The second party shall pay and be chargeable with all bills for labor, salaries, machinery, machinery rent, freight, expenses, estimated yardage and all other cost of clearing the right of way and cutting said canal of one hundred and eighty-three thousand cubic yards of dirt, except as a part heretofore set out as chargeable to first party.

'It is further solemnly agreed and bargained between the parties hereto that the remaining portion, if any so remains, of the said $19,500.00, after paying out the bills heretofore described, be paid to the Delta Drainage Company, upon the completion of the one hundred and eighty-three thousand cubic yards and the acceptance of the said work by the said commissioners.

'It is further agreed and understood that all reasonable diligence and activity must be exerted by the second party to accomplish the proper completion of this work, but the second party is to have proper and fair time to do same.

'And that the second party is to begin the work of digging the said canal at the lower, or northern, end of the same, on deposit of the said $19,500.00, as hereinbefore mentioned. The second party will furnish, as a part of this contract, a contractor's bond in the sum of $5,000.00 for the faithful performance of this contract.

'It is expressly understood that nothing in this contract shall be so construed as to require the contractors to change the size of the canal, where once cut according to engineer's specifications.'

It will be seen from this contract that the commissioners were to audit all 'bills for labor, material, expense, freight, rent on machinery, salary, and yardage, seeing that no bills were allowed except in instances where said salary, labor, materials, expenses, rents on machinery, etc., on requisition from the said company, are actually for the use and proper benefit of the said proposed canal, however the said commissioners may, at any time, decline to honor any requisition, if in their judgment, a proper amount of work on the said canal has not been done and completed to warrant the issuance thereof. ' It was evidently contemplated that payments should be made by the commissioners to the drainage company as the work progressed. The amount to be received by the drainage company is also stated to be $19,500 if the work then contemplated only was done and no new work ordered. If there was any new work ordered, the drainage company was to receive 9 1/3 cents per cubic yard for all earth removed in addition to that provided for in the contract and for which the $19,500 was to be in full payment.

Two of the defendant's pleas interposed in this case are as follows:

'Special Plea No. 1.

'For a further plea in this behalf, the said Equitable Surety Company avers, and will show on the trial of this cause that the $4,500 alleged to have been advanced to the Delta Drainage Company, by plaintiff for the purpose of purchasing a dredge boat, if advanced at all, was done without authority of law, and contrary to the statute of the state of Mississippi, and the law under which the plaintiff so operated, and was not provided for or contemplated by the terms of the contract, which plaintiff had with the Delta Drainage Company, and was not within the contemplation of the contract that the Equitable Surety Company here is sued upon and incurred no obligation upon it as surety for the Delta Drainage Company, and was ultra vires, and unlawful, and for which the defendant Equitable Surety Company is in no way liable under the law, or its contracts as surety, and this it is ready to verify.

'Special Plea No. 2.

'For further plea in this behalf, the said Equitable Surety Company, defendant, will show that $1,500 or more of the alleged cash advanced was never in fact advanced to the Delta Drainage Company, by plaintiff, but the item came about in this way: The bonds of said district which aggregated about $24,000 were unlawfully and in violation of a positive statute of the state of Mississippi, under which said district was organized, sold for at least $1,500 below par, and, in order to evade said statute requiring that said bonds shall not be sold for less than par, the said plai

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