Kansas City Hydraulic Press Brick Co. v. National Surety Co.

• Decision Date: 13 February 1909
• Docket Number: 2,767.
• Citation: 167 F. 496
• Parties: KANSAS CITY HYDRAULIC PRESS BRICK CO. v. NATIONAL SURETY CO.
• Court: U.S. Court of Appeals — Eighth Circuit

167 F. 496

KANSAS CITY HYDRAULIC PRESS BRICK CO. v. NATIONAL SURETY CO.

No. 2,767.

United States Court of Appeals, Eighth Circuit.

February 13, 1909

The defendant here and below, the National Surety Company, was the surety upon three bonds executed by W. W. Atkins conditioned that he should promptly pay and discharge all labor and material bills incurred in paving portions of two streets in Kansas City, Kan. The plaintiff furnished vitrified brick to Atkins, which were used in paving the streets. He made default in the payment of the purchase price, and this action is brought against his surety upon the bonds. Two defenses are interposed: First, that the contract is void for illegality; second, that the action is barred by the statute of limitations.

To understand the first of these defenses, a somewhat extended history of the transactions is necessary. In the month of August, 1901, the repaving of Fifth street from Reynolds avenue to Central avenue, and the paving of the same street from Central avenue to Euclid avenue, was under consideration. The Diamond Brick & Tile Company employed agents to circulate petitions among those owning property upon the street, asking the city council to take the proper steps to have the improvement made. Under the statutes of Kansas, this was the proceeding necessary to initiate such a public work. The petitions were prepared by the Diamond Brick & Tile Company, and specified that the paving should be made with 'No. 1 Vitrified Paving Brick, Diamond Brand. ' This was a kind of brick made exclusively by that company and the evidence shows that there were several other makes of vitrified brick that were equally fit for paving purposes. In the case of such improvements the statute of Kansas requires the petitions to contain a 'specific description of the material to be used. ' On August 6, 1901, these petitions, at the instance of the Diamond Brick & Tile Company, were presented to the mayor and city council, and a resolution in conformity therewith, also prepared by that company, declaring the necessity for paving the street, was passed. Thereafter detailed specifications for the doing of the work were drafted by the city engineer, and in the early part of September bids were solicited by public advertisement based upon such specifications. The Brick & Tile Company requested Atkins to become a bidder. Eight bids were submitted for each improvement. Those of Atkins being the lowest, he was awarded the contracts. On the 17th day of September, 1901, formal contracts were executed between him and the proper city authorities. On the same date the defendant herein joined him in the execution of bonds conditioned as above stated. The giving of such bonds was required by a statute of Kansas before Atkins could begin work upon the streets. In the contracts, as well as in all the proceedings before the city council, the Diamond brick manufactured exclusively by the Diamond Brick & Tile Company, were specified as the material to be used in constructing the paving.

In the month of July, 1902, similar proceedings were had for the paving of Split Log avenue, and on September 16, 1902, the contract was awarded to Atkins for the doing of that work, and a bond executed by the defendant as surety. The connection of the Diamond Brick & Tile Company with that improvement was the same in every particular as with the paving of Fifth street.

After the contracts were awarded to Atkins for the paving of Fifth street, and the bonds executed on his behalf by the defendant as surety, in September, 1901, the entire proceeding relative to that street seems to have been suspended for about a year. The next transaction consists of a written contract between Atkins and the Diamond Brick & Tile Company, bearing date October 30, 1902, whereby Atkins agrees to buy, and the corporation agrees to sell and deliver to him, brick for the paving of Fifth street between Central avenue and Euclid avenue. A similar contract was entered into between the same parties under date of December 1, 1902, for brick for the paving of Split Log avenue. Both of these contracts were on December 13, 1902, assigned in writing by the Diamond Brick & Tile Company to the plaintiff herein, and the latter agreed to carry out such contracts. On January 16, 1903, a written contract was entered into directly between Atkins and the plaintiff for brick for the paving of Fifth street from Reynolds avenue to Central avenue. It appears from the evidence that the plaintiff purchased the plant of the Diamond Brick & Tile Company where the Diamond brick were manufactured, but the date of the transaction is not given in the evidence. Mr. Atkins stated that it occurred some time during the spring of 1903. But the fact that two of the contracts between Atkins and the Diamond Brick & Tile Company for brick were assigned to the plaintiff on December 13th, and that the contract for the brick for the other job was entered into on January 16, 1903, by Atkins, directly with the plaintiff, tends to show that between these dates the plaintiff acquired the plant of the Diamond Brick & Tile Company, or had definite negotiations looking to that result.

The paving was completed by Atkins under the supervision of the city engineer in June, 1903. The work was then examined and approved by the proper authorities, and Atkins was paid the full consideration provided in his contracts. The plaintiff furnished the brick, as required by the contracts with Atkins above set forth. He has failed to pay for the same, and this action is brought against the surety company as his bondsman. At the close of plaintiff's evidence a verdict was directed in favor of the defendant. It was held not only that the contracts between Atkins and the city were illegal, but that their illegality also destroyed the contracts upon which the brick were furnished by the plaintiff and the bonds given by the defendant.

James S. Botsford (Buckner F. Deatherage, Odus G. Young, John E. McFadden, and Robert E. Morris, on the brief), for plaintiff in error.

Frank Hagerman (A. L. Berger, on the brief), for defendant in error.

Before SANBORN and HOOK, Circuit Judges, and AMIDON, d AMIDON, District Judge.

AMIDON District Judge (after stating the facts as above).

The trial court based its ruling in the main upon section 747 of the General Statutes of Kansas of 1901, which requires that, when the estimated cost of a contemplated improvement amounts to $100--

'sealed proposals for the doing or making thereof shall be invited by advertisement published by the city clerk in the official paper of the city for at least three consecutive days, and the mayor and council shall let the work by contract to the lowest responsible bidder.'

The Supreme Court of Kansas, in the Case of National Surety Co. v. Kansas City Hydraulic Press Brick Company, 73 Kan. 196, 84 P. 1034, construed this statute, and held that, when the nature of the material to be used in a public improvement admitted of competitive bidding, such bidding was indispensable, and that the specification of a particular make of brick for paving, when the evidence showed that there were several makes equally well adapted for the purpose, was a violation of this statute, and rendered the proceedings and the contract based thereon illegal and void. This decision of the highest court of the state construing its statute, and defining the powers and duties of municipal bodies, is binding upon us; but the effect of a violation of its provisions upon collateral and independent contracts is a matter of general law, as to which it is the duty of the federal courts to exercise an independent judgment. Giving effect to the statute as thus interpreted, the contracts between Atkins and the city for these several jobs of paving were illegal and void. No action could be based thereon, either for their enforcement or to recover damages for their violation. Any party affected thereby could maintain a suit to restrain the municipal authorities from entering into such contracts, and could successfully resist the collection of assessments based thereon. These contracts, however, are not directly before the court in the present suit. They have been fully executed. The city has paid the agreed price for the paving, and the property owners are paying without objection their assessments to create a fund to discharge the bonds issued to raise money to pay Atkins.

Three grounds have been advanced in argument in support of the charge that the bonds sued upon are illegal: First, it is urged that they are a part of the illegal contracts between Atkins and the city. The statute provides:

'That whenever any public officer shall, under the laws of the state, enter into contract with any person for the purpose of making any public improvements, * * * such officer shall take from the party contracted with a bond with good and sufficient sureties to the state of Kansas, in a sum not less than the sum total in the contract, conditioned that such contractor shall pay all indebtedness incurred for labor or material furnished in making said public improvement.'

The defendant contends that under this statute the contracts between Atkins and the city were incomplete until the bonds in suit were executed, and hence that the latter are tainted with the illegality of the former. While the statute requires public officers to exact such bonds, their failure to do so would not render either the original contract for making the improvement, or collateral contracts for labor and material used therein, illegal or void. Though the bonds and the contracts bear the same date, they are not part of one entire contract. They are between different parties, rest upon distinct considerations, and require the...