Massachusetts Bonding & Insurance Co. v. Ripley County Bank
| Decision Date | 14 December 1921 |
| Citation | 237 S.W. 182,208 Mo.App. 560 |
| Parties | MASSACHUSETTS BONDING & INSURANCE COMPANY, Respondent, v. RIPLEY COUNTY BANK, Appellant |
| Court | Missouri Court of Appeals |
Appeal from the Cape Girardeau Court of Common Pleas.--Hon. John A Snider, Judge.
REVERSED AND REMANDED (with directions).
Judgment reversed and cause remanded.
Borth & Ferguson and Abington & Phillips for appellant.
J. C Sheppard for respondent.
--This is a suit in equity, instituted in the circuit court of Ripley county. On change of venue the cause went to the Cape Girardeau Court of Common Pleas where a trial, before the court sitting as a Chancellor, resulted in a decree in plaintiff's favor, from which the defendant prosecutes this appeal.
THE PETITION.
The petition alleges that the School District of Doniphan, Missouri, on June 26, 1913, entered into a contract in writing with one W. J. McCully of the city of St. Louis, for the erection of a high school building, to be built for said district in the town of Doniphan, which contract is set out in the petition, whereby the school district agreed to pay McCully, as the contract price for the erection of said building, the sum of $ 22,592, less $ 1500 for brick and lumber salvaged from an old school building; that by the terms of the contract pleaded the district agreed to pay to said contractor, on or before the 15th of each month, a sum equal to eighty per cent of the value of the work done and finished material built in place in the building during the preceding month, based upon estimates made by the architect; and that twenty per cent of the contract price should be reserved until the building was completed.
It is alleged that the contractor, as required by law, executed a bond, upon which this plaintiff, the Massachusetts Bonding & Insurance Company, became surety for the faithful performance on the part of said contractor of the covenants and agreements contained in the contract aforesaid, which bond is likewise set out in the petition; that the contractor fully completed all of the work to be done by him under the contract, and turned the building over to the district, which accepted the same, but that the contractor failed to pay all of the bills for labor and material furnished on said building; and that plaintiff, "as it was compelled to do by having signed said bond," paid all bills for material furnished and labor performed on the building remaining due and unpaid, amounting in the aggregate to $ 4136.21. It is alleged that of said contract price, to-wit, $ 22,592, the school district paid to McCully, and to this plaintiff and upon its orders, the sum of $ 18,995.12, leaving a balance of $ 3596.88 remaining due and unpaid on said contract.
And it is alleged that by reason of the payment by plaintiff of the said bills for material and labor, plaintiff was "in equity subrogated to all the rights, equities, securities and monies which the materialmen, whose bills it had paid, had in and to all of the rights, equities, securities and monies which W. J. McCully had and all of the rights, equities, securities and monies which said Doniphan School District had, and which constituted a part of the twenty per cent so retained by it as aforesaid," by reason whereof plaintiff was entitled to have paid to it by the district, out of the money so retained by it, the sum of $ 3596.88.
The petition further alleges that on April 6, 1913, the Board of Education of said district, wrongfully, and without authority of law, and in disregard of the rights of plaintiff, and before the contractor had submitted receipts showing payment in full for all such material and labor or the certificate of the architect showing such payment, paid out of the said funds retained by it, as aforesaid, the sum of $ 2279.58 to the defendant bank, in payment of an individual debt of said contractor to defendant; and that defendant bank was neither a laborer on nor had it furnished any material to said building; that the defendant, at the time of the payment of said money to it, knew the purpose for which said fund was reserved by the school district, that the same was not subject to the payment of the individual debts of the contractor, knew of plaintiff's said right of subrogation and knew that the school district had no authority to pay defendant's claim out of said fund. And it is averred that the said payment to defendant was a wrongful and unlawful diversion of the funds so held by the school district, and a fraud upon the rights of plaintiff; and that by reason thereof plaintiff has been damaged in the sum of $ 2279.58, and the defendant has become and is indebted to plaintiff in said sum, with interest from April 6, 1913. Judgment is prayed accordingly.
THE ANSWER.
The answer, after admitting the averments of the petition as to the existence of the school district and the execution of the contract and bond pleaded in the petition, denies that plaintiff and McCully have paid all bills for material and labor used in and performed upon the building, and alleges that by the terms of said contract it became the duty of McCully and this plaintiff to pay for all material and labor necessary for the completion of said building in accordance with the contract; that in December, 1913, McCully became financially embarrassed and, in order to secure funds sufficient to pay for the labor and material necessary to be used in the erection of the building, borrowed from defendant $ 1000 for which he executed to defendant his note, and on Jan. 6, 1914, being still financially embarrassed and in need of money with which to pay for said material and labor, borrowed from defendant the further sum of $ 1500, for which he gave defendant his note; that to secure the payment of said notes, which were otherwise unsecured, McCully agreed with defendant that the same, with interest thereon, should be paid from the twenty per cent of the contract price of said building to be retained by the school district, as provided in the contract; and that McCully then and there assigned, transferred and set over to defendant, out of said fund, the sum of $ 2500, with eight per cent interest until paid; that the money so loaned to McCully by defendant was used by him to pay for necessary labor and material in the construction of said building, and was furnished to assist McCully and this plaintiff in carrying out the terms of said contract; and that it would now be inequitable and unjust to permit plaintiff to recover the same from defendant.
The answer then alleges that on April 1, 1914, the school district was made acquainted with said assignment by McCully to defendant, and on April 6, 1914, the district accepted the same and agreed to and did pay to defendant out of the fund above mentioned the sum of $ 2279.58, being the amount remaining in the hands of the School Board of said district due defendant by virtue of said assignment.
The answer further alleges that to secure this plaintiff against loss by reason of any of the facts pleaded in the petition, McCully has assigned and transferred to plaintiff securities and property of various kinds which in the aggregate "exceed in value any obligation or indebtedness that might arise and be owing from said McCully to this plaintiff growing out of any obligation that it might be compelled to pay by virtue of the bond set out herein;" and as a result thereof McCully has become insolvent, whereby defendant is deprived of any remedy at law or in equity as against him, whereas plaintiff is amply protected against any loss that it may sustain in the premises.
And the answer further alleges that on October 8, 1914, the plaintiff, with full knowledge of the facts pleaded in the petition and in the answer, brought a suit in the circuit court of Ripley county, Missouri, against said school district, for the sum of $ 3596.88, based upon the same facts upon which plaintiff now asks judgment against this defendant, which suit was prosecuted to a final judgment, which was affirmed on appeal; and that plaintiff thereby "elected to pursue the trustee of the trust alleged in plaintiff's petition, instead of pursuing the alleged trust fund therein mentioned;" and that such election precludes plaintiff from pursuing the alleged trust fund and operates as a bar to the prosecution of this suit.
Attached to the answer are exhibits consisting of the pleadings and the findings of fact and conclusions of law in the case of Massachusetts Bonding & Insurance Company v. The School District of Doniphan, referred to in the answer, together with the judgment and mandate of the Springfield Court of Appeals in that case.
THE REPLY.
The reply admits that plaintiff filed a suit against the school district for the sum of $ 3596.88, and recovered a judgment against the district on April 24, 1917, in the circuit court of Ripley county, which judgment was affirmed by the Springfield Court of Appeals on appeal. Plaintiff denies, however, that at the time said suit was filed it had any knowledge that the moneys therein sued for had at that time been paid over to defendant bank; and denies generally the other allegations of the answer.
THE FACTS.
By a stipulation of counsel filed, it was agreed that the exhibits attached to defendant's answer, as aforesaid, are true and correct copies of the records and papers of which they purport to be copies, and that in the trial of this cause such exhibits might be introduced in evidence subject to plaintiff's objections as to competency, relevancy and materiality.
To sustain the averments of the petition, not admitted by the answer, plaintiff read in evidence the testimony of a number of witnesses as...
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