Monona County v. Gray

• Decision Date: 24 November 1925
• Docket Number: 36698
• Citation: 206 N.W. 26,200 Iowa 1133
• Parties: MONONA COUNTY, Appellee, v. J. A. GRAY et al., Appellants
• Court: Iowa Supreme Court

206 N.W. 26

200 Iowa 1133

MONONA COUNTY, Appellee, v. J. A. GRAY et al., Appellants

No. 36698

Supreme Court of Iowa, Des Moines

November 24, 1925

Appeal from Monona District Court.--A. O. WAKEFIELD, Judge.

THE action is by the county against the sureties on a bond conditioned for the payment of all costs and expenses incurred in connection with a petition for the establishment of a drainage district in case the district was not established. From judgment on a directed verdict for plaintiff, defendants appeal.

Affirmed.

J. A Prichard, C. E. Cooper, and George E. Allen, for appellants.

Underhill & Miller and Jepson, Struble, Anderson & Sifford, for appellee.

VERMILION J. FAVILLE, C. J., and EVANS, STEVENS, and DE GRAFF, JJ concur.

OPINION

VERMILION, J.

The appellants, with others, were signers of a petition to the board of supervisors for the establishment of a drainage district. The appellants signed a bond in the sum of $ 6,000, conditioned upon the payment of all costs and expenses incurred in the proposed drainage proceedings petitioned for, in the event that the prayer of the petition should not be granted by the board of supervisors. The drainage district was not established; and this action is by the county upon the bond, to recover the amount alleged to have been paid by the county in costs and expenses so incurred.

The cause was tried to a jury, and, at the conclusion of all the evidence, the court overruled the motion of the defendants for a verdict in their favor, and sustained the motion of the plaintiff for a verdict for the amount of the bond, less $ 750 that had been paid by certain signers of it, and interest. The total cost and expense alleged by the plaintiff to have been paid in connection with the proposed project was $ 6,334.18, or $ 334.18 in excess of the amount of the bond.

The defenses presented by appellants, briefly stated, were: 1. An agreement that all signers of the petition should sign the bond. 2. That the bond had been mutilated by the removal of certain signatures. 3. That the engineer employed to make the preliminary survey departed materially from the project proposed by the petition. 4. That the amount claimed was in excess of the reasonable cost of a proper preliminary survey, as contemplated by the petition.

I. In respect to the claimed agreement that all who signed the petition should sign the bond, there is testimony tending to show the following facts: That the petition and bond were prepared in triplicate for circulation in different localities for signature; that, at a meeting of parties interested in promoting the project, and attended by some eight of the thirty-nine signers of the bond, it was stated that no one should be allowed to sign the petition who did not also sign the bond; and that instructions to that effect were given the persons who circulated the papers for signature. The signers of the bond present at that meeting testified that they would not have signed the bond, but for such agreement. Some twelve persons signed the petition whose names are not on the bond.

It is well settled that, where a bond is delivered in violation of the condition upon which it was signed by the sureties, the plaintiff may recover thereon if it is shown that the bond was received in good faith, for a sufficient consideration, and without knowledge or notice of the condition upon which it was signed. Benton County Sav. Bank v. Boddicker, 105 Iowa 548, 75 N.W. 632, and 117 Iowa 407; Novak v. Pitlick, 120 Iowa 286, 94 N.W. 916.

It is shown that Marquis, a member of the board of supervisors, was present at the meeting, and had actual knowledge of what was there done. He was, however, the owner of land within the proposed district, and was disqualified to act as a member of the board of supervisors in passing upon the petition. Stahl v. Board of Supervisors, 187 Iowa 1342. In Morgan v. Fremont County, 92 Iowa 644, 61 N.W. 231, the rule was laid down that:

"Whether notice to a public officer is notice to the corporation of which he is an agent depends upon the nature and extent of his powers. If the notice pertains to a matter concerning which it is his duty to act, then, as a general rule, notice to him is, in law, notice to the corporation."

Marquis, being disqualified, by reason of his interest, to act as a member of the board of supervisors upon the question whether the drainage district should be established, obviously had no duty to act in the matter on behalf of the county. Moreover, his presence at the meeting in question was clearly prompted by his personal interest in the success of the project, and this was opposed to the interest of the county in securing a bond to indemnify it for the expense incurred if the district should not be established. Notice to an agent whose interests in the matter in hand are antagonistic to those of his principal is not notice to the principal. Findley v. Cowles, 93 Iowa 389, 61 N.W. 998; Van Buren County v. American Sur. Co., 137 Iowa 490, 115 N.W. 24; Barnes v. Century Sav. Bank, 165 Iowa 141, 144 N.W. 367; Watt v. German Sav. Bank, 183 Iowa 346, 165 N.W. 897. We are of the opinion that the knowledge of Marquis is not, under these circumstances, to be imputed to the county.

While the burden was upon the appellee to establish that it took the bond in good faith and without notice of the alleged agreement of the sureties, or knowledge sufficient to put it upon inquiry, we think it fully sustained that burden, and that there were no facts or circumstances shown in evidence requiring the submission to the jury of the question of notice. First Nat. Bank v. Dutton, 199 Iowa 468, 202 N.W. 228, and cases cited.

But, at all events, it is clear that appellants are estopped to rely upon the claimed agreement for the purpose of escaping liability on the bond. They were all petitioners for the establishment of the drainage district. While it is not shown who actually presented and filed the petition and bond in the auditor's office, they were presented together, in the interest of the petitioners. The bond was an essential preliminary to action on the petition. Section 1989-a2, Code Supplement of 1913 (Section 7430, Code of 1924). It was accepted as such. The petition was acted on, and a large expense incurred and paid by the county in reliance on the bond. The bond was wholly in appellants' hands until it was filed. When they filed it, or caused it to be filed, for the purpose of securing action on their petition, and thereby induced the county to act, and expend money in reliance upon it, it does not lie in their mouths to say that, by a secret agreement among themselves, of which the county had no notice, the bond was to be signed by all the petitioners before it should be delivered and filed and they became liable thereon. Helwig v. Fogelsong, 166 Iowa 715, 148 N.W. 990. Nor can appellants be heard to say, under such circumstances, that they did not know that the bond had not been signed by all the petitioners. It was their bond, --their act; they were both petitioners and signers of the bond. They had the fullest opportunity to know if it did not conform to the alleged agreement among themselves. Under such circumstances, the resulting estoppel is clear. Sweezey v. Collins, 40 Iowa 540; McCormack v. Molburg, 43 Iowa 561; Ross v. Ferree, 95 Iowa 604, 64 N.W. 683; Marshall Field & Co. v. Sutherland, 136 Iowa 218, 113 N.W. 770; Phelps v. Linnan, 174 Iowa 138, 156 N.W. 294. In Theobald v. Hopkins, 93 Minn. 253 (101 N.W. 170), it is said:

"If plaintiff could, by proper inquiry, have learned all the facts * * * and neglected to make it, and defendants were misled to their prejudice by his inaction, he would be estopped from afterwards asserting a claim against them."

II. The answer, after setting up the alleged agreement that all the signers of the petition should also sign the bond, proceeds as follows:

"That, if the names of all of the petitioners named, and who signed said petition, were obtained as signers to said bond, said bond has been mutilated and the names of a large number of the petitioners removed therefrom, and said bond is not now in its original condition as when filed, and these defendants would be called upon to pay a much larger share than would have been their just due. That, if said bond has been mutilated, it was done while in the custody of the said plaintiff, and plaintiff is responsible therefor. That, if said bond was filed without said signatures' having been added, as agreed upon, then the same was in fraud of these defendants, and without their knowledge and consent; and plaintiff is not entitled to recover thereon."

This presents no defense based on a claim that the bond was altered by the removal of any signature after its execution and before it was filed; but it is expressly averred that, if the bond was mutilated, it was while it was in the custody of the plaintiff. No defense coming within the rule announced in State v. Craig, 58 Iowa 238, 12 N.W. 301, or Johnston v. Cole, 102 Iowa 109, 71 N.W. 195, is pleaded.

The evidence relied upon to sustain the defense of a material alteration is testimony tending to show that one Craven signed the bond, and that his name does not now appear thereon, and that two sheets have been removed from the packet or bunch of papers fastened together, and consisting of the bond and petition. This packet of papers has been certified to us. It consists of two complete and identical petitions and the last page of a third petition, all bearing signatures, and two identical bonds, with signatures on each. We may say here that there is no contention but that these several copies of both the petition and bond constituted, in effect, a single petition and bond. For...