Rathbun v. State

• Decision Date: 05 September 1908
• Citation: 97 P. 335,15 Idaho 273
• Parties: ALFRED RATHBUN, Trustee, Plaintiff, v. STATE, Defendant
• Court: Idaho Supreme Court

97 P. 335

15 Idaho 273

ALFRED RATHBUN, Trustee, Plaintiff, v. STATE, Defendant

Supreme Court of Idaho

September 5, 1908

LIEN LAW-MECHANICS' AND MATERIALMEN'S LIENS-NOT ENFORCEABLE AGAINST THE STATE-LIABILITY OF STATE TO LABORERS SUBCONTRACTORS AND MATERIALMEN-CONSTRUCTION OF CONTRACT.

1. The lien laws of this state do not authorize or justify mechanics,' laborers' or materialmen's liens against state buildings.

2. A provision in a building contract entered into between the state and a contractor which provides that, "If at any time there should be evidence of any lien or claim for which if established, the owner of the said premises might become liable, and which is chargeable to the contractor, the owner shall have the right to retain out of any payment then due or thereafter to become due, an amount sufficient to completely indemnify against such lien or claim," does not authorize or justify the state in withholding pay- ments from the contractor and paying the same to laborers and materialmen, unless the state has become directly responsible to such laborers and materialmen by contract, either express or implied.

3. ID.-Under such a stipulation in a building contract, entered into between the state and the contractor, the state cannot legally withhold from the contractor any claims that it may have allowed merely by reason of the claimant's having either worked for the contractor on the building or improvement or having furnished materials that were used therein; nor can it withhold any sum or amount on the theory that if the work were being done for a private individual the same would be lienable, and the laborer or materialman might prefer his lien therefor.

4. Evidence examined in this case, and held that it does not justify or support the contention made by plaintiff that he is entitled to recover for the extras claimed in this case.

(Syllabus by the court.)

Original action in this court for recommendatory judgment by Alfred Rathbun, as trustee of the estate of John W. Walker, a bankrupt, against the state for the judgment of this court as to the liability of the state for certain claims and demands preferred by the trustee of the bankrupt estate. Judgment for the plaintiff in the sum of $ 4,298, with interest from June 3, 1906.

No costs awarded.

Neal & Kinyon, for Plaintiff.

The provisions of art. 9 of Walker's contract with defendant do not create any sort of lien in favor of creditors of Walker, who have no contract relation directly with the state, nor any contract relation with Walker whereby a right to lien is expressly preserved by contract of the parties. (Bankrupt Act, sec. 67; 1 F. St. Ann. 688; Collier's Bankruptcy, 5th ed., 517.)

When a state enters into a contract with a private individual it relinquishes its sovereign character as to such transaction, and, as a general rule, can claim no exemption from the rules of law applicable to contracts of private parties under like circumstances. (26 Am. & Eng. Ency., 2d ed., 477; Davis v. Gray, 83 U.S. (16 Wall.) 203, 21 L.Ed. 447; Patton v. Gilmer, 42 Ala. 548, 94 Am. Dec. 665; Calloway v. Cossart, 45 Ark. 81; Chapman v. State, 104 Cal. 690, 43 Am. St. Rep. 158, 163, 38 P. 457; Boston Molasses Co. v. Commonwealth, 193 Mass. 387, 79 N.E. 827; Carr v. State, 127 Ind. 204, 22 Am. St. Rep. 624, 26 N.E. 778, 11 L. R. A. 370, 371, and note; People v. Stephens, 71 N.Y. 549; Danolds v. State, 89 N.Y. 36, 42 Am. St. Rep. 277.)

The power of the court to allow "legal rights" against the state does not include "mere moral obligations" which are neither legal nor equitable. (Page on Contracts, sec. 1007, pp. 1583, 1584; Western etc. Ry. Co. v. State (Ga.), 14 L. R. A. 438, 447; United States v. Gleeson, 124 U.S. 258, 8 S.Ct. 502, 31 L.Ed. 421; Coates v. United States, 53 F. 989, 991, 992, 4 C. C. A. 138; Young v. State, 19 Wash. 636, 54 P. 36; Julian v. State, 122 Ind. 68, 23 N.E. 690, 693; Lewis v. Colgan (Cal.), 44 P. 1081.)

J. J. Guheen, Attorney General, Edwin Snow and Jesse B. Hawley, for Defendant.

The state board of examiners is supreme in its jurisdiction, and its allowance or disallowance of a claim is a matter of its own discretion. Under clause 9 of this contract, it had a right to withhold payment whenever there was any evidence of a claim which might be an obligation of the state, and it therefore had the right to declare what claims would be an obligation against the state. Its action is final, creating an obligation on the part of the state to pay whenever there is a fund for that specific purpose. (Winters v. Ramsey, 4 Idaho 303, 39 P. 193; Pyke v. Stuenenberg, 5 Idaho 614, 51 P. 614; sec. 18 of art. IV, Const. of Idaho.)

We cannot see that the plaintiff in this case comes in good faith, for he is seeking to recover from the state money which beyond question he owes to the very men the state are trying to pay out of the fund which these men's material and labor have made for him. (Independent School Dist. v. Madis, 106 Iowa 295, 76 N.W. 794.)

In a case between individuals where the defendant had not the power to protect himself, which in this case the state has, a clause similar to the one involved in this case was held to be for the benefit of the laborer and materialman, as well as for the benefit of the builder. (Dempsey v. Schawacker, 140 Mo. 680, 38 S.W. 954, 41 S.W. 1100.)

One who is the equitable assignee of a fund has an equitable property in such fund. (Pomeroy's Eq. Jur., sec. 1280.)

By the contract . . . . the money in the hands of the board was subject to the exercise of this power, and the power was exercised. The board had received notice of these demands, and determined to hold, and did hold, this money for the protection of subcontractors and laborers, according to the terms of the contract. (Luthy v. Wood, 6 Mo.App. 67.)

AILSHIE, C. J., Sullivan, J., and Stewart, J., concur.

OPINION

AILSHIE, C. J.

This is an original action in this court, instituted by the trustee in bankruptcy, for the purpose of determining the liability of the state on account of certain building contracts hereinafter considered. The state answered and the plaintiff demurred to the answer, and also moved to strike out certain portions thereof. At the May term, 1907, both the demurrer and motion were overruled and the following opinion was announced from the bench:

"In this case the plaintiff, Alfred Rathbun, is the trustee of the estate of John W. Walker, a bankrupt. Walker was adjudged a bankrupt by the United States district court for the central division of the district of Idaho, and the plaintiff herein was elected trustee under the bankruptcy law. Walker had entered into a contract with the board of trustees of the Idaho Soldiers' Home for the furnishing of materials and supplies and the performance of certain labor in completing the construction of a building for that institution. He had also entered into a similar contract with the board of trustees of the Idaho Industrial Training School for the furnishing of materials and supplies and constructing certain buildings and improvements for that institution. The printed form of each of the contracts is the same, and appears to be that form known as the 'Uniform Contract Adopted and Recommended for General Use by the American Institute of Architects and the National Association of Builders.' The printed form is quite lengthy, consisting of thirteen articles. The ninth article in each of these contracts contains the following printed matter, which furnished the principal bone of contention in this controversy, and is as follows:

"'The final payment shall be made within thirty days after the completion of the work included in this contract, and all payments shall be due when certificates for the same are issued. If at any time there shall be evidence of any lien or claim for which, if established, the owner of the said premises might become liable, and which is chargeable to the contractor, the owner shall have the right to retain out of any payment then due or thereafter to become due, an amount sufficient to completely indemnify against such lien or claim.'

"The state acting, as it alleges, under the authority of the foregoing provisions of the contract, was advised and informed that various claims existed against these buildings and improvements, and that immediately after the contractor Walker, had absconded, the various laborers and materialmen who had contributed labor or furnished material for these contractors began clamoring for their pay, and asserted their claims against the contractor and the buildings and improvements on which they had labored and for which they had furnished material. The state further alleges that after being apprised of these claims it instituted an investigation through its proper officers as to the validity, justice and correctness of these claims, and that after it had ascertained those facts, the board of examiners audited and allowed such claims as were legal and just in favor of the several claimants. The state, therefore, claims that there is nothing due or owing to the contractor or his legal representative, the trustee in bankruptcy. The trustee contends, on the other hand, that the foregoing provision of the contract does not authorize the state to pay any sum due the contractor to any of the laborers or materialmen or to anyone other than the contractor or his legal representative. In the first place, it is conceded by the state that the lien laws of this state do not authorize mechanics' laborers' and materialmen's liens on state property and buildings such as were erected and constructed in this case. It will be noticed that the contract only authorizes the state to withhold such sums and amounts as constitute 'any lien or claim...