Thompson v. Bradbury

• Decision Date: 15 January 1898
• Citation: 51 P. 758,5 Idaho 760
• Parties: THOMPSON v. BRADBURY
• Court: Idaho Supreme Court

51 P. 758

5 Idaho 760

THOMPSON v. BRADBURY

Supreme Court of Idaho

January 15, 1898

CONTRACT FOR CONSTRUCTING CANAL-CONSTRUCTION OF CONTRACT BETWEEN CONTRACTOR AND SUBCONTRACTOR-ESTIMATES OF ENGINEER.-Where B agrees with T. and assignors to proceed to secure by action lien, compromise or otherwise the best settlement obtainable for certain demands against the I. M. & I. Co. and to pay over to T. and assignors their just parts and proportions thereof, of all compensations, money or property recovered or received, in excess of the estimates of said company's engineer and interest thereon T. and others are not entitled to recover from B. until he has recovered money or property from the I. M. & I. Co. in excess of the estimates of such engineer.

SAME-LIABILITY OF CONTRACTOR TO SUBCONTRACTORS.-Under such contract the recovery of a judgment does not fix the liability of B. to T and others. His liability is fixed by the amount or value of the property recovered or money received. If he recovers property or money exceeding in value, the estimates of the company's engineer and interest thereon, then T. and his assignors are entitled to their proportional part of such property or money.

MUST ALLEGE AND PROVE FRAUD OR MISTAKE.-Where parties agree that payments for work and materials done and furnished shall be paid upon estimates of a certain engineer, to recover more a party must allege and prove fraud or mistake on the part of such engineer.

(Syllabus by the court.)

APPEAL from District Court, Ada County.

Reversed and remanded.

Johnson & Johnson and W. E. Borah, for Appellant.

The evidence in the case at bar shows that the plaintiff does not represent all the subcontractors who would have an equitable interest in this property, and this fact is also disclosed by the bill of equity. This entire matter, therefore, would in its very nature be an equitable proceeding, and a bill in equity is the only proper method for determining such matters as arose in this case. The bill in equity, therefore, should have been heard and these matters settled in that proceeding. The equity matters should be first disposed of. (Martin v. Zellerbach, 38 Cal. 300, 99 Am. Dec. 365; Arguello v. Edinger, 10 Cal. 159; Weaver v. Marshall, 19 Cal. 447; Estrada v. Murphy, 19 Cal. 248; Downer v. Smith, 24 Cal. 114; Bodey v. Ferguson, 30 Cal. 512.) The findings should be statements of the ultimate, and not of the probative, facts. They should be the statement of the ultimate facts in the controversy and the legal consequences from the facts, and should not include the probative facts. (Mathews v. Kinsel, 41 Cal. 512; Smith v. Mohn, 87 Cal. 489, 25 P. 696; O'Connor v. Frasher, 53 Cal. 435; Bull v. Bray, 89 Cal. 286, 26 P. 873.) The estimate of the company's engineer can be set aside only for fraud, or such gross error or mistake as to imply bad faith. (Kihlberg v. United States, 97 U.S. 398; Martinburg etc. R.R. Co. v. March, 114 U.S. 549, 5 S.Ct. 1035; Williams v. Chicago etc. Ry. Co., 112 Mo. 463, 34 Am. St. Rep. 463, 20 S.W. 631; McEvoy v. Long, 13 Ill. 147; Wharton on Contracts, sec. 593; Chapman v. Kansas City R. R. Co., 114 Mo. 542, 21 S.W. 858; Howard Co. v. Baker, 119 Mo. 397, 24 S.W. 200, Snell v. Brown, 71 Ill. 133; Gilmore v. Courtney, 158 Ill. 432, 41 N.E. 1023; Trustees v. Lynch, 5 Gilm. 526; Mackler v. Railway Co., 62 Mo.App. 677; Zimmerman v. German etc. Church, 31 N.Y.S. 845, 11 Misc. 49; McCauley v. Carter, 22 Ill. 53; Sweeney v. United States, 109 U.S. 618, 3 S.Ct. 344; Chicago etc. Ry. Co. v. Price, 138 U.S. 185, 11 S.Ct. 290; Mundy v. L. M. R. Co., 67 F. 633; Lewis v. Chicago Ry. Co., 49 F. 708.)

Hawley & Puckett and John T. Morgan, for Respondent.

Appellant was bound to proceed and endeavor to secure the rights of the subcontractors and himself to the disputed amounts. The method of procedure was left to him, and he could sue in any manner or compromise as he saw fit, but proceed he must in some way. He did obtain a judgment for $ 170,000, and by so doing recovered over $ 59,000, for which he was liable to account to the subcontractors. Whether or not he received the amount of this judgment is immaterial. (20 Am. & Eng. Ency of Law, 604; Keiney v. Ingraham, 66 Barb. 257; Burrill's Law Dictionary, 871.) If he, Bradbury, was, as is apparently contended throughout, a trustee for the subcontractors in the effort to procure the money due, he did not show good faith or fair dealing with them, but was seeking to obtain an advantage over them in regard to the property to be applied to satisfy the trust. This court, in a very late decision, has expressed the true rule, in a case very similar in principle to this. "Trustees must, in dealing with trust funds and with the beneficiaries thereof, show the utmost good faith and fair dealing; they can make no profit out of the trust funds, nor obtain any advantage over the beneficiaries of such fund, and a trustee cannot assert an adverse claim to funds which he receives in his fiduciary capacity." (Vane v. Fowler, on rehearing, decided Nov. 29, 1897.) His actions would warrant the subcontractors in treating him either as trustee or debtor as they saw fit. (Lathrop v. Bampton, 31 Cal. 17, 89 Am. Dec. 141; Sharpsteen v. Freedlander, 63 Cal. 79; Gunter v. Jones, 9 Cal. 643; 27 Am. & Eng. Ency. of Law, 261, note 4.) Appellant had a remedy in the court below if he considered that certain facts in issue were not found upon, and that was by a motion for additional findings and failing to take advantage of that remedy he is precluded from raising the question in this case for the first time. (James v. Williams, 31 Cal. 211; Polhemus v. Carpenter, 42 Cal. 379; Smith v. Cushing, 41 Cal. 97; Warren v. Quill, 9 Nev. 264.

This action was brought by respondent, William H. Thompson, for himself and certain other parties who had assigned certain claims to him (all of whom were subcontractors), against the appellant, W. C. Bradbury, who was an original contractor upon what is known as the "New York Canal System," situated in the counties of Ada and Canyon. It appears that said Bradbury became the original contractor for the construction of said canal system, or a large part of it, in 1890, and that the respondent, Thompson, and assignors under written contracts, became subcontractors for the construction of parts of said canal system under Bradbury. The work progressed until late in the spring or early in the summer of the year 1891, when the company owning said canal system and having the work done, to wit, the Idaho Mining and Irrigation Company, failed and became insolvent, and work ceased; at which time said company was owing the appellant Bradbury a large sum of money, which he has not been able to collect except as hereinafter set forth. Bradbury was also owing the subcontractors, the respondent, his assignors, and others large sums of money, which he adjusted and paid as hereinafter stated. The failure of said company greatly embarrassed all parties and adjustment and settlement between the respondent and his assignors and appellant, Bradbury, was effected, and two contemporaneous written agreements were entered into between them, setting forth the terms of such settlement. Said agreements are as follows:

"This agreement made this twenty-fifth day of September, 1891 between W. C. Bradbury & Co., of Denver, Colorado, the party of the first part, herein called the contractor, and the undersigned subcontractors, for the construction of the canal and works of the Idaho Mining and Irrigation Company, herein called the subcontractors, the parties of the second part witnesseth: Whereas, it is claimed by said contractor and said subcontractors that the estimates for work, labor and materials done, performed and furnished for the construction of the canals and works of said company, as made and furnished by the engineer of said company, or under estimates, and much less than they should in fact be, and show much less work, labor and materials than has been actually done, performed and furnished; and whereas, said company has hitherto refused to settle with the contractor on any other greater basis, and has hitherto failed to pay the amounts shown due the contractor and the subcontractors by said estimates, and there are still large sums long overdue the contractor and the subcontractors according to said estimates, and other large sums justly due them according to just and true estimates; and whereas, the contractor has been compelled to pay the subcontractors large sums over and above the amounts received from the company, and agrees to pay them an additional sum upon the execution of this agreement, and to deliver to the Boise City National Bank, of Boise City, Idaho as trustee for the subcontractors, the promissory notes of W. C. Bradbury, payable to each of the undersigned subcontractors, for the balance due him according to his contract, and the rates and prices therein named, for work, labor, and materials done, performed, and furnished by him, according to the estimates of said engineer of said company, as shown by the books of said W. C. Bradbury & Co., and further agrees to deposit with said bank, to secure the payment of said notes, the bonds of the Colorado Land and Water Company at the rate of ninety-five per cent of their face of par value: Now, therefore, in consideration of the premises, and of the payment of said sum upon the execution hereof, and of the execution of said notes, and the pledge and deposit of said bonds, it is mutually covenanted and agreed by and between the parties hereto that said sum of money paid upon the execution hereof, and said promissory notes secured as aforesaid, are in full satisfaction, and are received by each and every subcontractor in full satisfaction and...