Under the Act of March 3, 1875, c. 137, the restriction of the
original jurisdiction of the circuit court of the United States in
suits by an assignee whose assignor could not have sued in that
court does not apply to a suit removed from a state court.
It is no objection to the exercise of jurisdiction by a circuit
court of the United States over a suit brought by an assignee of a
contract, that the assignor is a citizen of the same state as the
defendant if the assignor was not a party to the suit at the time
of its removal from the state court, and, being since made a party,
disclaims all interest in the suit, and no further proceedings are
had against him, and the complaint alleges that the defendant
consented to the assignment.
A claim against a county, heard before the county commissioners,
and on appeal from their decision by the circuit court of the
county, under the statutes of Indiana, may be removed at any time
before trial in that court, into the circuit court of the United
States under Rev.Stat. § 639, cl. 3.
In an action brought against one party to a contract by an
assignee, seeking to charge him by virtue of a contract of
assignment from the other party and other facts, a complaint
stating the same facts, not under oath and signed by attorney only,
in an action by the assignee against his assignor is incompetent
evidence of an admission by the plaintiff that he had no cause of
action against this defendant.
In a state whose law allows an assignee of an entire contract,
not negotiable at common law, to sue thereon in his own name, and
an assignee of part of such a contract to sue thereon jointly with
his assignor or to sue alone if no objection is taken by demurrer
or answer to the nonjoinder of the assignor, an assignee has the
like right to maintain such an action at law in the circuit court
of the United States.
By a contract for the construction of a jail, under the statutes
of Indiana (which require all such contracts to be let to the
lowest responsible
Page 133 U. S. 474
bidder, taking a bond from him for the faithful performance of
the work), the contractors agreed to construct the jail and to
provide all the materials therefor within a certain time for the
sum of $20,000, which the county commissioners agreed to pay,
partly in monthly payments on their architect's certificate and the
rest on the completion and acceptance of the building, and it was
agreed that the county should not in any manner be answerable or
accountable for any material used in the work, and that, if the
contractors should fail to finish the work by the time agreed, they
should pay $25 as liquidated damages for every day it should remain
unfinished. The contractors assigned to a third person the
obligation to do the iron work upon the jail, as if it had been
awarded directly to him, and the right to recover therefor from the
commissioners $7,700 at the times mentioned in the original
contract. The assignee did the work to the satisfaction of the
commissioners, and to the value of $7,700, but not within the time
stipulated in the original contract.
Held that the
assignment, though notified to the commissioners, if not assented
to by them, did not render them liable to the assignee, or prevent
them from making a settlement in good faith with the original
contractors.
The original suit was commenced March 4, 1885, by the Diebold
Safe and Lock Company, a corporation of the State of Ohio, against
the Board of Commissioners of Delaware County, in the State of
Indiana, by a claim in the form of a complaint filed with the
county auditor and by him presented to the board of county
commissioners in accordance with the provisions of the Revised
Statutes of Indiana of 1881, which are copied in the margin,
* and containing
the following allegations:
Page 133 U. S. 475
That on January 20, 1882, the board of commissioners entered
into a written contract with William H. Meyers and Edward F.
Meyers, partners as W. H. Meyers & Son, a copy of which was
annexed, showing that Meyers & Son agreed to construct a jail
for the county on or before September 4, 1882, agreeably to the
plans and specifications of a certain architect, and to provide all
the materials therefor, for the sum of $20,000, which the board of
commissioners agreed to pay in monthly payments, on the architect's
certificate, reserving on each payment twenty percent, to be paid
on the completion and acceptance of the building; Meyers & Son
agreed to give bond to secure the performance of the agreement, and
it was agreed that
"the county will not in any manner be answerable to or
accountable for any loss or damages that may happen in or to said
works, or any part or parts thereof, respectively, or for any of
the materials or other things used and employed in finishing and
completing the said works,"
and that
"should the contractors fail to finish the work on or before the
time agreed upon, they shall pay to the party of
Page 133 U. S. 476
the first part the sum of twenty-five dollars
per diem
for each and every day thereafter the said works shall remain
unfinished, as and for liquidated damages."
That a part of the work to be done and materials furnished under
the contract consisted of iron work, and that on March 6, 1882,
Meyers & Son assigned to the plaintiff so much of that contract
as related to this work by an agreement in writing, as follows:
"Fort Wayne, Ind. March 6th, 1882. We, the Diebold Safe and Lock
Company at Canton, O., hereby agree to construct and place in
position, in the new jail to be erected in the City of Muncie,
Delaware Co., Ind., all of that portion of the work for same (locks
included), and described under the head of iron and chrome-steel
work, in specifications and according to plans delineating them, as
already adopted by the board of county commissioners of said
county, the same as though the contract for such work had been
awarded us direct. The contract price for said work to be
seventy-seven hundred dollars ($7,700) for above work, completed
and accepted by the superintendent of the building and the county
commissioners, to be paid by the said county commissioners in
monthly estimates, less amount retained according to law and
contract between the county commissioners and Wm. H. Meyers &
Son, on completion of said work in full, as per amount named in
this contract, and charged by them against W. H. Meyers & Son,
and in full settlement with them for such iron and chrome-steel
work under their contract with the county commissioners, and any
questions that may arise on the construction of the work, or
deviations from the plans and specifications that may arise or be
deemed advisable, to be arranged and settled wholly between
ourselves, and the county commissioners, and the superintendent of
the building, and we, the Diebold Safe and Lock Company, in
consideration of the acceptance of the foregoing proposition by the
said W. H. Meyers & Son, agree to do said work, and insure the
same in perfect working order, according to the terms proposed, and
to the acceptance of the said architect and county commissioners,
and in such quantities and time as shall not materially interfere
with the completion
Page 133 U. S. 477
of said building, and to complete the whole work on or before
August 1st, 1882."
"DIEBOLD SAFE & LOCK CO."
"We, the said W. H. Meyers & Son named in the foregoing
proposition, do hereby accept the same, and agree that the said
Diebold Safe and Lock Company shall do and perform the work and
labor, and furnish the iron and chrome-steel work for said jail, in
manner and form as proposed and agreed by them in the foregoing
proposition and agreement, and that they shall receive payment
therefor as proposed. Dated Fort Wayne, Ind. March 6th, 1882."
"W. H. MEYERS & Son"
That the board of commissioners and the county had notice of and
consented to this agreement and assignment when it was made, and
before the jail was erected, and before any payments were made to
Meyers & Son on account thereof. That the plaintiff, with the
knowledge and consent of the board, did the iron work, and
furnished the materials therefor, in accordance with the original
contract of the board with Meyers & Son, and to the acceptance
of the architect. That such work and materials were of the value of
$7,700, and Meyers & Son did the rest of the work upon the
building. And that the board had not paid anything on account of
the iron work, although the plaintiff had duly demanded payment
therefor. And the plaintiff claimed payment of the sum of
$7,700.
The complaint contained a second paragraph, alleging the
contract between the board of commissioners and Meyers & Son,
its performance by Meyers & Son, and its nonperformance by the
board, an assignment, dated November 25, 1884, from Meyers &
Son to the plaintiff, of all their claims and demands against the
board on account of building the jail, and that the sum of $10,000
was due on account thereof from the board to the plaintiff.
The board of commissioners disallowed the claim. The plaintiff
appealed to the circuit court of the county, and immediately after
the entry of the appeal in that court, and before further
proceedings there, filed a petition and bond for the removal of the
case into the circuit court of the United States on the grounds
that the plaintiff was a citizen of Ohio
Page 133 U. S. 478
and the defendant a citizen of Indiana, and that by reason of
prejudice and local influence, the plaintiff could not have a fair
trial in the state court.
The case having been entered on the equity docket of the circuit
court of the United States, a motion was made by the defendant to
remand the case to the state court, upon the ground that Edward F.
Meyers, one of the plaintiff's assignors, was, and always had been,
as was admitted, a citizen of Indiana, it being also admitted that
William H. Meyers was and always had been a citizen of Michigan,
and that the petition for removal was filed too late, after the
case had been tried and decided by the board of county
commissioners and been appealed to the circuit court of the county.
The motion was denied.
The plaintiff then, by leave of the court, made William H.
Meyers and Edward F. Meyers parties defendant, and they appeared
and answered, admitting the allegations of the complaint, and
disclaiming all interest in the suit, and the record showed no
further proceedings in regard to them.
A demurrer filed by the board of commissioners upon the ground
that the complaint did not state facts sufficient to constitute a
cause of action was overruled. The motion to remand the case to the
state court was renewed and again denied, and the defendant
excepted to the overruling of its demurrer, and to the denial of
its motion to remand.
The board of commissioners then filed an answer, setting up the
following defenses:
1st. A denial of all the allegations of the complaint.
2d. Payment.
3d. Payment to Meyers & Son without notice of the pretended
assignment of the contract to the plaintiff.
4th. Payment before the assignment mentioned in the second
paragraph of the complaint, to Meyers & Son, upon a settlement
of accounts, and deducting damages for delay in the work.
5th. That, by the laws of Indiana, no contract for the building
of a jail shall be let without giving notice by publication for at
least six weeks in some newspaper of general circulation
Page 133 U. S. 479
in the county. The board of county commissioners is prohibited
from entering into any contract for such building until the
contractors have filed a bond, with surety, for the faithful
performance of the work, and all laborers or materialmen may have
an action on the bond for work done or materials furnished. That
the board took such a bond from Meyers & Son, which remained on
file in the auditor's office, subject at all times to be sued upon
by the plaintiff or any other laborer or materialman engaged in the
construction of the jail. That before the commencement of the suit,
and long before the board had any notice of the assignment set out
in the second paragraph of the complaint, the board fully settled
its account with Meyers & Son, including the value of the work
claimed to have been performed by the plaintiff, and paid the
amount found to be due to Meyers & Son after deducting damages
for delay in completing the building. That the board could not by
law enter into the contract which it was alleged, in the first
paragraph of the complaint, to have entered into, or lawfully
consent or agree to treat the plaintiff's agreement with Meyers
& Son as an assignment of so much of their contract with the
county, and never did in fact recognize or assent to it, or promise
to pay the plaintiff, but always treated Meyers & Son as the
only contractors with whom it had anything to do. And that the
plaintiff, having full knowledge of all the facts aforesaid,
elected to rely wholly upon the responsibility of Meyers & Son
for their pay in doing the work mentioned in the complaint, and on
June 30, 1884, brought an action of assumpsit against Meyers &
Son on the same cause of action, which was still pending.
6th, That the circuit court of the United States had no
jurisdiction, because the plaintiff was a citizen of Ohio, the
board of commissioners and Edward F. Meyers citizens of Indiana,
and William H. Meyers a citizen of Michigan.
By agreement of the parties and order of the court the case was
transferred to the law docket. A demurrer to the last three
paragraphs of the answer was sustained, and the defendant excepted
to the ruling. The plaintiff filed a replication denying the
allegations in the second and
Page 133 U. S. 480
third paragraphs of the answer. The second paragraph of the
complaint was dismissed by the court upon the plaintiff's motion,
and a trial by jury was had upon the issues of fact open upon the
pleadings.
At the trial, the plaintiff introduced in evidence the original
contract of January 20, 1882, the bond given and taken therewith,
and the agreement of March 6, 1882.
The plaintiff also introduced evidence tending to show that
shortly after the execution of its agreement with Meyers & Son,
and before any work had been done or money paid out on account of
the construction of the jail, and while the board was in lawful
session, engaged in transacting county business, oral notice was
given to it by the plaintiff of the execution and provisions of
this agreement, and the board made no objection to the agreement or
assignment; that on December 6, 1882, the plaintiff's agent filed
in the office of the auditor of the county a written copy of this
agreement, together with a written notice to the board that the
plaintiff expected to do the iron work, and to receive pay therefor
directly from the board, in the same manner as Meyers & Son
would have been entitled to do under their contract with the board,
and that it would demand payment from the board of the sum of
$7,700 out of the contract price to be paid by the board for the
construction of the jail, and that in April or May, 1883, before
the plaintiff did the iron work and furnished the materials, the
board, while in session, was notified orally by the plaintiff's
agent and others of the execution and provisions of the agreement
between Meyers & Son and the plaintiff.
On the other hand, the commissioners severally testified that
they had no notice or knowledge of that agreement or of the
plaintiff's claim until December 6, 1883. The auditor testified
that there was no such notice in his office, and he had no
recollection of any such notice having been filed there or brought
to his knowledge. But the deputy auditor testified that a written
claim for $7,700 presented by the plaintiff on account of said work
and contract was in the office before that date, and had been
returned by him to the plaintiff by order of a member of the
board.
Page 133 U. S. 481
It was proved, and not denied, that at all times prior to April
and May, 1883, the board of commissioners had in the county
treasury, of the fund provided for the erection of the jail, and
the payment of the contract price therefor, after deducting all
payments made on account thereof, about $12,000, not taking into
consideration any damages accruing to the county by reason of delay
in completing the jail; that the value of the work then done did
not exceed $7,000 or $8,000; that the plaintiff did all the iron
work and furnished all the materials therefor according to the
original contract and to the acceptance of the board of
commissioners and to the value of more than $7,700, but not within
the time stipulated in that contract, and that neither the
plaintiff nor any person on his behalf had ever received anything
in payment therefor, either from the board of commissioners or from
Meyers & Son.
The plaintiff introduced evidence tending to show that the board
of commissioners never paid to Meyers & Son, or to their order,
or to anyone for their benefit, more than the sum of $13,000 on
account of the construction of the jail.
The defendant introduced evidence tending to show that it had so
paid out more than $18,000; that in the spring of 1883, after the
work on the jail had progressed for some time, and about $8,300 had
been paid by the defendant to Meyers & Son, but before any of
the iron work had been done, the defendant refused to pay any more
money to Meyers & Son, and put one Parry in charge of the work,
and that on September 5, 1883, the jail being then in a forward
state of completion, a settlement was had between the board of
commissioners and Meyers & Son, as a part of which it was
agreed that the sum of $4,500 should be considered as the damages
sustained by the county for delay in completing the jail, and be
deducted from the contract price, and the amount necessary to
complete the jail was estimated, and the balance found to be due
Meyers & Son was paid to them by the county, and the jail was
taken off their hands by the board of commissioners; that at the
time of that settlement, the amount actually necessary to complete
the jail, together with the aforesaid sum of $4,500,
Page 133 U. S. 482
exceeded by more than $2,000 the contract price of the jail, and
that the plaintiff had then been engaged upon the iron work for a
week, and completed that work on September 24, 1883.
The plaintiff introduced evidence tending to show that at the
time of that settlement, the defendant agreed in writing with
Meyers & Son to pay them the sum of $2,000, part of the
aforesaid sum of $4,500, in case one Secrist, who was then
prosecuting a claim against the county for stone furnished to
Meyers & Son for the jail, should not finally recover the same
against the county, and that Secrist's suit was finally determined
against him, and in favor of the county, by the judgment of the
Supreme Court of Indiana, reported in 100 Ind. 59, yet no part of
the said sum of $2,000 had ever been paid to Secrist or to anyone
else; that the actual damages sustained by the county on account of
the delay in completing the jail did not exceed the sum of $25, and
that the $4,500 deducted from the contract price on account of such
delay was not intended to be enforced against Meyers & Son.
The defendant offered evidence tending to show
"that the settlement was made in good faith, and that the two
thousand dollars which the defendant promised to pay Meyers &
Son in case the Secrist claim was defeated was not intended as a
sham."
The complaint, signed by the plaintiff's attorneys, in an action
brought June 30, 1884, by the plaintiff against Meyers & Son,
setting forth the same facts as the complaint in the present case
and seeking to recover against Meyers & Son the sum of $7,700
for work done upon the jail, was offered in evidence by the
defendant, as tending to show that at that time the plaintiff did
not claim to have any such demand as it now asserted against the
present defendant. This evidence was objected to by the plaintiff
and excluded by the court, and to the ruling excluding it the
defendant excepted.
The defendant requested the court to instruct the jury that by
the statutes of Indiana, contracts for the construction of county
jails and other public buildings must be advertised and let by the
board of county commissioners as an entirety, and
Page 133 U. S. 483
not in parts, and that the contract between the board of
commissioners and Meyers & Son was not so divisible and
assignable by the latter that an assignment of a part thereof by
them, and mere notice given by the assignee to the board of
commissioners of the assignment, obliged the board to recognize the
assignment, and to account and settle with, and pay the assignee,
for work done and materials furnished by the assignee.
The court refused to give the instructions requested, and
instructed the jury that the effect of the agreement between Meyers
& Son and the plaintiff was to put the plaintiff into a
position of being entitled to do the iron work, and to get the pay
therefor from the county; that Meyers & Son made no agreement
to pay the plaintiff, and the plaintiff by doing that work acquired
no right of action against Meyers & Son, but was entitled
simply to look to the county, and that if the board of
commissioners had notice of the agreement between Meyers & Son
and the plaintiff before the settlement with Meyers & Son, the
defendant was bound by that agreement, and obliged to withhold from
Meyers & Son money enough to pay the plaintiff, and the
plaintiff might maintain this action, and that if a copy of the
contract was presented by the plaintiff and received by the auditor
at his office, that was legal notice to the board of commissioners.
To this instruction as well as to the refusal to give the
instructions requested, the defendant duly excepted. The court
further instructed the jury that if the defendant, before and at
the time of the settlement with Meyers & Son, had no notice of
the plaintiff's claim, the plaintiff could not recover if the
settlement was made in good faith, but that if the settlement was a
sham, not intended as between the parties to be a settlement, the
plaintiff might recover in this suit the sum in the defendant's
hands owing to Meyers & Son under the original contract. No
exception was taken to this instruction at the trial.
The jury returned a verdict for the plaintiff in the sum of
$8,739.50, upon which judgment was rendered, and the defendant sued
out this writ of error.
Page 133 U. S. 485
MR. JUSTICE GRAY, after stating the case as above, delivered the
opinion of the Court.
Before proceeding to consider the merits of this case, it is
necessary to dispose of the objections taken to the jurisdiction
assumed by the circuit court of the United States.
Page 133 U. S. 486
1. It was contended that that court had not cognizance of the
suit because the plaintiff's assignors could not have prosecuted
it, inasmuch as one of them was a citizen of the same state as the
defendant. But that restriction was applicable only to suits
commenced in the federal court, and did not extend to suits removed
into it from a state court. Act March 3, 1875, c. 137, §§ 1, 2, 18
Stat. 470;
Claflin v. Commonwealth Ins. Co., 110 U. S.
81.
2. It was further objected that the assignors were necessary
parties to the suit, because they had assigned to the plaintiff
part only of their original contract with the defendant and because
the statutes of Indiana, while they require every action arising
out of contract to be prosecuted by the real party in interest,
provide that
"When any action is brought by the assignee of a claim arising
out of contract, and not assigned by endorsement in writing, the
assignor shall be made a defendant, to answer as to the assignment
or his interest in the subject of the action."
Indiana Rev.Stat. 1881, §§ 251, 276. But this objection was
rather to the nonjoinder of defendants than to the jurisdiction of
the court, and presented no valid reason why the court should not
proceed. The assignors were not parties to the suit at the time of
the removal into the circuit court, and as soon as they were made
parties in that court, they disclaimed all interest in the suit,
and as no further proceedings were had, or relief sought or granted
against them, their presence was unnecessary.
Walden v.
Skinner, 101 U. S. 577;
Morrison v. Ross, 113 Ind. 186. Besides the first
paragraph or count of the complaint, upon which alone the trial
proceeded, alleged that the defendant not only had notice of the
assignment to the plaintiff, but consented to that assignment. If
that were so, there would be a new and direct promise from the
defendant to the plaintiff, and the assignors would be in no sense
parties to the cause of action.
3. It was also objected that the petition for removal was filed
too late after the case had been tried and determined by the board
of county commissioners. But, under the statutes of Indiana then in
force, although the proceedings of county commissioners in passing
upon claims against a county are in
Page 133 U. S. 487
some respects assimilated to proceedings before a court, and
their decision, if not appealed from, cannot be collaterally drawn
in question, yet these proceedings are in the nature not of a trial
inter partes, but of an allowance or disallowance by
officers representing the county of a claim against it. At the
hearing before the commissioners, there is no representative of the
county except the commissioners themselves. They may allow the
claim either upon evidence introduced by the plaintiff or without
other proof than their own knowledge of the truth of the claim, and
an appeal from their decision is tried and determined by the
circuit court of the county as an original cause, and upon the
complaint filed before the commissioners. Indiana Rev.Stat. §§
5758-5761, 5777;
State v. Washington Commissioners, 101
Ind. 69;
Orange Commissioners v. Ritter, 90 Ind. 362, 368.
It follows, according to the decisions of this Court in analogous
cases, that the trial in the circuit court of the county was "the
trial" of the case at any time before which it might be removed
into the circuit court of the United States under clause 3, § 639,
of the Revised Statutes.
Boom Co. v. Patterson,
98 U. S. 403;
Hess v. Reynolds, 113 U. S. 73;
Union Pacific Railway v. Kansas City, 115 U. S.
1,
115 U. S. 18;
Searl v. School District, 124 U.
S. 197,
124 U. S.
199.
The only ruling upon evidence which is excepted to is to the
exclusion of the complaint in an action brought by the present
plaintiff against its assignors. But there is no material
difference between the facts stated in that complaint and those
stated in the complaint in the present suit, and the former
complaint, not under oath nor signed by the plaintiff, but only by
its attorneys, was clearly incompetent to prove an admission by the
plaintiff that upon those facts it had not a cause of action
against this defendant.
Combs v.
Hodge, 21 How. 397;
Pope v. Allis,
115 U. S. 363;
Dennie v. Williams, 135 Mass. 28.
We are then brought to the main question of the liability of the
defendant to the plaintiff, depending upon the validity and effect
of the partial assignment to the plaintiff from the original
contractors of their contract with the defendant.
Page 133 U. S. 488
By the law of Indiana, the assignee, by a valid assignment of an
entire contract, not negotiable at common law, may maintain an
action thereon in his own name against the original debtor, and the
assignee, by valid assignment of part of a contract, may sue
thereon jointly with his assignor, or may maintain an action alone
if no objection is taken by demurrer or answer to the nonjoinder of
the assignor. Indiana Rev.Stat. § 251;
Groves v. Ruby, 24
Ind. 418. These rules govern the practice and pleadings in actions
at law in the federal courts held within the state. Rev.Stat. §
914;
Thompson v. Railroad
Companies, 6 Wall. 134;
Albany & Rensselaer
Co. v. Lundberg, 121 U. S. 451;
Arkansas Co. v. Belden Co., 127 U.
S. 379,
127 U. S. 387.
The case at bar was therefore rightly treated by the court below as
an action at law, and the real question in controversy is not one
of the form of pleading, but whether the plaintiff has any
beneficial interest, as against the defendant, in the contract sued
on.
A contract to pay money may doubtless be assigned by the person
to whom the money is payable if there is nothing in the terms of
the contract which manifests the intention of the parties to it
that it shall not be assignable. But when rights arising out of
contract are coupled with obligations to be performed by the
contractor, and involve such a relation of personal confidence that
it must have been intended that the rights should be exercised, and
the obligations performed, by him alone, the contract, including
both his rights and his obligations, cannot be assigned without the
consent of the other party to the original contract.
Arkansas
Co. v. Belden Co., 127 U. S. 379,
127 U. S.
387-388. And the fact that that party is or represents a
municipal corporation may have a bearing upon the question whether
the contract is assignable, in whole or in part, without its
assent.
By the Revised Statutes of Indiana, it is the duty of the county
commissioners to cause jails and other county buildings to be built
and furnished and to keep them in repair. Indiana Rev.Stat. § 5748.
But they are forbidden to contract for the construction of any
building, the cost of which exceeds $500, except upon public
advertisement for bids, and
Page 133 U. S. 489
to the lowest responsible bidder, and taking from him a bond,
with sureties, to faithfully perform the work according to the
contract, and to promptly pay all debts incurred by him in the
prosecution of the work, including labor and materials furnished,
and any laborer or materialman having a claim against the
contractor may sue upon that bond. Indiana Rev.Stat. §§ 4244,
4247.
It has been held by the Supreme Court of Indiana that the only
remedy of laborers and materialmen is against the contractor or
upon his bond, and that they have no lien upon the building or
right of action against the county, as well as that a county cannot
be charged by process in the nature of garnishment or foreign
attachment for the debts of its creditors to third persons, and the
reason assigned in each class of cases is that it would be contrary
to public policy that a county should be involved in controversies
and litigations between its contractors and their creditors.
Parke Commissioners v. O'Conner, 86 Ind. 531;
Secrist
v. Delaware Commissioners, 100 Ind. 59;
Wallace v.
Lawyer, 54 Ind. 501.
In
Bass Foundry v. Parke Commissioners, 115 Ind. 234,
where a contractor to whom the county commissioners had let a
contract for the construction of a courthouse and jail sublet the
iron work to the plaintiff, and, after partially completing the
buildings, abandoned the work and declared his inability to resume
it, and it was alleged in the complaint, and admitted by demurrer,
that the commissioners agreed with the plaintiff to pay it for such
work, it was held that it was within the incidental power of the
commissioners, without letting a new contract, to take charge of
the work and complete the building, and to bind the county to pay
the plaintiff the actual and reasonable value of iron work done by
him at their request, but that they had no power to assume, on
behalf of the county, debts due from the contractor to the
plaintiff, and the court, after referring to the statutes above
cited, said:
"In the event that a contractor should abandon his contract when
the work was at such an incipient stage as that to complete it
would amount practically to the construction of a courthouse by
county commissioners, without regard to the contract
Page 133 U. S. 490
previously let, it might be a question whether contracts made by
them for labor and materials would be binding as such upon the
county."
115 Ind. 243.
In
Bartholomew Commissioners v. Jameson, 86 Ind. 154,
cited for the plaintiff, the assignment was of an entire sum due to
the assignor for personal services. In
Smith v. Flack, 95
Ind. 116, likewise cited for the plaintiff, the municipality was
not a party to the suit, nor were its rights or liabilities brought
in question, but the controversy was upon the effect of an
assignment as between the parties to it and persons claiming under
them.
In the case at bar, by the original contract between Meyers
& Son and the county commissioners, the contractors agreed to
construct a jail for the county, and to provide all the materials
therefor, for a gross sum of $20,000, which the commissioners
agreed to pay partly in monthly payments, on their architect's
certificate, and the rest upon the completion and acceptance of the
building, and it was expressly agreed that the county should not in
any manner be answerable or accountable for any materials used in
the work, and also that, if the contractors should fail to finish
the work by the time agreed on, they should pay to the
commissioners, as and for liquidated damages, the sum of $25 for
every day the work should remain unfinished. Meyers & Son
executed a bond for their faithful performance of the contract, as
required by the statute.
By the subsequent assignment, to which neither the county nor
the board of commissioners was a party, Meyers & Son undertook
to assign to the plaintiff the obligation to construct and put in
place in the jail all the iron work required by the original
contract, as if the contract for such work had been awarded
directly by the commissioners to the plaintiff, and undertook to
fix the contract price for such work at $7,700, to be paid by the
commissioners at the times mentioned in the original contract.
The plaintiff in fact did the iron work according to the
original contract, and to the acceptance of the commissioners, and
to the value of more than $7,700, but not within the time
Page 133 U. S. 491
stipulated in that contract. Soon after the plaintiff began to
do that work, the commissioners made a settlement with the original
contractors, tractors, which, if valid, left in their hands much
less than that sum.
The court declined to instruct the jury, as requested by the
defendant, that the statutes of Indiana required contracts for the
construction of jails and other county buildings to be advertised
and let by the board of commissioners as an entirety, and not in
parts, and that the contract between Meyers & Son and the board
of commissioners was not divisible and assignable by the
contractors, and their assignment of part of the contract to the
plaintiff, and mere notice thereof to the board, did not impose any
obligation upon the board to recognize the assignment, and to
account and settle with, and pay the plaintiff for, work done and
materials furnished by the latter.
There was conflicting evidence upon two points: 1st., whether
the commissioners, before the settlement, had notice of the
assignment to the plaintiff; 2d., whether the settlement was made
in good faith. The judge instructed the jury that the plaintiff was
entitled to recover either if the defendant had such notice or if
the settlement was in bad faith. Exceptions were taken to the
refusal to give the instruction requested, and to the instruction
given upon the first alternative only. But it cannot be known on
which alternative the jury proceeded in coming to their verdict.
Upon the evidence before them and the instructions given, they may
have concluded that the settlement between the defendant and the
original contractors was in perfect good faith, and left in the
defendant's hands much less than the sum claimed by the plaintiff,
and that the defendant never assented to any assignment or division
of the contract, and may have found for the plaintiff upon the
single ground that they were satisfied that the defendant had
notice of the assignment. The decision of the case therefore turns
on the correctness of the instructions refused and given upon the
effect of the assignment and notice.
This case does not requires us to consider whether an
assignment
Page 133 U. S. 492
of the entire contract for the construction of the jail would
have been consistent with the intention of the parties as apparent
upon the face of the contract, or with the intention of the
legislature as manifested by the statutes under which the contract
was made. The plaintiff claims under no such assignment.
Those statutes, and the judicial exposition of them by the
supreme court of the state, as well as the terms of the contract
itself, are quite inconsistent with the theory that the original
contractors can at their pleasure, and without the assent of the
county commissioners, split up the contract and assign it in parts
so as to transfer to different persons or corporations the duty of
furnishing different kinds of material and labor, and the right of
recovering compensation for such material and labor from the county
commissioners.
Both the statutes and the contract contemplate that the county
commissioners shall be liable only to the contractors for the whole
work, and not to any person doing work or supplying materials under
a subcontract with them.
The original contract of the county commissioners was for the
construction by Meyers & Son of the building as a whole by a
certain date, for the payment to them by the commissioners of a
gross sum of $20,000 for such construction, upon an accounting with
them from time to time, and for the payment by the contractors of
$25 as liquidated damages for every day that the building should
remain unfinished beyond that date.
The assignment was not in the nature of a mere order for the
payment of a sum of money, but it was of that part of the contract
which related to the iron work, and required the assignee to
perform this part of the work, and assumed to fix at the sum of
$7,700 the compensation for this part, which the assignee should
receive from the commissioners. There is nothing either in the
original contract or in the evidence introduced at the trial to
show what proportion the iron work bore to the rest of the work
requisite for the construction and completion of the jail, or that
any separate estimate of the cost or value of the iron work was
contemplated by the
Page 133 U. S. 493
original contract, or ever made by the defendant, or by any
officer or agent of the county.
In short, the only agreement which the county commissioners were
proved to have made was with Meyers & Son, to pay them a gross
sum of $20,000 for the whole work upon an accounting with them, and
Myers and Son paying damages as agreed for any delay in its
completion. The agreement of Meyers & Son with the plaintiff
assumed to compel the commissioners to pay the plaintiff, for its
performance of part of the work, a definite sum of $7,700, and made
no provision for damages for delay, and thus undertook to fix a
different measure of compensation from the original contract.
The facts that the iron work was done by the plaintiff to the
acceptance of the commissioners, though after the time stipulated
in the original contract, and was of the value of more than $7,700
did not conclusively prove as matter of law that the commissioners,
on behalf of the county, made or recognized any contract with or
liability to the plaintiff in the place and stead of its assignors
and employers, or preclude the commissioners from insisting on the
right to pay no more than the amount due, according to the original
contract, for the whole of this and other work necessary to
complete the building, and to ascertain the amount so due by an
accounting and settlement with Meyers & Son, in which the sum
due for all kinds of work, as well as the stipulated damages for
any delay in completing the building, could be taken into
consideration.
The county commissioners could not, without their consent and at
the mere election of the original contractors and their
subcontractors and assignees, be compelled to account with the
latter separately or be charged with a separate obligation to pay
either of them a part of the entire price, instead of accounting
for and settling the whole matter with the original
contractors.
It might be within the authority of the commissioners, upon
becoming satisfied that Meyers & Son, after having performed a
substantial part of their original contract, were unable to
complete it, to give their consent to such an agreement with the
plaintiff as was described in the assignment, and it is
Page 133 U. S. 494
possible that the jury would have been authorized, upon the
evidence, to find such a consent.
But the difficulty with the instructions given to the jury is
that no question of such consent was submitted to or determined by
them, and that they were in effect instructed, in direct opposition
to the request of the defendant, that mere notice to the defendant
of the assignment to the plaintiff would prevent the defendant from
afterwards making a settlement with the original contractors in
good faith, and according to the sums justly due by the terms of
the contract from either party to the other, without retaining in
its hands enough to pay the plaintiff's claim. This instruction
held the defendant bound by a contract to which it was not proved
to have ever assented, and requires a new trial to be granted.
The cases in other states cited for the plaintiff, in which
municipal corporations have been held liable to an assignee of a
contract upon notice of the assignment, without proof of their
consent, expressed or implied, are distinguishable from the case
before us, and quite consistent with out conclusion.
In some of them, the assignments were of the whole or part of
money already due or to become due to the contractor -- in other
words, assignments of a fund, and not of any obligation to perform
work.
Brackett v. Blake, 7 Met. 335;
Field v. New
York, 6 N.Y. 179;
Hall v. Buffalo, 1 Keyes 193;
Parker v. Syracuse, 31 N.Y. 376;
People v.
Comptroller, 77 N.Y. 45. In others, the assignments were of
entire contracts for the labor of convicts, or for work upon
streets, which were held, from the nature of the subject, to imply
no personal confidence in the contractor.
Horner v. Wood,
23 N.Y. 350;
Devlin v. New York, 63 N.Y. 8;
Ernst v.
Kunkle, 5 Ohio St. 520;
St. Louis v. Clemens, 42 Mo.
69;
Taylor v. Palmer, 31 Cal. 241.
The plaintiff much relied on a decision of the Supreme Court of
Pennsylvania in a case in which a contractor to build a schoolhouse
for a city assigned his right to all moneys due or to become due
under it. The city, with notice of the assignment and after the
school house had been built by the assignees and accepted and
occupied by the city, paid the last
Page 133 U. S. 495
installment of the price to the original contractor. There was
no controversy as to the performance of the work or as to the
amount to be paid, but only as to the person entitled to receive
payment, and the court, treating the assignment as one of money
only, held the assignee entitled to recover against the city.
Philadelphia v. Lockhardt, 73 Penn.St. 211, 216.
On the other hand, that court, speaking by the same judge in a
case decided within five years afterwards and more nearly
resembling the one now before us, where a contractor for building a
bridge assigned all his interest in the contract "except the item
of superstructure" to one who had expended money upon the bridge,
held that such a partial assignment of the contract, though
notified to the city, did not make it liable to the assignee,
because "the policy of the law is against permitting individuals,
by their private contracts, to embarrass the financial affairs of a
municipality."
Philadelphia's Appeal, 86 Penn.St. 179,
182.
See also Geist's Appeal, 104 Penn.St. 351, 354.
It thus appears that the Supreme Court of Pennsylvania has taken
the same view as the Supreme Court of Indiana, as already shown,
holding it to be against public policy to permit municipal
corporations, in the administration of their affairs relating to
the construction of public works, to be embarrassed by subcontracts
between their contractors and third persons to which they have
never assented.
Judgment reversed and case remanded with directions to set
aside the verdict and order a new trial and to take such further
proceedings as may be consistent with this opinion.
*
"SEC. 5740. The auditor of the county shall attend the meetings
of such commissioners, and keep a record of their proceedings, and
the sheriff of the county shall also, by himself or deputy, attend
and execute their orders."
"SEC. 5742. Such commissioners shall adopt regulations for the
transactions of business, and in the trial of causes they shall
comply, so far as practicable, with the rules for conducting
business in the circuit court."
"SEC. 5758. Whenever any person or corporation shall have any
legal claim against any county, he shall file it with the county
auditor, to be by him presented to the board of county
commissioners."
"SEC. 5759. The county commissioners shall examine into the
merits of all claims so presented, and may, in their discretion,
allow any claim, in whole or in part, as they may find it to be
just and owing."
"SEC. 5760. No court shall have original jurisdiction of any
claim against any county in this state in any manner except as
provided for in this act."
"SEC. 5761. No allowance shall be made by such commissioners
unless the claimant shall file with such commissioners a detailed
statement of the items and dates of charge, nor until such
competent proof thereof is adduced in favor of such claim as is
required in other courts; but, if the truth of such charge be known
to such commissioners, it may be allowed, without other proof, upon
that fact being entered of record in the proceedings about the
claim."
"SEC. 5769. Any person or corporation, feeling aggrieved by any
decision of the board of county commissioners, made as herein
before provided, may appeal to the circuit court of such county, as
now provided by law."
"SEC. 5774. . . . The auditor shall make out a complete
transcript of the proceedings of said board relating to the
proceeding appealed from, and shall deliver the same, and all the
papers and documents filed in such proceeding, and the appeal bond,
to the clerk of the court to which the appeal is taken."
"SEC. 5777. Every appeal thus taken to the circuit court shall
be docketed among the other causes pending therein, and the same
shall be heard, tried, and determined as an original cause."
"SEC. 5778. Such court may make a final determination of the
proceeding thus appealed, and cause the same to be executed, or may
send the same down to such board, with an order how to proceed, and
may require such board to comply with the final determination made
by such court in the premises."