Board of Commissioners v. Diebold Safe Lock Company

'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 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 & 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 non-performance 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, 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 bee, 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: (1) A denial of all the allegations of the complaint. (2) Payment. (3) Payment to Meyers & Son without notice of the pretended assignment of the contract to the plaintiff. (4) 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. (5) 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 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 material-man 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. (6) 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 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 bon 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. 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 any one 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 set lement the amount actually necessary to complete the jail, together with the aforesaid sum of $4,500, 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 any one 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* 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, o t 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.

A. C. Harris and W. H. Calkins, for plaintiff in error.

Levi Ritter, for defendant in error.

[Argument of Counsel from pages 484-485 intentionally omitted]

Mr. Justice GRAY, after stating the case as above, delivered the opinion of the court.