City National Bank v. Independent School District

190 Iowa 25
CourtSupreme Court of Iowa
DecidedNovember 26, 1920
StatusPublished
Cited by3 cases

This text of 190 Iowa 25 (City National Bank v. Independent School District) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City National Bank v. Independent School District, 190 Iowa 25 (iowa 1920).

Opinion

Evans, J.

i. municipal cobfi^fmprovement1" subcontract tora- — I. Jones as ‘ ‘ contractor, ’ ’ and the Independent School District as “owner,” entered into a contract, whereby Jones undertook to erect a school building for the district. In the progress of the work, Jones borrowed money, from time to time, from the plaintiff bank. The plaintiff reimbursed itself by drawing from the district the moneys due Jones on the estimates of the architect, pursuant to a written order signed by Jones, which will be hereinafter set forth. The money borrowed by Jones from the plaintiff was used in the main in the payment of labor and material bills accruing in the performance of the contract. The building was completed and accepted. Before the district had parted with the 15 per cent reserved in its hands, it discovered unpaid claims for labor and material used in the building, to an amount totaling a greater sum than the balance remaining in its hands. None of these claimants, however, had presented or filed their claims within 30 days, as provided by Code Section 3102; but they did file them later. [27]*27Belying upon an alleged provision in the contract, the school district refused to pay the balance in its hands, until such claims for labor and material should be fully paid; or, as an alternative, it proposed, in effect, to apply the amount in its hands to the payment of such claims. These claimants are interveners. The other intervener is the New Amsterdam Casualty Company, which is surety on the bond of Jones. The first-named group of interveners filed a cross-bill against the surety company, asking for personal judgments against it for their claims respectively, and a cross-bill against the Independent School District, asking that the money in its hands be applied pro rata to the payment of their claims. In the latter claim, the surety company, as an intervener, joined; but it resisted the demand of such interveners for personal judgment against it. The district joined with -the first-named group of interveners in the claim that the money in its hands should be applied to the payment of the labor and material claims.

The decree entered below applied the fund upon the labor and material claims, and entered personal judgment against the surety company for the balance of such claims remaining unpaid. The plaintiff alone has appealed. The surety company served notice of appeal too late. It is in court, therefore, as an appellee, and has filed a brief in support of the decree, in so far as the same applies the fund in the hands of the district upon the labor and material claims. It is apparent that the effect of that portion of the decree is to reduce the liability of the surety company pro tanto.

II. The order sued on was as follows;

“Mason City, Iowa, Nov. 9, 1916.

“Board of Education, Independent. District of Mason City, la.,

“Mason City, la.

‘ ‘ Gentlemen:

“Please pay to the City National Bank of Mason City all moneys by estimates as they become due in the erection of the new high school building at Mason City, la. These estimates in the form of certificates will be delivered to you, either by me or by the said named bank after being issued by the architect or [28]*28of the proper authorities, and upon receipt of the same you will please pay the amount of the estimate to the above-named bank, and charge the same to my account.

“This order is given to the said bank for the purpose of covering funds which they have, or may advance to me from time to time in the payment of bills for material or labor arising out of, and on account of the construction of the new high school building for which I have the contract.

“This order is to remain in full force and effect until canceled by the above-named bank in conjunction with myself.

“H. F. Jones.”

This order was filed with the Independent School District. It was never formally accepted by the Independent School District; nor, on the other hand, was it affirmatively repudiated. Sums of money were paid pursuant thereto, from time to time, during the period of a year or more, and while the building contract was in course of performance. Under the building contract, payments were to be made, from time to time, up to 85 per cent of the estimates of the architect, and 15 per cent was at all times to be retained until the full completion of the work. The unpaid balance represents the reserve 15 per cent, and amounts to approximately $9,500.

2. municipal corííc^mprOTements: finds to PtMrd party: effect. The appellee assails in argument the sufficiency of the order to show a cause of action in favor of the plaintiff, on the ground that it was not accepted, and on the further ground that, by its terms, it applied only to the 85 per cent of the estimates. It is perhaps enough to say that the sufficiency of the order was in no manner assailed by the defendant by any form of pleading in the court below. Furthermore, equity will deem the order to be an equitable assignment of the rights of Jones. Hipwell v. National Surety Co., 180 Iowa 656. Nor can we say that the order indicates a purpose to confine the rights of the plaintiff to 85 per cent of the estimates.. It does provide for successive payments from the “estimates.” It was clearly intended to operate upon the future rights of Jones as such rights should accrue by performance of the contract on his part. Not more [29]*29than 85 per cent of the estimates could be drawn until after full performance. This did not forbid the accruing of a right to the remaining 15 per cent upon full performance. We think the order was, in equity, as between the plaintiff and Jones, sufficient to carry to the plaintiff all the rights of Jones, neither more nor less. In other words, it is entitled in equity to stand in the shoes of Jones.

erai instruments as one contract. III. The case is very logically argued on both sides, — to contrary results. Respective counsel part company at the threshold of their premises. The major premise of the appellant is that the contract between the district and Jones had no provision which required Jones ^ jor iabor and material. Taking this premise as true, there is no gainsaying the appellant’s argument. The major premise of appellee is that, under the contract, Jones did undertake to pay for labor and material. Accepting this premise, we think it is equally true that there is no gainsaying the appellee’s argument. This, then, is the first question before us, and, being the vital one, can as well be deemed both first and last. What was the contract? Three instruments appear in the record, which are mutually related to each other by appropriate reference. The first is an instrument which was signed by Jones and by the Independent School District, which is denominated a “contract.” The second is the so-called “specifications.” The “contract” in express terms made the “specifications” a part thereof. The third instrument is the contractor’s bond. The form of the bond was included at length in the “specifications,” and made a part thereof. The bond actually signed was upon such form. The provision, if any, whereby the contractor agreed to pay for labor and material, is contained in the bond, and in the form of bond included in the specifications. The appellee treats this bond as a part of the contract. The appellant treats the bond as separate and apart from the contract. This accounts for the conflicting major premises upon which the ease is argued pro and con.

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190 Iowa 25, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-national-bank-v-independent-school-district-iowa-1920.