Converse Bridge Co. v. Geneva County

53 So. 196, 168 Ala. 432, 1909 Ala. LEXIS 583

Opinion

MAYFIELD, J.

The appellee, Geneva county, on November 8, 1902, entered into a, contract with one of the appellants, Converse Bridge Company, a Tennessee corporation, by which the bridge company agreed to construct, for the county, an iron bridge across Choctawhatchee river at Martin’s Ferry. The contract was duly executed, was in writing, and contained minute specifications as to the plans, and as to the character and quality of the bridge, materials, etc. The agreed price or cost of the bridge was $9,840, payable in five county warrants: One for $2,480, payable December 1, 1904; one for $1,984, due December 1, 1905; one for $1,888, due December 1, 1906; one for $1,792, due December 1, 1907; and one for $1,696, due December 1, 1908. The bridge was completed in January, 1904, and was inspected by the county commissioners, and accepted by them, for the county, on certain conditions which were fully complied with by the bridge company; and the commissioners then, by an order of the court, accepted the bridge and ordered the probate judge to issue the warrants in accordance with the contract, with a slight deduction as to one of them, in accordance with the conditions of acceptance above referred to. The warrants were issued accordingly and delivered by the county to the bridge company. The contract was thus completely executed by both parties, except as to the payment of the warrants as they matured. The first warrant was paid at maturity. The bridge fell before the second warrant was due. The county then filed this bill, against the bridge company and the county treasurer, to recover the amount of the first warrant, and to enjoin the county treasurer from paying the outstanding non-matured warrants and to call in and cancel same. It was subsequently ascertained that one Probasco, a resident of Chattanooga, Tenn., was the owner and holder of the oustanding warrants, and he was made a party respondent, by amendment, for the purpose of having a cancellation of the warrants held by him. The county treasurer appears not to have defended except formally. The other respondents, strange to say, appeared, and defended by motions to dismiss for want of equity, demurrers, pleas, and answer. The original bill was several times amended, and later a new or amended bill was substituted, which was also amended. No special ruling on the motions or pleas appears to have been invoked, except as to the original bill. The cause was finally submitted on the amended bill, the amended answers, and the proof as taken by both parties; and the chancellor decreed complainant to be entitled to the relief prayed, and ordered an accounting, which was had. The report of the register was revised by the chancellor, and, as revised, was confirmed, and a decree entered, directing that the county treasurer be perpetually enjoined from paying the warrants and that they be surrendered and cancelled, and that the complainant have and recover of the bridge company $923.16, and that the respondent bridge company pay the costs of the suit. From this decree this appeal is taken, and appropriate errors are assigned.

It is conceded by counsel for appelllee that if the bill has equity, such as to warrant the relief granted, it is by virtue of the principles of law announced by this court in the cases of Commissioners' Court v. Moore, 53 Ala. 25, and Jeffersonian Publishing Co. v. Hilliard, 105 Ala. 576, 17 South. 112. The two learned chancel lors who passed upon the hill seem to have relied upon these two cases as giving equity to the bill, as quite an extended excerpt from the opinion in the former case is set out in the opinion of the chancellor as authority for the equity of the bill. There are dicta in the opinion in Moore’s Case, 53 Ala. 25, which, if decisive, would authorize a bill like this, but probably not this identical bill. The dictum is as follows: “If, after the audit and allowance, a warrant is pursuant to the statute, drawn on the county treasurer, it is a mere authority to him to pay. It is nothing more really than an order on the county itself, the debtor. — Dillon, Munic. Cor. §§ 406-412. When such warrants have been illegally issued — issued without authority — or when any just defense exists against the claim which they evidence, the county may maintain a bill in equity for their cancellation. — Id. 412. And this we incline to regard as the most appropriate remedy.” The case above referred to was not a suit in equity, but one in a law court, and the jurisdiction of equity to cancel was not involved on the appeal. That part of the dictum stating that the court was inclined to the opinion that a bill in equity to cancel the warrants, under the conditions mentioned, would be the most appropriate remedy, was evidently based on the law as stated by Judge Dillon in his work on Municipal Corporations. The text cited in the dictum does not support it to the full extent. The proposition is thus stated in the text cited: “A municipal corporation is not estopped, after a warrant upon its treasury has been issued, to set up the defense of ultra vires, or fraud, or want o.r failure of consideration. And it may maintain a bill in equity to cancel warrants illegally issued.” It does not say that it can maintain a bill to cancel the warrants for failure of consideration or for any other cause except illegality in their issuance.

There is no pretense in this case that the warrants were illegally issued, but the bill affimatively shows that they were legally issued — exactly as the laws of this state provide and contemplate that they shall issue— and that they were issued under and in accordance with a perfectly valid contract between the county and the bridge company, and upon a valid consideration, and that there was no fraud, actual or constructive, in the making of the contract or in the issuing of the warrants; and that there was nothing ultra vires in the making of the contract or in the issuing of the warrants. The only thing attempted to be shown, as to this contract or the issuing of the warrants, of which the county could complain, is that the bridge was not built, as provided in the contract, “in a good and workmanlike manner in accordance with the specifications,” and that the bridge, after being accepted by the county and used for a year, fell, to the great damage of the county. The contract provided that “the erection is (was) to be carried on subject to the approval of the purchasers, or their engineer, and is to be completed ready for their use to their satisfaction.” The bill avers that it was so carried on and completed to the satisfaction of the county, but that, on account of defective construction, it fell, to the damage of the county. A breach of the contract, or partial failure of consideration, is the only wrong or injury alleged. This, without more, cannot give a chancery court jurisdiction to annul the contract and cancel the warrants. If all that is averred in the bill to be true, and if it be construed most strongly against the bridge company, the company merely failed to comply fully with its contract; and if the county has any rights or remedy in a court of equity, it would be to specifically enforce its valid contract.—Piedmont Co. v. Piedmont Co., 96 Ala. 389, 11 South. 332; Birmingham Co. v. Elyton Co., 93 , 9 South. 235; 18 Ency. Pl. & Pr. pp. 806, 807, and notes, and pages 767, 770. The bridge company was certainly entitled to notice of its failure to comply, and an opportunity to carry out its contract if it had failed in the first instance. It should have been given the opportunity to rebuild the bridge and to make good the damages inflicted as a consequence of its first attempt. The contract, as it recites on its face, was nothing more nor less than one to construct, and then to sell a bridge to the county, with an opportunity to inspect after it was completed. The county could not accept and retain the bridge bought, and then ask a court of chancery to annul the contract ,cancel the warrants, and require the bridge company to refund the money paid. Such a bill was this, and it is without equity. Nor did the amendments, by offering to pay for the use of the bridge while it was standing, and to pay for the materials as for scrap iron or rubbish, give it equity, and thus wholly deprive the bridge company of the value of its labor and the other costs and expenses entering into the erection of the structure.—18 Ency. Pl. & Pr. 750, 751, and notes. The bridge company was entitled to rebuild and thus carry out its contract; it bearing, of course, all loss and damages, the proximate result of its. delay, failure, or negligence in the first instance.

The bill is clearly without equity, in that it affirmatively appears that the county did not offer to restore the consideration or benefits received under the contract, An offer in the bill (for the first time) to do this cannot give it equity; and the same is certainly true of an offer by way of an amendment to the bill.—Betts v. Gunn, 31 Ala. 219. While the authorities are not uniform. on this proposition, probably the weight and number, as above stated, are in favor of it. This court, however, holds that where rescission or cancellation of a con tract is sought in equity, on the ground of fraud, a restoration of the consideration or benefit received, or an offer to restore, is not a prerequisite to the filing of the' bill; but if the rescission sought be grounded on failure of consideration or of title, on mistake, or on any cause other than fraud, then there must be an antecedent restoration of that received by complainant under the contract, or an offer to restore.—Garner v. Leverett, 32 Ala. 410; Bailey v. Jordan, 32 Ala. 50.

This principle has been thus stated by Brickell, C. J.,. in the case of Strong v. Waddell, 56 Ala. 473: “(3) The law ought to be regarded as finally and definitely settled in this state, after the numerous decisions declaring it, that a vendee who has gone into possession, under a deed with covenants of warranty, or a bond stipulating for the conveyance of title with covenants of warranty on the payment of the purchase money, cannot, unless there was fraud in the sale to him, or the vendor is insolvent, and therefore without ability to respond to his covenants, so long as he remains in possession, either at law or in equity, defend against the payment of the purchase money.—Magee v. McMillan, 30 Ala. 420. (4) If there be no fraud, and no covenant taken to secure the title; the purchaser is remediless. The maxim caveat emptor applies.—Abbott v. Allen, 2 Johns. Ch. (N. Y.) 523 (7 Am. Dec. 554); Frost v. Raymond, 2 Caines (N. Y.) 188 (Am. Dec. 228; Cullum v. Br. Bank of Mobile, 4 Ala. 21 (37 Am. Dec. 725). If the purchase is made without fraud or warranty, with full knowledge of the defects in the title, the purchaser can have no just ground of defense against the payment of the purchase money.—Greenleaf v. Cook, 2 Wheat. 16 (4 L. Ed. 172).” This same quotation was made by Clopton, J., in the case of Thompson v. Sheppard, 85 Ala. 619, 5 South. 334. The same doctrine is announced in the cases of Jones v. An derson, 82 Ala. 302, 2 South. 911; Young v. Arntze, 86 Ala. 116, 5 South. 253; Martin v. Martin, 35 Ala. 560.

It is not sufficient, to give the bill equity on this score, that it offers to allow respondents $1,000 for the material from the fallen bridge, used in the construction of the new bridge. If the contract is to be rescinded, the parties must be placed in statu quo. If the contract is rescinded, the bridge belongs to the vendor and the warrants belong to the county. The county can no more rescind the contract and retain the bridge and the warrants, than the bridge company could rescind it and retain the warrants and the bridge, in case the warrants should not be paid in full at maturity. If these warrants had not been paid at maturity, the bridge company could not enjoin the county from the use of the bridge, and recover, possession of the structure, by offering to allow the $1,000 for the warrants which it retained. This, in effect, is what the bill in this case sought to do, and what the chancellor decreed should be done. The contract did not warrant that the bridge Avould stand for a given length of time; it only warranted or agreed that it should be built in accordance with given specifications, at a given place, and in a “Avorkmanlike manner,” and that it should be approved and accepted by the county. This was unquestionably done, with the exception that it Avas not done in “a Avorkmanlike manner.” There is also some dispute or question as to whether the exact location of the bridge was proper, and as to who was required to make this selection; but it is undisputed that it was built with the full knowledge of all the parties, and met their approval after it was completed. If the contract had contained an express Avarranty that the bridge Avould stand for a given length of time, assuredly the bridge company would have been entitled to the opportunity to make good its warranty, by rebuilding the bridge and paying the damages consequent upon the delay. Every breach of a contract by one party thereto, does not work a rescission, and entitle the other party to a cancellation and to recover what he has paid,' without restoring what he had received. There is no equity in the bill to cancel the warrants, if the contract is not rescinded.

It is conceded in this case by counsel for appellant, and it is undisputed law, that these warrants are not commercial paper, and that all defenses may be made against them, while in the hands of transferees, that could have been made against the original payees. It is not claimed that they were illegally or improvidently issued. They were unquestionably issued in accordance with a valid contract, and in accordance with the law providing for their issuance. The most that can be urged against them is a partial failure of consideration. This defense is adequate and complete in a court of law.. There is no contention that the bridge company is insolvent and not able to respond in damages for the breach alleged. The injunctive feature of the bill can give it no equity. The bill does not show that an injunction is at all necessary for relief. The county treasurer is a mere agent of the county, and acts for the county. It is not made to appear that he has failed, or will fail, to discharge his duties. It is not necessary for a court of chancery to protect the county against itself. If the bill were filed by the taxpayers of the county, against the county or its officers, to prevent waste of the funds of the county, then the injunction might be necessary; but the county, in this case, can well protect itself without the aid of an injunction.

While the county could not cancel the warrants with out the aid'of a court of chancery, it can well prevent the payment thereof, if they he not valid claims, by refusing payment. But, as we have shown before, the county is not entitled to a cancellation of the warrants. They are valid, and were not procured by any fraud; the only defense claimed being a partial failure of consideration. The bill and the answer of the county treasurer affirmatively show that he is friendly to the county; and he is represented by the same counsel who represent the complainant, and is, to all practical purposes, a plaintiff, and not a defendant in the suit. He expressly declares, in his answer that “he is friendly to the complainant, Geneva county.” So the bill has no equity in this phase, and we are wholly unable to perceive any equity in the bill.

The remedy at law is adequate and complete. Equity will not assume jurisdiction solely for the purpose of awarding damages for a breach of contract, though it may, in proper cases, award such damages where necessary to do complete justice between the parties. This is not a separate and distinct ground of equity jurisdiction. The only grounds of equity jurisdiction attempted to be set up in the bill are, injunction, rescission of contract, and cancellation of the warrants. The bill is clearly insufficient as to any of these grounds. In fact, the bill is clearly one to recover damages for breach of a contract, and the injunction and cancellation are sought merely as ancillary to the recovery of damages' for the breach complained of. The bill shows that neither injunction nor cancellation is proper or necessary.

A court of law, and not one of equity, is the proper forum, under all the averments of the bill, and unquestionably so under the bill, answer, and proof. If there could be said to be any doubt as to the want of equity in the bill, there certainly can be none when the bill, answers, and proof are all considered on final hear ing. Whatever lingering doubt could be entertained as to want of equity in the bill for injunction or cancellation is entirely removed by the answers and proof. It is wholly unnecessary to consider other assignments of error or other questions discussed in brief.

It is sufficient to say that the bill should have been dismissed on the final hearing, without prejudice to any of the parties, the remedy at law conclusively appearing to be adequate and complete.

Dowdell, C. J., and Simpson, Anderson, McClellan, Sayre and Evans, JJ., are of the opinion that the bill contains equity, and concur in the opinion of the chancellor as to his conclusions of the law, as stated in his opinion on pages 207 et seq. of the transcript. The reporter will therefore set out the opinion of the chancellor, above referred to, in his report of the case.

Finding no reversible error in the record, the decree appealed from is affirmed.

Affirmed.

Mayfield, J., dissents.