State Ex Rel. Red Lodge-Rosebud Irrigation District v. District Court

242 P. 431, 75 Mont. 132, 1925 Mont. LEXIS 213

• Court: Montana Supreme Court
• Decided: December 23, 1925
• Docket: No. 5,860.
• Status: Published

Opinion

MR. JUSTICE STARK

delivered the opinion of the court.

The Red Lodge-Rosebud Irrigation District is a public corporation, organized under the laws of this state for the purpose of acquiring water rights, and the construction of ditches and canals to be used in connection with the irrigation of the lands situated within its boundaries, all of which are located in Carbon county. Charlotte Dilworth at all times herein named was, and now is, the treasurer of said county, and as such was, by law, required to hold and disburse the funds of the district.

On the twenty-eighth day of April, 1923, this district entered into a written contract with one J. S. Haley, by the terms of which the latter agreed to construct the work specified in certain schedules designated 1 and 2 in the plans adopted by the district for the completion of its canals, which contract provided that the work to be done by Haley should be performed under the supervision of the district engineer; that the engineer should make monthly measurements of all.work performed and materials delivered by Haley prior to that date, classify the same according to the items named in the contract, make an estimate of the value of the labor performed and materials furnished on the basis of the unit price named in the contract, and, upon the approval of said account and estimate, the district would pay thg amount shown by the estimates of the engineer. Such payments are, by law, required to be made by warrants drawn against the “construction fund” of the district, held by the county treasurer.

On or about the twenty-fifth day of May, 1925, the district engineer measured and estimated the value of the work and labor performed and materials furnished by Haley, for the purpose of determining the amount earned by him under the contract for the preceding month, and, after making all the deductions provided for by the terms of the contract, ascertained that there was then due to Haley the sum of $5,962.98; and thereafter, on or about the twentieth day of June, 1925, the said district engineer caused measurements and estimates to be made of the value of the work and labor performed and materials furnished by Haley under the terms of the contract during the month preceding that date, and cer titled that the further sum of $9,210.91 was due and owing to him. These estimates were approved in all respects as provided by law. The board of directors of the district thereafter caused its warrants, drawn upon the treasurer, against the funds in her possession belonging to the district for the purpose of paying the same, to be issued and delivered to Haley. Haley indorsed said warrants, presented them to the treasurer at her office, and demanded payment of the same, which was refused.

On October 22, 1925, Haley filed in the district court a petition reciting these facts; also that at the time he demanded payment of said warrants the county treasurer possessed sufficient funds available for payment of the same, and prayed that a writ of mandate issue commanding her to do so. - Thereupon an alternative writ of mandate was issued commanding the treasurer to pay said warrants, or show cause why she had not done so.

The treasurer appeared in said action by filing an answer, which, among other things, admitted that, as county treasurer, she had on deposit in the “construction fund” of the district the sum of $27,430.32, but alleged that the same was not available for the" payment of the warrants above mentioned, for the reason that before the presentation of said warrants she had been instructed and ordered by the board of directors of the district not to pay any warrants drawn on its construction fund, and, further, that the moneys of said fund in her hands should be held by her for said district as a ten per cent holdback fund and as a penalty fund under the Haley contract, and that if. any warrants on said fund were presented, certified as required by law, she should register them and not pay them out of said fund; that these instructions had not been revoked or rescinded by the district, and were still in force and effect.

Subsequent to the filing of this answer, Haley, by his counsel, moved the court for judgment in his favor on the pleadings. Before this motion came on fqr hearing, the district, by its counsel, presented to the court an application for leave to intervene in the action. The petition was denied. The motion for judgment on the pleadings was sustained, and on November 18, 1925, judgment was entered directing a writ of mandate to issue, as prayed for. An appeal was taken from that judgment by the treasurer, which is now ’'pending, and execution of judgment has been stayed by the ’filing of a proper bond.

On November 23, 1925, the irrigation district petitioned this court for a writ of supervisory control to annul the order of the court refusing to grant its petition for leave to intervene. On this petition an order to show cause was issued. In due time the respondents appeared and filed answer. The matter was submitted to the court on this petition and answer.

At the argument counsel for the relator presented a motion for leave to amend its petition by attaching thereto and making a part thereof the answer, reply and a motion for interest and attorney’s fees, filed in the mandamus proceeding, and the judgment entered therein. No objections were interposed to the granting of this motion, and the same is allowed. .

The petition filed in this court contains a copy of the complaint in intervention which the district sought to file in the mandamus proceeding, and the same will hereafter be referred to as the complaint.

After reciting the institution of the mandamus proceedings, the complaint sets out in greater detail the facts referred to in the pleadings therein, exhibits the contract mentioned in the petition, and discloses that among its provisions were:

(a) That Haley should begin work after the district had deposited with the treasurer of Carbon county the sum of #216,381.58 for the purpose of providing funds out of which to pay Haley what he might earn under the contract, and that the work should be completed on or before the tenth day of January, 1925;

(b) That at the end of each calendar month the engineer should make an approximate measurement of all work done and materials delivered up to date and of the value thereof, upon the basis of the unit prices agreed upon, together with all extra work, and from the total amount so found to be due to Haley there should be deducted ten per cent thereof, together with the amount of damages which the district had sustained for delays, or otherwise, under the terms of the contract, and the balance thus determined should be paid to Haley upon the.approval of the account, and the ten per cent thus deducted should not become due or payable to Haley until the contract had been fully completed;

(c) That a. deduction of $25 per day for each of Schedules 1 and 2 should be made for each and every day, including Sundays and holidays, that such schedule remained uncompleted, in the event that Haley should fail, to complete the work at the time agreed upon.

It is stated that the above-mentioned sum of money was deposited with the county treasurer by the district prior to the tenth day of November, 1923, and that Haley commenced active work under his contract within the time agreed upon. From time to time thereafter, down to July, 1925, the district engineer made monthly estimates of the amount of work and labor performed and materials furnished by Haley, and the district, from time to time, caused warrants to be issued to Haley for the amounts of such estimates, after making the deductions provided for in the terms of the contract.

The complaint also sets out in detail damages alleged to have been sustained, and which would subsequently be sustained by the district on account of the defaults of Haley. In paragraph 15 it is alleged that on July 14, 1925, when the warrants in question were issued, these damages amounted to more than $29,250, and that the district then advised Haley.: “That it had no funds with which to pay said warrants, but agreed that said warrants could be registered with the county treasurer of Carbon county, Montana, and issued said warrants to said Haley, and said Haley agreed to accept the same and to register said warrants, so that said warrants would draw six per cent interest from the date of registration, and, at the time said Haley accepted said warrants, he understood and it was agreed between the parties hereto that said warrants would not be paid in cash by the county treasurer of Carbon county, Montana, until such time as funds were available for that purpose, and thereupon the directors of said intervener directed and ordered the county treasurer of Carbon county, Montana, not to pay said warrants, or either of them, and directed and ordered her to register the same if the said warrants were presented by the said Haley for registration.”

It is further alleged that on October 5, 1925, the district passed a resolution, which, among other things, recited that the treasurer, as the custodian of the funds of the district, was then holding the sum of $27,430.32 in a fund which she had designated “construction fund”; that under the terms of the contract it was the duty of the directors of the district to deduct the ten per cent holdback as provided for in the contract, and keep the same intact until the contract had been in all things completed and accepted; that this ten per cent holdback then exceeded the sum of #21,638.58, and that there was due to the district from Haley for delays and otherwise the sum of $5,791.74; that the said sum so held by the treasurer was not properly available in the construction fund to meet the warrants held by Haley, and the treasurer was directed to transfer from the construction fund the sum of $21,638.58 to a fund which was by the resolution designated as the “ten per cent holdback fund of the construction fund,” under the Haley contract, and the sum of $5,791.74 to a fund which was thereby designated as the “damage fund of the construction fund,” under the Haley contract. It was further alleged that a certified copy of this resolution was served upon the treasurer on October 6, duly filed in her office, and that she made the transfers on her books in accordance therewith.

It is also alleged that Haley had failed to complete his contract and had abandoned it; that the district had, by proper resolution, declared said contract abandoned; that Haley was insolvent; and that demand had been made upon the sureties on the bond which he had given to guarantee performance of the contract that they complete the same, which demand had been ignored.

Whether the district court was in error in granting the motion for judgment on the pleadings in the mandamus ease cannot be reviewed in this proceeding. The only matter which we can consider on this application is whether the court should have permitted the proposed complaint in intervention to be filed.

An appeal does not lie from an order denying a motion for leave to file such complaint. (Equity Co-operative Assn. v. Equity Mill. Co., 63 Mont. 26, 206 Pac. 349.) The unsuccessful movant in such an application cannot appeal from the final judgment entered in the action, since he is not a “party” thereto within the contemplation of section 9730, Revised Codes of 1921. The only recourse open to such applicant is by application to this court for an appropriate writ.

Assuming, but not deciding, that the application for leave to intervene was made in time, if the complaint disclosed facts sufficient to entitle the relator to intervene in the mandamus proceeding, the order of the court denying the application was erroneous and should be vacated, and we shall proceed to a consideration of that matter.

In so far as the complaint attempted to state a cause of action in favor of the district and against Haley for damages alleged to have accrued, and which would thereafter accrue by reason *of breaches of the . contract, it will be disregarded, for an issue on general damages is not triable in a mandamus proceeding. (Bailey v. Edwards, Mont. 363, 133 Pac. 1095; State ex rel. Shea v Cocking, 66 Mont. 169, 28 A. L. R. 772, 213 Pac. 594.)

. When the district caused the warrants to be issued and de livered to Haley, the treasurer was legally obligated to recognize and pay them, provided she had sufficient money in the construction fund for that purpose, unless the same had been revoked and rescinded or payment thereof stopped. It is admitted that there was $27,430.32 in this fund on July 14, 1925, and at all times subsequent thereto, but, to show that it was not available for payment of the warrants subsequent to the latter date, the resolution of October 5, above referred to, was relied upon.

Apparently the Haley contract did not call for the construction and completion of the work provided for in Schedules 1 and 2 for a specified sum, but the work actually done was to be paid for at stipulated unit prices. It was not agreed that the $216,381.58 deposited with the treasurer should cover the entire amount which might be earned under this contract. If the value of the work done by Haley, computed at the unit prices, should exceed the amount of the deposit, the district would be obliged to pay for the same at the agreed price. It would rather appear that this fund was deposited by the district as an evidence of its ability to pay Haley the amount which he would be entitled to receive from time to time for the work done at the unit price and as shown by the engineer’s estimates. By the contract it was expressly agreed that the fund should be used for that purpose and no other.

The resolution of October 5 recited that there was then in this construction fund a balance of $27,430.32. This resolution did not assume to revoke, rescind or question the validity of the warrants held by Haley. On the contrary, ■by necessary inference, it recognized them as valid and subsisting obligations of the district.

The complaint disclosed that, when this resolution was passed, Haley had already been paid more than $196,000 after deducting from the amount actually earned under his contract $21,638.58 as the ten per cent holdback, and $9,250 for stipulated damages, so that the amount which he had" actually earned prior to that date exceeded $226,888.58', and the district was then holding back $30,888.58 of this money.

Sections 3985 and 3986, Revised Codes of 1921, contain the only authorization for the transfer of money from the construction fund of an irrigation district, and under their provisions the directors have no power to make any such transfer unless, upon completion of the district project, there is a surplus of money in such fund, when the same may be transferred to an appropriate fund for the redemption of the outstanding bonds of the district.

The mere direction of the district to the county treasurer by the resolution of October 5 to designate portions of this fund by some other name, and her compliance with this direction by bookkeeping entries in her records, did not change the status of the fund. It still remained the construction fund, although called by other names.

We conclude that, despite this resolution and. the acts of the treasurer thereunder, she had in her possession sufficient funds available for payment of the warrants when they were presented to her on July 14, 1925, and still had at the time of the entry of judgment directing the peremptory writ of mandate to issue commanding her to do so.

Nor does the complaint disclose that the district had revoked and rescinded the warrants or stopped payment thereon. As shown above, this was not accomplished by the resolution of October 5. The quoted portion of paragraph 15 of the complaint, instead of alleging a revocation or rescission of the warrants, is a direct recognition of their validity and of the obligation of the district to pay them. If the words “the directors of said intervener directed and ordered the county treasurer of Carbon county, Montana, not to pay said warrants” were separated from their context, they would be construed as an effective order to stop payment; but read in connection with the entire sentence wherein they appear, which recognizes the validity of the warrants, but declares that at the time of their issuance it was agreed between Haley and the district that they should not be paid in cash “until such time as funds were available for that purpose,” these words can mean nothing more than that the order not to pay should cease to be effective when the treasurer had funds available with which to make payment.

Rehearing denied January 9, 1926.

Finally, basing the argument on paragraph 21 of the complaint, counsel contend it shows that Haley procured the issuance of the warrants to him by fraud. This contention is not sustained by the pleading. The paragraph of the complaint relied upon does not state facts sufficient to constitute fraud by false representations. (McIntyre v. Dawes, 71 Mont. 367, 229 Pac. 846.)

Our conclusion is that the proposed complaint in intervention did not state facts sufficient to entitle the relator to intervene in the mandamus proceeding, and that the court did not err in refusing permission to file the same.

The application for the writ is denied and the proceeding is dismissed.

Dismissed.

Mr. Chief Justice Callaway and Associate Justices Holloway, Galen and Matthews concur.