Village of West Duluth v. Norton

Canty, J. The complaint m this action alleges that the plaintiff is a municipal corporation organized under Laws 1891, ch. 146; that it entered into a written contract with the defendant Norton for the erection of an addition to its city hall, whereby he agreed to build such addition, and pay for material furnished by any person whatsoever for erecting the same; that at the time of entering into the contract, Norton, as principal, and the other defendants as sureties, made to plaintiff a bond conditioned for the performance of the contract, and to “pay for all labor done and material furnished for or on account of said contract, as aforesaid, as they shall become due;” that in the performance of the contract the Pioneer Fireproof Construction Company so furnished material to Norton, who agreed to pay $118 therefor, which is unpaid, and demands judgment for that sum. The answer admits the incorporation of plaintiff as alleged, the making of the bond, and, as a necessary implication, the making of the contract between Norton and the village. It then alleges that “said plaintiff has withheld from the said defendant Norton in said contract, and now has in its hands, more than sufficient funds to pay and discharge all just claims of [75] any persons or corporations furnishing material or doing work thereon, including the claim of the said Pioneer Fireproof Construction Company.” To this answer plaintiff demurs, as not stating facts sufficient to constitute a defense, and from the order overruling the demurrer plaintiff appeals. Laws 1891, ch. 146, subch. 9, § 4, provides that such a contract shall contain a covenant to pay for all labor done and material furnished, and that a bond shall be given as was given in this case; that “said bond shall contain a further condition that he will pay for all labor done and material furnished for or on account of said improvement.” These provisions are the same as those in the charter of Duluth construed in State Bank v. Heney, 40 Minn. 145, (41 N. W. 411.) We are of the opinion that the demurrer should have been sustained. The village brought the suit in its mere trust capacity, and, if it recovers the sum sued for, can make no use of it, but pay it to the beneficiary, the construction company. The fact that in its individual capacity the plaintiff has funds in its hands which it might have applied to the payment of this claim makes no difference; it still has a right to act in its trust capacity to compel Norton to perform his contract with the beneficiaries of that trust. Not it, but Norton, agreed to pay these beneficiaries, and, besides, it has a right, under its contract, to hold these funds until Norton has performed his contract, as well where it is for the benefit of such third parties as where it is for the benefit of the plaintiff itself. The answer does not state facts sufficient to constitute a defense. Order reversed. Buck, J., absent, took no part. (Opinion published 58 N. W. 829.)