Marshall County v. Callahan

Anderson, J., delivered the opinion of the court. Appellant,' Marshall county, sued the appellees R. A. Callahan and the United States Fidelity & Guaranty Company in the circuit court of Marshall county for damages for an alleged breach of a road contract and of a road contractor’s bond, made between appellant and appellee Callahan, with the United States Fidelity & Guaranty Company as surety on such bond. At the conclusion of the evidence, the court on motion of the appellees directed the jury to return a verdict in their favor, which was done, and a judgment entered accordingly, from which appellant prosecutes this appeal. For convenience the appellant, Marshall county, will be hereinafter referred to as the county and the appellee Callahan as the contractor. The Cayce separate road district of Marshall county was organized under chapter 145, Laws of 1912, as amended by chapter 176, Laws of 1914. Eoad bonds of said district were sold, and the proceeds thereof received into the treasury of the county. The usual road construction con [285] tract for the building of two improved highways in said Cayce separate road district was entered into between the county and the contractor, and the latter, to insure the faithful performance of such contract in accordance with the covenants therein undertaken by him, executed a bond to the county containing the usual stipulations in such contracts with the appellee the United States Fidelity & Guaranty Company as surety. The contractor thereupon entered upon the construction of said highways, and, after doing a considerable portion of the work, but before its completion, declined to further proceed with such work. Thereupon the county brought this suit against the contractor and the surety on his bond, for damages alleged to have been suffered by it on account of an alleged breach of said road contract and said bond. One ground of defense made by the contractor is that he was relieved from the completion of said highways because the county at the time he declined to further proceed with the work had itself breached the contract in that it had no funds in its treasury with which to pay the contractor for the ¡completion of his contract. The evidence is undisputed that when the contractor declined to proceed further with the construction of said highways there were practically no funds in the treasury of the county with which to pay for the work to be done. And furthermore, there is an entire absence of any showing in the record in this case that, at the time the county demanded of the contractor that he proceed to complete said highways, the county had either issued and sold additional road bonds with which to complete the work, or had taken any steps to do so, or to raise the necessary funds in any other manner known to the law. This, therefore, is a case where the proceeds of the bonds issued and sold for the specific purpose of building improved highways in a separate road district had proved insufficient to complete the work planned and contracted for, and the road contractor thereupon declined to complete his contract and undertook to justify such refusal on the ground that there were no funds in the county treasury [286] with which to pay for the work to be done, and the county was taking no steps to provide such funds. Did such a condition justify the contractor in refusing to complete his contract? In order to determine this question, the character of the covenants of the contract involved is a matter of important consideration. The contract provides for monthly payments by the county to the contractor, on estimates by the engineer in charge of the road construction. In other words it provides for progressive payments. It was the clear purpose and intent of the parties to the contract that said road project should finance itself by these monthly estimates and payments, provided of course the contract price was sufficient for the purpose; and that is the well-known plan and scheme of all such contracts. If it were not, there would bb few bidders at their letting. Were the covenant in this contract on the part of the contractor to do the work, and’ the covenant on the part of the county to pay for same in monthly installments based on the estimates of the engineer in charge, severable? Or were they dependent each upon the other? Where covenants in a contract form the consideration for each other, if one is conditioned upon the other, the failure of one party to perform the covenant undertaken by him will discharge the other. One party cannot maintain an action against the other without showing performance or a tender of performance on his part. The rule being that a person who has himself breached such contract cannot recover on it. 13 C. J., section 694, pp. 627, 628; Idem, section 538, p. 567; 9 C. J., section 170, p. 833; Leek Milling Co. v. Langford, 81 Miss. 728, 33 So. 492. It therefore seems clear that the covenants in question in this contract — the covenant of the contractor on the one hand to do the work, and the covenant of the county on the other to pay for such work in monthly installments on estimates of the engineer in charge — are interdependent. They are each conditioned upon the other. The question involved should be considered in connection with sections 3, chapter 209, Laws of 1918, which pro [287] yides that no warrant shall he issued by any county or municipality, unless there is sufficient money in the particular fund from which the allowance is made to pay such warrant. This section, as amended in chapter 326, Laws of 1920, provides that no warrant shall be issued or indebtedness incurred, unless there is sufficient money in the particular fund from which the allowance is to be made to pay such warrant or indebtedness. The act of 1918 prohibits the issuance of warrants by counties, unless there are funds with which to pay the same, while the act of 1920 prohibits the issuance of warrants or the incurring of any indebtedness, unless there are funds in the treasury to meet the same. The issuance of a warrant is a mere ministerial act of the- clerk, and must be authorized by a precedent allowance by the board of supervisors. The inhibition in the act of 1918 against issuing warrants carries with it an inhibition against the allowance of claims where there are no funds with which to pay the same. Therefore when the contractor in this case declined to complete his contract, in addition to an empty treasury and an absence of any showing .that the county intended to provide funds with which to pay the contractor, said statute absolutely prohibited the county from allowing and issuing to the contractor, warrants for his monthly installments. It is said, on behalf of the county, that it had power under the law to issue additional road bonds for this district in time to meet the contractor’s first monthly installments, and might have done so. But a complete answer to that suggestion is that it might not,have done so. This contract at least impliedly provides that the county will at all times have sufficient funds to meet the contractor’s monthly installments. The court knows what is commonly known, that county bonds cannot be issued and sold in-a day; it is a matter of weeks and sometimes months. The 'legality of such bonds are to be passed upon by competent bond attorneys, and in some instances their legality is contested in the courts, which may consume months and even a year or more. It is argued on behalf of the county that [288] there could be no breach on its part to pay the contractor until his-claim had been filed with the board of supervisors and disallowed; that under the statute such action by the board is a condition precedent to any right on the part of the contractor to sue the county. However, the law never requires a vain thing to be done. It would be utterly useless to file a claim with the county when there is no money in the treasury with which to pay it, and in the face of the statute prohibiting its allowance and payment. An empty treasury in this case was a standing refusal in advance by the county to pay the contractor his installments. Under the law it amounted to notice by the county to the contractor that he should proceed no further with the work until funds had been provided to meet the payments to become due him. In a suit for breach of a contract of this character, containing mutual and dependent covenants, the plaintiff cannot recover unless he is ready, willing, and able to perform the covenants undertaken by him. In this case it devolved on the county to allege and prove that it either had the funds in hand with which to meet the contractor’s monthly payments, or that it had taken steps by which it would certainly realize such funds. It did neither. The disposition of this question renders it unnecessary to consider the other questions argued. Suggestion of error overruled.