Contract, Implied. Interest. Municipal Corporation.
An action of contract for money had and received cannot be maintained against a municipal corporation for three per cent of an amount of money which, after it had become due to the plaintiff as the general contractor for the building of a school house, the defendant during the pendency of litigation begun by sub-contractors under St. 1909, c. 514, § 23, had held on deposit in a bank account containing its general funds, receiving three per cent interest on the entire fund, where it appears that the contract between the parties provided that, if at any time there should be evidence of any lien or other claim for which, if established, the defendant "or the said premises might be liable, directly or indirectly, and which is chargeable" to the plaintiff, the defendant had the right to retain out of any payments then due or thereafter to become due to the plaintiff a sum sufficient "to completely indemnify it against any such claim," and that the contract contained no provision for the payment of interest received by the defendant upon the amount of the payments so deferred.
BRALEY, J.
The general rule at law is that interest is allowed upon the ground of contract either expressed or implied for its payment, or by way of damages where money is detained, or for breach in the performance of a contract where some duty has been violated. Dodge v. Perkins, 9 Pick. 368. Donahue v. Partridge, 160 Mass. 336. Whitcomb v. Whitcomb, 217 Mass. 558. While equity generally follows the law, interest occasionally is allowed in the exercise of a sound discretion. Williams v. American Bank, 4 Met. 317. Law v. East India Co. 4 Ves. Jr. 824. See Hollister v. Barclay, 11 N.H. 501. The plaintiff accordingly must show either that his contract with the city provided for interest, or the amount retained to pay the claims of lienors had been wrongfully withheld. Burr v. Commonwealth, 212 Mass. 534.
By the terms of the contract if at any time there shall be evidence of any lien or other claim for which if established the defendant "or the said premises might be liable, directly or indirectly, and which is chargeable to the contractor," the right is given to the city to retain out of any payment then due or thereafter to become due a sum sufficient "to completely indemnify it against any such claim." The defendant lawfully could hold the money represented by the checks, which, though drawn in the plaintiff's favor, had not been delivered because of the pending bill in equity, brought under St. 1909, c. 514, § 23, to enforce payment of claims for materials furnished to, and of workmen employed on the building by a subcontractor who engaged to provide and to install the heating and ventilating plant. Tower v. Miller, 211 Mass. 113, 114. The claims having been adjusted and the bill dismissed, no legal advantage had accrued to either of the present parties over the other because of the litigation. Webb Granite Construction Co. v. Worcester, 187 Mass. 385, 390, 391. And, the defendant having on the day after entry of the decree delivered to the plaintiff the checks for the unpaid balance which were accepted, it is manifest that no interest is due for the temporary detention of the money.
It is conceded in the record that during the period of litigation the defendant was credited with interest on the balance in its general account, which having included the money ultimately paid to the plaintiff, he contends that even if interest as such cannot be recovered he is entitled to his proportionate part of the increment. But the defendant was not required to keep the money coming to the plaintiff under the contract separately and the title to the deposit remained in the city which sustained no fiduciary relation whatever to the plaintiff. Vail v. Durant, 7 Allen, 408,410. Central National Bank v. Connecticut Mutual Life Ins. Co. 104 U.S. 54. It did not unconscionably or unlawfully appropriate or retain any money of the plaintiff. See Morse v. Lowell, 7 Met. 152; Cronan v. Cotting, 104 Mass. 245; Woodward v. Towne, 127 Mass. 41; Raphael v. Mullen, 171 Mass. 111; Furber v. Dane, 204 Mass. 412.
The rights of the plaintiff as between him and the city were those of a general creditor and for the reasons stated the exceptions must be overruled.
So ordered.