Indemnity Company v. . Perry

Bbogtoen, J. The bond executed by the defendant referred specifically to the contract between the defendant and the city of High Point, and the contract “for construction of water and sewer improvements in High Point, North Carolina,” was expressly made a part of said bond. The obligation of the bond was to the effect that if the defendant principal should faithfully perform said contract according to the terms and conditions thereof, then the obligation would be void, or otherwise remain in full force and effect. The contract provided not only for the “proposed water and sewer connections in the northern part of the city,” but also “for any other similar work which may be ordered by the city council, all in accordance with plans and specifications hereto attached and made a part hereof,” etc. Upon this state of facts two questions arise: (1) Was the extra work done under the original contract between the parties ? (2) Was the awarding of extra work an ultra vires act and forbidden by C. S., 2830? If the additional work was done under the terms of the original contract, then the plaintiff surety undertook to guarantee the faithful performance of said contract. Hence, if the contractor had defaulted in the performance of the additional work, the surety would have been *289 liable for snob default. It necessarily follows tbat, if tbe surety was liable for such, default, it was entitled to receive from the defendant an additional premium as specified in the contract between the plaintiff and the defendant. However, the defendant offered evidence tending to show that the additional work was done under a separate and distinct contract with the city of High Point. Therefore, an issue of fact was raised, and such question must be submitted to a jury. The second proposition of law involves the construction of C. S., 2830. It appears from the evidence that proper advertisement was made for bids, and there is no evidence that the contract was divided for the purpose of evading C. S., 2830. But even if it be conceded that the contract between the defendant and the city of High Point was ultra vires, the defendant is not in 'a, position, upon the facts, to take' advantage of such plea, because the contract was fully performed by both parties thereto. This Court said in Hutchins v. Bank, 128 N. C., 72, 38 S. E., 252, that “where a corporation has entered into a contract which has been fully executed on the other part and nothing remains for it to do but to pay the consideration promised, it will not be allowed to set up the plea of ultra vires.” This principle is settled law in this jurisdiction. Trustees v. Realty Co., 134 N. C., 41, 46 S. E., 723; McCracken v. R. R., 168 N. C., 62, 84 S. E., 30; Sherrill v. Trust Co., 176 N. C., 591, 97 S. E., 471; Bank v. Odom, 188 N. C., 672, 125 S. E., 394; Commissioners of Brunswick v. Bank, 196 N. C., 198, 145 S. E., 227. There is an exhaustive note on ultra vires in L. R. A., 1917 A, p. 749, et seq. Moreover, the corporation is not making such plea. Furthermore, it has been held by this Court “that the doctrine of ultra vires has been very much modified in recent years, and many contracts made in the course of business, especially when executed and benefits • are received or liabilities are incurred, will be upheld and enforced which were formerly declared absolutely void.” Victor v. Mills, 148 N. C., 107, 61 S. E., 648. Reversed. Claeksok, J., dissents.