McDuffee v. Hayden-Coeur D'Alene Irrigation Co.

AILSHIE, C. J. About the 14th of August, 1909, the respondent herein, John I. McDuffee, entered into a contract and agreement with the appellant Hayden-Coeur d’Alene Irrigation Co. for the purchase of certain tracts of land situated in Kootenai county, Idaho, and to be irrigated from the water of Hayden Lake. He made a cash payment of about $1,000, and the contract provided for the payment of a balance in instalments and that the company would maintain — 374 — and operate the irrigation system for which McDuffee agreed to pay a stipulated annual fee for maintenance. This action was instituted in the year 1912 by McDuffee against the irrigation company to recover damages equivalent to the amount paid on the contract and amount of money paid out and expended by him on the land. The cause of action seems to have been predicated upon two grounds: First, that the tracts of land purchased did not contain the acreage that the company represented they contained at the time of the sale, and that the company was guilty of knowingly making “false and untrue” statements and representations as to the acreage of the several tracts, and that, in truth and in fact, the tracts purchased did not contain as great an area as the vendor had represented them to contain. The other charge made against the irrigation company is that the company had not at the time of entering into this contract and never since has complied with the provisions of the act of the ■legislature of March 13, 1909, being House Bill No. 276, entitled, “An act providing for the regulation and control of the sale of water rights and for the filing with the state engineer and with the state board of land commissioners of plans, maps and specifications,” etc. (1909 Sess. Laws, p. 335.) It is alleged by the complaint that the company failed to comply, and never has complied, with the provisions and requirements of this act by filing in the office of the recorder of the county in which the land was situated the statement required by law, and has never procured the certificate of the land board showing the number of water rights, units or shares of water which may be sold in the irrigation works or system of the company, and that no such certificate has ever been recorded in Kootenai county, and generally alleged that the company had failed to comply with the provisions of House Bill No. 276, being the act of March 3, 1909, and the requirements of sec. 2844 of the Rev. Codes. The case went to trial, and the court found against the plaintiff, respondent here, on the first issue, that is, the court found that defendant did not make any false or untrue state — 375 — ments to the plaintiff with reference to the acreage and area of the several tracts of land covered by the contract. On the second issue, the court held with the plaintiff and made findings to the effect that the Hayden-Coeur d’Alene Irrigation Co. has never at any time “filed in the office of the recorder of the county of Kootenai, state of Idaho, the statement required by sec. 2844 of the Rev. Codes of the state of Idaho, nor has the state board of land commissioners ever determined the number of water rights, units or shares of water which may be sold by the defendant Hayden-Coeur d’Alene Irrigation Company, a corporation, in its irrigation works and irrigation system, and the number of acres which may be irrigated therefrom, nor the form of contract and deed which may be issued to the purchasers thereof, nor has the state board of land commissioners ever issued to the defendant Hayden-Coeur d’Alene Irrigation Company any certificate signed by the chairman of the state board of land commissioners or attested by the register, certifying or showing the number of water rights, units or shares of water which might be sold in the irrigation works or system of the defendant company as constructed, maintained and operated on the 14th day of August, 1909, nor at any other time, or showing the number of acres which could then be irrigated therefrom, or the form of contract or deed which should be given to the purchaser of water rights in or under such irrigation system; nor has the Hayden-Coeur d’Alene Irrigation Company, a corporation, ever recorded any such certificate or any duly certified copy, or any copy thereof, in the office of the county recorder of Kootenai county, state of Idaho, the county in which the lands described in plaintiff’s complaint and in said contracts, are situated. ’ ’ From these findings, the court concluded that the plaintiff was entitled to judgment for damages equal to the amount which he had paid the company on this contract, and also the money that he had paid out and expended on the land since the execution of the contract. It has been argued with considerable force and with some show of reason that plaintiff’s alleged causes of action are — 376 — inconsistent and that he could not predicate his action on the ground of false and fraudulent representations, and then have relief on the ground of failure of the corporation to comply with the law in procuring certificates and filing the same with the proper officers. It is therefore contended by* appellant that he should have been required to elect between these two remedies. We are relieved of the necessity of considering or discussing this question, for the reason that it does not appear to have been raised in the lower court or in any way to have been suggested to the trial court. Such a question cannot be raised for the first time in this court. We therefore pass to the consideration of the question of the company’s failure to comply with the statute. It is admitted that the company did not comply with the statute, either sec. 2844, Rev. Codes, or House Bill 276, approved March 13, 1909. Section 5 of the act of March 13, 1909, provides, inter alia, “Any pretended deed, contract or other instrument conveying or pretending to convey water rights in such irrigation works prior to the filing of such certificate in the county recorder’s office .... shall be absolutely null and void, and the owner of such irrigation works, or those claiming to be the owner thereof, and the officers, and agents .... of any such owner or claimant, who shall make or attempt to make any deed, contract or agreement relative to the sale of water rights in such irrigation works, or for the furnishing of water therefrom, prior to the filing of such certificate .... or who shall violate any of the provisions of sec. 4 hereof, shall he jointly, severally and personally liable upon and for all such contracts and agreements and for any and all damages .... and in addition thereto, every such owner, claimant, agent or representative shall be guilty of a misdemeanor punishable by a fine,” etc. See. 2844 contains a similar provision making it a misdemeanor to fail to comply with the provisions thereof. It needs no further citation of authority, therefore, to show that this contract was “null and void.” The statute places no penalty, however, upon the party who enters into a contract with such a noncomplying corporation. It would be an act of the greatest injustice to hold that a person contracting — 377 — with, such a corporation who failed to acquire title to the property could not recover the money paid under such a void contract. The contention that these parties are in pari delicto and •that neither can therefore recover is not well taken. No penalty is imposed upon the party contracting with such a corporation. If a statute imposes a penalty upon one party for entering into or attempting to enter into a certain contract on account of having failed to perform some precedent act, the law will not place a penalty upon the other party and will not consider the 'parties as both guilty of wrong, and neither entitled to recover. (9 Cyc. 552; Bond v. Montgomery, 56 Ark. 563, 35 Am. St. 119, 20 S. W. 525; Manchester etc. R. Co. v. Concord R. R. Co., 66 N. H. 100, 49 Am. St. 582, 20 Atl. 383, 9 D. R. A. 689; Tracy v. Talmage, 14 N. Y. 162, 67 Am. Dec. 132; Stansfield v. Kunz, 62 Kan. 797, 64 Pac. 614.) The general principle of law is very well settled that where an innocent party enters into an executory contract with a company or corporation that has not complied with the law and which is in such a ease forbidden to contract, he may thereafter repudiate the agreement and contract and reclaim the money paid under such contract. (Kiewert v. Bindskopf, 46 Wis. 481, 32 Am. Rep. 731, 1 N. W. 163; Ware v. Spinney, 76 Kan. 289, 91 Pac. 787, 13 Ann. Cas. 1181, 13 L. R. A., N. S., 267.) ‘ It was suggested on the oral argument that none of the irrigation companies of the state are observing the requirements of this statute, act of March 13, 1909, but the fact that other companies are not complying with the law cannot excuse appellant. Lastly, it was argued that the respondent was in possession of this property for some two or three years and had returns from it, and that he ought not to have been allowed to recover on that account. We have no doubt but that any receipts or returns from the property realized by respondent might have been charged up against him as an offset or counterclaim, and that he could have been properly charged with the reasonable — 378 — value of the possession of this property. No offset or counterclaim has been presented, and so we are not confronted with that question in this ease. The judgment should be affirmed, and it is so ordered. Costs awarded to respondent. Sullivan; J., and Stewart, J., concur. Petition for rehearing denied.