Deer Creek Highway District v. Doumecq Highway District

MCCARTHY, J. — Three causes of action are set forth in the amended complaint upon which this action is based. In the first cause of action appellant bases his right to recover upon contract and alleges that appellant, respondent and the Whitebird Highway District are duly organized highway districts; that appellant highway district is bounded on the north by respondent highway district, and on the east by Salmon River, which is the western boundary of the Whitebird Highway District, and also the eastern boundary of respondent highway district, and the Whitebird Highway District is located and adjacent to both appellant and respondent districts and on the opposite side of Salmon River; that in June, 1918, and for some time prior thereto, and some months thereafter appellant, respondent and the Whitebird Highway District were confined to the use of privately owned toll ferries as a means of crossing Salmon River and this was the only manner in which residents of appellant and respondent districts were able to reach the railroad, — 605 — transact their business at the county seat, and market their livestock and produce. Appellant then alleges the natural conditions surrounding Salmon R-iver in this vicinity, the instalation of toll ferries and the danger occasioned by their use during the high-water season. The passage of three bills at different sessions of the legislature to construct a bridge in this vicinity and their veto by the Governors in office is also alleged. It is then alleged that appellant, respondent and the Whitebird Highway District entered into a contract for the construction of a bridge across said river, at a point at and near the mouth of Whitebird Creek from the east side in said Whitebird Highway District to a point opposite in said respondent district; and that it was agreed the expense of the construction of such bridge should be borne equally by appellant, respondent, and the Whitebird Highway District; that respondent solicited and requested appellant to carry on said work and pay respondent’s share of the cost and expense of material, work and labor in the construction of said bridge and agreed to pay appellant all sums expended by it for respondent in order to pay and discharge its one-third of the cost; that after the bridge was constructed the Whitebird Highway District paid its one-third of the cost of construction and appellant paid two-thirds, covering its own proportion and respondent’s, the latter being $7,588; that no part of this has been paid and it is due and owing from respondent to appellant. In the second cause of action appellant seeks to recover, upon quantum, meruit, the reasonable value of one-third of the cost of construction of the bridge. The third cause of action is based upon the promise of respondent to pay one-third the cost of construction and the resultant damage occasioned appellant upon its failure to comply with its promise. General and special demurrers were filed to each cause of action and to the complaint as a whole. The court sustained the demurrer upon the ground that the said complaint does not state facts sufficient to constitute a cause of action. Upon appellant’s refusal to amend, judgment was entered — 606 — dismissing the action and awarding costs in favor of respondent. From the order sustaining the demurrer and from the judgment this appeal is taken. Appellant specifies two errors: (1) sustaining the demurrer to each cause of action, (2) dismissing the action and awarding judgment in favor of respondent. The contract upon which the first cause of action is based received the consideration of this court in the case of Allen v. Doumecq Highway District, 33 Ida. 249, 192 Pac. 662, an action brought to enjoin the issuance, negotiation .and sale of 'bonds of respondent district, the proceeds of which were to be used for the purpose of paying for its proportion of the costs of construction of the bridge in question, not to exceed $5,000, and also for other highway purposes. The court held that the election was invalid because there were two separate and distinct proposals, submitted in such a way that the voter could not east his vote in favor of one and against the other if he desired to do so. The court also said: “The cost of construction of the bridge was not an ordinary and necessary expense authorized by the general laws of the state, and the effort to incur an indebtedness on the part of Doumecq Highway District by agreement between its board of commissioners and that of Deer Creek district was in contravention of the section of the constitution above quoted (Const., art. 8, sec. 3) and void.” It also pointed out that respondent did not have and had never had an income sufficient to meet the obligation which its board of commissioners sought to contract against it. The purport of the decision thus is that, since the contract sought to impose a liability upon respondent in excess of its income and revenue, and since the election was invalid, the contract is void. Appellant’s counsel contends that the statements of the court to the effect that the contract was void are obiter dictum. Strictly speaking, this may be true, since the precise question for decision was whether or not the election was valid, and that depended upon the method of conducting it rather than upon the nature of the contract. However, the views expressed 'by the court in regard to the — 607 — contract are entirely sound; we approve them, and make them the law of this case. It is elementary that there can be no recovery on a void contract. The court properly sustained the demurrer to the first cause of action. Appellant seeks, in his second cause of action, to recover the reasonable value of one-third the cost of construction of the bridge. Article 8, sec. 3, of the constitution, referred to in Allen v. Doumecq Highway District, supra, declares “any indebtedness incurred contrary to this provision shall be void.” It does not merely say that a contract entered into in violation of its provisions shall be void, but extends such invalidity to any indebtedness or liability incurred contrary to its provisions. The contract has been declared void for that reason. Indebtedness or liability may be incurred expressly or impliedly. The making of the contract was an attempt to incur indebtedness expressly und this the court held void. If the debt could not be incurred expressly it certainly could not be incurred impliedly, and if appellant was not entitled to recover upon the contract he could not recover upon quantum meruit. It would simply be an attempt to do indirectly what could not be done directly. The lower court correctly sustained the demurrer to the second cause of action. Estoppel is relied upon by appellant as the basis of its third cause of action, the theory being that appellant relied upon the promise of respondent to pay its proportion of the cost of construction, that respondent had benefited, and should be estopped to set up the illegality of the contract as a defense. Highway districts are creatures of the statute, their powers are limited, persons dealing with them are conclusively presumed to know the extent of their powers, and one entering into contracts with them in excess of their powers does so at his peril. They have only the powers expressed in the statute and such as may be necessarily implied. Circumstances almost identical with those of the instant case are to 'be found in Gillette-Herzog Mfg. Co. v. Canyon County (C. C. Ida.), 85 Fed. 396, where a contractor sought to enforce a contract for the construction of two — 608 — bridges entered into with the county commissioners of Canyon county. The court declared the contract void as in violation of art. 8, see. 3, of the constitution, the same section under which the contract in the instant case was held to be void. In that case the court said: “Plaintiff’s counsel further say that, if the contract was not authorized, yet, as the defendant made it, as the bridges were constructed in pursuance of it, as there was no fraud in the transaction, and as defendant accepted the bridges, and has since had the benefit thereof, it must pay for them their fair value as upon an implied contract, and, as in support of this view, cite, among other authorities, Pacific Bridge Co. v. Clackamas Co., 45 Fed. 218; Barber Asphalt Paving Co. v. City of Harrisburg, 64 Fed. 283, 12 C. C. A. 100; Hitchcock v. Galveston, 96 U. S. 341, 24 L. ed. 659; and Norton v. Shelby Co., 118 U. S. 425, 6 Sup. Ct. 1121, 30 L. ed. 178. If such is the law, it follows that this constitutional provision is utterly useless. In open defiance of it, reckless officials could burden the people with bankruptcy. Surely, the fundamental law of the state cannot be so easily overthrown. "Will the authorities cited be found, upon careful examination, to sustain counsel’s views? By such examination it will be found that there was reason in each ease why the contract was not absolutely ultra vires; that, while there was authority for making, only some irregularity occurred in the mode of compliance or payment.....The distinction between the two classes of cases is that when there is authority to make the contract, but some irregularity has occurred in its provision for payment or any other irregularity which does not turn upon the power to make it, and a corporation has received the benefit of the work done, it may be compelled to pay for it; but when the contract is absolutely and directly prohibited by some statutory or constitutional enactment, the contract is void, and it cannot be enforced either as an express or implied contract; and so it must now be held of the one in question.” This court has determined the question of estoppel adversely to appellant’s contention: — 609 — “An estoppel can never be invoked in aid of a contract ■which is expressly prohibited by a constitutional or statutory provision.” (School District v. Twin Falls County, 30 Ida. 400, 164 Pac. 1174. See, also, McNutt v. Lemhi County, 12 Ida. 63, 84 Pac. 1054.) Appellant has cited many authorities' in support of its contention that a municipality may be estopped to set up as a defense illegality of a contract into which it has entered. Brown v. City of Atchison, 39 Kan. 37, 7 Am. St. 515, 17 Pac. 465, and California-Oregon Power Co. v. City of Medford, 226 Fed. 957, would seem to bear out appellant’s contention in the present case. In most of the authorities cited, however, it appears that the contract was within the lawful power of the municipality, but was rendered invalid by some irregularity. Almost all of the authorities agree with the holding of this court in School District v. Twin Falls County, supra, that there can be no estoppel if the contract was expressly prohibited 'by the constitution or statute, or if it was entirely 'beyond the power of the municipality. Appellant relies strongly on Argenti v. City of San Francisco, 16 Cal. 255, and Pimental v. City of San Francisco, 21 Cal. 351. "While some of the language used in these opinions, isolated from the context, would seem to bear out appellant’s contention, the decisions as a whole do not go the length of holding that there may be a recovery upon quantum meruit where a municipality has entered into a contract rendered void by express constitutional or statutory prohibitions. The true doctrine is expressed by Chief Justice Field in Zottman v. San Francisco, 20 Cal. 96, 81 Am. Dec. 96, as follows: “A municipal corporation, acting under a charter expressing the mode in which its contracts for the improvement of its property shall be made, cannot be rendered liable for improvements made in the absence of such contract, on the ground of an implied contract to pay for benefits received. The law never implies an agreement against its own restrictions and prohibitions; it never implies an obligation to do that which it forbids the party to agree to do.” — 610 — ■ Appellant contends the general rule that persons dealing with municipal corporations are chargeable with notice of their powers is subject to exception in eases like the present, where one municipal corporation deals with a similar corporation. No authorities have been produced in support of this conteution. The general rule is that the knowledge or means of knowledge of an officer of a municipality, affecting and pertaining to the subject matter of his duties, will be imputed to the municipality. (6 McQuillin on Municipal Corporations, sec. 2810.) No sound reason occurs to us why a highway district should not be chargeable with knowledge of the limitations of the lawful powers of other highway districts with which it seeks to contract. Municipal corporations must he required to take account of and obey the law whose creatures they are. The demurrer to the third cause of action was properly ‘sustained. The judgment is affirmed, with costs to respondent. Dunn, William A. Lee and Wm. E. Lee, JJ., concur.