Hirsch & Spitz Manufacturing Co. v. City of Enterprise

PELHAM, J. — The appellant, as transferee or indorsee, brought suit on a note given by the city of Enterprise to Blut-henthal & Bichert for the purchase of whisky. The judgment entry in the record shows that issue was joined on the defendant’s plea of the general issue and special plea No. 2 and the plaintiff’s general replication thereto. The special plea, of the defendant designated as plea No. 2 set up that the defendant municipality was conducting a dispensary under an act of the Legislature authorizing municipalities to buy and sell liquors, approved December 9, 1898 (Acts 1898-99, p. 108), commonly known as and called the “Moody Law”; that the whisky for which the note sued upon was given was purchased by the city while operating a dispensary under the Moody Law; and that the purchase was made on credit in violation of section 9 of said law. On the trial the plaintiff introduced the note given-by the city to Bluthenthal & Bickert, indorsed to the plaintiff, and proved ownership of the note, that it was due and unpaid, etc. The plaintiff also offered ordinances of the municipality authorizing the execution of the note, and it was admitted that the liquors purchased and for which the note was given had been sold by the city and the proceeds from the sale paid to the proper city authorities, gathered into the treasury and used for general municipal purposes by the defendant. The defendant introduced evidence showing that the note was given for whisky purchased for the city by the city clerk and treasurer on the order of the dispenser, and also evidence tending to show that the sale was not a cash, but a credit sale. The court, at the request of the defendant, gave the general charge requested in its behalf, and in this the court was in error. The plaintiff made out a prima facie case entitling it to [390] recover, and the defendant failed to prove its special plea numbered 2, the only special plea upon which issue was joined as shown by the judgment entry. Had the defendant shown that it was operating a dispensary under the Moody Law and that the whisky was bought on credit in violation of the express provision of section 9 of that act, then, under the authority of Bluthenthal & Bickert v. Headland, 132 Ala. 249, 31 South. 87, 90 Am. St. Rep. 904, the plaintiff could not have recovered, even though the city received and got the benefit of the goods sold. — See, also, Town of Cottonwood v. Austin & Co., 158 Ala. 117, 48 South. 345. It is, however, not shown in this case in any way that the city of Enterprise, the defendant, was operating a dispensary under the Moody Law, making such a purchase a prohibited act under section 9 of that law. The burden of proving this special plea rested upon the defendant, and for aught- that is proven on this point the defendant was operating the dispensary without legal authority, and, if so, then while the purchase may have been unauthorized and ultra vires, yet the city, having-received and appropriated the goods and received the benefit of the money derived from their sale, could not have defeated the plaintiff’s recovery by showing only an unauthorized act as distinguished from a prohibited act. The difference between the right to recover on an unauthorized contract that is ultra vires and a contract that is prohibited by statute, and violative of public policy for that reason, is discussed and distinguished in the cases of Allen v. Lafayette, 89 Ala. 641, 8 South. 30, 9 L. R. A. 497, and Bluthenthal & Bivkert v. Headland, 132 Ala. 249, 31 South. 87, 90 Am. St. Rep. 904. In the instant case the defendant’s right to defeat the plaintiff’s recovery because of the contract being ultra vires is not raised, for, although the record contains a [391] plea (No. 3) setting up this defense, the judgment entry states that issue was joined only on defendant’s first and second pleas, and it is to be presumed under that state of the record that the third plea was abandoned. — Providence Sav. Life Ins. Co. Society v. Pruett, 157 Ala. 540, 47 South. 1019. As the case must be reversed because of the error of the court in giving the general charge for the defendant, as above pointed out, we do not deem it necessary to discuss in detail other rulings of the court, as the issues upon another trial will probably be whether or not the city was operating á dispensary under the Moody Law at the time of the purchase, and whether the sale was in violation of the provisions of that act. What facts may be shown by the evidence on another trial on those issues we of course do not know but, under the facts as shown by the record on this appeal, the defendant failed to prove its special plea No. 2, and the court was clearly in error in refusing the general charge for the plaintiff and giving such instruction in behalf of the defendant. We discover no error in the ruling of the court in sustaining demurrers to the plaintiff’s replication to plea No. 2, for if, in fact, the contract of purchase was made in violation of an express charter provision, or some law making the transaction void, it was violative of public policy and an act malum in se and it then makes no difference if the goods were retained and the note given for them is held by a bona fide holder for value and without notice.- — Bluthenthal & Bickert v. Headland, supra; Ala. Nat Bk. v. Parker, 146 Ala. 513, 40 South. 987; Hanover Nat. Bank v. Johnson, 90 Ala. 552, 8 South. 42; B. T. & S. Co. v. Curry, 160 Ala. 370, 49 South. 319, 135 Am. St. Rep. 102. [392] The city of Enterprise being a municipal corporation created and existing solely under the laws of Alabama, its right to contract must be construed by the laws of this state, irrespective of where the contract is .made, and the fact, if it be a fact, that this contract was made in Atlanta, can be of no benefit to the appellant. For the errors we have pointed out, the case will be reversed. Reversed and remanded.