Slagle & Co. v. Elk Point Independent Consolidated School District No. 3

SMITH, J. -Six distinct actions were begun in the circuit court of Union county against appellant school 'district by various pensions wIto bad furinistad labor or materials flor the construction of a school building now occupied by the defendant. .The defenses interposed -by the district were ’ substantially the same in all the actions. Plaintiffs in the several actions having prevailed in the trial court, the 'defendant .took a separate appeal in each -case. The appeals were consolidated by an order of this court; the prepositions relied upon by the appellant being substantially the same in each case. Counsel for appellant and for the several respondents 'have filed briefs presenting various views and discussions 'of the facts .and legal questions involved. The following we deem to be the material facts: On April 27, 1914, school district No. 3 of Union county, embracing the city of Elk Point, entered into a contract with the Merten Construction Company, c-f Sioux City, Iowa, for the erection of a high school building. Early in May, 1914, the contractors began work upon the building, and continued until about the middle of December, 1914, during which time the work, labor, and materials involved in the various actions were furnished to the contractors by the different parties plaintiff. While the work was in progress, and on November 4, 1914, school district No. 3 of Union county was attempted to be organized, with its then existing boundaries. a.s Elk Point independent consolidated school district No. 3 of Union county. About the middle of December, 1914, the contractors abandoned the w!ork. After such aban [76] donment the work was taken over by the new district and, under t'he control and direction of its officers the building was completed about September i, 1915. Shortly thereafter the school building was, and has ever since been, occupied by the district for school purposes. Neither the officers of the original district nor those of the reorganized district ever took or demanded from the contractors 'the bond required. by section 1 of chapter 245, Session Laws of 1909, which makes it the duty of such-corporations to require contractors to furnish a bond, in at least the amount of the contract price, conditioned for the payment of all labor and material which may enter into the construction of the building. The several actions are founded on section 2 of that act, which provides that: “In case any such corporation shall fail or neglect to require the bond to be given as provided in section 1,” then the “corporation shall be liable to pay any person, firm, corporation-, or association who shall have performed labor or furnished any material that” may enter “into the erection * * * of said building the value of such work or' material, and an action may be maintained therefor.” [1, 2] This statute creates a liability entirely distinct from any liability of the district which might arise under a valid contract. It was enacted solely for the protection of laborers and materialmen who may have been induced by reason of a supposedly valid contract between the corporation and contractor to furnish labor and material. It is not incumbent upon such persons at their peril to ascertain and determine whether all technical legal proceedings have been complied with by the corporation which may have been necessary to render the contract valid and binding between the corporation and the contractor. Bell v. Kirkland, 102 Minn. 213, 113 N. W. 271, 13 L. R. A. (N. S.) 793, 120 Am. St. Rep. 621; Hambach v. Ward, 69 Wash. 351, 125 Pac. 140. If the corporation possessed the power to contract for the erection of the building and proceeded to1 exercise it, the statute protects such persons, regardless of the technical invalidity of tíre Contract. We are not called upon to determine whether the statutory liability would attach where the corporation was absolutely without authority under any conditions to undertake the erection of such building, or had never appropriated the building [77] to uses for which the same might ‘have 'been lawfully provided. In this case the district had authority to erect a building- for school purposes, and assumed control of the unfinished building and of the materials- sued for which were used in its construction, received the benefit of labor performed, and completed and have since utilized the building for a lawful purpose. If the corporation was wholly and originally without power or authority to make any expenditure of public money for the particular purpose by reason of constitutional limitations or otherwise, a different question would arise — -one which we are not called upon to consider at this time. Such was the case of Kettle River Quarries Co. v. City of East Grand Forks, 96 Minn. 290, 104 N. W. 1077. In that case the contract was wholly void for want of power, and not by reason of an irregular exercise of power. These facts and the fact that any resident taxpayer of the district might have enjoined the school officers and the contractors from a proceeding under an alleged contract void in its inception should be held to estop the school corporation from denying the validity of the contract for the purpose of defeating a liability^ under the statute. Appellant contends that the original school district, not having authority to maintain a high school, was without authority to construct a “high- school” -building — so -designated in -the contract. The authority of the school corporation to erect school bu-ildings of such kind as would accommodate public needs is undoubted, by whatever name such -building may be designated. Whether the corporation -had- authority to establish and maintain a high school, as defined by the school law, in -such -building, is an entirely distinct matter with which materialmen and laborers need not concern themselves. The case of Kretchmer v. School Board, 34 N. D. 403, 158 N. W. 993, which is largely 'relied upon by appellant, wa-s an action to enjoin the establishment and maintenance of a high school, and might be in point were this an action by a taxpayer of the school district -to enjoin the maintenance of a high sch-o-ol pursuant to an unauthorized and illegal contract. [3] Application of the doctrine of estoppel is sustained by the foillo-wii-nig -cases-: Fransioli v. Thompson, 55 Wash. 259, 104 Pac. 278; Hambach v. Ward, 69 Wash. 351, 125 Pac. 140; Plumbing Supply Co. v. Board of Education, 32 S. D. 270, 142 N. W. 1131; Handelan v. Smee School District, 38 S. D. 29, 159 N. W. [78] 888. The liability created by a valid contract is not dependent upon it, and is measured in terms of the statute itself as the reasonable valúe of the material or labor which enters into the building. Such value might be limited by an express agreement of the materialmen, or laborers, as to the price to- be paid for either, which -would at least be Competent evidence tending to show the reasonable value of such labor or material. Lumber Co. v. Schmitt, 74 Cal. 625, 16 Pac. 516. Appellant’s counsel cite cases holding that a municipal corporation may not be estopped from pleading the defense of ultra vires. The case of Norbeck & Nicholson Co. v. State, 32 S. D. 189, 143 N. W. 847, Ann. Cas. 1916A, 229, sufficiently points out -the classes of cases- in which that doctrine applies, and this -case is not within any of them. As- said by Justice Mitchell in Bass Foundry, etc., v. Board of Com’r. 115 Ind. 234, 17 N. E. 593, “the doctrine of ultra vires does not absolve municipal- corporations from, the principles of common honesty.” In Municipal Security Co. v. Baker County, 39 Or. 396, 65 Pac. 369, the court approving this statement holds that “neither party will -be heard to- allege the invalidity of a transaction which- is simply ultra vires, while holding the fruits thereof.” The limitations u-pon this statement of the rule are indicated in Norbeck & Nicholson Co. Case, supra. We deem it unnecessary to -discus's -the sufficiency or competency of the evidence to sustain the findings of the court, or the validity of the contract; nor is it necessary to consider any question as to regularity of the proceedings- bad in the change of organization of the original school district. It was clearly competent for the Legislature to cure any such irregularities, and they have clone so by chapters 2 and 3, Laws 1915. The judgment* in each of the cases, will be affirmed.