Booth-Kelly Lumber Co. v. Oregon & California R.

BEAN, J. 1. Having rendered an opinion on this date in the case of Hammond v. Oregon & California R. Co., ante, p. 1 (193 Pac. 457), involving questions similar to those in the present case, but one phase of the case remains to be considered. It is the position of plaintiff that what the defendant undertook to do by its contract was prohibited by statute and null and void; that the plaintiff received nothing from defendant for the money it paid to it upon the land contract; that the transaction was not malum in se, but merely malum prohibitum; and that plaintiff is entitled to recover all the money it paid to defendant in this action for money had and received. It is suggested by plaintiff that in any event the plaintiff is entitled to recover the lesser sum of $2.50 per acre, the amount paid to the United States to perfect plaintiff’s title. There ean be no question but that plaintiff, by its contract and payment, obtained all the right and title to the lands that the defendant had or could convey. What title did the defendant get by virtue of the grant and the construction of the road in compliance therewith? This question has been answered by the federal supreme court in Oregon and California R. Co. v. United States, 238 U. S. 393 (59 L. Ed. 1360, 35 Sup. Ct. Rep. 908). We quote from page 434 of 238 U. S., page 924 of 35 Sup. Ct. Rep. (59 L. Ed. 1360), the language used in construing the grants: “There was a complete and absolute grant to the railroad company with power to sell, limited only as prescribed. * * ” The lumber company, after ascertaining all of the facts, did not attempt to rescind, or treat the contract as a nullity, but held fast to whatever rights they had. It was the vendee of all the interest the rail [30] road had in the land and conld convey, and as such vendee it established its good faith in the transaction to the satisfaction of the Department of Justice' of the United States. By virtue of being such vendee, or innocent purchaser, it obtained a confirmation of its title to the lands upon the payment of $2.50 per acre to the United States. Being such purchaser from the railroad company formed the basis of its right to obtain a confirmatory title to the lands from the United States. This status was reached by means of its contract with, and payment to, the defendant. It is now contrary to plaintiff’s former conduct for it to say that it received nothing by virtue of its contract, or the. money paid defendant. It should not now be permitted to treat the foundation of its title as a nullity. As noted in the Hammond case, the title of plaintiff to the land was confirmed by the United States, and the contract in question ratified. The law applicable to the transaction and the policy of the government are both fixed by the federal acts and adjudication. In order, to perfect its title to the lands plaintiff was compelled to, and did pay the sum of $2.50 per acre. As already stated in the Hammond case, the contract of purchase should be carried out as made by the parties or disregarded. It is not the province of the court to make a new contract for the parties. The plaintiff should have title to the lands for the price fixed by the contract, and should recover the amount it was compelled to pay for the outstanding title. This amount is not claimed by defendant to be unreasonable or unfair. It is suggested by the defendant that it may be required to account and pay to the United States the full amount of the contract price. As we understand the provision in regard to the accounting, it is to [31] be adjudged in a legal manner. In the language of the Chamberlain-Ferris Act of June 9, 1916, suits are authorized— “to have determined the amount of moneys which have been received by the said railroad company or its predecessors from or on account of any of said granted lands, whether, sold or unsold, patented or unpatented, and which should he charged against it as a part of the ‘full value’ secured to the grantees under said granting Acts as heretofore interpreted by the Supreme Court. In making this determination the court shall take into consideration and give due and proper legal effect to all receipts of money from sales of land or timber.* * ” Section 7. We see no reason for the defendant to fear that anything will be charged against it in such an accounting which should not be charged. Confusion has resulted from the lack of precision in the use of the terms “void” and “voidable” contracts. A contract which the law denounces as void is necessarily no contract whatever, and the acts of the parties in an effort to create one in no wise bring about a change of their legal status. The parties and the subject matter of the contract remain just as they did before any act was performed in relation thereto. A void contract is a mere nullity. It is obligatory on neither party. It requires no disaffirmance to avoid it, and cannot be validated ’by ratification. It is void as to everybody whose rights would be affected by it if valid: 6 R. C. L., p. 591, § 10; Bradtfelt v. Cooke, 27 Or. 194 (40 Pac. 1, 50 Am. St. Rep. 701); Allen v. Berryhill, 27 Iowa, 534 (1 Am. Rep. 309); Blinn v. Schwartz, 177 N. Y. 252 (69 N. E. 542, 101 Am. St. Rep. 806); Tate v. Gaines, 25 Okl. 141 (105 Pac. 193, 26 L. R. A. (N. S.) 106); [32] Jordan v. Greensboro Furnace Co., 126 N. C. 143 (35 S. E. 247, 78 Am. St. Rep. 644); Kellogg v. Howes, 81 Cal. 170 (22 Pac. 509, 6 L. R. A. 588, and note); Austin v. Davis, 128 Ind. 472 (26 N. E. 890, 25 Am. St. Rep. 456, 12 L. R. A. 120); Breckenridge v. Ormsby, 1 J. J. Marsh. (24 Ky.) 236 (19 Am. Dec. 71); McFarland v. Heim, 127 Mo. 327 (29 S. W. 1030, 48 Am. St. Rep. 629). The land contract in question does not come within any of the descriptions of a void contract. It affected the rights of the parties and bore fruit. It is obligatory upon the defendant. The Booth-Kelly Lumber Company was not in equal fault with the Oregon and California Railroad Company in making the contract of sale in violation of the provisos of the grant, and is therefore entitled to recover the money paid to perfect its title. Upon this point, in addition to the other authorities cited in the Hammond and Winton case, see Lowell v. Boston & Lowell R., 23 Pick. (Mass.) 24 (34 Am. Dec. 33, 37); Tracy v. Talmage, 14 N. Y. 162 (67 Am. Dec. 132, 143); Schermerhorn v. Talman, 14 N. Y. 93; Bond v. Montgomery, 56 Ark. 563, 571 (20 S. W. 525, 35 Am. St. Rep. 119); Michener v. Watts, 176 Ind. 376 (96 N. E. 127, 36 L. R. A. (N. S.) 142); Manchester etc. R. Co. v. Concord R. Co., 66 N. H. 100 (20 Atl. 383, 49 Am. St. Rep. 582, 9 L. R. A. 689); Quirk v. Thomas, 6 Mich. 111. The facts alleged in the complaint show that the plaintiff is entitled to recover the sum of $2.50 per acre, paid to the United States to perfect its title to the lands purchased of defendant. Therefore the demurrer to the complaint should be overruled. The judgment of the lower court is reversed, and the cause will be remanded for such further proceed [33] ings as may be deemed proper, not inconsistent herewith. Reversed and Remanded. Mr. Justice Harris did not sit in this case. Mr. Justice Bennett, who heard the case, having resigned, did not participate in the decision. McBride, C. J., and Johns, J., concur.