McKinney v. Big Horn Basin Development Co.

PHILIPS, District Judge (after staling the facts as above). We pass by the suggestion that it might be inferred from the face of tlie bill that practically all the things done by the appellant were under his written contract with Wiley and Rutan prior to the acceptance by the board of the proposed contract from the appellee; that no written contract, in fact, was ever entered into between the appellant and the appellee, so that tlie liability of the latter, if any, depends solely upon acts in pais, from which an adoption of the contract sued on is to be inferred; as, in our judgment, the case is disposable upon other grounds quite incontestable. The underlying purpose of the acts of Congress in ceding the vast domain of desert lands within the territorial limits of the given state was, through the agency of the state government more immediately concerned, to speedily have them reclaimed from an unproductive waste by means of artificial irrigation, whereby they might become susceptible of human suslentaliou, bringing population and wealth to the state. But Congress did not make the grant to the state of such lands in mass to take effect in prasenti. The state was first to furnish satisfactory evidence to the Secretary of the Interior that the lands are irrigated, reclaimed, and occupied by actual settlers before any patent therefor should issue. It also imposed the condition that the state should not accord to any one person over 1(50 acres of said lands. It limited the price of the land to the settler at 50 cents per acre. And to interdict the pernicious, evil of speculation, even by the slate itself, it provided that any surplus derived from such sales, in excess of the cost of their reclamation, should be held as a trust fund for and be applied to the reclamation of oilier desert lands in such State. The state statute intrusted the selection, management, and disposal of the lauds to a Board of Commissioners. While contemplating that persons, associations, and corporations might construct ditches and canals for irrigating the lauds, they were, on prescribed conditions, to obtain license from the board. As a condition precedent thereto, they should file with the board maps of the lauds to be reclaimed, and the [776] proposal should state the things prescribed by section 940 of the statute (Rev. St. 1899), among which is the estimated cost of the works, the price and terms per acre at which the perpetual water rights were to be sold to settlers on the lands to be reclaimed. As evidencing the stale’s policy and control over the whole matter, and the reservation of the right to protect the settlers induced to go upon the land, section 946 prescribed that it should be the duty of the board to enter into a contract with the party submitting the proposal, containing complete specifications of the location, dimensions, character, and estimated cost of the proposed ditch or irrigation work, and “the price and terms per acre at which such works and perpetual water rights shall be sold to settlers; the price and terms upon which the State will dispose of the lands to settlerswith the proviso that such price and terms for irrigation works, water rights, and lands to be disposed of by the state to settlers shall, in all cases, be reasonable and just. From all of which it is manifest that the scheme and policy of the statute was and is that the person or company contracting to furnish the water supply should make contract with the settler subject to the supervision and control of the Board of Commissioners, charged with the enforcement of the proviso that the water rates to the settler shall be reasonable. Whereas, the contract in question, which the appellant by this suit seeks to have specifically enforced, in its scope and essence, is an attempted evasion of the obligation of the contracting company to the state. Section 950 of the statute requires that immediately upon the withdrawal of the land for the use of the state, and the inauguration of work by the contractor, the State Board shall give notice by publication, in the manner prescribed, “that said land is open for settlement, the price for which said land will be sold to settlers by the state, and the contract price at which settlers can purchase perpetiral water rights.” Evidently the statute contemplates that the board would obtain. the necessary information of the contract price at which the settlers can purchase perpetual water rights from the contractor, and not otherwise. The bill of complaint alleges that immediately after the making of the contract between the appellant and Wiley and Rutan the appellee “adopted the same, * * * and directed the complainant to set to work at once to procure settlers.” As this was nearly two months' prior to the appellee entering into any contract with the board authorizing it to deal with the settlers, and as the bill alleges “that all of said things were done (i. e., the procuring of settlers and contracts) during the month of August, 1904,” it is manifest that the appellant made contracts with settlers before the required publication of notice could have been lawfully made. And unless the contract in question was not only adopted by the appellee, but the written agreement in its terms was presented to the board for its acceptance and approval, as that of the contractor, no notice of its special terms could have been given by the board in conformity to the statute. And the bill does not in terms aver that this contract was submitted or made known to or accepted by the board, or that notice thereof was ever published by it; thus, clearly enough, again showing that in making this contract and [777] acting thereunder the appellant was proceeding in utter disregard of the prescriptions of the statute. By the contract in question the settlers were to be placed at his will. The bill avers on its face that the complainant “by means of the premises was and is in equity entitled to the exclusive privilege and authority of making contraéis between the defendant and such settlers upon said lauds in regard to the furnishing of water for said lands.” He was to fix the price arbitrarily at which the settler could secure his complement of land with the water privileges, within the limit of $30 per acre. The contract arbitrarily fixed the cost to settlers at not Lss than $19 per acre, and complainant’s compensation should come out of the excess over the $19 per acre; whereby, in any event, the appellee should receive $19 per acre, leaving the complainant $11 per acre for his services, if he could wring it from the settler. So the bill asserts a claim against the appellee for $11 per acre for the lands claimed to have been put under contract by him, amounting to the sum of $550,000, and damages for the breach of the contract at the rate of $6 per acre for each acre of land so segregated over the 50.000 acres. Can it be entertained for a moment that, had the State Board been advised, at the time the application for the contract with it was made, the appellee had such an arrangement with the complainant as disclosed in the bill, the company’s application for a contract would have been accepted? The answer must be no, for the reason that the contract was in contravention of the declared legislative policy, in that it disregarded the obligation of the appellee to sell at not exceeding the reasonable cost, and also because it contemplated placing the settler at the will of the complainant as to the cost to be exacted from him. The audaciousness of the contract which the court is asked to enforce is manifested in the prayer that the appellee be enjoined from making any contract with any settler at any price who may desire to enter upon the land and establish a home, and that the complainant, in effect, by decree of court be substituted as the contracting party with the state, as the sole authorized person to deal with and admit settlers on the lands, and on the terms of his alleged contract. The assertion of such a right flies in the face of a fundamental principle of law, that, where a grant of power under a statute is given for the accomplishment of the state’s policy, the due performance of the function by the grantee is the consideration for the public grant; and consequently any contract by the grantee which tends to disable it from performing its entire function by undertaking to transfer to others the discharge thereof, with an effect, different from the grant, is violative of the contract with the state and contrary to public policy. York & Maryland Railroad Company v. Winans, 17 How. 30, 15 L. Ed. 27; Thomas v. Railroad Company, 101 U. S. 71-83, 25 L. Ed. 950. Every person dealing with such grantee of a privilege or right must take notice of the limitations placed thereon by the creative act. It is no answer to this to say that after the original contractor, the appellee, had stood by and permitted the appellant to proceed to incur expenses and give his time and labor in execution of the contract, it should now be estopped to deny its accountability under the con [778] tract. The answer to' this is fully made by Mr. Justice Miller in Thomas v. Railroad Company, supra: .“It is a contract forbidden by public policy and beyond the power of the defendants to make. Having entered into the agreement, it was the duty of the company to rescind or abandon it at the earliest moment. This duty was independent of the clause in the contract which gave them the right to do it. Though they delayed its performance for several years, it was nevertheless a rightful act when it was done. Can this performance of a legal duty, a duty both to stockholders of the company and to the public, give to plaintiffs a right of action? Can they found such a right on an agreement void for want of corporate authority and forbidden by the policy of the law? To hold that they can, is, in our opinion, to hold that any act performed in executing a void contract makes all its parts valid, and that the more that is done under a contract forbidden by law, the stronger is the claim to its enforcement by the courts.” It is suggested that there is no legal incompatibility between the appellant’s rights under the alleged contract and the exercise of the supervisory control of the State Board to see that the cost to the settler is reasonable. If this condition is to be regarded as written into the contract in suit, how can it be the subject of specific performance, which the suit, in legal effect, presents? Such a condition, if on the face of the contract, would disclose such an element of uncertainty as to render'it incapable of being specifically enforced by decree of court. It would rest with neither party to say or concede what the reasonable cost would be, the standard to which appellant’s compensation must be made to conform, as that ascertainment under the statute in the first instance devolved upon the managing board of the state, over whose action neither the appellant nor the appellee have any control. Moreover, the bill of complaint neither asks this court to determine whether or not the cost made to the settler by the complainant was reasonable, and, if it had, it furnishes no basis for its ascertainment- and determination. Nor can the complainant on this appeal be heard to say, as in the brief of counsel, that there is nothing in the contract’ which precludes the principal from' selling direct to the settler. As already shown, the gravamen of the bill is that the defendant denied the complainant the exclusive right under the contract to make terms with settlers, and he prays, inter alia, for an injunction “restraining the defendant from entering into any contract or contracts with settlers upon said lands in regard to the furnishing of water for such settlers for said lands, except such contracts as have been negotiated and shall be negotiated and made for and in behalf of the defendant by the complainant.” That was the question raised by the bill which the chancellor heard and passed on below, and it is the question the appeal seeks to have reviewed. While under the general prayer for relief a party may have any relief to which in equity he shows himself to be entitled, it is none the less limited to relief founded on and consistent with the facts set out in the bill. Nor is the party entitled to a decree on a finding of fact different from any theory of the case set up in the bill. Newham v. Kenton, 79 Mo., loc. cit. 385, 386; Reed v. Bott, 100 Mo., loc. cit: 66, 12 S. W. 347, 14 S. W. 1089; Harrison v. Nixon, 9 Pet., loc. cit. [779] 503, 9 L. Ed. 201; Boone v. Chiles, 10 Pet., loc. cit. 209, 9 L. Ed. 388; Phelps v. Elliott (C. C.) 35 Fed., loc. cit. 461. As a dernier ressort, counsel for the appellant suggest that at least he should he entitled to relief as for compensation for valuable services rendered by him which the appellee refuses to pay. There are two answers to this: Eirst, no such case is presented by the bill, and no such relief is prayed for. A party may not in equity sue for one thing, and, failing in that, recover for another; and, second, if such action were the predicate of the bill, it would put the complainant out of a court of equity, as presenting the action of quantum meruit, fully cognizable at law, in which the parties would be entitled to trial by jury. This bill is predicated upon a specific, written contract, seeking its enforcement, which is of such a character as a court of equity will not countenance. It results that the decree of the Circuit Court must be affirmed, and it is so ordered.