237 N.W. 507 | Iowa | 1930
Lead Opinion
[1] Jackson v. Creston,
Defendants contend that there was in reality but a single contract for all of the work specified in the four and that formal division was made into four contracts for the purpose of evading the requirements of the budget law by which the governing body of the city, before entering "into any contract for any public improvement to cost $5,000 or more," is required to adopt plans and specifications, proposed form of contract, give notice and hear objections if any are made. Code, 1927, Sections 352, 353. By Section 351, "The words `public improvement' as used in this chapter shall mean any building or other construction work to be paid for in whole or in part by the use of funds of any municipality." It seems to be assumed in argument here that the work in question is "building or other construction work." There is a distinction between "construction work" and "repairs." Fuchs v. Cedar Rapids,
[2] The trial court, among other grounds for its decision, held that the contracts were in contravention of the statute requiring such work to be let on competitive bidding. Plaintiffs apparently assume that such statute applies only to special assessment proceedings and not to contracts by which the city binds itself to pay. We have not the benefit of an argument by appellee upon this question. *932
Section 6004, Codes, 1924, 1927, Section 19, 40th Ex. G.A., S.F. 169, commands:
"All contracts for the construction or repair of street improvements and for sewers shall be let in the name of the city to the lowest bidder by sealed proposals, upon giving notice by two publications in a newspaper published in said city, the first of which shall be not less than fifteen days before the date set for receiving bids, which notice shall state as nearly as practicable the extent of the work, the kinds of materials for which bids will be received, when the work shall be done, the terms of payment fixed, and the time the proposals will be acted upon. If there be no such newspaper, such notice shall be given by posting the same in three public places within the limits of such city."
This section is found in Chapter 308, Codes, 1924, 1927, as to which appellants say "the various steps required by the chapter are necessary only when it is proposed to assess all or a part of the cost against private property." The section originated in Section 813, Code, 1897, and previous Codes. Section 813 was contained in Chapter 7, Title V. This division into sections, chapters and titles was made by the legislature. By Section 832 in that chapter the cost of the repair of any street improvement might be paid from the city improvement fund or the general revenue. Section 813, Code, 1897, did not require contracts for repairs to be let on competitive bidding. The requirement of that section applied only to the making or reconstruction of street improvements and sewers. The extension of the provisions of Section 813 to contracts for repairs was effected by the codifying act 40th Ex. G.A., S.F. 169, Section 19. Nor did the provisions for assessment against benefited property under Chapter 7, Title V, Code, 1897, extend to repairs. Ellyson v. Des Moines,
The contracts in controversy were entered into without *933
submission to competitive bidding. The statute is peremptory that "all contracts for the construction or repair of street improvements and for sewers shall be let in the name of the city to the lowest bidder by sealed proposals, upon giving" prescribed notice. The statute is a prohibition upon letting such contracts in any other mode. Des Moines v. Gilchrist,
Municipal corporations are the creatures of the legislature. They have such powers to contract, and only such powers, as the legislature grants to them. When the legislature withholds power to contract, or permits the exercise of the power in a given case only in accordance with imposed restrictions, the corporation may no more bind itself by implied contract than *934
by the forbidden express contract. All persons dealing with a municipal corporation are charged with notice of the limitations upon its power. Those limitations may not be exceeded, defeated, evaded or nullified under guise of implying a contract. A municipal contract let without competitive bidding when the statute requires competitive bidding, is void, and no recovery may be had either upon the purported express contract or upon an implied contract to pay the reasonable value of the services or material furnished thereunder. Weitz v. Independent District,
A meeting of the minds is as essential to the existence of a contract implied in fact as it is to an express contract. Thompson Yards v. Haakinson Beaty Co.,
In Harrison County v. Ogden,
"A demand against the county may be in a very informal shape and still be legal and represent an honest claim, and the very clear meaning of the statute is to prohibit speculation in any form of indebtedness issued by the county, and in any form or character of demand made against it. Any other construction *935
would destroy the very purpose of the law, and provide a complete cover and shield for the acts which are prohibited. It is further said that, even if the transaction falls within the prohibition of the statute, the county has received the benefit of the work, and that it is inequitable and unjust to hold the warrants void. It is a fundamental rule, however, that rights based on the violation of the law will never be enforced by the courts, and this without reference to the wish of either party to the transaction. If the court is advised that the transaction is illegal because in contravention of a statute making it a criminal offense, it is sufficient to justify a refusal to uphold the transaction in any way. Nelson v. Harrison County, supra; Berka v. Woodward,
In Bay v. Davidson,
"That contracts such as are here complained of are against public policy is plainly manifest. The courts of the country, including this court, have repeatedly made pronouncement to that effect. And it is fundamental doctrine that a contract which is violative of public policy is void and will not be enforced. Guenther v. Dewien,
In Wayman v. Cherokee,
"Contracts entered into by a member of a city council to perform labor or to furnish material are contrary to public policy, in violation of the statute and void. Bay v. Davidson,
In considering the cases about to be cited it is to be remembered that the action now before us is not one brought by the city or by tax payers for affirmative equitable relief by cancellation or to enjoin payment of warrants, assessment certificates or evidence of indebtedness in which an offer to do equity would be essential to give the plaintiff standing to ask equity. In the present case the contractor and its assignee are the actors. They are asking affirmative relief by way of recovering compensation according to the terms of an express contract and (in effect) if the contracts are void, alternatively for the value of the labor and material furnished as upon an implied contract to pay that value. An action on the quantummeruit for the reasonable value of material and labor furnished includes a claim for reasonable profit. See Shaddock v. Schwartz,
Hartley v. Floete Lumber Co.,
Kagy v. Independent District,
Likewise Diver v. Keokuk Savings Bank,
James v. City of Hamburg,
"There are some statements in this case which would seem to support intervener's contention, but a careful review of the case itself and of the authorities cited, we think, does not sustain such contention. We rather think that case sustains the contention of the plaintiff herein. The contract between the city and McMaken Sons Company is not tainted with any of the fraud complained of here. That contract is valid. This case involves only the right of the bank to receive the proceeds of that contract. The money has not been paid and the city is not seeking to avoid the contract after performance, but stands ready to pay the same to anyone who is legally entitled to the proceeds. Under our construction of the law, the intervener has placed itself in a position so that it is not entitled to claim the proceeds under the assignment, whatever its other rights may be. It bases its claim on the assignment, and the assignment is void. The same doctrine is found in Kagy v. Independent District of West Des Moines,
Some of the members of the court are of the opinion that cases such as Hartley v. Floete Lumber Company,
To sustain the plaintiff's contention would be to permit one to obtain from a municipality an illegal contract for doing work impossible of return and by performing it enable him to recover the reasonable value of the services and materials furnished — to nullify the law by evasion and indirection and to recover the value of work done under a contract which the law prohibits.
Our cases cited and relied upon by plaintiffs, Marion Water Co. v. Marion,
While a discussion of the reasons for denying recovery either on express or implied contract would be superfluous as they are fully set out in Head v. Providence Ins. Co., 2 Cranch (U.S.) 127, 156; Zottman v. San Francisco,
This suit is brought on the equity side of the court. It is, however, to recover on quantum meruit, which is a common law cause of action, but whether on the law or the equity side it is entirely outside the province of the court to suspend or override a positive statute, to confer upon a municipal corporation power which the legislature withholds from it. Equity follows the law. An often repeated quotation from Hedges v. Dixon County,
"Where a contract is void at law for want of power to make it, a court of equity has no jurisdiction to enforce such contract, or, in the absence of fraud, accident, or mistake, to so modify it as to make it legal and then enforce it. Courts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law. They are bound by positive provisions of a statute equally with courts of law, and where the transaction, or the contract, is declared void because not in compliance with express statutory or constitutional provision, a court of equity cannot interpose to give validity to such transaction or contract, or any part thereof."
1 Pom. Eq., Section 425; 21 C.J. 196.
[3] As plaintiff would not be entitled to recover on thequantum meruit, error, if any, in striking out the count onquantum meruit was without prejudice. — Affirmed.
De GRAFF, KINDIG, ALBERT, WAGNER, and EVANS, JJ., concur.
Dissenting Opinion
The opinion of the majority, in my judgment, fails to either overrule or adequately distinguish this case from the rule recognized by us in Kagy v. Independent District,
I think we should do one thing or the other, either follow our former cases or overrule them; and I am therefore constrained to dissent. I am authorized to say that Justices Stevens and Grimm join in this dissent.
Addendum
Plaintiff's petition for rehearing revolves around the contention that Section 6004, Code, 1924, applies only to special assessment cases. Section 6004 is Section 19 of the codifying act introduced into the Fortieth Extra G.A. as Code Commissioners' Bill or Senate File 169 entitled, "A Bill for an Act to amend, revise, and codify Sections 3835, 3844 * * * 3877 * * * 3896 * * * of the Compiled Code of Iowa, and Sections 3849 * * * of the Supplement to said Code, relating to municipal corporations." A general analysis of the codifying act and amendments and comparison with the next previous general statutory enactments embraced in the codifying sections as found in Chapters 6 and 7, Title V, Code, 1897, and amendments, and discussion of the general purpose and effect of Senate File 169 as now contained in Chapter 308, Code, 1927, is not now necessary. The specific question presented is whether Section 19 of the codifying act as it was finally amended and adopted and as now found in Section 6004 of the Code of 1927 was intended by the legislature to apply as the language reads to "all contracts for the * * * repair of street improvements * * *" or to be limited to contracts for repair of street improvements to be paid for by special assessment. The effect generally of the codifying act upon the method by which such repairs are to be paid for need not now be discussed. As Senate File Number 169 was introduced into the General Assembly it did not require contracts for repairs to street improvements to be let on competitive bidding. Section 19 of the act as originally introduced provided:
"All contracts for the making or reconstruction of street improvements and sewers shall be let in the name of the city *942 or town, to the lowest bidder, by sealed proposals, upon giving notice * * *"
This was in substantial conformity with the then existing law, Compiled Code, Section 3877, Code, 1897, Section 813. It was, however, provided by Section 29 of the bill as introduced: "The cost or any part thereof of the repair of any street improvement may be paid from the improvement fund or the general revenue." The bill, therefore, in its relation to repairs of street improvements as it was under consideration in the legislature was not restricted to repairs to be paid for from the proceeds of special assessments. The act comprehended the payment for repairs from the improvement fund or the general revenue. The Senate Committee reported numerous amendments to Senate File 169 among which were the preliminary definition, "The word `repair' shall include reconstruct and resurface" (Code, 1927, Section 5974, Sub. 2) and the striking from Sections 17 and 19 of the words "making or reconstruction" and substituting therefor the words "construction or repair". (Code, 1927, Sections 6001, 6004, Senate Journal February 22, 1924, 738, 740.) These amendments were adopted (Id. 840, 841), as was an amendment to Section 19 (6004) making mandatory instead of permissive the requirement that if there be no newspaper, notice be given by posting. As thus amended Section 19 (6004) was enacted in its present form. It thus appears from the legislation as proposed in Senate File 169, and as amended and finally enacted that that very enactment comprehended the payment for repairs of street improvements from the improvement fund and the general fund. The court is unable to hold that the unrestricted language of Section 6004, "All contracts for the * * * repair of street improvements * * *," must be restricted or limited to "All contracts for the * * * repair of street improvements" which are to be paid for by special assessment.
The specific point presented here and the legislation to which we have referred were not presented to or considered by the court in Dunn v. Sioux City,
[4] Plaintiff seems to contend that this statutory limitation on the defendant's power to contract is nugatory, because defendant was contracting in its private or municipal capacity, *943 and was not exercising governmental powers. A municipal corporation is as much the creature of the legislature, as thoroughly limited by the laws of its creation or enacted for its government (exclusive of constitutional limitations not here involved, 19 R.C.L. 758) as thoroughly subject to legislative restrictions upon its powers and mode of exercising its powers, when acting in its private or corporate capacity as when exercising governmental powers. In either case it is an artificial body exercising only donated or delegated power. It may not legally act in defiance of legislative restrictions. Those dealing with it must at their peril take notice of the limitations upon its power.
Former supplemental opinion 234 N.W. 227, is withdrawn.
The petition for rehearing is overruled.