247 P. 1056 | Colo. | 1926
THIS is an action by school district No. 98 of Adams county, Colorado, against N. Pomponi, T. A. Young, S. M. Bishop and other defendants, having as its object the nullification of a certain contract, which, while the defendants, T. A. Young and S. M. Bishop, were two of the three members of the school board, was entered into by the district, as party of the first part, with these two *660 directors and three other defendants, as parties of the second part, whereby the defendants, including Young and Bishop, were given the right to the use of a private sewer line of the plaintiff, school district, and the right to tap its water main. The defendants filed their joint answer not denying the foregoing facts, but in separate special defenses, alleged laches of the plaintiff in bringing the action, improper joinder of defendants, insufficiency of facts, and particularly, that the action is barred by what is generally spoken of by the profession as our residuary or equitable statute of limitations. Sections 6403 and 6404, C. L. 1921.
Testimony was heard. There is no dispute as to the facts. The only defense insisted upon on this review that is worthy of consideration is the statute of limitations. A school district is not strictly a municipal corporation. It is a quasi municipal corporation, being a subordinate division of the county government which has control of the public schools and school property. The same rule, however, is equally applicable to both classes of municipal or quasi municipal corporations or bodies, that one who contracts with such a body is charged with knowledge of its statutory powers and authority, and its limitations and restrictions in making contracts. City of Colorado Springs v. Coray,
The trial court seems to have based its decision on, or at least to have been influenced by, its finding that the school district had not been injured financially, but rather benefited, by the making of the contract. The defendants in their brief here seem to rely solely on their plea of the statute of limitations. Their theory is that the action is one involving a trust, or constructive trust relation, and that it includes both express and implied trusts; therefore, since this action was not commenced by the school district to nullify the contract within a period of five years from the time it was made it may not be maintained. We do not think so. The school board was composed of three members, two of whom acted for the district and also for themselves as individual beneficiaries of the contract. They conducted the negotiations leading up to the contract and themselves made it, as members of the school board, with themselves, as individuals, and other parties. Assuming then with the defendants that the trust relation arose and that sections 6403 and 6404 of our statute of limitations are applicable to this sort of case, we think, even on this assumption, that they do not apply to this case, under the facts. *663 Certainly no trust relationship between the plaintiff school district and the defendants existed at the time the suit was brought, and not at all after the time that Bishop and Young retired from the school board. There never was any trust relationship between the school district and the other defendants. The statute could not run as long as Bishop and Young were school directors, and it could not begin to run until the trustees repudiated or denied the alleged trust. There is nothing in the pleadings or the record which shows that the action was not begun within the period of five years after the trust was repudiated, or that it was not begun within the period of five years after Bishop and Young retired as school directors. In disposing of this case we have already said that it is immaterial whether the contract was void at its inception, or merely voidable at the instance of the school district. In either event the judgment below was wrong. The mere fact that in this particular case no financial loss has been sustained by the school district and that the defendants, other than Bishop and Young, are innocent parties, should not lead to a relaxation of the beneficient [beneficent] rule of public policy, which prohibits public officers contracting with themselves and for their own benefit. These defendants, other than the former directors of the district, are presumed, equally with such members, to know that public policy will not permit directors of school districts to contract with themselves as individuals, even though third parties are interested with them in the contract. There was no laches on the part of the plaintiff in bringing suit. The action is not barred by the statute of limitations. Public policy, if not the particular statute invoked, frowns upon such transactions. The judgment of the district court is reversed, the cause remanded with instructions to that tribunal to set the same aside and enter a judgment in behalf of the plaintiff annulling the contract in question. *664