248 F. 93 | 8th Cir. | 1917
(after stating the facts as above).
“It is difficult to make clearer tie force and meaning of tlie language used by any degree of refinement or discussion. It is the contention of counsel for relator, however, that this portion of this section of the Constitution is a grant of power to the municipal subdivisions of the state to become indebted to the amount of the income and revenue provided for the year, and, that being a grant of power, the act of the territorial Legislature under consideration, limiting as it does the amount of indebtedness which could lawfully be incurred, must fall. We cannot so read this language. * * * To our minds the simplest and most obvious interpretation of this section of the Constitution is to say that it is here intended to place a limitation upon the authority of the Legislature and other agencies of the state of allowing any of the subdivisions mentioned to create, assume, or incur in any manner or for any purpose any indebtedness in excess of the limitation therein fixed.”
And the court proceeded to hold that section 26 did not restrict the power of the Legislature to fix a lower limit of indebtedness than that specified in that section. In Haskins & Sells v. Oklahoma City, 36 Okl. 57, 66, 126 Pac. 204, 208, the Supreme Court of Oklahoma, speaking of this decision, said:
“In Kerr, County Clerk, v. State ex rel. Wimbish, County Atty., 33 Okl. 110, 124 Pac. 284, in an opinion by Justice Dunn, this court held that the act of 1S85, fixing the indebtedness which counties may incur at 80 per cent, of the tax levy, is not repugnant to section 26, art. 10, of the Constitution (section 291, Williams’ Ann. Const. Okla.), fixing the maximum limit at a higher rate. The question presented in the case supra, was whether the limitation fixed by the Constitution was a grant of power which the Legislature could not prevent counties or subdivisions of the state from reaching, or whether it was merely a maximum limit within which the Legislature might fix a lower maximum, but could not prescribe a limit beyond or in excess of that fixed by the Constitution. The court held it to be a limitation upon the authority of the Legislature to allow counties or other subdivisions of the state to become indebted beyond the limit therein prescribed and not a limitation upon its authority to fix a limit within the maximum prescribed by the Constitution. This holding is in thorough accord with our views on the question presented.”
In the case of In re Town of Afton, 43 Okl. 720, 144 Pac. 184, L. R. A. 1915D, 978, the Supreme Court of Oklahoma held that an indebtedness incurred in excess of the entire income and revenue provided for the year was violative, of section 26 and therefore unenforceable. If these three decisions do not indicate with sufficient certainty the opinion of the Supreme Court of Oklahoma upon the question whether sections 26 and 19 of the Constitution fix a limit of indebtedness at the total income and revenue provided for the year, it is not so indicated, for none of its other decisions expressly decide that question, or come so near it as the three which have been last referred to. In this state of the case the opinion of the majority of the court, in which the writer is unable to concur, is that sections 26 and 19 limit such indebtednéss to the amount of the levy for the special fund applicable to the payment of the specific debt in question.
However that may be, the Supreme Court of Oklahoma has directly decided that under a statute substantially identical with section 1683, which expressly prohibits the board of commissioners from making any expenditures or contracting any indebtedness to be paid
Conceding that the contract of September, 1908, was illegal and that the county was not indebted under it, nevertheless the board of commissioners had the right-and the power,to make the necessary levies in September, 1909, and September} 1910, to buy of the Bridge Company and to pay it for this bridge, which the county had procured from it, had accepted, and was using. These county warrants are prima facie evidence that they were lawfully issued for the discharge of valid claims, and in the face of the stipulation that they were issued and paid the burden was upon the county to prove that they were not issued for such a claim, or that at the time of their issue or payment there were no taxes levied, cash, or other available assets applicable to their payment. Johnson v. County Com’rs, 7 Okl. 686, 689, 691, 56 Pac. 701. The county failed to carry this burden, and is not entitled to recover back this $3,015.70 for that reason. There are, however, broader and more compelling reasons why it may not have this recovery.
“The action of assumpsit for money had and received, it is said by Lord Mansfield, Burr, 1012, Moses v. Macfarlen, will lie in general whenever the defendant has received money which is the property of the plaintiff, and which the defendant is obliged by the ties of natural justice and equity to refund. And by Buller, Justice, in Stratton v. Hastall, 2 T. R. 370, ‘that this action has been of late years extended on the principle of its being considered like a hill in equity. And therefore, in order to recover money in this form of ad,ion the party must show that he has equity and conscience on his side, and could recover in a court of equity.’ ”
In Bradley Lumber Co. v. Bradley County Bank, 206 Fed. 41, 45, 124 C. C. A. 175, 179, Judge Smith, delivering the opinion of this court, said:
“This was an action which at common law would have been assumpsit for money had and received. While this ivas an action at law, it was based upon the broad equities of the plaintiff. Such an action would lie if the defendants had received money, the property of the plaintiff, under such circumstances as to be obliged by natural justice, good conscience, right, and equity to refund. * ' * ® In such cases, if the defendant may in good conscience retain the money in his hands, there can be no recovery. Barr v. Craig, 2 Dall. 151, 1 L. Ed. 327; Morris v. Tarin, 1 Dall. 147, 1 L. Ed. 76.”
In the last case the court said:
"This is a liberal kind of action, and will lie in all cases where by the ties of natural justice and equity the defendant ought to refund the money paid to him; bnt where the party might with a good conscience receive the money, and there was no deceit or unfair practice in obtaining it, although it was money which the party could not recover by law, this action has never been so far extended as to enable the party who paid the money voluntarily, to recover it back again. The case of Lowrey v. Bourdieu, in Doug. 452, and that of Farmer v. Arundel, in 2 W. Black. 825, are full to this point.”
In Barr v. Craig, 2 Dall. 151, 153 (1 L. Ed. 327), Mr. Justice Bradford said:
“This is an equitable action; the defendant, under the general issue, may go into all the equity of the case; and unless it appears that he cannot in conscience and equity retain the money, unless, ex aiquo et bono, he is bound to refund it, the verdict must be for him.”
Here is the principle which ought to determine this case. While the Bridge Company could not have recovered this $3,015.70 by an action at law because the county failed to comply with the provisions of the statute as to the method of making the contract, yet, since the county has paid it, it cannot recover it back because it has received,
Counsel argue, however, that both parties in this action, violated the law and made'an illegal contract. If so, when an illegal agreement has been made and both parties are equally at fault, neither a court of equity nor a court of law will grant relief to either. But these parties were not equally at fault. The prohibition of the law which made the contracts unenforceable was against the county, not against the Bridge Company. It declared that it should be unlawful for the county to incur any debt in excess of the levy it made for the special fund and its other assets available to pay it, and while the Bridge Company was chargeable with notice of the county’s disregard of the law the primary duty to obey it, and to make a lawful levy and a lawful contract, was upon the. county, and it was the main wrongdoer. Louisiana v. Wood, 102 U. S. 294, 298, 26 L. Ed. 153; Parkersburg v. Brown, 106 U. S. 487, 503, 1 Sup. Ct. 442, 27 L. Ed. 238. Having violated-the law, secured, accepted, and kept the bridges, and paid less than two-thirds of their value, it appeals to the conscience of. the chancellor to pay back $3,015.70 and inflict still greater loss upon the Bridge Company. But “he who has done inequity cannot have equity,” and “he who comes into a court of equity must come with clean hands.”
Again:
“A court of equity can act only on the conscience of a party; if he has done nothing that taints it, no demand can attach upon it, so as to give any jurisdiction.” Boone v. Chiles, 10 Pet. 177, 210 (9 L. Ed. 388).
If this $3,015.70 was received by the Bridge Company, it undoubtedly supposed, as did the county, that the contracts were valid. It •had built the bridges worth $17,500, and they had been accepted by the county. In consideration of those bridges, which the county still has, it paid the Bridge Company $3,015.70 in part payment for them, and the Bridge Company received it. There is certainly nothing in this transaction to taint the conscience of the Bridge Company, nothing unjust or inequitable in its acts, and there is no equity, but much inequity, in the claim of the county to recover back this payment.
There is no such case among the authorities cited for the county, nor has any such case been found, where a like recovery has been permitted in the face of equities so compelling in favor of the defendant. Tn the first case cited for the county (City of Geneseo v. Gas Co., 55 Kan. 358, 40 Pac. 655) the city recovered the proceeds of its bonds issued to discharge its contract to become a stockholder in a mining corporation, a contract that was beyond its corporate power, and, because it could not be a stockholder, and had therefore received no consideration for its bonds it was permitted to recover back the money it paid for them. In the Fields Case the recovery was granted because the city received no consideration whatever for moneys to the amount of about $500,000, which it paid out to those who had no legal or equitable claim against it. People v. Fields, 58 N. Y. 491, 499, 501, 503. In the cases of Shakopee and Chaska those cities recovered because they had paid their money upon contracts beyond their corporate power, contracts to pay manufacturing companies moneys in order to bring their plants and business from other places to those cities and there to operate them. Chief Justice Gilfillan said:
"It is conceded that the contract was invalid; that it was beyond the power of the corporation, and, a fortiori, of any officer of the corporation, ¡to make such a contract. * * * It had no authority to make it; no one of its officers, nor all of them together, had authority to make it. 'The case stands in law as it would, had some person, not connected with the city government, taken the money from its treasury, and paid it to defendants.”
But he added, and here is the controlling difference between these cases and those of like character and the one in hand:
“It may be different in a case where the payment is for a legitimate purpose, within the power conferred on the municipal corporation, and is made by an officer, or upon the direction of an officer, who has authority to de-*102 terrain© whether some condition precedent to the authority of the paying officer to pay has been complied-with.”
The payments to the Bridge Company were made by the treasurer of the county on county warrants issued and delivered to it after'the bridges were built and accepted by the county. They were made for the building of bridges, for a legitimate purpose to accomplish which the county had plenary corporate power.
In Railway Co. v. McCarthy, 96 U. S. 258, 267 (24 L. Ed. 693) the Supreme Court said:
“The doctrine of ultra vires, when invoked for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice or work a legal wrong.”
In Central Transportation Co. v. Pullman’s Palace Car Co., 139 U. S. 24, 60, 11 Sup. Ct. 478, 488 (35 L. Ed. 55) the Supreme Court said:
“A contract ultra vires being unlawful and void, not because it is in itself immoral, but because the corporation, by the law of its creation, is incapable of making it, the courts, while refusing to maintain any action upon the unlawful contract, have always striven to do justice between the*103 parties, so far as could bo done consistently with adherence to law, by permitting property or money, parted with on the faith of the unlawful contract, to be recovered back, or compensation to be made for it.”
The construction of the bridges described in the contracts was within the corporate power of the county. The board of commissioners had the power to purchase or contract for these bridges (section 1671, Revised Statutes of Oklahoma 1909), to levy taxes to pay for them, but in making its contracts it was forbidden to make a contract at any given time in excess of the levy for roads and bridges plus the other assets of the county available for its discharge. It is conceded that the board had the power to make the levy of $6,892.80 for the fiscal year 1908-1909 and to apply it to the payment of the bridges. By dividing the work of constructing the bridges into three parts, limiting its first contract to one-third of the bridges in value, making a like levy and contract in each of the fiscal years 1909-1910 and 1910-1911, it could have lawfully contracted for or purchased the bridges without the vote of the electors. It might have refrained from contracting debts chargeable to other funds to such an extent that there would, at the end of the fiscal year 1908-1909, have been a surplus from those funds sufficient to discharge the contracts it made. Probably it could have borrowed money, as it did in the preceding year, and have applied that money to discharge the contract. So it is that this is a case in which without a vote of the electors the board could have lawfully obtained the. bridges for the county and have lawfully bound it to pay for them, and the only reason why its contract for them is unenforceable is that it did not comply with the laws made for its government which it was its duty to observe.
In San Francisco Gas Co. v. City of San Francisco, 9 Cal. 453, 470, the city defended an action for $18,188 for gas furnished to it on the ground that no obligation or liability of the city could be created without the passage of a proper ordinance, and no such ordinance had been passed. Justice Field, afterwards Mr. Justice Field of the Supreme Court, said:
■‘The obligation to do justice rests equally upon it as upon an individual. It cannot avail itself of the property or labor of a party, and screen itself from responsibility under the plea that it never passed an ordinance on the subject.”
And he affirmed a judgment against the city. If the city had paid to the gas company a part of the $18,188, and had then brought a suit for money had and received, its cause would have been on all fours with the claim in hand, and there is no doubt what its fate would have been.
In Pimental v. City of San Francisco, 21 Cal. 352, 361, 362, 363, 366, the passage of an ordinance was indispensable under the city charter to empower the mayor and joint committee on legal claims to sell certain parcels of real estate of the city at public auction. The mayor and committee, however, sold the lots to various holders, who paid the purchase prices therefor'to them, and they paid them into the, city treasury, and the city gave conveyances of the respective parcels. These conveyances were void and gave no title, and the bidders
“The city is not exempted from the common obligation to do justice, which binds individuals. Such obligation rests upon all persons, whether natural or artificial. If the city obtain the money of another by ‘mistake, or without authority of law, it is her duty to refund it, from this general obligation. If she obtain other property, which does not belong to her, it is her duty to restore it, or, if used, to render an equivalent therefor, from the like obligation. Argenti v. San Francisco, 16 Cal. 282. The legal liability springs from the moral duty to make restitution. And we do not appreciate the morality which denies in such cases any rights to the individual whose money or other property has been thus appropriated. The law countenances no such wretched ethics; its command always is to do justice.”
In Parkersburg v. Brown, 106 U. S. 487, 500, 501, 503, 1 Sup. Ct. 442, 455 (27 L. Ed. 238), the city under a void law and against public policy issued and loaned its bonds to M. to the amount of $20,000 to aid him in carrying on a manufacturing business, and he mortgaged his real and personal property to secure the payment to the city of the interest and principal of the bonds, and the city sold the bonds to A. and B. The court held the bonds void, and thereupon the bondholders brought a suit in equity to recover the mortgaged property which the city had taken over after the mortgagor failed to pay the interest on the bonds, and the court granted the relief sought and said:
“The property was transferred under a contract which was merely malum prohibitum, and where the city was the principal offender. In such a case the party receiving may be made to refund to the person from whom it has received property for the unauthorized purpose, the value of that which it has actually received.”
In Chapman v. County of Douglas, 107 U. S. 348, 355, 356, 357, 2 Sup. Ct. 62, 69 (27 L. Ed. 378) the authority of the county commissioners to purchase a poor farm was limited to a purchase at such a price, payable in such installments as could be discharged by a tax of 1 per cent, per annum. They contracted for and obtained a deed for such a farm upon the payment by the county of $2,000 cash and its agreement to pay $6,000 in four equal annual payments, evidenced by its promissory notes and secured by its mortgage on the poor farm. The $2,000 was paid; the county delivered its note and mortgage and took possession of the property. The amounts and times of payment were such that they could not be met by an annual tax of 1 per cent., and the contract, the notes and mortgage, were held illegal and void. Thereupon Chapman, the representative of the owners of the notes and mortgage, brought his suit to recover the land. The city defended on the ground that as the entire transaction was illegal and the parties .could not be put in statu quo the court should grant no relief. But the Supreme Court held that as the board had the power to buy the farm, and tire contract, notes, and mortgage were void because the board contracted to buy it and to pay for it by instruments, the note
“It was not illegal in the sense of being in-ohibitecl as an offense; the power in that form was simply withheld. The policy of the law extends no further than merely to defeat what it does not permit, and imposes upon the parties no penalty. It thus falls within the rule, as stated by Mr. Pollock, in his Principles of Contract, 26-1: ‘When no penalty is imposed, and the intention of the Legislature appears to be simply that the agreement is not to be enforced, then* neither the agreement itself nor the performance of it is to be treated as unlawful for any other purpose.’ ”
In Geer v. School District No. 11, 111 Fed. 682, 684, 685, 687, 692, 49 C. C. A. 539, 541, 542, 544, 549, the statutes prohibited the creation of any debt by a school district by a loan in any form unless approved by a majority of its qualified taxpayers, and also forbade the creation of an aggregate bonded indebtedness in excess of 3% per cent, of the assessed value of the property in the district. The qualified taxpayers voted to issue bonds to build the schoolhouse. The school district issued and sold the bonds and used the proceeds to construct a schoolhouse, which it retained and held. The bonds made the bonded indebtedness more than 3% Per cent, of the assessed valuation of the property of the district, and when the bondholder sued upon them this court denied him any recovery, and held that the bonds were illegal and void. He then sued the district to recover the money he paid to it for the bonds and recovered.
Because the city failed to prove that at the time the $3,015.70 was paid to the Bridge Company in satisfaction of the warrants it had issued the payment was illegal; because the county was under a moral obligation to pay the $3,015.70, although that obligation could not be enforced at law, and where one pays money in satisfaction of an unenforceable moral obligation like a just debt barred by the statute of limitations, he cannot maintain a suit to recover the money back; because the city’s cause of action is for money had and received, which in good conscience, justice, and equity the Bridge Company ought to return, and in good conscience, justice, and equity the Bridge Company may retain the money, and the city ought not to recover it; and because the contracts for the bridges were within the corporate powers of the county, were not against public policy or malum in se, or forbidden under any penalty, the board of commissioners had the authority by proceeding in a manner prescribed by the statute to purchase and secure for the county the bridges it has received and retained without a vote of the electors, the contracts are unenforceable only because the board did not proceed in the manner prescribed by the statute, but in another way; the county has received, accepted, and retains the full benefit of the Bridge Company’s complete performance of the contracts — for these reasons the county is not entitled to recover the $3,015.70 it has paid to the Bridge Company in part payment for the bridges, and the judgment below must be modified in accordance with the views expressed in this opinion.