Am.-lafrance & Foamite Indus. Inc v. Arlington County.*

• Citation: 192 S.E. 758
• Court: Supreme Court of Virginia
• Decision Date: 23 September 1937
• Parties: AMERICAN-LAFRANCE & FOAMITE INDUSTRIES, Inc. v. ARLINGTON COUNTY.*

192 S.E. 758

AMERICAN-LAFRANCE & FOAMITE INDUSTRIES, Inc.

v.ARLINGTON COUNTY.*

Supreme Court of Appeals of Virginia.

Sept. 23, 1937.

Error to Circuit Court, Arlington County; Walter T. McCarthy, Judge.

In the matter of claims of the American-LaFrance & Foamite Industries, Inc., against Arlington County. To review an order overruling claimant's demurrer to the county's plea in bar, claimant brings error.

Reversed and remanded, with directions.

Argued before CAMPBELL, C. J., and HOLT, HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

Frank L. Ball, and W. C. Gloth, both of Arlington, for plaintiff in error.

Lawrence W. Douglas, of Arlington, for defendant in error.

SPRATLEY, Justice.

The American-LaFrance & Foamite Industries, Inc., hereinafter referred to as the plaintiff, in agreement with the board of supervisors of Arlington county, Va., hereinafter referred to as the defendant, prior to January 1, 1932, sold and delivered to the county of Arlington seven pieces of fire apparatus or equipment, under contracts which the board of supervisors undertook and presumed to execute for and on behalf of the defendant. The sale price of the equipment amounted to $63,450. The contract provided for an initial cash payment on account of the purchase price for each of the said pieces of equipment as it was delivered, and for the payment of the balance in one, two, and three years from date, evidenced by a series of promissory notes executed by the board of supervisors on behalf of the county. $20,750 was paid in cash on delivery, and of the residue evidenced by notes the sum of $7,948 was paid. Under the contracts, title to the equipment was reserved in the vendor until full payment of the entire purchase price.

The county subsequently declined to pay the balance on the ground that the contracts and notes were executed in violation of the statutes and of the provisions of section 115a of the Constitution of Virginia, and are, therefore, void, since the contracts and notes attempted to create a debt on the county, not approved by vote of its qualified voters, payable in some year or years beyond that in which the debt was contracted, and were not in payment of any previous liability of the county.

The plaintiff here thereupon brought an action against this same defendant to recover the alleged balance due on the purchase price of the fire-fighting apparatus and equipment sold and delivered to the county. It was conceded that the obligation in question did not come within the exceptions noted in the statutes and in the Constitution, and that the creation of the debt had not been submitted to the qualified voters. It was contended, however, that, although there could be no recovery under the contracts, or upon the notes, there could be a recovery for the value of the equipment sold and delivered. A judgment of the circuit court of Arlington county sustaininga demurrer to the action of the plaintiff was affirmed by this court on March 14, 1935, in the case of American-LaFrance & Foamite Industries, Inc. v. Arlington County, 164 Va. 1, 178 S.E. 783. This court there held that the contracts and notes were void, and that the plaintiff could not recover either on the express contracts or on one implied by law for the value of the goods. But since, as expressly stated in that opinion, the plaintiff did not seek restoration of the specific property, or compensation for the use thereof, neither of these questions was considered, and further opinion thereon was expressly reserved.

The decision in that case simply invalidated the agreement and contract made between the parties, and denied the plaintiff the right to enforce its provisions, or to recover on a quantum meruit or quantum valebat. The contract for the payment of the money became utterly void and dead. It did not operate to create or to pass title in the fire equipment to the county. It never had any life, nor did the action of the court breathe life into it for the purpose of changing the rights of the parties to the property. The title to the property remained as if the contract had never existed.

It now appears that since the decision in that case the County of Arlington has retained in its possession and for its use the fire-fighting apparatus and equipment, and accepted the benefits thereof. No agreement having been made between the parties, either for its return or for compensation for the use thereof, the plaintiff on September 28, 1935, filed with the board of supervisors of the county seven separate claims for the rent thereof and also a written demand for the return of the property. The county having refused to make payment of the claims for rent, or to return the property, the plaintiff appealed to the circuit court of Arlington county, as provided by statute.

By agreement of counsel, the claims for rent and the demand for the return of the property were consolidated in one cause and heard together. The defendant filed its plea in bar, setting out the record in the former case, and contended as before, that the whole transaction was illegal, contrary to public policy, and void; that it was without authority to rent the equipment, or to pay the balance due upon the contracts, either directly or indirectly; and that, if this action should be maintained since no part of the payments made by the county on account of the purchase price had been repaid, or attempted to be repaid to it, it would lose the equipment and yet be required to pay for same.

The plaintiff demurred to the plea on the ground that it was not sufficient in law, and that the matters and things stated therein were immaterial and irrelevant, and did not constitute a defense to its claims. The trial court overruled the demurrer, and in its judgment recited that the plaintiff was not entitled to any rental or compensation for the use of the equipment, nor to the return thereof; but that it was entitled to have the said equipment sold and the proceeds of the sale applied to the balance of the purchase price thereof, with any surplus over the purchase price to be paid to the defendant, provided the plaintiff would amend its claim for return of the equipment, and pray for the relief indicated by the court's judgment. To this action of the court both parties excepted, and the sole error here assigned by the plaintiff is to the action of the court in overruling the demurrer.

The issue now before us is whether the plaintiff is entitled to the return of the fire fighting equipment, and to reasonable compensation for its use.

The plaintiff contends that the contract is not malum in se, but merely invalid and void, since it violates a provision of law only in respect to the manner or mode of its performance on the part of the county; that the substance and object of the contract to secure the fire equipment and apparatus for the purpose of protecting the lives and property of the citizens of the county is a beneficent purpose, and is in no sense contrary to public policy, or forbidden by statute; that, on the other hand, such object is one of the primary purposes and objects of a progressive government; that this object, in its substance, is not only not prohibited by law, but is in accord with public policy; and that the invalidity of the contract does not apply to the subject to be achieved, but solely to the manner and method by which it is sought to be achieved.

The defendant, on the other hand, contends that the contract is an illegal one, and relies especially upon the cases of Levy v. Davis, 115 Va. 814, 80 S.E. 791; City of Bristol v. Dominion National Bank, 153 Va. 71, 149 S.E. 632; Thomas v. Richmond, 12 Wall. (79 U. S.) 349, 20 L.Ed. 453; and Roller v. Murray, 112 Va. 780, 72 S.E. 665, 38 L.R.A.(N.S.) 1202, Ann.Cas. 1913B, 1088.

In these cases the court declined to enforce an agreement where the transactions upon which the contracts were based were either malum in se, violative of public policy, forbidden by statute or by common law, or involved moral turpitude. In each of these cases, the claimant either sought a recovery under the express terms of the contract, or upon an implied contract, to pay for goods sold or services rendered, and, in order to enforce his claim, was required to trace his right through his own illegal acts and dealings.

In the Levy Case, the object of the contract was the furtherance of an illegal and immoral purpose known to both parties. In the Bristol Case, the agreement was in violation of common law, the city's charter, a state statute, a constitutional provision and public policy, and had but one object in view, to improve the property of an officer of the city at the expense of the city. The law provided not only that the contract should be void, but an additional penalty therefor. In the Thomas Case, one who was a violator of a penal statute, as a guilty holder of unauthorized currency, was denied the right to recover. In the Roller Case, a quantum meruit recovery sought upon a champertous contract, declared illegal in an action theretofore brought on the contract, was denied. The object of the agreements above relied upon were not only void, but illegal, and the parties were in pari delicto as to the objects sought to be achieved.

"An illegal contract has been denned as 'an agreement with an unlawful object. It is not merely lacking in valid subject-matter, but its purpose is positively invalid.' Billingsley v. Clelland, 41 W.Va. 234, 244, 23 S.E. 812, 815. * * *

" '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.' * * * Where an agreement violates a statute with respect only to the mere mode of its performance, the contract, its substance not being prohibited by law, is not unlawful--is not illegal. Chapman v. County of Douglas, supra, [107 U. S. 348, 356, 2 S.Ct. 62, 69, ...