Bluthenthal v. Town of Headland

• Decision Date: 20 December 1901
• Citation: 31 So. 87,132 Ala. 249
• Parties: BLUTHENTHAL ET AL. v. TOWN OF HEADLAND.
• Court: Alabama Supreme Court

31 So. 87

132 Ala. 249

BLUTHENTHAL ET AL. v. TOWN OF HEADLAND.

Supreme Court of Alabama

December 20, 1901

Appeal from circuit court, Henry county; John P. Hubbard, Judge.

Action by Bluthenthal & Bickert against the town of Headland. From a judgment for defendant, plaintiffs appeal. Affirmed.

Espy Farmer & Espy, for appellants.

Pearce & Pace, for appellee.

HARALSON J.

An ultra vires contract is one that is wholly and manifestly outside of the charter or constituent act of the corporation or some valid legislative act applicable to it, and contracts in this sense ultra vires, import in general no corporate liability directly upon the contract. 2 Dill. Mun. Corp. § 969. Incorporated companies have no powers except those which their charters confer upon them either expressly or as incidental to their existence. Beach v. Fulton Bank, 3 Wend. 583; Dartmouth College v. Woodward, 4 Wheat. 518, 4 L.Ed. 629; Alabama Gold Life Ins. Co v. Central Agricultural & Mechanical Ass'n, 54 Ala 73; Taylor v. Association, 68 Ala. 235; 2 Dill. Mun Corp. § 969; Green's Brice, Ultra Vires, 28.

While it is true that no corporate liability is imposed on the corporation when sued on such a contract, it is well established, that "persons who have in any way advanced money to a corporation, which money has been devoted to the necessaries of the corporation, are considered in chancery and at law, in the equitable action for money had and received as creditors of the corporation to the extent to which the loan has been so expended" (Green's Brice, Ultra Vires, 724); and the corporation is liable in an action of implied assumpsit. 1 Dill. Mun. Corp. § 126, note 1. The rule is thus stated by Mr. Tiedeman, quoting Field, C.J., in Argenti v. City of San Francisco, 16 Cal. 252, 282: "The doctrine of implied municipal liability applies to cases where money or other property of a party is received under such circumstances that the general law, independent of express contract, implies an obligation upon the city to do justice with respect to the same. If the city obtain money of another by mistake, or without authority of law, it is her duty to refund, not from any contract entered into by her on the subject, but from the general obligation to do justice which binds all persons whether natural or artificial * * * The money must have gone into the treasury or been appropriated by her, and when it is property other than money, it must have been used by her, or be under her control." Tied. Mun. Corp. § 164.

The evidence in this case shows, that the goods purchased were received and sold and the money paid into its treasury or appropriated to its uses. If the defense rested wholly on the ultra vires character of the transaction in the purchase of the liquors, it would be unavailing. This question was fully discussed and settled in the case of Allen v. Intendant, etc., 89 Ala. 641, 8 So. 30, 9 L. R. A. 497.

A distinction, however, exists between acts or contracts simply ultra vires, and those which are illegal because made in violation of a positive provision of statute. When contracts are prohibited by statute to be made, they are, if made illegal, and not simply ultra vires, and are subject to the rules governing the action of courts in respect...