General Electric Co. v. Town of Ft. Deposit

• Decision Date: 21 November 1911
• Citation: 56 So. 802,174 Ala. 179
• Parties: GENERAL ELECTRIC CO. v. TOWN OF FT. DEPOSIT.
• Court: Alabama Supreme Court

56 So. 802

174 Ala. 179

GENERAL ELECTRIC CO. v. TOWN OF FT. DEPOSIT.

Supreme Court of Alabama

November 21, 1911

Appeal from Circuit Court, Lowndes County; M. W. Rushton, Special Judge.

Action by the General Electric Company against the Town of Ft Deposit. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

W. P McGaugh, for appellant.

John V Smith, for appellee.

McCLELLAN J.

Detinue by appellant to recover numerous specific articles that might be generally called electric lighting apparatus and machinery, which appellant delivered, in 1906, to the municipality (appellee) under a written contract of conditional sale; the title to the property being retained therein by the vendor until payments (deferred) were made in full therefor. The price stipulated in the instrument was about $4,000. Approximately $1,400 was paid, out of city funds, on the contract price.

It was expressly provided in the charter of Ft. Deposit (Acts 1890-91, pp. 594, 598; Acts 1896-97, pp. 972-974, 1265-1267) that contracts for the purchase of real and personal property "above the amount of one thousand dollars made by said town council" should not "hold good and valid," without ratification by the electorate of the municipality. It is conceded in brief for appellant, and the contrary was not shown on the trial, that no ratification, as required by the charter, of this contract was had. Hence, though made by the council, the contract was, by force of the express charter provision, invalid. The contract was not binding in any degree upon the municipality.

The pertinent charter provision did not inhibit a purchase of property, however much the amount to be paid therefor exceeded "one thousand dollars." On the contrary, it contemplated purchases above that amount. Where the amount exceeded "one thousand dollars," it affixed, as a condition to its validity, the ratification thereof by the electorate. But no ratification was, of course, possible without a previously existing status, inconclusive though, under this charter, it must have been, upon which the ratification contemplated could have operated to impart validity to the engagement. Hence the plaintiff did not violate this provision of the charter in entering into and in setting down in formal contractual manner the sale and purchase of the articles described therein. The invalidity of the contract resulted, therefore, from the failure of the electorate to ratify it. Why it was not ratified is not, on this occasion, at all material. As is apparent, the exercise or control of the right of the electorate to ratify the contract was in no sense within the keeping of the vendor. Under this contract, invalidated for the reason stated, the plaintiff delivered the articles described in the amended complaint. Omitting at this time consideration of the state of the pleading, the inquiry is, Should it be allowed a recovery of property so parted with?

All persons are bound to take notice of the extent and limitations of charter powers in dealing with municipal corporations or with their officers. 2 Dillon, Munic. Corp. (5th Ed.) § 777; Mayor, etc., v. W. W. Co., 63 Ala. 611; Spence v. M. & M. Ry. Co., 79 Ala. 576, 589, among others.

In Marsh v. Fulton, 10 Wall. 676, 684, 19 L.Ed. 1040, and reiterated in Louisiana v. Wood, 102 U.S. 294, 26 L.Ed. 153, an obviously wholesome and here pertinent doctrine was thus stated: "The obligation to do justice rests upon all persons, natural and artificial, and if a county obtains the money or property of others without authority the law, independent of any statute, will compel restitution or compensation." This court, in Allen v. La Fayette, 89 Ala. 641, 648, 8 So. 30, 9 L. R. A. 497, took account of it, and also quoted approvingly this expression from Salt Lake City v. Hollister, 118 U.S. 256, 263, 6 S.Ct. 1055, 1059 (30 L.Ed. 176): "But, even in this class of cases (i. e., avoided ultra vires contracts), the courts have gone a long way to enable parties who have parted with property or money on the faith of such contracts to obtain justice by recovery of the property or the money specifically, or as money had and received to plaintiff's use." (Italics supplied.) In Pimental v. City of San Francisco, 21 Cal. 352, 363, cited in Allen v. La Fayette, supra, it was declared that if a city "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." In Clark v. County Com'rs of Saline County, 9 Neb. 516, 4 N.W. 246, Paul v. City of Kenosha, 22 Wis. 266, 94 Am. Dec. 598, Bridge Co. v. Frankfort, 18 B. Mon. (Ky.) 41, among others, the like doctrine was declared.

However, these general pronouncements of primary justice cannot be availed of or given effect in all cases of void contracts with municipalities. Where the acts or dealings upon which the contracts are based are " prohibited by their charters, or some other law bearing upon them, or are malum in se, or violative of public policy," where the plaintiff, in order to recover, "must trace his right" through a violation by him of positive law, the courts will not lend their aid to reimburse the loss, nor to restore the property delivered under such contracts. Allen v. Intendant, supra; Blumenthal v. Headland, 132 Ala. 249, 31 So. 87, 90 Am. St. Rep. 904; Town of Cottonwood v. Austin, 158 Ala. 117, 48 So. 345; Clark v. Colbert, 67 Ala. 92; Walker v. Gregory, 36 Ala. 180; 2 Dillon (5th Ed.) § 795; Jemison v. B. & A. R. R. Co., 125 Ala. 378, 383, 28 So. 51; Thornhill v. O'Rear, 108 Ala. 299, 19 So. 382, 31 L. R. A. 792; Hill v. Freeman, 73 Ala. 202, 49 Am. Rep. 48; Yarbrough v. Avant, 66 Ala. 532. The basis of the rule is thus stated by Chief Justice Parker, in Worcester v. Eaton, 11 Mass. 368, 377, 378, cited in Walker v. Gregory, supra: "It appears then to be the settled law in England, and we are satisfied that it is also the law here, that, where two parties agree in violating the laws of the land, the court will not entertain the claim of either party against the other, for the fruits of an unlawful bargain. If one holds the obligation or promise of the other to pay him money, or do any other valuable act, on account of such illegal transaction, the party defendant may expose the nature of the transaction to the court; and the law will say, 'Our forms and rules are established to protect the innocent and to vindicate the injured, not to aid offenders in the execution of their unjust projects;' and if the party who has foolishly paid his money repents his folly, and brings his action to recover it back, the same law will say to him: 'You have paid the price of your wickedness, and you must not have the aid of the law to rid you of the inconvenience, which is suitable punishment of your offense.' "

At least one means for and source of the establishment and ascertainment of public policy is statute law. People v. Hawkins, 157 N.Y. 1, 51 N.E. 257, 42 L. R. A. 490, 68 Am. St. Rep. 736; U.S. v. Tr. Mo. Ass'n, 58 F. 58, 7 C. C. A. 15, 24 L. R. A. 73; Vidal v. Girard's Ex'rs, 43 U.S. 127, 197, 11 L.Ed. 205; Tarbell v. Portland R. R. Co., 73 Vt. 347, 51 A. 6, 56 L. R. A. 656, 87 Am. St. Rep. 734, note on p. 737. "The law which prohibits the end will not lend its aid in promoting the means designed to carry it into effect; * * * that it will not promote in one form that which it declares wrong in another." Tarbell v. Railroad Co., supra, quoting Shaw, C.J., in White v. Buss, 3 Cush. (Mass.) 448.

A distinction is taken between void contracts and illegal contracts. City of Los Angeles v. City Bank, 100 Cal. 18, 34 P. 510. Money paid or property surrendered under a merely void contract may, in a proper case, be recovered; but not so where the contract is illegal. Wharton on Contr. §§ 336, 340, 741. An illegal contract has been defined 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.

While a penalty implies a prohibition, and a contract relating to it is void, yet a penalty is not essential in order to construct a prohibitory law. Woods v. Armstrong, 54 Ala. 150, 25 Am. Rep. 671; McGehee v. Lindsay, 6 Ala. 16. "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." Chapman v. County of Douglass, 107 U.S. 348, 356, 2 S.Ct. 62, 69 (27 L.Ed. 378). Where an agreement violates a statute with...