Horrabin Paving Co. v. City of Creston

• Citation: 221 Iowa 1237,262 N.W. 480
• Decision Date: 24 September 1935
• Docket Number: No. 42847.,42847.
• Parties: HORRABIN PAVING CO. v. CITY OF CRESTON.
• Court: United States State Supreme Court of Iowa

221 Iowa 1237

262 N.W. 480

HORRABIN PAVING CO.

v.CITY OF CRESTON.

No. 42847.

Supreme Court of Iowa.

Sept. 24, 1935.

Appeal from District Court, Union County; Homer A. Fuller, Judge.

Action in equity for an accounting and for benefits alleged to have been received and enjoyed by defendant city because of materials furnished and work done upon its streets by plaintiff. The opinion states the facts. From a decree in favor of the defendant, the plaintiff appeals.

Affirmed.Kelly, Shuttleworth & McManus, of Des Moines, and R. Brown, of Creston, for appellant.

J. D. Reynolds and K. H. Davenport, both of Creston, for appellee.

DONEGAN, Justice.

On July 27, 1925, the Horrabin Paving Company submitted to the city of Creston, Iowa, its proposal to do certain work upon four certain streets of said city upon which the pavement had become somewhat worn and out of repair, and, on the same day, the city of Creston, by resolution of its city council, accepted this proposition. On the following day, July 28, 1925, the paving company and the city entered into four separate contracts, one for each of said streets, covering the proposed work and material to be furnished by the paving company. The four contracts were identical in form and substance, except that they referred to different streets. Under the terms of these contracts the paving company was to do the work and furnish the material for what is designated in the contracts as reflush coating the surface of the streets in question. This work consisted substantially in first giving the surface of the streets a thorough cleaning, and then applying a coat of thin highly soluble viscous oil. This was followed by a second coat of liquid asphalt, which, in turn, was followed by a thin coat of warm sand; all to be done pursuant to specifications which were made a part of the contracts. The paving company entered upon the performance of the contracts, and on October 19, 1925, the work was accepted as completed by resolution of the city council.

Thereafter, the city council adopted a resolution levying special assessments against the private property which it declared had been benefited and authorized the issuance of bonds in anticipation of the collection of such special assessments. One Jackson and certain other property owners appealed from the levy made by the city council, and one Mitchell and others instituted an injunction proceeding to restrain the city from issuing the bonds. Upon the trial of these actions in the districtcourt the special assessments were canceled and an injunction issued as prayed. From the decrees thus entered appeal was taken to this court by Horrabin Paving Company and by Johnson County Savings Bank, to which the paving company had assigned its right to the proceeds of the contracts as security for a loan. So far as we can find from the record, neither the paving company nor the bank was a party to the action in the district court, but, after requesting the city to appeal from the decree in question, which it failed to do, they served notice of appeal as parties interested in the outcome of the action, such notice of appeal being served on the defendant city as well as on all other parties. Upon appeal to this court the two actions were consolidated. The opinion in that case, Jackson v. City of Creston, 206 Iowa, 244, 220 N. W. 92, affirmed the decrees of the trial court, held that the work done under the contracts in question was not oiling, that the failure to submit the contracts for the work done to competitive bidding rendered the contracts invalid, and that special assessments for the improvement could not be levied against the abutting property.

Following the decision of this court in Jackson v. City of Creston, supra, Johnson County Savings Bank and Horrabin Paving Company, as plaintiffs, instituted an action against the city of Creston, its officials, and the owners of the abutting and adjacent property, to recover the contract price for repairing the pavement under the four contracts in question, and alternatively for a peremptory writ of mandamus to compel the defendants to take the necessary proceeding for the issuance of proper obligations representing the amount due plaintiffs under the contracts and for obtaining liens upon abutting and adjacent property. By an amendment to their petition plaintiffs added a separate count in which they sought to recover the equivalent of the contract price as the reasonable and fair value of the material and labor furnished. Upon motion this amendment was stricken. Upon the trial of this case the district court entered a decree in favor of the defendants, and plaintiffs appealed. The opinion of this court in Johnson County Savings Bank et al. v. City of Creston et al., 212 Iowa, 929, 231 N. W. 705, 237 N. W. 507, 84 A. L. R. 926, affirmed the decree of the trial court, held that the contracts were void because entered into in disregard of the statute requiring competitive bidding, and that, under the decree in Jackson v. Creston, which had been affirmed on appeal, the contractor and his assignee could not, on the theory of an implied contract, recover against the city either at law or in equity for the contract price or on a quantum meruit.

Following the decision of this court in Johnson County Savings Bank v. City of Creston, supra, plaintiff instituted the instant action in which a recovery is asked on the theory of unjust enrichment or quasi contract. Plaintiff claims that work and material were received and are retained by said city, and that, under the doctrine of what is known as quasi contracts, or contracts implied in law, the city should not be permitted to retain the benefits derived from plaintiff's work and labor and thus unduly enrich itself without paying therefor. For defense the defendant city denied generally all allegations of the petition; alleged that plaintiff's cause of action did not accrue within five years next preceding the commencement of the action; that the said alleged contracts were a fraudulent attempt to evade the statutes providing for the resurfacing or reconstruction of pavements; that the price proposed to be paid under said contracts was exorbitant, unreasonable, and extortionate, and that the material was defective and the labor defectively performed in applying said material; that all rights and obligations between the parties were adjudicated in the prior actions; and that the plaintiff is barred and estopped from prosecuting this action because of its election to prosecute the prior actions upon the contracts. Upon the trial of the case the district court sustained the defense based on the statute of limitations and also held that the plaintiff was barred from prosecuting this action by its election to stand upon the contracts in the prior actions, and a decree was entered dismissing the petition at plaintiff's costs. From such decree, the plaintiff appeals.

[1] Although based on equitable principles, the doctrine of quasi contracts is enforced in actions at law. In the instant case, however, plaintiff also alleged that defendant had collected and retained money for the work done by plaintiff and asked for an accounting. The case was brought and tried in equity by the trial court, and has been tried de novo on appeal. Several propositions are set forth and argued by the appellant as grounds for reversal. In our opinion, however, it is unnecessary to consider any questions other than those which involve the merits of the case. For convenience, and to avoid confusion, we deem it advisable to state at the outset that we shall hereafter refer to the name of the plaintiff as if it were a legal entity, although it is in fact only a trade-name under which an individual, W. A. Horrabin, conducted a general contracting business.

[2] It is claimed by plaintiff that it should be allowed to recover in this action, because it furnished materials and labor from which appellee has derived benefits, that the appellee has been unjustly enriched to the extent of such benefits, and that the appellee is under a legal duty to recompense the appellant to the extent of such unjust enrichment. Appellee contends that, under the decisions of this court, the appellant cannot recover in this action. Much of appellee's argument and many of the cases cited by it are applicable to the question of the right to recover under a contract implied in fact, but are not decisive of the question as to whether one who cannot recover under an implied contract in fact may nevertheless recover under the doctrine of quasi contract, or as it is sometimes called-contract implied in law, on the ground of unjust enrichment. It is true, as contended by appellee, that in many cases recovery has been denied against municipal corporations on the ground of unjust enrichment or quasi contract, where the money or property or services by which it was claimed the municipal corporation was enriched were furnished under an express contract which was invalid because ultra vires. It is not true, however, that, where a benefit has been received by a municipal corporation under an express but ultra vires contract, there can be no recovery against the municipal corporation, under any circumstances, on the ground of quasi contract or unjust enrichment.

[3][4] Municipal corporations are creatures of the Legislature and possess only such powers as the Legislature has expressly granted to them, or such powers as are incidental to their existence, or such powers as may be implied from other powers granted. 44 C. J. 66; Johnson County Savings Bank v. City of Creston, 212 Iowa, 929, loc. cit. 933, 231 N. W. 705, 237 N. W. 507, 84 A. L. R. 926. Quite frequently the powers possessed by a municipal corporation are restricted as to their exercise by either constitutional or statutory provisions. The term ultra vires has been commonly applied to such contracts of municipal corporations as are beyond the powers...