McGillivray v. Joint Sch. Dist. No. 1, Towns of Melrose

• Decision Date: 17 December 1901
• Parties: MCGILLIVRAY v. JOINT SCHOOL DIST. NO. 1, TOWNS OF MELROSE AND IRVING.
• Court: Wisconsin Supreme Court

112 Wis. 354

88 N.W. 310

MCGILLIVRAY

v.JOINT SCHOOL DIST. NO. 1, TOWNS OF MELROSE AND IRVING.

Supreme Court of Wisconsin.

Dec. 17, 1901.

Appeal from circuit court, Jackson county; James O'Neill, Judge.

Action by James J. McGillivray against the Joint School District No. 1, Towns of Melrose and Irving. Judgment for defendant, and plaintiff appeals. Reversed.

An action for $850 worth of material and mill work sold and furnished by the plaintiff under a written contract made February 19, 1900, and incorporated in the construction of a new school house situated upon land belonging to the district, and now occupied and used by it for school house purposes. The contract was simply to “furnish all the mill work for your school house, according to plans and specifications, for the sum of $850.00.” The defense was invalidity of the contract. It appeared, and was found by the court, that the defendant district, in 1899 and 1900, contained a population of 376 and had an assessed valuation of real and personal property of $71,564; that, at the annual school meeting in July, 1899, it was declared, as the sense of the voters, that proper steps be at once taken for the erection of a suitable school house for the district. A building committee was appointed, including the school board, and was directed to “get plans for a school house within four thousand dollars ($4,000).” On August 8, 1899, at a special meeting, a loan for $2,580 from the state trust funds was authorized, which was negotiated, and the money received in December, 1899. At the time of the contract with the plaintiff, no other steps had been taken by the school district, either to authorize the building or to provide money. At that time there had been incurred indebtedness in the course of building the school house, aggregating $2,983.76, a sum in excess of the moneys borrowed from the trust funds. In July, 1900, it was resolved that the board be instructed to negotiate a loan of $1,000. Also, it was resolved that the sum of $1,600 be levied against the taxable property of the school district for that year, to be used for building purposes. In a subsequent suit by taxpayers, that levy has been adjudged void in toto, and its collection enjoined, on the ground that there never was any certification by the town board that a larger sum than $1,000 needed to be raised. The court found that the plaintiff was not shown to have had any actual knowledge as to the condition of these funds or the amount contracted against them. The court held, as conclusion of law, that the power of the building committee to bind the defendant had been exhausted at the time of the contract with the plaintiff, for the reason that the constitutional limit had already been passed, and that there were then no funds provided by the district for said building. Accordingly judgment was entered in favor of the defendant, from which the plaintiff appeals.Pope & Pope, for appellant.

G. M. Perry, for respondent.

DODGE, J. (after stating the facts).

The validity of plaintiff's contract is assailed on the ground, among others, that it carried the indebtedness beyond the constitutional limit of 5 per cent. of the assessed valuation, and was therefore beyond the power of the district itself. That such was the fact is beyond dispute. Five per cent. of the assessed value was $3,578.20; the existing indebtedness on February 19, 1900, was $2,983.76; the constitutional limit of indebtedness was therefore $594.44, less than $850. The contract was therefore forbidden by section 3, art. 11, of the constitution. Appellant, however, contends that, even though the express contract to pay for the “mill work” furnished and performed by him be void, yet, as he has alleged and proved that the district has had the benefit, it must be held liable as upon an implied contract. Obviously, if that position is to be sustained in all such cases, the constitutional prohibition that “no * * * school district * * * shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein” is ineffectual to protect the inhabitants and taxpayers against the unlawful acts of their agents, either the electors in school district assembled, or the school board, or even the individual officers. If, whenever those agents are able to cause lumber to be wrought into a school house, or work to be done thereon, the district must be held to pay therefor, however unlawful or forbidden, the result prohibited by the constitution is accomplished, for the district becomes indebted. Nevertheless, the doctrine is not without support from remarks made in opinions of courts and from text writers, though it is believed that all well considered decisions stop short of holding that a municipal corporation may be held liable on implied contract to pay quantum meruit for property which it had no power or was forbidden to purchase. We by no means question the rule that a municipal corporation may be held on principles of equity to return that which it has obtained and holds by means of a contract which it had no authority to make, whether the thing obtained be money or property. That rule has recently been enforced in the thoroughly considered case of Thomson v. Town of Elton, 109 Wis. 589, 85 N. W. 425, where the other Wisconsin decisions supporting it are cited, together with some from other jurisdictions, to which might be added the very illustrative case of Chapman v. Douglas Co., 107 U. S. 348, 2 Sup. Ct. 62, 27 L. Ed. 378. There the corporation, having power to purchase land for a court house, did so by a contract void because the manner of payment was forbidden. The court rendered judgment requiring, in the alternative, reconveyance of the property or payment of the purchase price. Another illustrative case is Stebbins v. Perry Co., 167 Ill. 567, 47 N. E. 1048, where, after railroad-aid bonds had been found unauthorized and void, and all recovery thereon denied, the right of the plaintiff was sustained to reclaim the capital stock held by the county as consideration therefor. These cases all proceed upon the theory of rescinding a void contract and undoing the acts done in reliance thereon, so as to place the parties in the original status quo. None of them hold that a municipal corporation can become liable for a debt by implied contract in defiance of a direct statutory or constitutional prohibition against its becoming liable at all. Indeed, such prohibition is expressly mentioned in Thomson v. Town of Elton as an insuperable obstacle to recovery. Other cases marking the distinction and enforcing such a prohibition might be cited almost without limit. A few will suffice: Richardson v. Grant Co. (C. C.) 27 Fed. 495;Gamewell Fire Alarm Tel. Co. v. City of Laporte, 42 C. C. A. 405, 102 Fed. 417, 419;Litchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. 820, 29 L. Ed. 132;Mosher v. School Dist., 44 Iowa, 122, 126;Capital Bank of St. Paul v. School Dist. No. 53, 1 N. D. 479, 48 N. W. 363;McDonald v. Mayor, etc., 68 N. Y. 23, 23 Am. Rep. 144;Fox v. City of New Orleans, 12 La. Ann. 154, 68 Am. Dec. 766;School Dist. v. Reid, 82 Wis. 96, 51 N. W. 1089;Earles v. Wells, 94 Wis. 285, 68 N. W. 964, 59 Am. St. Rep. 886. In the instant case we find the direct and positive prohibition against incurring the liability for the property and labor furnished by appellant, and that prohibition cannot be evaded by the legerdemain of substituting the fiction of an implied contract on which the prohibited liability may rest instead of the void express contract. He who deals with the officers of public corporations must take notice of the limits placed by law upon the powers of those agents of the taxpayers. If he becomes party, however innocently, to an attempt to impose on the latter forbidden burdens, he must expect to fail.

A much graver question, hardly suggested and not at all argued in appellant's brief, forces itself upon our consideration. That is whether the district, having the power to incur liability to the extent of $594.44, may not be held to have done so by a promise to pay a larger amount, when, as here, the contract of the other party has been fully executed, and the district has obtained something that it had authority to purchase. That exact question is new in Wisconsin and not controlled by direct authority, though the principles on which it may be resolved are pretty well established. No rule is better settled than that, in the revision of governmental acts claimed to exceed the limits imposed upon such governing bodies by the fundamental laws under which they exist, the courts will uniformly strive to give effect to such acts so far as is possible without disobeying the restrictions so imposed, and will hold acts valid up to such limits, notwithstanding some excess beyond constitutional restrictions, if the latter can be separated and can be denied efficacy without defeating the clear and obvious purpose of the whole act. McCullough v. Virginia, 172 U. S. 102, 19 Sup. Ct. 134, 43 L. Ed. 382;City of Detroit v. Detroit City Ry. Co. (C. C.) 60 Fed. 161;Illinois Trust & Savings Bank v. City of Arkansas City, 22 C. C. A. 171, 76 Fed. 271, 34 L. R. A. 518;Kimball v. City of Cedar Rapids (C. C.) 100 Fed. 802; Lewis v. City of Clarendon, 5 Dill. 329, Fed. Cas. No. 8,320; Johnson v. Stark Co., 24 Ill. 75;City of Quincy v. Warfield, 25 Ill. 317, 79 Am. Rep. 330;Briscoe v. Allison, 43 Ill. 291; State v. Allen, Id. 456; Scofield v. City of Council Bluffs, 68 Iowa, 695, 28 N. W. 20;Thompson v. School Dist., 102 Iowa, 94, 70 N. W. 1093; Lynch v. The Economy, 27 Wis. 69;Chicago & N. W. Ry. Co. v. Langlade Co., 56 Wis. 614, 14 N. W. 844;Monroe Water Works Co. v. City of Monroe, 110 Wis. 11, 18, 85 N. W. 685; State v. Stevens (decided Nov. 29, 1901) 88 N. W. 48;Allen v. Intendent, etc., of La Fayette, 89 Ala. 641, 8 ...