School Dist. No. 2 of Silver Bow County v. Richards

• Decision Date: 23 January 1922
• Docket Number: 4610.
• Citation: 205 P. 206,62 Mont. 141
• Parties: SCHOOL DIST. NO. 2 OF SILVER BOW COUNTY v. RICHARDS ET AL.
• Court: Montana Supreme Court

205 P. 206

62 Mont. 141

SCHOOL DIST. NO. 2 OF SILVER BOW COUNTY v. RICHARDS ET AL.

No. 4610.

Supreme Court of Montana

January 23, 1922

Rehearing Denied March 6, 1922.

Appeal from District Court, Silver Bow County; Edwin M. Lamb, Judge.

Action by School District No. 2 of Silver Bow County, on relation of John Hawkins, against Frank L. Richards and others. From a judgment for defendants, and an order denying a motion for new trial, plaintiff appeals. Reversed and remanded, with directions.

M. J Cavanaugh, of Butte, for appellant.

N. A Rotering and A. C. McDaniel, both of Butte, for respondents.

HOLLOWAY J.

The complaint in this action, omitting the formal parts, sets forth that plaintiff and defendants Richards and Chinn constituted the board of trustees of school district No. 2 Silver Bow county; that on November 14, 1918, Richards and Chinn, assuming to act for the school district, wrongfully and corruptly entered into a contract with defendant Connell Company for the purchase by the district of a piano and victrola at the agreed price of $663.45; that the contract was made without a meeting of the board being held or the contract authorized and without any bids having been called for, as required by law; that the instruments were delivered to the district on November 17; that, upon protest being made by plaintiff, the board ordered that bids be received and a notice calling for bids to be opened on February 15, 1919, was published in one of the Butte papers; that the defendants Richards and Chinn, in agreeing to call for bids, acted in bad faith without any intention of considering any bids which might be submitted, and only for the purpose of giving color of legality to their proceedings, and with the intention of ratifying and confirming the illegal contract previously made with the defendant Connell Company; that at the meeting held on February 15 two other bids were received, each lower than the bid of the Connell Company, but that defendants Richards and Chinn, intending to defraud the district, ignored and refused to consider the other bids and arbitrarily awarded the contract to the defendant Connell Company for the sum of $663.45, and immediately ordered a warrant for that amount to be drawn and delivered; that the warrant was drawn, delivered, and cashed; that the instruments purchased did not meet the requirements contained in the published notice, but were greatly inferior in quality, and the price paid therefor grossly excessive. The prayer is for the cancellation of the contract, for the return of the goods to the seller, and for the recovery of the purchase price, with interest, for the use of the district. Issues were joined, and the cause brought on for trial. At the conclusion of plaintiff's testimony, the court, upon motion of defendants, rendered and had entered a judgment dismissing the complaint. From that judgment and from an order denying a new trial, plaintiff appealed.

The right of the plaintiff to maintain the action cannot be questioned. This is a taxpayer's suit, but the judgment recovered inures to the benefit of the school district. Plaintiff could gain nothing from a successful termination of the action except the benefit common to all taxpayers which would accrue from preserving the public funds from unlawful dissipation. Independent School District v. Collins, 15 Idaho, 535, 98 P. 857, 128 Am. St. Rep. 76; 14 C.J. 938. It is immaterial whether a school district of this state is, strictly speaking, a municipal corporation. It is a public corporation, and as such may sue and be sued. Section 402, c. 76, Laws of 1913. It is the general rule that in a controversy of this character relief must be sought first from the corporate authorities (Brandt v. McIntosh, 47 Mont. 70, 130 P. 413), but, where it is made to appear that the majority of the governing board acted fraudulently in bringing about the condition of which complaint is made, it would be idle to demand of the members constituting the majority that they institute suit against themselves and charge their own delinquency as the ground for recovery ( Gerry v. Bismarck Bank, 19 Mont. 191, 47 P. 810; McConnell v. Combination M. & M. Co., 30 Mont. 239, 76 P. 194, 104 Am. St. Rep. 703; Kleinschmidt v. American Min. Co., 49 Mont. 7, 139 P. 785). Neither does it alter the situation that after the transaction in question and before the trial defendant Richards resigned as trustee. His personal liability is predicated upon his fraudulent disposition of the public funds, and that liability cannot be evaded by his subsequent resignation.

Section 5065, Revised Codes, provides that, as a condition precedent to the right to rescind a contract, the party seeking rescission must restore to the other party everything of value received under the contract or offer restoration. This statute is but declaratory of a rule in effect long prior to the enactment of our Codes, and it has been held quite uniformly that, where restoration has been rendered impossible or impracticable through no fault of the rescinding party, he may have his relief, particularly if the court is able to accomplish the result by its decree. 2...