U.S. Rubber Products v. Town of Batesburg, Inc.

• Decision Date: 25 February 1937
• Docket Number: 14440.
• Citation: 190 S.E. 120,183 S.C. 49
• Parties: UNITED STATES RUBBER PRODUCTS, Inc. v. TOWN OF BATESBURG.
• Court: South Carolina Supreme Court

190 S.E. 120

183 S.C. 49

UNITED STATES RUBBER PRODUCTS, Inc. v. TOWN OF BATESBURG.

No. 14440.

Supreme Court of South Carolina

February 25, 1937

Appeal from Common Pleas Circuit Court of Lexington County; E. C Dennis, Judge.

Suit by the United States Rubber Products, Incorporated, against the Town of Batesburg. From a judgment, the defendant appeals.

Affirmed.

George Bell Timmerman, of Lexington, for appellant.

Blackwell & Smith, of Columbia, for respondent.

A. L GASTON, Acting Associate Justice.

The complaint in this suit was filed in January, 1936, and demands judgment for the value of certain fire hose and other accessories shipped during the years 1930 and 1931, by the Eureka Fire Hose Manufacturing Company. It is alleged in the complaint that the defendant is a municipal corporation under the laws of this state with a population of over one thousand inhabitants; and that by virtue of section 7439 of the Code of 1932 it has the power to control and equip, and maintains, a fire department for the protection of the town. The complaint further alleges that the fire hose was received and accepted by the defendant, used and consumed to a large extent, by it, in the operation of the fire department of the town; that a part of the hose is still in use; that the hose is necessary and essential to the defendant and it has been benefited and enriched to the extent of the reasonable value of the said commodities.

The answer contains a general denial. The second defense is a denial that the hose was ordered or accepted from the plaintiff, or its assignor, by any officer or agent having authority to bind the defendant, except one item of 750 feet of hose, the purchase of which was authorized by the town council on July 6, 1931. It is also alleged that the defendant had no funds with which to pay for such purchase, as all available revenues for the current year had been previously pledged and appropriated to other purposes, and that the effect of said attempted contract to purchase the hose was an effort to illegally create a debt to be paid at a future date, as evidenced by the contract for the 750 feet of hose attempted to be executed on July 6, 1931.

Also that the contract to purchase the hose is illegal because the payment of the purchase price was to be made out of taxes of another fiscal year and not out of current funds; and that no officer or agent of the town had the power thus to create a future obligation, or a bonded debt; and that the acts of the town council, or any officer or agent of the town, are ultra vires, in regard to the debt created by reason of the purchase of the hose.

The third defense is that the debt created is not authorized by law but violates the Constitution, because no election was held to authorize the creation of the debt, and because the current taxes were not available to pay the debt.

On plaintiff's motion his honor, Judge Dennis, granted an order to strike all of the allegations of the answer as to both the second and third defenses, and holding that the plaintiff is not suing upon contract, but for goods had and received.

The appeal is from this order. Appellant states that three issues are made by the exceptions. The first contention is that the denial in the answer that the hose was ordered or received by an authorized agent of defendant is a valid defense. It is manifest that the complaint does not base the action upon a contract, but is for the recovery of the value of goods had and received by the defendant, as a municipality, which goods were necessary, essential, and beneficial to the defendant, for the operation of the fire department, and were actually so used, to the enrichment of the town in carrying on a legitimate corporate purpose and function.

The lack of authority of the officers, or agents, of the defendant to order or accept the goods in question is not germane to the issue made by the complaint. The defenses struck out by the court do not deny that the goods were received or used by or in behalf of the defendant and for its benefit and gain, but only denies the authority of the defendant's agents to do so. The material issue under the allegations of the complaint is, not what the claimant has parted with to officers who are not authorized to take the goods for the town, but whether the town has been benefited, and to what extent, or how much is the reasonable value of the goods had and received. The answer does not seek to establish as a defense any extravagant use by the agents of the town of its revenues, for goods not reasonably needed or required, for municipal purposes or squandered and misused, with the knowledge of the plaintiff or its assignor. There is no allegation that the defendant's agents acted in flagrant violation of a legal duty to order and receive fire hose and contrary to the public interest and welfare of the municipality, but merely that the goods were not ordered or received by an authorized agent of the defendant. The true test is the reasonable value of the goods received and used for corporate public purposes for the benefit of the defendant.

The case of Luther v. Wheeler, 73 S.C. 83, 52 S.E. 874, 4 L.R.A. (N.S.) 746, 6 Ann.Cas. 754, is in point. In that case the city council created a debt against the town, evidenced by three notes, which would necessarily have to be paid by a future council, and out of taxes to be collected in another fiscal year, and the revenues of a future fiscal year would have to be applied to the payment of the debt contracted in a prior year. The debt was created for the purpose of building a town hall, market, and guard house. A note was executed to the Bank of Prosperity for money borrowed for this purpose. This court held that a municipal corporation has the following powers and no others, to wit: (1) Those granted in express words; (2) those necessarily or fairly implied in, or incident to the powers expressly granted; and (3) those essential to the declared objects and purposes of the corporation-not simply convenient, but indispensable. This court held that the power to borrow money is not a necessary incident of municipal life; but there is an obvious difference between borrowing money, and contracting debts to third parties for the erection of buildings to be used for municipal purposes. This court further held that the power to borrow money is a much larger and more dangerous power than the power to contract a debt either for labor or supplies, or for money had and received for the benefit of the town. In an action for goods or money had and received for the benefit of the town, he who furnishes goods or money can only recover for a debt arising from the actual benefit or enrichment of the town at his expense. The debt is valid if it was created for goods of another used by the town for legitimate corporate purposes authorized by law. In an action depending on the obligation or duty called quasi contract the measure of the recovery is the extent of the duty or obligation imposed by law, and is expressed by the amount which the court considers the defendant has been unjustly enriched at the expense of the plaintiff. In an action against the town for money or goods had or received, the question is not what the claimant has parted with to officers who were not in authority to take his money or goods for the town, or what they have promised him, but how much has the town been benefited. The right to such a recovery is supported by the weight of authority. Therefore, the town is liable if the goods received were used for a municipal purpose impliedly authorized by the charter because reasonably necessary for the proper conduct of municipal affairs, in all cases where the town received the full benefit for the entire amount expended, or for the entire debt created, where the council had reason to believe and did believe that the entire debt thus created would be repaid from the regular income of the town for the current fiscal year. The proper municipal officers may contract debts for services actually rendered and for money or goods had and received to the actual benefit of the town in the prosecution of authorized municipal work and in anticipation of the taxes or other revenue, and with a reasonable expectation at the time the work was commenced and expense incurred, that payment could and would be made from such expected revenue of the current year. The debt for money or goods had and received for the benefit of the town used in an enterprise authorized by law reasonably necessary for corporate purposes, the town receiving full value and the council believing, and having reason to believe, it would be paid from the revenue of the current year, is within the province and authority of the officers of the corporation.

The Constitution was adopted in view of the established rule to which we have adverted. An action for goods or money had and received stands on the judicial conception that the use by one person of the goods or money of another creates a debt which is valid, if not repugnant to the Constitution, nor in the face of positive constitutional or statute law that such debt shall not be contracted by a municipality, or only in a certain manner. The Constitution allows municipalities to contract debts which existing laws recognize as being within their province and authority to contract. This is the character of the present debt, its payment is authorized by the general rules of law, and is not only not forbidden by the Constitution, or statute law, but on the contrary the authority to create such a debt is strongly implied in the Constitution itself. The Constitution must always be enforced and obeyed but there is no conflict found to exist in a case of this nature.

The debt being valid at...