Case ID: miss_54/html/0499-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Chalmers, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

City of Natchez v. W. H. Mallery, administrator.
    Ultka Vires. Contract to pay money for land. Lien reserved by vendor.
    
    A corporation which buys laud and receives a deed in which an express lien is reserved for its price, cannot retain the land and escap’e paying in money because of incapacity to contract or pay in any thing but warrants on its treasury.
    Appeal from the Chancery Court of Adams County.
    Hon. Thomas Y. Berry, Chancellor.
    Casey Mallery filed this bill against the board of mayor and aldermen, successors of the board of school directors, of the city of Natchez, to enforce an express lien for $2,000, balance of purchase-money, reserved in the deed by which he conveyed a piece of land to the directors for a school site. The answer alleged that the board of directors had not the power to agree to pay the sum in cash, but could only pay by warrant on the county treasurer, payable out of the school-house fund of the school district of the city of Natchez; and that on the complainant presenting his note at a session of the board, they had ordered such a warrant to issue; but he, declining to receive it, had withdrawn his claim. After revivor on the death of Mallery, in the name of his administrator, that part of the answer was expunged on exception ; and on final hearing there was a decree for the complainant, from which the city appealed.
    
      T. Otis Baker, for the appellant.
    In all cases whatever, a promisor will be discharged from all liability, when the non-performance of his obligation is0 caused by the act, or the fault, of the other contracting party. 2 Parsons on Contracts (5th ed.), 676, and notes ; Chartier v. Marshall, 51 N. I-I. 400; s. c. 56 N. H. 478; 5 Mass. 67 ; 4 Wend. 377; 4 Cow. 39; 3 Hill, 570 ; 3 Johns. 527; G-randy v. Me Cleese, 2 Jones, 142 ; ■Warters v. Herring, 2 Jones, 46. The matter of the defendant’s answer embraced by the complainant’s exception sets up that the non-performance of the ven-dee’s obligation was caused by the act or fault of the vendor, and is therefore material, and hence not impertinent. This proposition will be rendered obvious by considering what were the full terms of the contract. These terms are not to be gathered from the deed and note alone, but from the deed and note taken in connection with the provisions of the school law of that date; for it is a universally recognized principle that “ the laws which exist at the time and place of the making of a contract, and where it is to be performed, enter into and form part - of it. This embraces alike those which affect its validity, construction, discharge and enforcement.” Walker v. Whitehead, 16 Wall. 317. This is especially true of the contracts of a quasi corporation such as the vendee, because its charter is to be strictly construed, and its powers exercised only in the manner pointed out by that instrument. 1 Dillon on Municipal Corporations, §§ 10 a, 55, 372, and notes; Bea-man v. Board of Police, 42 Miss. 237, 247; 12 Wheat. 68; 2 Cranch, 167-169 ; Thomas v. Richmond, 12 Wall. 356. The school law of 1870, therefore, entered, into and formed part of the contract in question. See Laws 1870, p. 1 et seq. See also Code 1871, § 1992 et seq., which was in force when the note matured.
    
      Counsel then reYiewed the statute at length, and contended that it appears from the law, —
    1. That the moneys for the payment of school sites in the city of Natchez were held by the treasurer as part of a separate and distinct fund, designated as the school-house fund of that district.
    2. That these moneys could not be transferred or paid by the treasurer to a creditor of the school board or school-house fund upon the mere presentation to him of the original claim or evidence of debt, but could only be paid out upon the presentation to him of a formal warrant executed in the manner prescribed by the statute. The mode was designated by the statute. Becrnan v. Board of Police, 42 Miss. 237, 247, 248; Head v. Providence Ins. Oo., 2 Cranch, 167, 169 ; Bank of the United States v. Bandridge, 12 Wheat. 67, 69.
    3. That such a warrant could only be issued upon an order of the board to that effect, a record being kept “ of all matters coming before the board and of all accounts allowed,” the law thus contemplating what has been established on principle by the decisions; namely, that creditors of a quasi or municipal corporation must present their claims and make demand for payment before they can put the corporation in default. Pekin v. Reynolds, 31 Ill. 529; Sages v. Symonds, 9 Barb. 269.
    4. That the warrant could only be issued upon the presentation and surrender of, and in substitution for, the original evidence of debt, the law clearly not contemplating the coexistence of two evidences of the same debt susceptible of rendering the corporation liable to be twice charged without any remedy at law, especially when the taking of a warrant would not extinguish or discharge the original debt or cause of action. Short v. Sew Orleans, 4 La. Ann. 281; G-oldsmith v. New Orleans, 5 La. Ann. 436 ; Wadlington v. Qovert, 51 Miss. 631.
    5. The complainant knew that “ he had no right to expect or demand payment out of any other fund or in any other mode than that designated by statute.” Beaman v. Board of Police, 42 Miss. 237, 247, 248 ; Thomas v. Richmond, 12 Wall. 356. He will be presumed to have assented to the usage thus established by law, to have contracted in reference to it, to have assented to the statutory mode of receiving payment, and to have accepted the note under an implied engagement to conform to the established usage. Lincoln Bank v. Page, 9 Mass. 155; Weld v. Gorham, 10 Mass. 366; Benner v. Bank of Columbia, 9 Wheat. 584; Bank of Utica v. Smith, 18 Johns. 239; Varner v. Nobleborough, 2 Greenl. 126 ; Pease v. Cornishr 19 Maine, 191.
    The contract on the part of the vendee was, therefore, in substance, that, upon presentation of the note at maturity by the vendor, with an application or demand for a warrant for the amount thereby evidenced, the vendee would order and direct the issuance, in lieu of the note, of a duly executed Avarrant upon the proper treasurer, authorizing him to pay out of the “ school-house fund ” the amount due under the contract.
    
      J. Z. Greorge, on the same side,
    made an oral argument.
    
      A. H. ITandy, for the appellee,
    argued the case orally, and filed a brief making the folloAving points : —
    1. The act of the legislature, under which the sale took place, does not expressly restrict the payment of the purchase-money in such a case to warrants issued by the board on the treasurer. The learned counsel then reviewed the act, citing-32 Miss. 302; 35 Miss. 630; 1 Dillon on Municipal Corporations, §§ 371, 372, 381, 766. It had, therefore, the power te contract for payment in money.
    2. It is admitted that the board entered into the contract in writing, promising to pay the balance of $2,000 of the purchase-money by a stated time, and agreed that the same should be secured by the express mortgage, to be enforced in case of default of payment.
    8. The claim by the board of the right to pay by warrant on the treasurer was a refusal to pay in any other mode, and a. denial of the right to receive payment in the mode sjiecified in the contract. There is, therefore, no force in the objection that there was not a demand and refusal prior to suit.
    4. It will be borne in mind that this is not a suit for a personal judgment, but a proceeding in rem for the purchase-money.
    
   Chalmers, J.,

delivered the opinion of the court.

This proceeding in rem seeking nothing but the subjection of the land conveyed, it seems manifest that tfye vendee cannot, without offering to surrender the land, escape payment of the purchase-money on the ground that it had no authority to enter into the contract. If it had made expenditures upon the property, it might be that the vendor would be held to have notice of its legal incapacity to make the purchase, and it might consequently be entitled to a rescission and an account; but nothing of the sort is asked here.

So, also, if we grant that parties contracting with corporations of this character, which bylaw can pay debts only by the issuance of warrants on their treasury, are entitled ordinarily to receive warrants only in liquidation of their demands, the principle will not apply where, by the terms of the contract, real estate has been mortgaged for its purchase-money. In such case, the contract, by its terms calling for money, must be enforced, or the property surrendered.

There is no force in the objection that no demand was made previous to suit brought, because, granting this to be necessary, the record shows that demand was made and a tender of warrants offered, which, as we have seen, was insufficient.

Decree, affirmed.