Case Name: City of Findlay v. Pendleton and Whitely, Partners, Etc.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1900-02-20
Citations: 62 Ohio St. 80
Docket Number: 
Parties: City of Findlay v. Pendleton and Whitely, Partners, Etc.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 62
Pages: 80–89

Head Matter:
City of Findlay v. Pendleton and Whitely, Partners, Etc.
Municipality contract with attorneys for legal service — Must conform to section 2702 Rev. Stat. — Invalidity of act of May 21, i8q2 — Authorizing certain cities to purchase real estate, etc.— Constitutional law.
1. A contract made by a municipality with attorneys for legal services is void, unless the auditor or clerk first files and records a certificate, as required by section 2702, Revised Statutes.
2. The act of May 21, 1892, 89 O. L., 168, being unconstitutional, the “Board of City Improvement Fund,” created by that act, never had power to make a contract binding the city for the employment of counsel to defend actions growing out of said act.
(Decided February 20, 1900.)
Error to the Circuit Court of Hancock county.
On May 2nd, 1898, George F. Pendleton and Fred P. Whiteley filed their petition in the court of common pleas against the City of Findlay as follows:
“The said plaintiffs say that they are duly authorized and empowered to practice law in any court in the State of Ohio.
That the City of Findlay is a municipal corporation duly incorporated under the laws of Ohio.
That in the seventieth General Assembly of the State of Ohio there was passed a bill known as “Senate Bill No. 80,” and entitled “An act to authorize cities having a population at the last federal census of 18,553, or that may hereafter have such population, to issue and sell bonds of such city to purchase real estate and construct buildings thereon, and to own and control, lease and sell the same.”
Among other things said act provided for the appointment of a board of city improvement fund, which board was to act in behalf of said city. Said board was authorized to take charge of all improvement bonds, sell the same and the money to be deposited with the city treasurer. Said board was also authorized to sue and be sued.
That said City of Findlay, acting under said act hereinbefore set forth, and having the required population of 18,553, after complying with all the terms of said act, proceeded and organized said board of city improvement fund.
That afterward, David Joy, W. B. Ely, L. 0. Glessner, C. D. Swalley and Ancil E. Marvin were duly appointed and qualified as members of said board of city improvement fund and entered upon their duties and did so act as said board.
That while acting in the capacity of said board of city improvement fund there was sold city bonds to the amount of $15,000.00, the proceeds of said sale being placed in the custody of the city treasurer to the credit of said city improvement fund and there was afterward paid out of said fund upon contracts made by said board, the sum of $12,700.00, leaving a balance in the hands of said treasurer in the sum of $1,300.00, which amount has always remained in the custody of said treasurer, and is still in his custody.
That afterward, to-wit, on the 29th day of March, 1895, one James T. Adams commenced an action in the court of common pleas against the City of Findlay and said board to restrain the issuing of another series of city bonds. That said board, acting under authority given them by said act, and acting on behalf of said city, the matter having been referred to said board by the council of said city, employed and retained said plaintiffs to defend said suit for said city, and’at the same time agreed to pay said plaintiffs the sum of three hundred and fifty dollars ($350) for their services in defending said action out of said fund of $1,300.00 now in the hands of said treasurer.
Plaintiffs say that they defended said case, that a hearing was had in the common pleas and circuit courts of Hancock county and in the supreme court of Ohio. That said plaintiffs were at their own expense compelled to and did make several trips to Columbus, Ohio, to appear before the supreme court, and did prepare and have printed for use in said supreme court a brief for which they have never been reimbursed, said expense incurred by said plaintiff amounting in all to the sum of $22.75.
That said city through its council has been requested to pay said plaintiffs plaintiffs’ claim, but that said council refused and still refuses so to do although said fund is in custody of the city treasurer to pay the same.
Plaintiffs say that there is now due them from the City of Findlay the sum of $372.75 with interest from 22d day of December, 1896.
Wherefore plaintiffs pray judgment against said defendant in the sum of $372.75 with interest from 22d day of December, 1896.
To this petition the city of Findlay demurred, upon the ground that the said petition did not state facts sufficient to constitute a cause of action against the city.
The demurrer was overruled and exceptions taken. The city then answered as follows:
“First cause for defense: Now comes the eity of Findlay and for answer herein admits that plaintiffs are duly authorized and empowered to practice law in the state of Ohio, but denies each and every other allegation made in the petition except as herein specifically admitted.
“Second cause for defense: The defendant for its second defense says, that the “Senate Bill No. 80,” in the petition referred to, is in controvention of the constitution of Ohio, and the same has been so held by the supreme court of Ohio, and that the same delegated no power to nor created any “board of city improvement fund,” and that said pretended board did not, and was not authorized by said act, or otherwise, to employ plaintiffs, nor to make the expense in traveling and printing as alleged in the petition.
“Third cause for defense: The defendant for its third defense says that the pretended employment of plaintiffs was not authorized by any ordinance or resolution of the council of said city, or otherwise, and the clerk of said city did not then certify, nor has he since certified, that the money was in the city treasury of the city sufficient to meet such an expenditure or to pay such an obligation, in compliance with the statute in such case made and provided.”
To the second and third defenses of this answer the plaintiffs duly filed a general denial.
A jury was waived and the cause was heard by the court upon the pleadings, evidence and arguments of counsel, and was decided in favor of the city. A motion for a new trial was filed and overruled and exceptions taken, and a bill of exceptions was allowed and filed, and upon petition in error the circuit court reversed the judgment of the common pleas, and the controlling facts being conceded, the circuit court rendered judgment in favor of plaintiffs below for the full amount claimed in the petition.
Thereupon the city filed its petition in error in this court, seeking to reverse the judgment of the circuit court, and for an affirmance of the court of common pleas.
Upon the trial, as appears from the record, the controlling facts were conceded, and there was no conflict of evidence. The facts stated in the petition are conceded to be true, except the slight intimation that the attorneys were employed by the city council. It was conceded on the trial that the only employment was by the “board of city improvement fund.” The facts stated in the second and third grounds of defense were conceded to be true, but the conclusions of law therein were controverted. It was conceded that the clerk of the city, there being no city auditor, on each meeting night of the council made a full financial statement of the finances of the city, showing the status of each fund at the close of business on the previous meeting.
Wm. F. Duncan, for plaintiff in error,
This act was declared to be unconstitutional in the case in which the contract of employment of defendants in error is claimed, and on account of which this suit was brought. Adams v. Nemeyer, Mayor, 54 Ohio St., 614.
An unconstitutional law creates no power to contract and even less “when a legislative enactment proves to be invalid it is for all legal purposes as if it had never been. Cooley’s Constitutional Law — Angell’s 2nd. Ed., p. 161; Norton v. Shelby County, 118 U. S., 425.
When a municipal corporation acquires legal services, the obligation thus arising as a contract is no greater than where money is obtained by it upon an issue of bonds. One is as much a contract as the other, and their binding force is determined by the same rules. The holder of the bonds would be in the better situation, if there is any difference, especially if he were a bona fide holder for value before ma turity, but even in this latter case, recovery cannot be had, where, as in the case at bar, there was no authority to make the contract. Parkersburg v. Brown, 106 U. S., 487; Hayes v. Holly Springs, 114 U. S., 120.
There is a distinction between irregularities in the exercise of the power conferred and the total want of power to do the act, the distinction being between questions of fact and questions of law. The question made here is “want of power,” and is one of law. Beach on Public Corporations, Section 614; Brenham v. Bank, 144 U. S., 173; East Oakland v. Skinner, 94 U. S.,255; Supervisors v. Cook, 38 Ill., 44; 87 Am. Dec., 282; Bissell v. Kankakee, 64 Ill., 251; Rochester v. Bank, 13 Wis., 432, 80; Am. Dec., 746.
It has been held in this state that an issue of bonds under an unconstitutional act may be enjoined at the suit of a tax payer. Simpkinson v. Bd. Pub. Wks., 13 Bull, 614; Gen. Term. Supr. Court, Cin.
And that levy of a tax to pay the interest on bonds issued under an unconstitutional act may be enjoined at the suit of a tax payer. Counterman v. Dublin Township, 38 Ohio St., 515.
Pendleton & Whiteley and John Poe, for defendants in error.
At the time of the retainer the city and its said board, prima facie had such powers under this law, and they were then in the full exercise and enjoyment of the same. If the act conferred corporate power, it carried with it the usual authority to protect the property and funds in its possession from all attacks, and to retain attorneys to assist it if need be. It would seem to us that the power to employ servants, and to constitute such help and agencies as were apparently Avithin the scope of such power, is within the purview of the statute.
The statute made it the duty of the city and its said board to perform the duties required by such act. Neither the city, its board nor its servants or retained attorneys could set up their private judgment against this law, or for that matter against any law passed by the.legislature. Neither could they ignore the law while being challenged in the courts. The decision ultimately given in the common pleas questioned its constitutionality. The decision in the circuit court sustained the law, or at least untied the city and its board and left the law as at first. When this court finally passed upon the law and pronounced it invalid, such decision bound everybody, for thereafter such decision would be read into every subsequent contract, and every subsequent retainer made under such void law. But such decision had no retroactive effect. Douglass v. County of Pike, 101 U. S., 677; Loeb v. Trustees, 6 U. S. Cir.; 41 Bull. 38, No. 3 Jan. 16, 1899.
And every citizen of the state was bound to respect and obey said law the same as any and every other law until the constitutionality thereof was finally settled by this court. Its officers were clothed for the time being with all the powers given by the act and were bound to perform all the duties required by. it. State v. Gardner, 54 Ohio St., 24.
.Shorn of circumlocution the common sense of the situation seems to be this: A law passed by the legislature of the state binds all its citizens in their public and private capacities, and they must regulate their conduct in conformity thereto, and unless the act attempts to deprive the citizen of some natural right, or some right reserved to him by the federal constitution, the statute is the law of the land until abrogated by judicial decree. The adverse view tends to anarchy and the dethronement of all law and order.
But of course acts wholly unauthorized by any statute are void and vest thereunder no right nor title. Markley v. Mineral City, 58 Ohio St., 430.
Here the retainer was made by its proper board and agent, and with its full knowledge and previously expressed request. It with full knowledge of every step taken in its behalf acquiesced therein and allowed without question of dissent the act intended for its sole benefit to be litigated in its name and behalf without dissent or disapprobation.
Having thus accepted the benefits and full performance from the attorneys another principle of law governs the case.
It is this in substance. Where a void or voidable contract not declared so by statute has been fully performed by one party and nothing remains for the other party to do but to pay the price agreed on, the courts will not permit the party who received the benefits to hold them and repudiate the obligation to the injury of the other party. Bank v. Chillicothe, 7 Ohio, part 2, p. 31; Weeden v. Railway Co., 14 Ohio, 564; Larwell v. Savings Society, 40 Ohio St., 274; Towsley v. Moore, 30 Ohio St., 184; Vanatta v. State Bank, 9 Ohio St., 27; Packet Company v. Shaw, 37 Wis., 655; Arms Co. v. Barlow, 63 N. Y., 62; S. C. 20 Am. Rep., 504; Cer. Cong. v. Stegner, 21 Ohio St., 488; Norton v. Blinn, 39 Ohio St., 145; Coodall v. Brewing Co., 56 Ohio St., 257.
It seems to us to'be a novel view that when a municipal corporation is sued and the object of that suit is to restrain some disposition it may be about to make of its funds and property, and when common prudence requires it to act at once, that yet it cannot retain counsel to defend it because forsooth the very act creating the fund may be ultimately declared unconstitutionah

Opinion:
By the Court :
The controlling facts in the case are conceded, and that leaves only a question of law to be determined, namely: Was the right judgment rendered upon the conceded facts? . Minnear v. Holloway, 56 Ohio St., 148.
The financial statement made each meeting night to the council by the city clerk as to the status of each fund, was not the equivalent of the certificate required by section 2702, Revised Statutes. The presence of the $1,300 in the treasury did not in legal effect dispense with such certificate. The object of that section is not only to show the presence in the treasury of sufficient funds unappropriated to meet the contract, but also to prevent such funds from being taken out of the treasury for any other purpose. That section provides that no contract or agreement involving the expenditure of money, shall be entered into, unless the clerk of the corporation shall first certify that the money required for the contract or agreement is in the treasury to the credit of the fund from which it is to be drawn, and not appropriated for any other purpose, which certificate shall be filed and immediately recorded; and the sum so certified shall not thereafter be considered unappropriated until the corporation is discharged from the contract or agreement. And that all contracts or agreements entered into contrary to the provisions of that section shall be void.
With the financial statement of the clerk, and the presence of the $1,300 in the treasury, there was still nothing to prevent the city authorities from using the money so in the treasury for other purposes, and then be compelled to make a levy on the general tax list to pay those attorneys' fees. The filing of the proper certificate would have tied up the money in the treasury to be used only for the payment of those fees.
The act in question was declared unconstitutional and therefore void. Adams v. Nemeyer, 54 Ohio St., 614. It was void not only from the time it was declared unconstitutional, but it never had any validity, and could not be invoked as a foundation of a right to be enforced in a court of justice. Liabilities are occasionally enforced against parties growing out of proceedings under an unconstitutional act, as in Tone v. Columbus, 39 Ohio St., 281, and Mott v. Hubbard, 59 Ohio St., 199, hut such enforcement is not by virtue of the unconstitutional act, but by virtue of the acts of the parties whereby they have become estopped from contesting the liability against them.
Usually courts will leave the parties to a contract founded upon an unconstitutional act where they have placed themselves, and it will never invoke such act to aid in the enforcement of such contract when unexecuted, unless the parties have relied upon a previous judicial determination of a court of competent and final jurisdiction holding such act valid. Bader v. C. P. & V. Ry. Co., 61 Ohio St., 471.
The authorities cited by counsel do not conflict with these conclusions. The judgment of the circuit court will be reversed, and that of the common pleas affirmed.
Judgment of the cirouit court reversed, and that of the common pleas affirmed.