Case Name: CARL BARTELSON, Respondent, v. INTERNATIONAL SCHOOL DISTRICT NO. 5, PORTAL TOWNSHIP, Appellant
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1919-07-18
Citations: 43 N.D. 253
Docket Number: 
Parties: CARL BARTELSON, Respondent, v. INTERNATIONAL SCHOOL DISTRICT NO. 5, PORTAL TOWNSHIP, Appellant.
Judges: 
Reporter: North Dakota Reports
Volume: 43
Pages: 253–260

Head Matter:
CARL BARTELSON, Respondent, v. INTERNATIONAL SCHOOL DISTRICT NO. 5, PORTAL TOWNSHIP, Appellant.
(174 N. W. 78.)
Schools and-school districts — debt contracted in excess of constitutional debt limit — where debt is ultra vires and exceeds constitutional debt limit equity will not aid in recovery.
1. Where one seeks to recover for benefits received by a school district the amount due and unpaid in excess of the constitutional debt limit pursuant to a contract of construction, ultra vires as to such excess, and where neither the property representing such excess can be segregated or returned without destruction or damage to the property of the municipality, nor can a burden of indebtedness therefor be imposed upon such municipality without exceeding the constitutional debt limit imposed, equity will not afford relief.
Municipal corporations — schools and school districts — school district not a trustee for the amount in excess of legal limit —where part in excess of contract cannot be segregated no recovery can be had.
2. In an action where it is sought to' recover the amount due a contractor for the construction of a school building, in excess of the constitutional debt limit, by requiring the school district to return the property received or be declared a trustee for the use or rental value thereof, and where it appears that the building cannot be returned or any part thereof segregated without destruction or loss of property of the municipality, and that no burden can be imposed upon the municipality without exceeding the debt limit, it is held that no recovery can be had.
Opinion filed July 18, 1919.
Rehearing denied September 8, 1919.
Action to recover in equity moneys due and unpaid in tbe construction of a sebool building in excess of tbe constitutional debt limit.
From a judgment in favor of tbe .plaintiff in District Court, Burke County, Leighton, J., defendant bas appealed.
Reversed and action ordered dismissed.
O. H. Marshall (John G. Lowe, of counsel), for appellant.
Tbe claim of plaintiff as to tbe amount of $4,295.90 being in excess of tbe constitutional debt limit, is void, and tbe plaintiff cannot recover. N. D. Const. § 183; N. D. Comp. Laws, § 2218.
One who makes an agreement with another in contravention of an express statute or constitutional provision is a particeps criminis; and one who contracts with another in violation of the debt limit provision of the Constitution is a particeps criminis. It is fundamental law that particeps criminis cannot come into court with clean hands. Litchfield v. Ballou, 114 U. S. 190, 29 L. ed. 132.
A contract or indebtedness in excess of the debt limit is void, and beyond the aid of a court of equity. McQuillin, Mun. Corp. § 2239.
“Where the contract is executed and the money- paid in pari delicto, this rule certainly holds, and the party who has paid it cannot recover it back.” Browning v. Morris, 2 Cow. 791; Holman v. Johnson, 1 Cow. 342; Martin v. Hodge, 58 Am. Hep. 763; Nellis v. Clark, 4 Hill, 424; Merienthal v. Shafer, 6 Iowa, 226; Smith v. Bean, 15 N. H. 577; 10 E. C. L. 353, 389.
“Whoever deals with a municipality does so with notice of the limitation of its powers, and with notice, also, that he can receive compensation for his labor and materials only from the revenues and incomes previously provided for the fiscal year during which his labor and materials are furnished.” San Francisco Gas Co. v. Brickwedel, 62 Cal. 641; Helena Waterworks Co. v. Helena, 81 Am. St. Eep. 453; Black v. Detroit, 78 N. W. 660; 28 Cyc. 649.
“One contracting with a municipality does so at his peril, so far as the chance of being unable to recover where the debt limit has been exceeded.” McQuillin, Mun. Corp. § 2239; G'amewell Fire Alarm Co. v. Laporte, 102 Fed. 417.
“The purpose of the constitutional prohibition is to serve as a limit to taxation, and as a protection to taxpayers; to effectually protect persons residing in municipalities from the abuse of their credit and the consequent operation of burdensome if not ruinous taxation.” Mc-Quillin, Mun. Corp. 87 111. 396; Balch v. Beach, 95 N. W. 132; Anderson v. School Dist. 32 N. D. 413; Engstad v. Dinnie, 8 N. D. 1.
The plaintiff is not only not entitled to enforce payment of his claim, but on the contrary, if the officers of the defendant school district had voluntarily paid his claim, an action would lie to recover it back. Chaska v. Hedman, 55 N. W. 737; 28 Cyc. 1561.
Fish & Murphy, for respondent.
No person, not even a municipal corporation, shall be permitted un justly to enrich itself at the loss of another. Thompson v. Elton (Wis.) 85 N. W. 425; MeGillivan v. Joint School Dist. 112 Wis. 354, 88 Am. St. Rep. 969, 88 N. W. 310; Lefebre v. Board, 81 Wis. 66, 51 N. W. 952; Bordwell v. Southern E. & B. Works (Ky.) 20 L.R.A.(N.S.) 110, 113 S. W. 97; Salt Lake City v. Hollister, 118 H. S. 256, 30 L. ed. 176; State v. Dickerman (Mont.) 40 Pac. 698; Livingston v. School Dist. (S. D.) 76 N. W. 301; Allen v. Lafayette (Ala.) 9 L.R.A. 497; Chapman v. Douglas Co. 107 H. S. 348, 27 L. ed. 378; Read v. Plattsmouth, 107 U. S. 568, 27 L. ed. 414; Parkershury v. Brown, 106 H. S. 432, 27 L. ed. 238; Central T. Co. v. Pullman Parlor Car Co. 139 U. S. 24, 35 L. ed. 238; Snoffer v. City, 161 Iowa, 223, 142 N. W. 97, L.R.A.1915B, 173 (Bridge Case); Turner v. Cruzen, 70 Iowa, 202, 30 N. W. 483. See also notes in 4 Columbia L. Rev. 67, and 17 Harvard L. Rev. 343; Paul v. Kenosha, 22 Wis. 266; Lefebre v. Board, 81 Wis. 660, 51 N. W. 952; Salt Lake City v. Hollister, 118 H. S. 256, 30 L. ed. 176; Pimental v. San Francisco, 21 Cal. 362; Louisiana v. Wood, 102 U. S. 294, 26 L. ed. 153; Read v. Plattsmouth, 107 U. S. 568, 27 L. ed. 414; Allen v. Lafayette (Ala.) 9 L.R.A. 497; Scofield v. Council Bluffs, 68 Iowa, 695, 28 N. W. 20.

Opinion:
Bronson, J.
This is an action to recover the amount due a contractor for the construction of a high school building in a school district in Burke county, North Dakota. The facts are stipulated. In May, 1913, pursuant to an election theretofore held so authorizing, the board of education made a contract with the plaintiff to erect a high school building for the contract price of $24,000. Accordingly, the building was constructed and its value, as stipulated since completion, is $30,-000. The plaintiff has received $19,769.10. There is a balance due and unpaid of $4,295.90, with interest. In 1914 an action to enjoin the school district, its officers, and the plaintiff herein, was instituted by a resident taxpayer of the district to enjoin further issuance or reception of warrants in payment of outstanding warrants for the contracts of constructing such building. ' In that case (Anderson v. International School Dist. 32 N. D. 413, L.R.A.1917E, 428, 156 N. W. 54, Ann. Cas. 1918A, 506), this court in November, 1915, held that the contract created a present debt against the district, greatly in excess of the constitutional debt limit, and that to the extent of such excess, the contracts were void, and enjoined further payments thereupon. This action, accordingly, has been instituted not to enforce the contract, but upon the equitable doctrine that no person, not even a school district, shall be permitted unjustly to enrich itself at the loss of another. It is stipulated in this record that the school district is and was indebted, at the time of the commencement of this action, for an amount equal to 5 per cent of the assessed valuation of the taxed property of such district, and that the plaintiff herein has no remedy excepting such as the court in equity may grant to him. The theory of plaintiff's action therefore is to disaffirm the contract and to place the parties in statu quo by requiring the school district to restore the property which it has received without cost, or be declared a trustee for the use of it and liable for the reasonable rent or the value of .the use of the same, or for its return. The trial court, upon findings made, determined that the plaintiff was entitled to be reimbursed for the unpaid balance due him, and that it was impractical to restore to the plaintiff the material and labor furnished. That therefore the school district should remunerate the plaintiff for the value thereof. Accordingly, in July, 1918, judgment was rendered for the plaintiff for $5,528.82, from which this appeal has been taken. The sole question involved, therefore, is the right of the plaintiff in equity, upon the facts to obtain relief for the amount unpaid and due him in the construction of such high school building.
The respondent frankly concedes that the consideration is involved whether, under the facts, any form of relief may properly be awarded to him. He further concedes a different rule to apply to municipal corporations in seeking to enforce restitution for benefits received under contracts than that which applies to natural persons or private corporations. He further asserts that where restitution will impose no additional burden upon the taxpayers it may be enforced according to the ordinary principles of quasi contracts.
Equity properly recognizes that a municipal corporation should not be permitted to take the property of another, and receive the benefits thereof, and thus be enriched through the loss of another, without compensation.
On the other hand, constitutional limitations upon the creation of indebtedness of municipalities are mandatory restrictions, enacted for the purpose of curbing the taxing power and of restraining excessive expenditures that entail tax burdens. It is well settled that those who deal with municipalities are bound to take notice and be bound by these constitutional restrictions. Accordingly, it 'must be recognized that, in applying equitable relief in the present form of action, equity must not accomplish by indirection what the law has prescribed must not be done directly.
In accordance with the stipulated facts it is impossible to restore to the plaintiff the building erected without destroying property of the municipality. It is likewise impractical to segregate or detach that portion of the building which represents the excess moneys therein owing to the plaintiff. It is likewise clear that the imposition of a judgment to pay such amount, or the requirement that a rental be paid for that portion of the building represented by plaintiff's moneys unpaid, would impose a burden upon the school district in excess of the constitutional restrictions. It is stipulated that the school district has been compelled to and does levy, the maximum rate prescribed by law in order to maintain its schools. Although, in equity recovery may be permitted in such cases, where no additional burden is thereby placed upon the municipality in excess of the constitutional debt limit, or where the property itself can be identified, segregated, and restored to the parties without injuring the municipality or its property by so doing, nevertheless, in upholding the constitutional restrictions absolutely imposed, relief upon equity principles cannot .be granted where this cannot be accomplished. Litchfield v. Ballou, 114 U. S. 190, 29 L. ed. 132, 5 Sup. Ct. Rep. 820; Grady v. Pruit, 111 Ky. 100, 63 S. W. 283; Grady v. Landram, 23 Ky. L. Rep. 506, 63 S. W. 284; McGillivray v. Joint School Dist. 112 Wis. 354, 58 L.R.A. 100, 88 Am. St. Rep. 969, 88 N. W. 310. See Goose River Bank v. Willow Lake School Twp. 1 N. D. 26, 26 Am. St. Rep. 605, 44 N. W. 1002; Engstad v. Dinnie, 8 N. D. 1, 12, 76 N. W. 292.
It therefore follows that the trial court erred in entering judgment for the plaintiff. The judgment is reversed, with directions to enter judgment for the defendant, dismissing the action. The appellant will recover costs of this appeal.