Case Name: City of Lancaster v. Miller
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1898-06-21
Citations: 58 Ohio St. 558
Docket Number: 
Parties: City of Lancaster v. Miller.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 58
Pages: 558–577

Head Matter:
City of Lancaster v. Miller.
Municipal corporation contract — To construct sewer — Imposes no obligation on city unless contract conforms to law — Sections 2303 and 2702, Revised Statutes — Omission of requirements a good defense by municipality — Effect op overruling motion to make petition definite.
1. A contract entered into by a municipal corporation by which, in its own behalf, it undertakes to pay for the construction of a sewer in one of its streets, the cost of which exceeds five hundred dollars, imposes no valid obligation on thecorporation, unless it has advertised for bids according to the requirements of section 2303, Revised Statutes.
2. Nor will such contract impose on the corporation a valid obligation even if bids were advertised for pursuant to said section 2303, unless the auditor, or clerk, of the corporation, as the case may be, 11 shall first certify that the money required for” that purpose “is in the treasury to the credit of the fund from which it is to be drawn, ” etc., as required by section 2702, Revised Statutes.
3. Where either of such requirements has been omitted the municipality will not by the acts of its officers be estopped to set up such omission as a defense to an action brought against it on such contract.
4. Where in an action founded on such contract the petition does not set forth its terms, and a motion is interposed by the defendant to make the petition more definite and certain by stating those terms, an order overruling such motion constitutes error affecting a substantial right of the defendant.
(Decided June 21, 1898.)
Error to the Circuit Court of Fairfield county.
This action was brought in the court of common pleas of Fairfield county by the defendant in error against the city of Lancaster, plaintiff in error, to recover a balance claimed to be due him from the city on account of the construction of part of a certain sewer, and certain catch-basins to be used in connection therewith, for the use of the city. The plaintiff had judgment in the court of common pleas which was affirmed by the circuit court on error. Thereupon the defendant below, plaintiff in error, brought the cause to this court to obtain a reversal of the judgment of the circuit court.
The facts necessary to an understanding of the questions decided will be found in the opinion of the court.
Frank M. Acton and A. I. Vorys, for plaintiff in error.
As general propositions of law applicable to the case, and that should have been given to the jury in the charge, we maintain:
First. The positive, mandatory, statutory requirements, not being observed in making the contracts, no subsequent action of the council, however formal, can ratify the contracts and make them binding on the city.
Second. If such informal and unauthorized contract can be ratified by the council it must be done by the same formal mode of record, as is required in the first instance; that is by ordinance and observance of the other requisite formalities.
Third. No acceptance or use of the improvement will ratify the unauthorized contract.
Fourth. If a sewer is constructed without authority of the council, the fact that the natural drainage of the street causes surface water therefrom to flow into the sewer, and the city cleans out the sediment from the sewer, to prevent overflow, etc., does not bind the city to pay a quantum meruit for the sewer.
Fifth. It must be shown by the party claiming the benefit of the contract, that the acts of acceptance and ratification were by the council with full knowledge of the contract.
There is no evidence in this case that the council had any knowledge of the contract, or of the improvement, or that the sewer was cleaned out.
Sixth. The statutory requirements of a previous certificate that the money is in the treasury, and published advertisement for sealed bids having been omitted, no subsequent action of the council can cure these omissions.
Eighth. The court say, that if the contract was made by the committee and Miller, and afterwards modified by the engineer and Miller, and “the council of defendant, with full knowledge of the character and terms of the modified agreement, ratified the same. Then the agreement became binding as contracts on the city, ’ ’ etc.
Ninth. Again, the court say: “It (the council) might ratify and make binding on the city, those agreements, by payment either of the whole or part of the price of such catch basins to plaintiff on those agreements.”
Tenth. Or it might ratify by accepting the work.
Eleventh. “If the city, through its official authorities took charge of those basins and exercised control over them, actively used them, cleaned them out * * * or repaired them, that
would be evidence of acceptance by the city of those basins.”
It is not said here that the council must take charge, etc., but that if the sewer is made under an unauthorized contract and the “official authorities”--the street commissioner for instance cleans it out that would amount to acceptance, and the city is bound to pay the contract price.
Twelfth. Again the charge proceeds on the theory that there is evidence of knowledge by the council of the contract between the committee and engineer, and Miller.
Thirteenth. The next instruction excepted to specially, seems to us unfounded in any view. It is in substance and effect that if a payment was made to Miller, or if the water ran in the sewer and any servant of the city cleaned the same out, “the plaintiff will be entitled to recover the contract price, * * * even though the contract price may be in some measure in excess of the actual cost, as you may find it from the evidence. ”
Fourteenth. The next instruction relates to the $106 order. The order was given to Miller under a resolution passed in his presence, declaring it payment in full. Miller received it, endorsed it and received the money on it, and after-wards, at his instance, the words “in full” were eliminated from the council’s records.
We claimed that this was acceptance by him of the $106, in full settlement, when he knew it was paid under that resolution, and that the subsequent action of council could not effect this settlement.
■ Fifteenth. That the contracts averred in the petition were made, was denied in the answer and there is strong evidence in the record showing that the contracts were not made as claimed by Miller. To meet this phase of the ease, the court instructs the jury in substance, that even if the contract were not made, Miller would be entitled to recover the value of the catch basins if the officers of the city cleaned them out, or if the council made any payments to Miller, and that the city might ratify a contract that was never in fact made, even by the committee or engineer.
Sixteenth. We maintain, for the reasons heretofore urged, here also, that the verdict is not supported by any evidence, and for that reason the judgment of the lower courts should be reversed.
The decisions upon this subject are somewhat numerous and not altogether harmonious. No authorities, however, in states having statutes controlling municipalities, analogous to ours, support the position taken by the court in this case.
In Beach on Municipal Corporations, the general rule respecting ratification of unauthorized contracts, is extended as far as the most liberal authorities will allow it. Volume I, sections 692, 696, 697, 1143; Dillon’s Municipal Corporation, Volume I, section 463, 3d Edition (old section 385); Parr & Village of Greenbush, 72 N. Y., 463.
Ratification and acceptance and use of the improvement were urged as binding the village. It was held that the resolution was illegal. Parr could not recover for the sand and gravel, because the furnishing of the same had not been let to bids, as directed by the charter of 1871, and that no recovery could be had on a quantum meruit. Earl I, page 472; Brody v. Oity of New York, 20 N. Y., 312; McDonald v. the Mayor, 68 N. Y., 23; Guita Percha Rubber Mfg. Go. v. Village of Ogalaila, 59 N. W. Rep., 513 (Nebraska), Cent. Law Journal, Volume 39, page 162; French v. Burlington, 42 Iowa, 614; Am. and Eng. Ency. of Law, Volume 15, page 1104. But ordinarily mere use does not amount to ratification. Turney v. Town of Bridgeport, 55 Conn., 412; Dellanty v. Town of Vaughn, 45 N. W. (Wis.), 1128; Taff-v. Montague, 14 Mass., 282; Looker v. Brookline, 13 Pick., 343; Sceery v. Springfield, 112 Mass., 512: Town of Durango v. Pennington, 8 Colo., 257; 7 Am. and Eng., Corp. Case, 588.
Thomas H. Dolson and Brasee <& Brasee, for defendant in error.
We contend that even if the improvements did involve an expenditure of more than $500, and that the contract was let without advertisement, still such a contract could not be ultra vires but at most informal merely. Beach on Public Corporations, sections 225 and 693; Commentaries on the Laws of Municipal Corporations by Dillon, section 936; Beach on Public Corporations, 689; Beers v. Dallas City (1888), 16 Oregon; section, 693, Beach on Public Corporations; Ward v. The Town of Forest Rose (Oregon, 1891), 25 Pacific Rep., 1020; Gas Company v. San Francisco, 9 California, 469; Fister v. La Rue, 15 Barbour, 323; Beach, section 366; Board of County Commissioners v. Ffewland, (Ind., 1892), 31 N. E. Rep., 465; Sims v. Himes, 131 Ind., 534; 23 N. E. Rep., 515.
And if there was no express contract then there was an implied contract, and implied contracts for property and labor are extended to municipal corporations the same as to individuals. Beach, sections 225, 226, 227, 228, 229, 794, 300 and 610; Argenti v. San Francisco, 16 Cal., 282; Pimentol v. San Francisco, 21 Cal., 351; Dillon’s Commentaries, sections 459, 192 and 938.
The recovery may be had upon a quantum meruit. Beach, section 705.
Where services have been completely performed at the request of a municipal corporation, made through its officers, and have been accepted and received by it, the corporation is then under legal and moral obligation to pay for such services whatever they may be reasonably worth notwithstanding irregularities intervening in the original employment. Mayor of N. T. v. Sonneborn, 113 N. Y., 425.
Suppose the committee was unauthorized or not properly authorized to make the contract, still we contend that by the appropriation, acceptance and use of the sewer basins and of the partial payment made for them, as shown by the evidence, on the part of the city, the contract of its committee has been ratified; and that unauthorized contracts may be ratified there can be no doubt. Beach on Public Corporations, section 249; School Distinct v. Sullivan (Kansas, 1892) 29 Pacific Reporter, 1141; Dillon’s Commentaries on the Law of Corporations, sections 139, 463 and 464; Beach, section 1343^
The city is estopped to set up as a defense its own irregularities in the exercise of' a power clearly granted to it. Dillon’s Commentaries, section 936. Cincinnati v. Cameron, 33 Ohio St., 336; Fister v. Trustees of School District, 15 Barb., 323.
Several decisions of the courts of other states have been quoted and amplified and are relied upon by counsel for plaintiff in error in support of the doctrine contended for by them; in answer to which we have only to quote from the language of Judge Field in the case of Argenti v. San Francisco, 16 Cal., 284.
It was not an error in the trial court to overrule defendant’s motion to require the plaintiff to separately state and number in his petition his several causes of action. There were not several causes of action stated in the petition. The suit was not upon an original contract and also upon an additional or supplemental one, but upon an ac count for a balance due for labor done and materials furnished under an original contract made between the parties which was afterwards amended and modified by them. It is upon the account for a balance due under this amended and modified contract that the petition is predicated. Brown v. Ghamplin, 66 N. Y., 214; Bates’ Code of Pleading, Volume I, page 379.
However we might concede to the plaintiff in error that the trial court should have sustained this motion, yet there was no prejudicial error in its refusal so to do. Bear v. Knowles, 36 Ohio St., 43.
Nor was there any error in the refusal of the trial court to sustain defendant’s motion to require the plaintiff to make his petition more definite and certain, and to set forth his contract more specifically. The averments in the petition in this respect were sufficiently explicit. Dorrington v. Meyer, 8 Neb., 211; Estes v. Farnham, 11 Minn., 423, 434; Detroit, etc. B. B. v. Forbes, 30 Mich., 165; Bollins v. St. Paxil Lumber Go., 21 Minn., 5; Williams v. Healey, 3 Den., 363; Henry v. Gleland 14 Johns., 400.
And in doing this the legal effect of the contract may be stated or its substance given or the covenant for whose breach the action is brought may be set forth in ypsissimis verbis. Bates’ Code Pleading, Volume I, page 97.
Also the demurrer to the petition was properly overruled. The petition states facts sufficient to constitute a cause of action on the account for a balance due under the modified contract. But even if this be not so, while no ratification is pleaded in so many words, yet the allegations show an appropriation, acceptance and use by the city of the work done, and partial payment made there for, which under the doctrine of law already stated, would at least entitle the plaintiff to be paid for his work, labor and material a quantum meruit, and enable his petition to successfully resist a ■ general demurrer.

Opinion:
Bradbury, J.
This action was begun by the filing of the following petition:
"In the month of---, A. D. 1891, the defendant, which is a municipal corporation, was engaged in improving Broad and Columbus streets in said city of Laneester, with a brick pavement and at the same' time the plaintiff was engaged in performing his contract duly made with the defendant to put a twenty-four inch sewer across said Columbus and Broad streets at their intersection with Mill street in said city and connect them with and build eight sewer pipe catch-basins with McDonald tops at the four corners of said streets at their intersections and one such catch-basin at an alley on Columbus street, near to said Mill street, and the performance of which contract required the use of the following materials, and for the same and the necessary labor to dig the trenches, etc., and put said material in place and fill said trenches, he was entitled by the terms of said contract to receive from defendant and be paid the following prices and sums, viz.:
"Two hundred feet 24-inch sewer pipe at $1.25, $250.00; two hundred and forty feet 15-ineh sewer pipe at 65 cents, $156.00; two hundred and twenty feet 12-ineh sewer pipe at 55 cents, $121.00; twenty-three ells of 15-inch 2 pa by G. Matt, at $1.25, $26.25; nine tees of 24 inch sewer pipe at $3.50, $31.50; nine sewer inlets, $108.00; nine catch-basins, $225.00.
"Said plaintiff had all his materials on the ground for the construction of said catch basins and had completed the one at said alley and said work was being done under the direction and superintendence of the city engineer of said city and the committee on drainage of the council of said city, and thereupon said engineer and committee being of opinion that said sewer pipe catch-basins would not answer the purpose intended, directed the plaintiff instead thereof, to construct at said eight corners cistern patch-basins with McDonald tops, and agreed to pay him for such change and the necessary labor and materials to make the same, the sum of $25 apiece or together $200.
"And the plaintiff says that in pursuance of said direction and agreement he completed said contract and made said changes and furnished all the necessary labor and material therefor, which was of the cost and value, of $25 apiece or $200, and the same was so done with the knowledge of said defendant and its officers and agents other than said engineer and said committee and since the construction thereof said defendant has possessed and used and still and now possósses and uses said catch basins, and by reason of the premises there became and was due to the plaintiff on account of said original contract and said modifications and extras thereof as aforesaid, the sum of $1,117.75, but said defendant, although often requested so to do, has hitherto failed and refused to pay plaintiff said sum or any part thereof except $723 and the whole balance thereof, to-wit: $394.75, with interest thereon from the first day of January, A. D. 1892, is still due to him and unpaid for and for which he asks judgment against defendant. Wherefore the said plaintiff prays judgment against said defendant for said sum of three hundred and ninety-four dollars and seventy-five cents, together with interest thereon from the 1st day of January, A. D. 1892."
The petition does not disclose the terms of this contract, nor the circumstances under which it was made. Had this been done, the character of the contract, whether legal or illegal, would have appeared, and its validity could have been determined by a demurrer to the* petition.
Doubtless an apprehension of the result that might follow such a course was the moving cause that induced the able and experienced counsel for the contractor to refrain from setting forth more specifically the contract and the manner in which it was made. A motion to require the plaintiff below to make his petition more definite and certain, by setting forth the terms of the contract, was made and overruled in the court of common pleas. The city then interposed a demurrer to the petition on the ground that it did not state a cause of action. The demurrer was overruled, and thereupon the city answered, denying the validity of the contract under which the work was alleged to have been done and the material furnished, and also denying that such work or material were of the value alleged.
An inspection of the petition will show that the claim of the contractor exceeded $1,100.00, $200.00 of which accrued from work authorized by a modification of the original contract. The circumstances under which the modification of the original contract was made are set forth with reasonable clearness, but the petition is silent concerning the terms of the original and principal contract itself. The petition simply states that: "The plaintiff was engaged in performing his contract duly made with the defendant to put in twenty-four inch sewers across said Columbus and Broad streets at their intersection with Mill street," etc. This averment shows simply that at the time the contract was modified, the plaintiff was performing a contract "duly made" with the city, but contains no word as to its terms. If it appeared that the plaintiff had been paid in full for all the work, etc., performed under the principal (original) contract and was seeking only to recover what had accrued under the modification, the averment might have been sufficient, but this was not the case. His right rested on both. The existence and terms of the original contract were as necessary to his recovery as were those of the modification. The right of the city in this respect was to be advised as to the whole claim of the contractor. It was entitled to know just what, according to the plaintiff's version of the contract, he was to do and what obligations it imposed on the city— that it might admit or take issue upon those terms according to its understanding of their truth or falsity.
Certainly no principle of pleading is more firmly established than that one who founds his cause of action upon a contract must set forth that contract, at least in all cases where a quantum meruit will not lie. The amount involved in the contract in question exceeded $500, and according to the principles hereafter to be announced a special contract was indispensable to a recovery against the city.
The motion should have been sustained.
In view of the principles hereinafter announced doubts will at once arise respecting the sufficiency of the petition and the correctness of the action of the court of common pleas in overruling the demurrer to it. But as the real qustion in the case is whether the contract under which recovery was sought was legal and valid, and as the answer controverts this validity, andas the circumstances upon which its validity depends are found in the bill of exceptions, that question will be determined according to the undisputed facts there disclosed, rather than by a review of the holding on the demurrer which would confine us to such facts or rather absence of facts as may be found in the petition. Those undisputed facts show that the city of Lancaster was engaged in paving two of its streets, Broad and Columbus streets; that these two streets ran parallel to each other, both crossing Mill street; that the latter street at the two points where the two streets above named cross it, would be paved as parts of those streets; that the city of Lancaster was contemplating the construction at an early date of a sewer along Mill street, and to avoid tearing up the paving at its intersection with Broad and Columbus streets, which would become necessary if the city delayed the construction of the sewer in question until after the improvement of those two streets had been completed, the city determined to locate and construct at once the sewer at those intersections. The determination was reached by the drainage committee of the council rather than by any formal action of the council itself, and this is also true of the letting of the contract for the construction of the sewer at these intersections. The city council took no action whatever, either to authorize the drainage committee to enter into the contract, or to ratify the contract after it was made, except what may be implied from its appropriating money to be applied in part payment of the work. No advertisement for bids was made, as provided by section 2303, Revised Statutes, nor does it appear that funds to pay for the work was in the city treasury, or that a certificate to that effect was made by the proper officer, as prescribed by section 2702, Revised Statutes. That the work was done according to the contract and partly paid for is not disputed. Did a contract thus made, and afterwards performed, impose a liability on the city? Doubtless it would do so but for the restrictive provisions of the sections of the statute before alluded to. Counsel for defendant in error cite authorities which strongly tend to establish the general doctrine that municipal bodies, as well as individuals, may be bound by implied contracts, and that where work has been done, or material supplied to municipal corporations for purposes within the scope of their powers, and has been accepted by them, they should be held to the payment of their reasonable value. Conceding the. soundness of this rule as a general principle, to what extent has it been modified by the statutes of Ohio. The statutory provisions that chiefly bear upon this question are found in sections 1693, 2303 and 2702, Revised Statutes. Section 1693, provides: "And no contract, agreement or obligation shall be entered into except by an ordinance or resolution of the council,' nor any appropriation, of money for any purpose be made except by an ordinance; every ordinance appropriating money shall contain an explicit statement of the uses and purposes for which the appropriation is made; the power or authority to make a contract, agreement or obligation to bind the cor poration, or to make an appropriation, shall not be delegated; and every contract, agreement or obligation, and every appropriation of money made contrary to the provisions of this section shall be void as against the corporation, but binding on the person or persons making it. ' '
Section 2303. When the corporation makes an improvement or repair provided for in this chapter, the cost of which will exceed five hundred dollars, it shall proceed as follows:
' 'First. It shall advertise for bids for the period of two weeks in two newspapers published in the corporation. "
Section 2702. No contract, agreement, or obligation involving the expenditure of money shall be entered into, nor shall any ordinance, resolution or order for the appropriation or expenditure of money, be passed by the council or by any board or officer of a municipal corporation, unless the auditor of the corporation, and if there is no auditor, the clerk thereof shall first certify that the money required for the contract, agreement or other obligation, orto pay the appropriation or expenditure, 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, agreement or obligation, or so long as the ordinance, resolution or order is in force; and all contracts, agreements or other obligations, and all ordinances, resolutions and orders entered into or passed, contrary to the provisions of this section shall be void."
The provisions of one of these sections (2303) applies only to contracts for improvements the cost of which exceeds $500. Did the contract involved in this action contemplate an expenditure exceeding that sum?
The contract related to two different and disconnected sections of the same sewer. One section was to be constructed at the intersection of Mill street and Broad street; the other section at the intersection of Mill and Columbus streets, each to be supplied with catch basins. These two sections, however, were, in the end, to become component parts of a sewer extending along Mill street. When the balance of the sewer should be constructed it would be joined to these two sections and the whole compose a single sewer along that street.
While a municipality in this state should not be allowed to divide an improvement, which is in fact single and entire, into separate parts so as to make the cost of each part less than $500, and contract separately for the construction of each part, thereby evading the provisions of section 2303, Revised Statutes, as to advertising for bids; nevertheless, if in view of the circumstances under which the city was acting at the time this contract was made, it in good faith had elected to regard the construction of each section as a matter distinct and independent of the other, and had proceeded to contract separately for each section, neither would have originally involved an expenditure of $500, and therefore, it might not have fallen within the provisions of section 2303 as to advertising for bids. This was not done, however, but instead, the two sections were treated as one and their construction was provided for by a single contract, which involved an expenditure exceeding $500.
This section, 2303, Revised Statutes, however, does not extend to every contract involving an expenditure exceeding $500, but only to such contracts as relate to an improvement or repair provided for in chapter 4, division 7, of Title XII, Revised Statutes. The circumstances under which the contract in question was made are peculiar. The municipal authorities were acting in advance of any established plan of improvement. How the fund was to be raised to pay the cost of the sewer upon its ultimate construction does not appear. The scheme in this respect had not been developed when the contract was made. The usual course where an improvement is made pursuant to the chapter above named, is to assess the cost of construction, or a material part of it on the property to be benefited, but whether it was to be done in this way or the expense placed upon the entire taxable property of the city, nevertheless the contract related to the construction of a sewer and that is an improvement provided for in that chapter. Therefore, we think the provisions of section 2303 are applicable and that the advertisement for bids which it prescribes, was indispensable to the validity of the contract.
Section 2702, Revised Statutes, is also applicable to this contract. This section prohibits a municipality from entering into any contract involving the expenditure of money unless the auditor or clerk, as the case may be, shall first certify that the money required for the contract is in the treasury.
The provisions of section 1693, Revised Statutes, are equally applicable and emphatic: That section provides that "no contract shall be entered into except by ordinance or resolution of the council . The power or authority to make a contract shall not be delegated and every contract made contrary to the provisions of this section shall be void as against the corporation. "
The evils against which these restrictive statutes are directed are municipal extravagance and the negligence and indifference of municipal officers. They were designed for the protection of municipal taxpayers generally, as well as to guard against excessive special assessments against property to pay for local improvements. The mischief arising from municipal prodigality and the growth of municipal debts that attended thereon, called loudly for an efficient remedy. These restrictive statutes are the answer to that call. They embody that principle of sound public policy which seeks to enforce economy in the administration of public affairs. The judicial tribunals of the state should administer these laws so as to advance the purpose thus sought to be accomplished. Contracts made in violation of these statutes should be held to impose no corporate liability. Persons who deal with municipal bodies for their own profit should be required at their peril to take notice of limitations upon the powers of those bodies which these statutes impose.
The corporation should not be estopped by the acts of its officers to set up these statutes in defense to contracts made in disregard of them. It would be idle to enact those statutes, and afterward permit their practical abrogation by neglect or other misconduct of the officers of the municipality. If such effect should be given to such acts of municipal officers it would defeat the operation of the statutes. The strict enforcement of these provisions may occasionally cause instances of injustice; it is possible that municipal bodies may secure benefits under a contract thus declared void and refuse to maké satisfaction. In the nature of things, however, these instances will be rare. Those who deal with public agencies entrusted with the management of municipal affairs, usually experience liberal treatment. Such agencies are not stimulated to acts of injustice by cupidity. Self-interest, that great motive to overreaching, is absent. If, however, cases of hardship occur, they should be attributed to the folly of him who entered into the invalid contract. The gateways of municipal prodigality should not be left wide open, because an attempt to narrow them may cause an occasional instance of seeming hardship.
A few words may be added as to operation of section 1693, Revised Statutes, which declares a contract void as to the municipality if not "entered into by ordinance or resolution of the council." Notwithstanding this emphatic declaration, yet, so far as this ease is concerned it may be conceded-that a contract made in violation of this section is capable of subsequent ratification by the council. But whether a contract thus made may be ratified by the council or hot, or if capable of ratification, whether the act of the city council in appropriating money to be applied on the contract involved herein, was a sufficient ratification, is immaterial to á decision of the case and will not be considered further, because however that may be, the contract having been made in violation of sections 2303 and 2702, Revised Statutes, is on that account clearly void and imposed no liability on the city.
Judgment reversed and judgment for plaintiff in error on the undisputed facts.