Case Name: KANSAS CITY, Appellant, v. JAMES O'CONNOR et al., Respondents
Court: Kansas City Court of Appeals
Jurisdiction: Missouri
Decision Date: 1900-02-05
Citations: 82 Mo. App. 655
Docket Number: 
Parties: KANSAS CITY, Appellant, v. JAMES O’CONNOR et al., Respondents.
Judges: Smith, P. J. concurs and also files separate opinion. Gill, J. dissents and asks that the cause be certified to supreme court as being in conflict with the cases of Presbury v. Fisher, 18 Mo. 50, and Peltz v. Eichele, 62 Mo. 171.
Reporter: Missouri Appeal Reports
Volume: 82
Pages: 655–668

Head Matter:
KANSAS CITY, Appellant, v. JAMES O’CONNOR et al., Respondents.
Kansas City Court of Appeals,
February 5, 1900.
1. Municipal Corporation: SPECIAL TAXES: SPRINKLING. Special tax against abutting property is based on the idea of an improvement to the property but sprinkling a street is too intangible to be denominated an improvement and a contract for paving and sprinkling a street is ultra vires where the contract is entire.
2.--: -: -: ENTIRE CONTRACT. Where the ordinance, the bids, the letting and the contract itself, — all contemplate and provide for the paving, repairing and sprinkling as one work for an entire sum, the transaction is an entirety and a part being illegal and void the whole is void. Smith, P. J., concurring in a separate opinion discussing entire and severable contracts and indivisible and apportionable considerations.
3. -: CONTRACTS: ULTRA VIRES. An ultra vires contract can not be validated by being partly performed.
4. -: -: -: STATUTE OE FRAUDS. Ultra vires contracts are prohibited from being made and the corporation can not make them, while contracts within the statutes of frauds are not prohibited from being made but are only prohibited from being enforced.
5. -: -: -: COMPLETELY PERFORMED. Where an ultra vires contract has been performed by both sides, the status of the parties has become fixed and the courts will not disturb their condition; but a party can not stand in court upon a contract forbidden by law.
6. -: -: -: -: REMEDY. While municipal corporation can not enforce an ultra vires contract or recover damages for its breach, it may recover the consideration parted with on reliance on the contract and thus disaffirm the same.
7. -:-:-: SURETY. A municipal corporation can not maintain an action on a contractor’s bond against Ms sureties where the contract is ultra vires.
ON MOTION FOR REHEARING.
8.-; -: -: PRINCIPAL AND SURETY. Where the contract is not unlawful the party who has received the benefit and his sureties are estopped to deny its validity; but a contract to tax abutting property to sprinkle a street is unlawful and the municipal corporation is not estopped to set up ultra vires.
9. -: -: -: VOID TAX BILLS. Where a city ordinance taxes abutting property to sprinkle a street and issues tax bills in payment thereof, the bills are void and there is no payment or part performance by the city.
Appeal from the Jackson Circuit Court. Henry, Judge. —Hon. Jóhn. W.
Aebtrmed.
B. B. Middlebrooh for appellant.
(1) “It is needless to cite authorities that this bond, although voluntary and not authorized by any statute, is good as a common law bond. All bonds, though voluntary, if they do not contravene public policy, nor violate any statute, are valid and binding on the parties to them.” Barnes v. Webster, 16 Mo. 265. (2) The provisions of section 21, article 9 of the Kansas City Charter, distinctly authorize the city authorities to provide for the maintenance and repair (within two years) of work of this character. Section 21, article 9, charter 1889, Kansas City, as amended in 1892, page 162, Revised Charter and Ordinances of 1898. Also section 2, article 9, page 137, Revised Charter and Ordinances of Kansas City, of 1898. (3) The decision by Judge Philips of the federal court, which declared that tax bills for sprinkling, issued on the authority of section 21, article 9, of the Kansas City Charter, are void, and that the city had no power to make-a contract binding adjoining property with liens for the payment of sprinkling tax bills, can not be invoked as an au thority in this case, because the conditions of the bond sued on are severable, and the petition has made a severance and seeks to bind the bondsmen, not for a failure to sprinkle the street, but for a failure to maintain and keep in- repair the" same. “The rule is that where the condition of a bond is entire and the whole be against law, it is void; but where the condition consists of several different parts, and some of them are lawful and the others not, it is good for so much as is lawful, and void for the rest.” Presbury v. Eisher, 18 Mo. 52. (4) Defendants are estopped from denying the validity of the contract mentioned in the bond. An admission under seal is conclusive upon the obligor and estops him from asserting or proving to the contrary. The obligors now seek to maintain that there was no such contract, for the reason as they say that the city had no power to enter into it. Under a well known rule of law governing estoppel, defendants are estopped from setting up such a defense as this. Hermann on Estoppel and Res Judicata, secs. 630, 631, 632, 633, 634, 635 and 636; State ex rel. v. Williams, 77 Mo. 463; Brewing Co. v. Niederweiser, 28 Mo. App. 237; State v. Pace, 34 Mo. App. 459.
Scarritt, Vaughan, Griffith & Jones for respondent.
(1) It has been expressly held that Kansas City has no authority to issue special tax bills against private property to pay for sprinkling streets. Ins. Co. v. Prest, 71 Fed. Rep. 817; Chicago v. Blair, 149 HI. 310; 36 N. E. Rep. 829; Pettit v. Duke, 10 Utah, 311; 37 Pac. Rep. 568; Charter and Rev. Ords. of Kansas City, 1898, secs. 12, 234; Verdin v. St. Louis, 131 Mo. 26, 101. (2) The city exceeds its authority and power when it attempts by ordinance, contract and bond to pay the cost of sprinkling by special taxation. The contract and bond are consequently ultra vires, and there can be no liability on such a contract or bond. Oheeney v. Brookfield, 60 Mo. 53; State v. Railway, 75 Mo. 212; Mister v. City of Kansas, IS Mo. App. 217; McQuiddy y. Brannock, 70 Mo. App. 541; Knapp y. Kansas City, 48 Mo. App. 485; Schopp v. St. Louis, 117 Mo. 131; Dill., Mun. Corp., secs. 411, 381, 412, 749; Marsh v. Pulton Co., 10 "Wall. 676; Thomas y. Richmond, 12 "Wall. 349; Loker y. Brookline, 13 Pick. 353; Clark y. Des Moines, 19 la. 119, and eases cited; Brady y. The Mayor, etc., of the City of New York, 20 N. Y. 312. (3) Nor is a party making a contract with a municipal corporation which is ultra vires, estopped when the corporation brings an action formed thereon to set up its want of authority to make it. 15 Am. and Eng. Ency. of Law [1 Ed.], pp. 1100 to 1102 and cases cited in notes; Montgomery y. Road Co., 31 Ala. 76; Oheeney y. Brookfield, 60 Mo. 53. (4) A condition to perform an antecedent or contemporaneous contract other than that of the bond itself is construed with reference- to and in connection with such separate contract. The bond and contract are part of one and the same transaction. 4 Am. and Eng. Ency. of Law [2 Ed.], p. 685, and cases cited in notes. Oberbeck y. Mayer, 59 Mo. App. 289; Sumner y. Summers, 54 Mo. 340; Cheltenham Brick Co-, y. Cook, 44 Mo. 29; Gwinn y¡ Simes, 61 Mo. 335; Biek y. Seal, 45 Mo. App. 475; Malone y. Fidelity & Casualty Co., 71 Mo. App. 8; Friend y. Porter, 50 Mo. App. 89; Sprague v. Rooney, 104 Mo. 349; McDearmott y. Sedgwick, 140 Mo. 172; Lewis y. Walker, 61 Mo. App. 550; Johnson y. Ragsdale, 73 Mo. App. 594; Harrington y. Crawford, 136 Mo. 467 and citations. No cause of action either quantum meruit or sounding in damages can arise from a void contract. Keating y. Kansas City, 84 Mo. 415; Crutchfield y. Warrensburg, 30 Mo. App. 456; Taylor y. School Dist., 60 Mo. App. 372. (5) The question of estoppel does not enter into this case. No question of estoppel can arise under a deed which is void. Douthitt y. Stinson, 63 Mo. 268; Reinhart y. Mining Co., 107 Mo. 616; Schenck y. Stumpf, 6 Mo. App. 381; Crockett y. Althouse, 35 Mo. App. 404; State ex rel. y. Murphy, 134 Mo-. 548; Merriam v. Boston, 117 Mass. 241; Nichols v. Bank, 55 Mo.App. 81.
Q. F. Ballingal and Wm. Moore for respondent.
(1) The ordinance, contract and bond were without authority of law, ultra vires, illegal and wholly void. Chicago v. Blair, 14-9 111. 311; Pettit v. Duke, 10 Utah, 319; Verdin v. S.t. Louis, 131 Mo. 26, 91; Sumner v. Summers, 54 Mo. 340. (2) The sureties may set up the illegality of the contract in an action against them for the penalty of the bond, for which it is the consideration, and wherever the consideration is partly illegal or wholly illegal, the obligation is void. Bank v. Stegwall, 41 Miss. 142; Thorn v. Ins. Co., 80 Pa. St. 115; Widoc v. Webb, 20 Ohio St. 435; Gwinn v. Simes, 61 Mo. 337; Sumner v. Summers, 54 Mo. 340. (3) If the contract-is unlawful or illegal in whole or part, this defeats the entire contract. Bick v. Seal, 45 Mo. App. 475; Eriend v. Porter, 50 Mo. App. 89; Connor v. Black, 119 Mo. 126. When contract is void no recovery can be had on quantum meruit. Ashbrook v. Dale, 27 Mo. App. 649. (4) When the contract is unlawful or ultra vires, and the municipality brings suit on -the contract, the contracting party is not estopped from setting up the want of authority to make it. Montgomery v. Road Co., 31 Ala. 76; Sumner v. Summers, 54 Mo. 340; Harley v. Stapleton, 24 Mo. 248; Brewing Co. v. Hazen, 55 Mo. App. 277; City Charter (Revised), 1898, see. 2, 137; MeQuiddy v. Brannock, 70 Mo. App. 544.

Opinion:
ELLISON, J".
The defendant O'Connor is a contractor who paved a street in Kansas City under an ordinance thereof. This action is on the bond given by O'Connor as principal and the other defendants as sureties for the faithful performance of the contract, wherein it was alleged to have been a part of the contract that O'Connor was to keep the street in rep'air for á certain period which he failed to do. The action is for a breach of the contract. A demurrer to the petition was sustained in the trial court on the ground that it did not state a cause of action. The city appealed.
The contract embodied an agreement not only to pave and keep in repair, but also to sprinkle the street in question. The ordinance, the bids, the letting of the contract and the contract itself, all contemplated and provided for the paving, repairing and sprinkling as one work for one entire sum. There was no separation.
That portion of the contract providing for sprinkling the street was ultra vires. It was not within the power of the city to lay a special tax against the abutting property of the citizen for the purpose of paying for sprinkling. A special tax against abutting property is based and sustained on the idea that- the work for which the tax is laid is an improvement of the property, and sprinkling to keep down the dust, while good for the comfort of the inhabitants, is too intangible to be denominated an improvement of the property. Chicago v. Blair, 149 Ill. 310; Ins. Co. v. Prest, 71 Fed. Rep. 817; Pettit v. Duke, 10 Utah, 311.
We therefore have a contract and a bond which provide for doing a work, as an entirety — inseparable—a part of which is illegal and void. Under such condition the whole contract is void. Virden v. City of St. Louis, 131 Mo. 26; Sumner v. Summers, 54 Mo. 340.
But it is argued for the plaintiff that since O'Connor, the contractor, has been paid for the work as provided by the contract, it has become performed by the city and that he (or his sureties standing in his shoes) can not set up ultra vires against the city. The authorities on this phase of the doctrine of ultra vires are not in accord. But in our view the reason of the matter is, that if a contract is void it can not be validated by being partly performed. The limit to the right of a corporation to contract is made by the policy of the law and a violation of the law ought not to be made to work out the validity of the contract. Thomas v. Railway, 101 U. S. 85. In that case it was said that a right of action on a contract ultra vires could not be founded on the withdrawal of a party to it. To hold that it could "is, in our opinion, to hold that any act performed in executing a void contract makes all its partis valid, and that the more that is done under a contract-forbidden by law, the stronger is the claim to its enforcement by the courts." The same conclusion is announced in Railway v. Railway, 130 U. S. 22, 38; Railway v. St. Louis R'y Co., 118 U. S. 316-318; Transportation Co. v. Car Co., 139 U.S. 54; Compress v. Planters' Press., 70 Miss. 669; Marble Co. v. Harvey, 92 Tenn. 115; Trust Co. v. Miller, 33 N. J. Eq. 155; Black v. Delaware, 24 N. J. Eq. 455. In Trust Co. v. Miller, 33 N. J. Eq. 162, it is said that: "The supreme court of the United States has recently declared, following a judgment of the house of lords, in which the present Lord Chancellor (Sebome) and the late Lord Chancellor (Cairns), and Lords Chelmsford, Hatherly and O'Hagan concurred, that the broad doctrine is now established that a contract, not within the scope of the powers conferred on a corporation, can not be made valid by (the consent of every one of the shareholders, nor can it, by any partial performance, become the foundation of a right of action. Thomas v. Railroad, 101 U. S. 71. While it must be -admitted that this doctrine has not received the sanction of every eminent judge who has been called upon to enforce it, yet I think it is now vouched for by such august authority, and is so manifestly supported by sound reason and the highest considerations of policy, that it must hereafter be accepted, universally, as expressing the true rule of judgment in such cases." The view expressed in the foregoing cases is adopted as á correct statement of the law in Reese on Ultra Vires, sec. 72.
Contracts ultra vires can not be likened to contracts within the statute of frauds where part performance ousts the application of the statute. Eor the former are prohibited from being made and the corporation can not make them. A thing void can not be made valid by relation. While the latter are not prohibited from being made but 'are only prohibited from being enforced and they are not void, they are simply unenforcible. McGowen v. West, 7 Mo. 569; Alexander v. Merry, 9 Mo. 514; Farrar v. Patton, 20 Mo. 81; Ivory v. Murphy, 36 Mo. 534; Browning v. Walbrun, 45 Mo. 477; Aultman v. Booth, 95 Mo. 383; Minns, v. Morse, 15 Ohio, 568; Child v. Pearl, 43 Vt. 230. The language of the statute of frauds is that "no action shall be brought to charge," etc.. While the language of the law is, that no contract beyond the chartered power can be made.
This is a different case from that where a contract ultra vires had been performed by both sides, the status of the parties become fixed and the whole matter at an end. In such instances courts rarely disturb the condition in which the parties have placed themselves. Neither party could make out his case without showing his own violation of the law. This case is founded on the fact that a part of the contract, to wit, repair, had not been performed and it is for that alleged dereliction that damages are sought. And in order to sustain its case the city proposes to rely upon a contract which was forbidden by law.
But if, as claimed, the city has paid O'Connor for the, work, it must not be understood that it is without remedy. It is without remedy on the contract for that, as we have seen, is void. But it may sue'O'Oonnor on the case it has outside the contract. That is, O'Connor can not keep the consideration and yet refuse to perform the work for which he received the consideration.
"A contract ultra vires being unlawful and void, not because it is in itself immoral, but because the corporation, by the law of its creation, is incapable of making it, the courts, while refusing to maintain any action upon the unlaw ful contract, have always striven to do justice between the parties, so far as could be done consistently with adherence to law, by permitting property or money, parted with on the faith of the unlawful contract, to be recovered back, or compensation to be made for it."
"In such case, however, the action is not maintained upon the unlawful contract, nor according to its terms; but on an implied contract of the defendant to return, or, failing to do that, to make compensation for property or money which it has no right to retain. . To maintain such an action is not to affirm, but to disaffirm, the unlawful contract." Transp. Co. v. Car Co., 139 U. S. 60.
The plaintiff may recover outside the contract "to the extent of the benefit received by the defendant from the execution of the agreement by the plaintiff." Compress v. Planters' Press, 70 Miss. 669; Gas Light Co. v. United Gas Co., 85 Maine, 541; Reese on Ultra Vires, see. 74, and authorities cited.
So far as the relief is concerned, there is analogy between a contract disavowed on account of ultra vires and on account of the statute of frauds. In the latter case, as we decided this term in Andrews v. Broughton, if one who has received money or property on a contract which he avoids by the statute of frauds, he is liable to an action for the money, or the value of the property.
Since this remedy of the city is not upon the contract, but rather in disaffirmance of it, and so it is stated by the foregoing authorities, it follows that the sureties are not liable on the bond, for the bond is conditioned for a performance of the contract, which, ¿s we have seen, is an illegal thing and ought not to be performed. The sureties only stand for the principal on the contract. - If the contract is void no liability attaches in the absence of a provision to that effect. O'Connor not being liable on the contract, there can be no default and, of course, no liability can attach to the sureties.
The result is that we affirm the judgment.
Smith, P. J. concurs and also files separate opinion. Gill, J. dissents and asks that the cause be certified to supreme court as being in conflict with the cases of Presbury v. Fisher, 18 Mo. 50, and Peltz v. Eichele, 62 Mo. 171.
It is so ordered.