Opinion ID: 1995280
Heading Depth: 1
Heading Rank: 3

Heading: (a) Contract Is Against Public Policy

Text: The purported contract of January 15, 1962, was, in my opinion, illegal as an attempt by Rockville to exercise or fetter its legislative power by contract. As has already been indicated, the great weight of authority in this country supports the doctrine that contracts to exercise or not to exercise governmental power are void as against public policy. It takes no extended discussion to demonstrate the grave dangers to the public welfare which could result from a holding that such contracts were valid. The exercise of the police power by municipalities could substantially  if not completely  cease or be exercised for the benefit of those persons or groups who were able to make advantageous contracts with municipalities. The general law is summarized in 43 Am. Jur., Public Officers, sec. 295, as follows: An agreement which controls or restricts, or tends or is calculated to control or restrict, the free exercise of a discretion for the public good vested in one acting in a public official capacity is illegal and reprobated by the courts, so that no redress can be given to a party who sues for himself in respect of it. Public officers and boards will not be permitted to make any agreement among themselves, or with others, by which their public action is to be or may be restrained or embarrassed, or its freedom in any wise affected or impaired. Courts will hold invalid any agreement by governing bodies by which they abdicate any of their legislative powers, or circumscribe the limits of such powers, or diminish their efficiency. Especially will they not be allowed by an obligatory agreement, even for a valuable consideration, to discriminate in favor of one citizen or class of citizens as against another entitled to equality of privilege and benefit. Such agreements are contrary to the true principles upon which society is founded, and subversive of all well-regulated government. See 63 C.J.S. Municipal Corporations, sec. 981(c). See also Modjeski and Masters v. Pack, 215 Tenn. 629, 388 S.W.2d 144 (1965); Smith v. Ousts, 214 Ga. 144, 103 S.E.2d 567 (1958); Sellers v. Lamb, 303 Mich. 604, 6 N.W.2d 911 (1942); Pippenger v. City of Mishawaka, 119 Ind. App. 397, 88 N.E.2d 168 (1949); San Diego County v. California Water & Tel. Co., 30 Cal.2d 817, 186 P.2d 124, 175 A.L.R. 747 (1947); Johnson v. Board of Commissioners of Wake County, 192 N.C. 561, 135 S.E. 618 (1926); and McCortle v. Bates, 29 Ohio St. 419 (1876). Cf. Westminster Water Co. v. Westminster, 98 Md. 551, 56 Atl. 990 (1904) declaring a contract purporting to bind the municipality to levy a certain annual tax in perpetuity, ultra vires, null and void and as an attempted abdication of its legislative powers, and holding that the abrogation of such a contract did not impair the obligation of a contract as prohibited by the federal constitution. Clearly, the exercise of governmental powers must be free and unfettered except by constitutional or statutory limitations until the final moment of its exercise by those public officers to whose judgment the exercise of that power is delegated by the constitution or by statute. Our predecessors have consistently held that the exercise of the policy powers by legislative bodies can be neither limited by contract nor bartered away by legislation. Liberto v. Mayor & City Council of Baltimore, 180 Md. 105, 23 A.2d 43 (1941). See also Jones Hollow Ware Company v. State Roads Commission, 134 Md. 103, 106 Atl. 274, 3 A.L.R. 1658 (1919)  cited with approval and followed in Liberto  for a comprehensive review of the prior decisions of this Court and of the cases in the Supreme Court of the United States. The principle has been generally applied throughout the United States. See 16 C.J.S., Constitutional Law, sec. 179, especially the many cases collected in Note 58. It has also been applied to the exercise of the power of annexation by municipalities, Rhodes v. City of Aberdeen, 74 S.D. 179, 50 N.W.2d 215 (1951). As was pointed out by our predecessors in Walsh v. Hibberd, 122 Md. 168, 173, 89 Atl. 396 (1913)  a case involving a contract between the County Commissioners and a construction firm to induce the opening of a public road  a contract against public policy will be declared void even though the public does not suffer any injury from the illegal contract. Judge Burke, for the Court, stated: No actual injury resulted to the public from this particular contract, and the parties to it, may be conceded, were not conscious that they were doing a thing which the law did not approve, or would not sanction. The law refuses to enforce a contract which is contrary to public policy, not from any consideration or regard to the defendant; but its refusal `is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice as between him and the plaintiff.' `Where a contract belongs to a class which is reprobated by public policy, it will be declared illegal, though, in that particular instance, no actual injury may have resulted to the public, as the test is the evil tendency of the contract, and not its actual result.' 15 Am. & Eng. Ency. of Law (2nd ed.) 934. After a review of the authorities, Judge Burke further stated: There are stronger reasons for holding that a contract between petitioners for a road and the contractors, which induced the opening of the road, should be void, because the abuses and evil consequences to the public might be much greater. (122 Md. at 176, 89 Atl. at 398). In the present case the record establishes that the annexation resolution was adopted because of the execution of the purported contract of January 15, 1962. Paragraph 4 of the contract specifically provides that the city agrees to act, insofar as it is permitted by law, to annex the 3.55 acre tract now under consideration   . Mayor Greene testified, as has been noted above, that the contract had an effect on whether or not the annexation would be granted or rejected. The contract was intended to bind Rockville to exercise its power of annexation and thus to fetter by contract the exercise of this power. Such an attempt is against public policy and is illegal and void. Such an illegal contract cannot be specifically performed, and in my opinion, the Chancellor was correct in so holding.