Court Opinion

ID: 3511879
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:22:39.929643+00
Date Added: 2024-06-11T14:05:38.453507
License: Public Domain

In an attempt to reconcile the divergent views of the members of the court reargument was granted upon two propositions, the *Page 32 
main one being framed thus: The contracts between the school district and the contractors being declared by statute void, could the interruption thereof give rise to any damages under the injunction bond? Appellants deny that the contracts are void. It must be conceded that, under the facts thus far established, the wording of the above issue for reargument was not the best. Over 50 contracts are involved. Respondents admitted that some of these are in every respect valid. It has never been determined that a single one comes within the ban of G.S. 1923, §§ 2058, 2070, the only enactment which could be invoked against their validity. The court in the injunction suit did find the date upon which each contract was let and the amount thereof, and then this:
"The school board of said independent school district during the years 1920 and 1921 at many times awarded contracts for the erection of school houses far in excess of the moneys on hand in the building fund and in all funds, such excess amounting at times to hundreds of thousands of dollars and an amount which would require a levy of much more than eight mills upon the dollar of the taxable property of the district to pay." [155 Minn. 400, 404, 193 N.W. 949.]
This is far from holding, even by implication, any contract so let void; for it must be remembered that the attack of the mining companies upon the contracts centered on the proposition that G.S. 1913, § 2917 (G.S. 1923, § 3013), limited the indebtedness which could be incurred for school buildings by this restriction upon the power to raise the funds needed:
"In independent districts no tax in excess of eight mills on the dollar shall be levied for the purpose of school sites and the erection of school houses."
But the learned trial court took the view that this was a restriction upon the power of the school board in such district to levy a tax for that purpose, and not upon the power of the electors to incur an indebtedness in the erection of buildings which might authorize and require the school board to levy a much higher tax *Page 33 
to meet the obligations created by the voters directly. In this the court below was sustained (Oliver I.M. Co. v. Ind. School Distr. 155 Minn. 400, 193 N.W. 949); and we held that no statutory limit exists beyond which the electors may not go in financing the erection of needed school buildings.
But assuming, as was done in the above decision, that the school board let some of the contracts involved when inhibited by § 2058, are those contracts void so that no legal damages can be claimed for a wrongful interruption of their performance? The statute in question reads:
"It shall be unlawful for the authorities of any county, town, city, village, or school district, unless expressly authorized by law, to contract any debt or incur any pecuniary liability for the payment of either the principal or the interest of which during the current or any subsequent years it shall be necessary to levy a rate of taxes higher than the maximum prescribed by law. Every such contract shall be null and void in regard to any obligation thereby sought to be imposed upon such corporation; but every officer, agent, or member thereof who participates in or authorizes the making of such contract shall be individually liable for its performance. Every such officer or agent who is present when such contract is made or authorized shall be deemed to participate in or authorize the making thereof, as the case may be, unless he enter or cause to be entered his dissent therefrom in the record of such corporation."
Only the action of the officers in creating an indebtedness, when to meet it funds are not available, is denounced, not the conduct of the creditor or the other party to the contract. In fact it is clearly apparent that the legislature intended to protect the rights of such other party. The contract itself is not declared null or void, except only insofar as an obligation is thereby sought to be imposed upon the school district. On the contrary, the statute expressly declares the same binding upon every member of the school board, making each one individually liable for its performance. It should follow that the contractors were legally and morally entitled to perform their several contracts. They could not be regarded as trespassers *Page 34 
or wrongdoers in so doing. And it cannot be held as a matter of law that legal damages do not result to them from an interference with their work. So long as the contracts were in performance of the construction of the buildings, as planned by the school district, the mining companies should not have had any standing in a court to restrain performance; for if any contract failed to impose a pecuniary obligation upon the district under § 2058, the companies, as taxpayers, were not harmed and had no cause for complaint.
On the proposition that the contractors were rightfully pursuing work upon all the contracts, it must be remembered that the voters of the district had properly determined to construct these buildings. It is true that at first the cost was estimated at less than one-fourth of that ultimately authorized, but the evidence discloses that, after the building program had been fixed upon, construction cost increased about one-third. Nor does it appear that the ultimate cost was attempted to be estimated at first. The voters of the district had, by a state loan, by bond issues and by direct approval, indicated permission to the school board to expend for the purpose, in round numbers, $1,850,000 (this includes the taxes levied by the school board for the years 1920 and 1921, and the unexpended surplus in the general fund for these years and the one preceding which lawfully could be and was used for building operations), long prior to the injunction suit started. The plans for the buildings had been on exhibition in public places from the start, and there is no question but that by every move the school district had consented to the contractors going upon the land and proceeding with the construction, irrespective of whether some of the contracts were let without sufficient funds provided at the time to meet them. In no sense could any contractor be held a trespasser or wrongdoer in going on with the performance of his contract. Another case would be presented had not the electors directly authorized the erection of these buildings. The cases cited by respondents, where the parties were denied damages upon bond in injunction suits, are where the obligee was a trespasser or tortfeasor, or else where suit was brought for damages for an interruption of a contract illegal in *Page 35 
every aspect of the law; typical of these are East Tenn. Tel. Co. v. Anderson County Tel. Co. 115 Ky. 488, 74 S.W. 218; Tipton v. Jones, 77 Ind. 307.
As between the contractors and the mining companies the equities, upon the record as it now stands, appear to be with the former, and ordinary square dealing would require that the latter pay the damages which they stipulated and contracted to pay when the temporary injunction issued. The companies were advised of the building plans from the start; they kept track of the contracts as they were awarded, and of the action of the electors in financing and authorizing expenditures. They employed an office force of several competent persons to gather this information. Whatever charge of extravagance may be made against the district or possibly against the architects, can in no wise reach any of these contractors who obtained their contracts upon competitive bids duly advertised for. At the best, where there is competitive bidding the profits to the contractors are not large, and the interruption such as this is likely to cause injury and pecuniary loss. The mining companies, with knowledge of all the facts, let these contractors go on for nearly two years, and then when the work on some of the contracts was within less than 10 per cent of completion and none less than half done, come into court not only to contest the right to receive pay for the work done, but urge the unconscionable proposition that the contractors should pay back all that they had been paid.
We think as the record now stands the mining companies are not in position to invoke superior equities against the actual damages the contractors sustained because of the temporary injunction. And as herein shown, at the time the restraining order was obtained on the stipulation above set out, no contract was by § 2058 void so that work thereon could be enjoined for the work was such as was authorized and the contractors were neither trespassers nor wrongdoers in doing it.
The conclusion reached in the opinion already filed is adhered to. *Page 36