Court Opinion

ID: 7915231
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:10:09.451318+00
Date Added: 2024-06-11T16:32:46.641420
License: Public Domain

Wedell, J.
(dissenting in part): I concede some of the questions presented are not free from difficulty. I am, however, obliged to dissent from that portion of the opinion which permits the township to retain the benefits of the illegal use of the machine. That result is contrary to principles announced in various decisions of our own, and is contrary to the great weight of authority in other jurisdictions. (Brown v. City of Atchison, 39 Kan. 37, 17 Pac. 465; Ritchie v. City of Wichita, 99 Kan. 663, 669, 163 Pac. 176; Annotations 42 A. L. R. 632 and 93 A. L. R. 441, 450.) Where justice may be done, without inflicting any loss upon the municipality, equity will lay' hold of the conscience of the parties and make them do what is just and right. (See authorities cited in majority opinion.) It seems to me that under the majority decision the court applies the foregoing equitable doctrine only in part and stops short of its full and just application. That the township need suffer no loss by its complete application will be demonstrated presently.
The budget and cash-basis laws were never intended to permit a municipality to gain an unconscionable advantage by virtue of an illegal contract of its officers. Their intent and purpose was to pro*632tect the taxpayers of municipalities and the various subdivisions of taxing units. If a decision can be reached which need not result in a financial loss to the township, and which will not permit the township to obtain an unconscionable advantage over the other contracting party, and which, at the same time, will not result in the circumvention of the budget and cash-basis laws, I think the decision would be just and unassailable. I think such a decision can be reached.
A setoff in favor of the plaintiff to the extent of the payments the township officers made, which is far less than the reasonable value of the use of the machine, can be effected without sacrificing any of the objectives stated. The reasoning of the majority is that to allow such a setoff to plaintiff would in effect be making the township pay rentals upon the theory of implied contract, where an express contract is prohibited, and thus undermine the budget and cash-basis laws. It seems to me there are two fallacies in that reasoning. I agree that ordinarily a contract will not be implied against a municipality where an express contract is prohibited. (Johnson County Sav. Bank v. Creston, 212 Ia. 929, 231 N. W. 705, and annotation 84 A. L. R. 936, 954.) An express contract to purchase or lease road machinery was not prohibited in the instant case. It was only tire mode or manner in which the actual power to make such a contract was exercised that was prohibited. It is well established that a municipality, under the latter circumstances, may be held liable upon the theory of an implied contract where it has actually received the benefit of labor or material or the use of machinery. (Brown v. City of Atchison, supra; Ritchie v. City of Wichita, supra; Annotations 42 A. L. R. 632 and 93 A. L. R. 441, 450.) It is also inequitable to permit the township to unjustly enrich itself under an illegal contract at the expense of the other contracting party. (Brown v. City of Atchison and Ritchie v. City of Wichita, both supra.) The setoff sought in the instant case should be allowed.
In the second place the township need suffer no loss by reason of the setoff in favor of the plaintiff to the extent of the payments made by the township officers. Those payments were illegally made by the officers, and the township may recover them from its officers and their bondsmen. (Superior Grade School District No. 110 v. Rhodes, 147 Kan. 29, 75 P. 2d 251.)
It may be well to touch upon one other point. It pertains to the fear that the allowance of any setoff to plaintiff upon the theory of implied contract might result in a breakdown of the budget and cash-*633basis laws. If I entertained such fear I should oppose the allowance of the requested setoff in the instant case. In my opinion municipal officers cannot circumvent the budget and cash-basis laws by means of an implied contract, and thus relieve themselves and their bondsmen from civil liability for illegal payments on implied contracts. Those laws make no exception in the case of an implied contract, and certainly courts will not permit those laws to be circumvented by arbitrarily reading such an exception into them. The sham of officers obligating a municipality for the reasonable value of the use of machinery by merely using it without entering into an express contract would be too obvious and transparent to mislead anybody. It seems to me the responsibility for illegal transactions under the budget and cash-basis laws should be placed by courts where the lawmakers intended and provided it should be placed. That duty and responsibility was placed upon the officers of municipalities and other taxing units. It is the officers who transact their business. The lawmakers were fully aware of that fact. For that reason they directed their attention to the duties and responsibilities of officers. For the same reason the lawmakers made the officers subject to removal for a violation of the provisions of the budget law. (G. S. 1935, 79-2936.) For that same reason the lawmakers made the officers guilty of malfeasance for knowingly violating the provisions of the cash-basis law, made them subject to removal from office, and to a penalty for violating its provisions and for neglect or refusal to perform any duties imposed under that law. (G. S. 1935, 10-1121.)
Now, I am not unmindful of the fact that parties contracting with governmental units ordinarily are not excused for failure to ascertain whether the officers of governmental units have complied with the requirements of the budget laws, which proceedings, if regularly recorded, are available to them. The lawmakers, however, did not make those contracting parties guilty of a misdemeanor for failure to first obtain such information. They placed the responsibility for the proper exercise of contracting power upon the officers of governmental units, where it belongs. Of course, if the officers fail to comply with the requirements of the law the contract itself is unenforceable by either party, but where the municipality has actually received the benefits of the illegal transaction, as here, and need suffer no financial loss by an equitable adjustment of the benefits it has received, I think it is only just and proper that courts require such adjustment to be made. It was in exactly such a situation where *634this court in Ritchie v. City of Wichita, supra, allowed a paving contractor to recover for work actually performed under the illegal contract. We said:
“A majority of the court are of opinion that' the case at bar falls within the general principle that where a municipal corporation receives a service, or property, or an improvement, which it retains and uses, common honesty requires that it make payment therefor, where the matter is not tinctured with moral turpitude nor altogether beyond the statutory power of the corporation to acquire or procure.” (p. 669.)
That doctrine is also amply supported by cases contained in the annotations at 42 A. L. R. and 93 A. L. R. previously cited, and see, also, 7 R. C. L., § 22, pp. 946, 947.
Hoch, J., concurs in this dissent.