Court Opinion

ID: 3511881
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:22:39.943038+00
Date Added: 2024-06-11T14:05:38.455641
License: Public Domain

Our reinvestigation of the facts of this case has convinced me that originally I indulged to too great an extent the assumption that the contracts when made, and until validated by the election, were invalid. But I still think that the issue of invalidity remains for original determination in the district court and that it should be determined with respect to each contract before the case will be in shape for final decision.
My present concern is not with the final issue so much as it is with the construction of sec. 2058, G.S. 1913. Its first sentence in unequivocal language denounces as "unlawful" any contract contravening its terms. The next sentence starts with the mandate that every such contract shall be invalid "in regard to any obligation thereby sought to be imposed on such corporation." It must follow that these contracts, so far as they violated the statute, were wholly void until validated by the voters of the district. There being no obligation upon it, the corporation or anybody proceeding in its right could have stopped further performance.
The succeeding and final provision imposes liability upon the municipal officers and agents participating in or authorizing the making of an invalid contract. It declares them individually liable only for its "performance." There is no other effect than to impose such liability in the event, and only in the event, that the contractors have actually proceeded with performance in good faith. The result is that if such a contract is fully performed, notwithstanding its invalidity, the corporate officers who authorized it are individually liable to the contractors on the contract or, in the event of partial performance, completion of the contract being prevented by any cause (as a taxpayer's suit), such officers and agents are liable for damages as for a breach of the contract.
In other words, the purpose of the statute is to apply to the situation the rule of agency which makes individually liable to a third party an agent who has induced him to contract upon the faith of the agent's possession of an authority which in fact he did not possess. In such a case the principal is not bound and he may prevent *Page 37 
or stop performance of the contract without liability to himself. If the contract is fully performed, the agent is individually liable, or, if its performance is prevented, he is liable for the resulting damage.
Any other construction makes the statute result in a degree of absurdity and contradiction which elementary rules of construction bid us to avoid if at all possible. Can it be that the legislature has declared such a contract unlawful and has expressly prohibited a municipality from entering into it and yet has said that, notwithstanding such prohibition, the contractor has a legal right to proceed with its performance? Can it be that the legislature intended to say that anybody has a legal right to proceed with any contract so clearly unlawful? Can it be that, where such an unlawful contract is once made, the municipality itself is powerless to stop its performance as against the contractors who wish to proceed and resort finally only to the statutory liability of the law violating officials? Can it be that in such a case a succeeding administration must stand by helplessly while the real estate of the municipality is wrongfully taken and withheld from its possession and for the time being unlawfully converted by the contractors to their own use?
Because the construction put upon the statute by my brethern of the majority answers all such questions in the affirmative, I cannot join in its adoption. The results are too weird and distant from the known purposes of such statutes. It is much more reasonable to say that the legislative intention was, while denouncing such contracts as invalid, to apply the usual rule of agency which makes an agent liable to one who in good faith has relied upon his assumption of an authority which in fact he did not possess.
Returning to the grounds of my original dissent and reversing the order in which they were then treated, the first is that the laches of a defendant cannot operate affirmatively to create a cause of action where none could exist otherwise. I do not understand that, as a general principle of equity jurisprudence, there is any dissent therefrom and so pass it without further comment.
The remaining proposition, and the main one which gave rise to the original divergence of opinion, is that an interruption in a peaceful *Page 38 
and legal manner of the performance of a contract, unlawful inits inception and remaining so at the moment of the interruption, cannot give rise to legal damage. Opposition to that proposition has disappeared under the reason of the situation as illustrated and applied in such cases as East Tenn. Tele. Co. v. Anderson County Tele. Co. 115 Ky. 488, 74 S.W. 218. That case is especially valuable for its review of the authorities. The pith of them is expressed in this quotation from Macey v. Titcombe,19 Ind. 135, 137: "The plaintiff in a suit on an injunction bond must show a legal contract to have been enjoined." The Kentucky court went on to say that the gist of an action such as this "is damages sustained by being deprived of some right."
So far as any of the contracts now involved were invalid (and we cannot say now which were good and which bad at that time), the thing which was prevented was the performance of a contract which was prohibited by positive law upon broad and obvious grounds of public policy. There is no legal right to proceed with the performance of such a contract and hence no legal damages can arise from its interruption while it remains illegal.