Peter Mintener Lumber Co. v. School District No. 56

The defense of ultra vires, or that a contract is void or irregular because the procedure laid down by statute has not been followed, when relied upon, is an affirmative defense, and must be pleaded and proved. (Brown v. Board of Education, 103 Cal. 531,37 P. 503; State v. School District, 34 Kan. 237,8 P. 208; Burkhardt v. Georgia School Township, 9 S.D. 315,69 N.W. 16; Webb v. School District, 83 Minn. 111,85 N.W. 932; Arizona Life Ins. Co. v. Lindell, 15 Ariz. 471,140 P. 60; Martin v. Kentucky Lands Inv. Co., 146 Ky. 525, Ann. Cas. 1913C, 332, 142 S.W. 1038; Iowa Business Men's B. L. Assn. v.Berlau, 125 Iowa, 22, 98 N.W. 766; Miller v. Board ofCommissioners, 17 Colo. App. 120, 67 P. 347; Morgan v.Board of Education, 136 Cal. 245, 68 P. 703; James EvaEstate v. Mecca Co., 40 Cal. App. 515, 181 P. 415; WarrenBros. Co. v. Boyle, 42 Cal. App. 246, 183 P. 706; LarimerCounty v. City of Ft. Collins, 68 Colo. 364, 189 P. 929; 10 Cyc. 1156; 7 R.C.L., sec. 678.)

Whether the proceedings relating to Cuddy's appointment as clerk were irregular is purely a collateral question, and not in any manner material to the issues in this case. The rule of the law that title to office can never be tried collaterally, has been approved by several decisions of this court. (Carland v.County of Custer, 5 Mont. 579, 6 P. 24; State v. Cook,17 Mont. 529, 43 P. 928; State ex rel. Dunne v. Smith,53 Mont. 341, 163 P. 784; see, also, O'Brien v. SchoolDistrict, 68 Mont. 432, 219 P. 1113.) The complaint does not state sufficient facts to constitute a cause of action. It wholly fails to show any compliance with any or either of the provisions of sections 1006, 1016, 1174, 1176 or subdivision 8 of section 1015, Revised Codes, in that it does not affirmatively appear that the defendant school board ever passed any resolution letting any contract to the appellant, either at a special or regular meeting of such school board, and in that it does not appear that the defendant school board ever advertised a call for bids, or that the contract sued upon was awarded to the lowest responsible bidder. Neither does it appear from said complaint that the plans and specifications for erecting the school building for which such lumber was alleged to be purchased were submitted to the state board of health for its approval, or to the superintendent of public instruction; and, further, there is no allegation that the alleged contractor, the appellant herein, furnished a certified statement signed by the state board of health, that the plans and specifications of the school building to be erected had been fully approved by the state board of health. Neither does the complaint show that the voters of defendant district authorized the erection of any school building. In suits against a municipal corporation, as opposed to suits against individuals or corporations generally, it is generally held that the complaint must show a compliance with the statutory requirements. (Keeler Bros. v. School District No.3, 62 Mont. 356, 205 P. 217; Reams v. Cooley, 171 Cal. 150, Ann. Cas. 1917A, 1260, 152 P. 293; Wellston v. Morgan, 65 Ohio St. 219, 62 N.E. 127; City ofHarrodsburg v. Harrodsburg Water Co., 23 Ky. Law Rep. 956, 64 S.W. 658; Waterworks Co. v. City of San Antonio (Tex. Civ.), 48 S.W. 205; Ashland Waterworks Co. v. City of Ashland, 230 Fed. 254; Texas Water Gas Co. v. City of Cleburne, 1 Tex. Civ. 580, 21 S.W. 393; Sayles v. City of Abilene (Tex. Civ.),290 S.W. 239; F.V. Smith Contracting Co. v. City of New York,146 A.D. 760, 131 N.Y. Supp. 479; affirmed,70 Misc. Rep. 132, 128 N.Y. Supp. 351; City of Philomath v. Ingle, 41 Or. 289,68 P. 803.)

The cases cited by plaintiff in support of his argument that the failure by the defendant to comply with statutory provisions relating to advertising for bids and other prerequisites to a valid contract need not be alleged in the complaint but should be raised by answer, are not applicable to the facts of this case. Most, if not all, of them, deal with "ultra vires" contracts. Plaintiff's counsel uses the term "ultra vires," as applied to contracts, in much too broad and comprehensive a sense, the term being limited to such contracts "as are not within the powers conferred upon the corporation by the acts of its creation." (14A C.J. 308, 309.) Boards of school trustees do have the power to build schoolhouses, when authorized by the vote of the taxpayers, and under the conditions and regulations prescribed by statute. Any other transaction or so-called "contract" is "illegal," not"ultra vires." The respondent contends that the alleged contract in this case is "illegal" rather than "ultra vires." It is only in those cases where the existence of a contract is conceded and it is sought to be avoided upon the ground of ultravires, that the defense must be specially pleaded. (Morgan v.Board of Education, 136 Cal. 245, 68 P. 703.)

Section 1005, Revised Codes, prohibits a member of a school board from serving as clerk. The evidence shows that Cuddy attempted to serve as clerk of the defendant school district in addition to being a member of the board. This shows a clear violation of the mandatory provisions of the statute; and certainly can afford no presumption that such illegally appointed and unlawfully acting clerk was duly authorized by the board to bind the defendant district by contract in the absence of any resolution spread upon the minutes of the board at either a regular or specially called meeting for such purpose.

There is no proof that the defendant school district held a lawful meeting for the transaction of business in the acceptance of the alleged proposal or offer of the appellant as provided by section 1006, Revised Codes, and further it appears that the members Joseph V. Cuddy and E.C. Townsend acted as individuals; and not as a board in a meeting duly called for that purpose. If such members attempt to act in their individual capacity any purported contract so made by them is void as against the school district. (School Dist. No. 2 v. Richards, 62 Mont. 141,205 P. 206.) "Where the statute prescribes the only mode by which the power to contract shall be exercised the mode is themeasure of the power. A contract made otherwise than as so prescribed is not binding or obligatory as a contract and the doctrine of implied liability has no application in such cases." (Reams v. Cooley, 171 Cal. 160, Ann. Cas. 1917A, 1260,152 P. 293; Perry Water, Light Ice Co. v. City of Perry,29 Okla. 593, 39 L.R.A. (n.s.) 72, and note, 120 P. 582;McCormick v. City of Niles, 81 Ohio St. 246, 27 L.R.A. (n.s.) 1117, and note, 90 N.E. 803. This action was brought to recover for lumber and other building material alleged to have been sold and delivered by plaintiff to defendant.

The complaint contains two causes of action; the first alleges, in substance, that on the seventeenth day of January, 1923, plaintiff submitted to defendant its offer, proposal and estimate to furnish certain lumber and material to defendant for the construction of a schoolhouse; that its offer was accepted by defendant and thereafter on the seventh day of February, 1923, plaintiff delivered the lumber and material pursuant to its offer, so accepted by defendant, and sold and delivered the same to defendant, and that defendant has failed, neglected and refused to pay the contract price of $416, or any part thereof. The second cause of action alleges that between February 7 and 27, 1923, at the special instance and request of defendant, plaintiff sold and delivered to defendant certain building material of the value of $60.20, and that plaintiff has not paid any part thereof. Defendant, by answer, denied the material allegations of the complaint.

Upon the trial of the action plaintiff's testimony disclosed that on January 17, 1923, it submitted to defendant an estimate and bid to furnish the lumber and other building material described in the first cause of action for the construction of a schoolhouse, which was mailed to Mr. Joseph V. Cuddy; thereafter, by letter signed "Jos. V. Cuddy, Clerk," plaintiff was advised that its proposal and bid had been accepted and directed to deliver the materials to Bert Watts. All the materials described in plaintiff's bid were delivered to defendant's designated agent. Between February 7 and 27, 1923, plaintiff, at the request of Cuddy, delivered to defendant the materials described in the second cause of action. None of the materials so delivered have been used by defendant and payment therefor has not been made.

At the close of plaintiff's case defendant's motion for a nonsuit was granted, judgment entered thereon, and from it plaintiff appeals.

The principal question presented for determination is: Was[1] plaintiff required to allege and prove that defendant complied with the statutory provisions relating to advertising for bids and other prerequisites, before entering into the contract in question?

Section 1016, Revised Codes 1921, provides, in substance, that no board of trustees shall let any contract for building a schoolhouse where the amount involved is in excess of $250, without first advertising a call for bids for at least two weeks, and that such contract must be awarded to the lowest responsible bidder. Under the provisions of section 1006, Id., no business transacted by the board is valid unless transacted at a regular or special meeting of the trustees; while section 1015, Id., authorizes the board to build a schoolhouse when directed so to do by a majority of the electors of the district, voting at an election held for that purpose.

Counsel for defendant contend that plaintiff was obliged to allege and prove that the board of trustees of defendant district complied with these statutory provisions. With this contention we do not agree. One of the general powers of the board is to build schoolhouses. "Every school board, unless otherwise provided by law, shall have power and it shall be its duty: * * * 8. To build * * * schoolhouses * * *." (Sec. 1015, supra.) And we must presume that the board regularly performed its official duty in that regard. (Sec. 10606, Rev. Codes 1921.)

It does not affirmatively appear, either from the allegations[2] of the complaint or the testimony, or from any fact or circumstance, that the trustees of defendant school district acted beyond the scope of their authority, and in the absence of proof in that behalf it will be presumed that the contract is valid and that the board regularly performed the duties imposed upon it by law. (Sec. 10606, Id.) If the proper and necessary steps were not taken to authorize it, the burden was upon defendant to prove the facts rendering it illegal; when it seeks to avoid the same upon the ground of an antecedent failure of its trustees to comply with certain statutory requirements, prior to the making of the contract, this was a matter of defense which it must prove. (Brown v. Board of Education, 103 Cal. 531,37 P. 503; Mosher v. School District, 42 Iowa, 632; Harrold v. City of Huntington, 74 W. Va. 538, 82 S.E. 476; City ofRome v. Whitestown Water Works Co., 113 A.D. 547,100 N Y Supp. 357; Skinner etc. Stationery Co. v. Board ofEducation, 182 Mo. App. 541, 165 S.W. 835; City of Chicago v.Peck, 196 Ill. 260, 63 N.E. 711; Board of Commrs. v. City ofFt. Collins, 68 Colo. 364, 189 P. 929; Oklahoma City v.Derr, 109 Okla. 192, 235 P. 218.) There are reputable authorities supporting defendant's contention, but we think the conclusion we have reached is supported by the better reasoned cases.

Counsel contend that the cases of Pue v. Lewis and ClarkCounty, 75 Mont. 207, 243 P. 573, and Jay v. SchoolDistrict, 24 Mont. 219, 61 P. 250, are controlling. These cases are clearly distinguishable. In Pue v. Lewis and ClarkCounty the evidence disclosed that plaintiff had performed certain services without the knowledge or consent of the board of health or the board of county commissioners, and affirmatively showed that the statutory provisions relating to the character of contract involved in the action had not been complied with. InJay v. School District, the illegality of the contract appeared upon the face of the complaint. In each of these cases the court properly held that the plaintiffs were not entitled to recover. We go no further than to hold that under the allegations of the complaint and the proof offered in support thereof, plaintiff made out a prima facie case sufficient to go to the jury. There is not anything in the language used in the cases above referred to inconsistent with the conclusion announced here. If upon a retrial of this cause it is made to appear that the trustees failed to comply with the statutory provisions before entering into the contracts, the case will fall squarely within the rule announced in the cases cited above.

Counsel for defendant contend that plaintiff failed to prove[3] acceptance of its bid by defendant and insist that the letter signed "Jos. V. Cuddy, Clerk" is insufficient proof. The letter, standing alone, would fall short of establishing this disputed fact, but the evidence shows that at the time the letter was written Cuddy was acting clerk of defendant school district, and the materials were in fact received and accepted by defendant. We think this showing was sufficient. The presumption obtains that in notifying plaintiff that its bid had been accepted, the clerk, as the medium through whom the trustees expressed themselves, regularly performed his official duties. (O'Brien v. School District, 68 Mont. 432, 219 P. 1113.)

It appears that during the time Cuddy was acting as clerk he was a member of the board of trustees of defendant school district, and counsel contend that, by reason thereof, under the statutes, he could not act as clerk.

Section 1005, Revised Codes 1921, provides that the board of trustees shall "organize by choosing one of their number Chairman, and a competent person, not a member of the board, as clerk," while section 1049, Id., prescribes the duties of the clerk of the board and "if he shall not be present [at meetings], the board of trustees shall select one of their number as clerk, * * *."

Whether Cuddy was qualified to act as clerk is not necessary[4] for decision; his title to office cannot be tried in a proceeding to which he is not a party. He was, at least, a defacto clerk, and his acts, by color of office, are proof against collateral attack. (State ex rel. Dunne v. Smith, 53 Mont. 341,163 P. 784; State ex rel. Buckner v. Mayor of Butte,41 Mont. 377, 109 P. 710.)

For the foregoing reasons the judgment is reversed and the cause remanded for a new trial.

MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES MATTHEWS, GALEN and ANGSTMAN concur.

Rehearing denied May 11, 1929.