Borough of Milford v. Milford Water Co.

Opinion,

Mr. Chief Justice Paxson :

The contract between the Milford Water Company, plaintiff below, and the borough of Milford, defendant, is a valid and binding contract, provided ordinance No. 2 of said borough, passed April 9, 1875, is a valid ordinance. Just here is the pinch of the plaintiff’s case.

It is not denied that when the ordinance was passed a majority of councils were also directors of the water company. They were thus contracting with themselves to supply the borough with water. The 66th section of the act of March 31, 1860, P. L. 400, provides that “ It shall not be lawful for any councilman, burgess, trustee, manager, or director of any corporation, municipality, or public institution, to be at the same time a treasurer, secretary, or other officer, subordinate to the president and directors, who shall receive a salary therefrom, or be the surety of such officer; nor shall any member of any corporation or public institution, or any officer or agent thereof, be in anywise interested in any contract for the sale or furnishing of any supplies, or materials to be furnished to, or for the use of any corporation, municipality, or public institution, of which he shall be a member or officer, or for which he shall be an agent, nor directly nor indirectly interested therein, nor receive any reward or gratuity from any person interested in such contract or sale; and any person violating these provisions, or either of them, shall forfeit his membership in such corporation, municipality, or institution, and his office or appointment thereunder, and shall be held guilty of a misdemeanor, and on conviction thereof be sentenced to pay a fine not exceeding five hundred dollars,” etc.

I have quoted this section at length as I very much fear it is not as widely known as it ought to be, nor as generally observed. It is at least probable the members of the borough councils, who were at the same time members of the water company, overlooked this statute when they voted for and passed the ordinance in question, otherwise they must have known they were not only making a void contract, but also subjecting themselves to a criminal prosecution. It is almost needless to say that a contract so prohibited by law is utterly void, and there is no power that can breathe life into such a dead thing.

It appeared, however, upon the trial below, that the borough had been using and paying for this water for several years; that upon some occasions when the bills were passed there was less than a majority of councils who were members of the water company, and some years in which there were no members of councils who were also members of said company. From this it was urged that there was a ratification of the contract by councils. The learned judge below adopted this view, and entered judgment non obstante on the verdict in favor of the water company. This will not do.

There was no ratification of the contract because there was no contract to ratify. The water company never contracted with the borough. They contracted with themselves to supply the latter with water; to that agreement the borough was not a party in a legal sense. It is true, the boroxigh might, after its councils bad become purged of the members of the water company, have passed an ordinance similar to ordinance No. 2, and thus have entered into a new contract. But no such ordinance was passed, and neither councils nor the officers of the municipality can contract in any other way. It is one of the safeguards of municipal corporations that they can only be bound by a contract authorized by an ordinance duly passed. The act of 1860 is another and a valuable safeguard thrown around municipalities. It was passed to protect the people from the frauds of their own servants and agents. It may be there was no fraud actual or intended in the present case, but we will not allow it to be made an entering wedge to destroy the act of 1860. Of what possible use would that act be if its violations are condoned, and its prohibited, criminally condemned contracts allowed to be enforced under the guise of an implied ratification ? It is too plain for argument that the payment by councils for some years for water actually furnished created no contract to accept and pay for it in the future. Nor was this suit brought upon any such impli ed contract. On the contrary it was brought upon the contract authorized by ordinance No. 2 ; it has nothing else to rest upon, and with, the destruction of its foundation the superstructure crumbles.

The judgment is reversed, and judgment is now entered for the defendant below non obstante veredicto.