Bartelson v. International School District No. 5

Bronson, J.

This is an action to recover the amount due a contractor for the construction of a high school building in a school district in Burke county, North Dakota. The facts are stipulated. In May, 1913, pursuant to an election theretofore held so authorizing, the board of education made a contract with the plaintiff to erect a high school building for the contract price of $24,000. Accordingly, the building was constructed and its value, as stipulated since completion, is $30,-000. The plaintiff has received $19,769.10. There is a balance due and unpaid of $4,295.90, with interest. In 1914 an action to enjoin the school district, its officers, and the plaintiff herein, was instituted by a resident taxpayer of the district to enjoin further issuance or reception of warrants in payment of outstanding warrants for the contracts of constructing such building. ‘ In that case (Anderson v. International School Dist. 32 N. D. 413, L.R.A.1917E, 428, 156 N. W. 54, Ann. Cas. 1918A, 506), this court in November, 1915, held that the contract created a present debt against the district, greatly in excess of the constitutional debt limit, and that to the extent of such excess, the *256 contracts were void, and enjoined further payments thereupon. This action, accordingly, has been instituted not to enforce the contract, but upon the equitable doctrine that no person, not even a school district, shall be permitted unjustly to enrich itself at the loss of another. It is stipulated in this record that the school district is and was indebted, at the time of the commencement of this action, for an amount equal to 5 per cent of the assessed valuation of the taxed property of such district, and that the plaintiff herein has no remedy excepting such as the court in equity may grant to him. The theory of plaintiff’s action therefore is to disaffirm the contract and to place the parties in statu quo by requiring the school district to restore the property which it has received without cost, or be declared a trustee for the use of it and liable for the reasonable rent or the value of .the use of the same, or for its return. The trial court, upon findings made, determined that the plaintiff was entitled to be reimbursed for the unpaid balance due him, and that it was impractical to restore to the plaintiff the material and labor furnished. That therefore the school district should remunerate the plaintiff for the value thereof. Accordingly, in July, 1918, judgment was rendered for the plaintiff for $5,528.82, from which this appeal has been taken. The sole question involved, therefore, is the right of the plaintiff in equity, upon the facts to obtain relief for the amount unpaid and due him in the construction of such high school building.

The respondent frankly concedes that the consideration is involved whether, under the facts, any form of relief may properly be awarded to him. He further concedes a different rule to apply to municipal corporations in seeking to enforce restitution for benefits received under contracts than that which applies to natural persons or private corporations. He further asserts that where restitution will impose no additional burden upon the taxpayers it may be enforced according to the ordinary principles of quasi contracts.

Equity properly recognizes that a municipal corporation should not be permitted to take the property of another, and receive the benefits thereof, and thus be enriched through the loss of another, without compensation.

On the other hand, constitutional limitations upon the creation of indebtedness of municipalities are mandatory restrictions, enacted for the purpose of curbing the taxing power and of restraining excessive *257 expenditures that entail tax burdens. It is well settled that those who deal with municipalities are bound to take notice and be bound by these constitutional restrictions. Accordingly, it 'must be recognized that, in applying equitable relief in the present form of action, equity must not accomplish by indirection what the law has prescribed must not be done directly.

In accordance with the stipulated facts it is impossible to restore to the plaintiff the building erected without destroying property of the municipality. It is likewise impractical to segregate or detach that portion of the building which represents the excess moneys therein owing to the plaintiff. It is likewise clear that the imposition of a judgment to pay such amount, or the requirement that a rental be paid for that portion of the building represented by plaintiff’s moneys unpaid, would impose a burden upon the school district in excess of the constitutional restrictions. It is stipulated that the school district has been compelled to and does levy, the maximum rate prescribed by law in order to maintain its schools. Although, in equity recovery may be permitted in such cases, where no additional burden is thereby placed upon the municipality in excess of the constitutional debt limit, or where the property itself can be identified, segregated, and restored to the parties without injuring the municipality or its property by so doing, nevertheless, in upholding the constitutional restrictions absolutely imposed, relief upon equity principles cannot .be granted where this cannot be accomplished. Litchfield v. Ballou, 114 U. S. 190, 29 L. ed. 132, 5 Sup. Ct. Rep. 820; Grady v. Pruit, 111 Ky. 100, 63 S. W. 283; Grady v. Landram, 23 Ky. L. Rep. 506, 63 S. W. 284; McGillivray v. Joint School Dist. 112 Wis. 354, 58 L.R.A. 100, 88 Am. St. Rep. 969, 88 N. W. 310. See Goose River Bank v. Willow Lake School Twp. 1 N. D. 26, 26 Am. St. Rep. 605, 44 N. W. 1002; Engstad v. Dinnie, 8 N. D. 1, 12, 76 N. W. 292.

It therefore follows that the trial court erred in entering judgment for the plaintiff. The judgment is reversed, with directions to enter judgment for the defendant, dismissing the action. The appellant will recover costs of this appeal.