Bartron v. County , 68 S.D. 309 ( 1942 )

The result reached in the majority opinion ought to be modified so as to include the affirmance of No. 8410.

I do not believe that the defendants acted in good faith. To me it seems that the evidence sustains the finding by the court which was as follows: "Doctor H.J. Bartron was made solely for and on behalf of the corporation, and with intent that the same was to be performed by the corporation", especially in view of the fact that the majority decision expressly holds "that the bargains between the Bartron Clinic and Codington County are against public policy." It would seem to me that the defendants cannot retain the benefit which they derived from the unlawful act and that it is consonant to the spirit and policy of the law that the plaintiff, Codington County, should be permitted to recover back the money paid to the defendants. This is the law today and in my opinion is supported by the great weight of authority. It applies to this case because the transaction here in question is against public policy and in violation of law. The unlawful contract and the acts of the officers in entering into the contract were repudiated and the action was brought to recover back the money taken without authority of law from the treasury. The reasoning in Campbell County v. Overby, 20 S.D. 640, 108 N.W. 247, 248, permitting the recovery of money retained by the County Treasurer, received by him as certain commissions for the sale of real estate at tax sales, in face of the law limiting the compensation of a county treasurer as to salary, is applicable to the facts in the instant case. In it the court held that the claim on its face showed that it was illegal and its allowance was wholly unauthorized and said "county commissioners are not the county nor its agents in the ordinary sense. They are public officers with definite and limited powers, to whom the rules relating to voluntary payments by persons in their individual capacities are not applicable."

The plaintiff county was a public corporation and therefore was not bound by the rule as to voluntary payments applicable to individuals and private corporations as that rule does not apply to public corporations which can always recover back money paid out on void or illegal claims or contracts. The defendants knew or should have known of the statutory provision, Rev. Code 1919, § 10055, relating to the annual appointing of a well qualified physician to attend to the county asylum. This statute does not empower the county commissioners to appoint a corporation to take the place and perform the office as county physician. Therefore any claims paid to the corporation can not be legally chargeable against the county. The statutory term "well qualified physician" has a distinct meaning and it would not be much amiss to say that the clear cut language used in this law was designed for the protection of public monies within its treasury. Sioux Falls Paint Glass Co. v. Knudtson, County Auditor, 66 S.D. 261,281 N.W. 201.

This court pointed out in Norbeck Nicholson Co. v. State,32 S.D. 189, 142 N.W. 847, Ann. Cas. 1916A, 229, that an unlawful and illegal act can never be the basis of recovery against a public corporation. I shall not encumber this opinion by quoting but wish to reiterate and reaffirm all of the portions in that opinion covering illegal contracts such as the one now under consideration. See also Norbeck Nicholson Company v. State of South Dakota, 33 S.D. 21, 144 N.W. 658. This court cited and quoted with approval the Norbeck Nicholson Company v. State, supra, in Jacobson v. Ruden et al., 60 S.D. 285, 289,244 N.W. 363. It would seem that any claim based upon the appointment as "physician" may well for argumentative purposes be comparable to an officer holding a county office and therefore the legal rights existing under the well established principle of law "money paid to a county officer to which he is not entitled by law may be recovered back, without previous demand, in an action for money had and received instituted by the county, or by a taxpayer under some statutes." 20 C.J.S., Counties, § 128. 15 C.J. 509 § 176(b) must apply to the facts in this case. Campbell County v. Overby, supra. Natural justice will not be done by our refusing to grant the respondents the power of this court to recover back the money paid over to the defendants. The reason uniformly adopted by courts permitting a recovery where the consideration for which payment was made is illegal, void and contrary to public policy is well stated in footnote 35, 15 C.J. pp. 662, 663: "The reason for the rule (1) is that the payment of a claim not legally chargeable to the county is not a voluntary payment by the county but an unauthorized act of its agents and is without consideration. Mobile County v. Williams, 180 Ala. 639, 61 So. 963; People v. McCord, 143 Ill. App. 28; Sudbury v. Board of Com'rs of Monroe County, 157 Ind. 446, 62 N.E. 45; Board of Sup'rs of Richmond County v. Ellis, 59 N.Y. 620. (2) Such a payment does not come within the rule precluding the recovery of payments made under mistake of law. Board of Com'rs of Huntington County v. Heaston, 144 Ind. 583, 41 N.E. 457, 43 N.E. 651, 55 Am. St. Rep. 192." See also 20 C.J.S., Counties, § 317.

"It is contended that the only penalty provided in said statute is that an action cannot be maintained or recovery had against the district on such a contract. That being true, the money once paid on such void contract cannot be recovered back. We cannot agree with that contention. That statute was not intended to prevent the district or a taxpayer thereof for the district from recovering back any money paid by the district upon a void contract. The general rule is that money paid by a municipal corporation upon a void contract may be recovered back by such corporation; or, in case the proper authorities refuse to proceed to do so, a taxpayer thereof may do so for the corporation, and this general rule is not changed or abrogated by said statute in such cases as the one at bar." Independent School Dist. No. 5 v. Collins, 15 Idaho 535, 98 P. 857, 859, 128 Am. St. Rep. 76.

Payments made by a municipality to a contractor may be recovered back in a proper case. The municipality can however recover only to the extent that the payments were erroneous. 44 C.J. 408 § 2611(2) and see Inland Construction Co. v. Rector et al., 133 Ark. 277, 202 S.W. 712, and City of Leavenworth v. Scaman, 138 Wn. 6, 245 P. 7.

"A municipal corporation may invoke the aid of the courts to protect its property and funds to the same extent as an individual * * * and it is held by the weight of authority that when a municipal corporation has paid out its funds for purposes for which it had no legal or constitutional right to spend money, it may maintain an action to recover them back." 19 R.C.L. 1142 § 418, and see cases cited in footnote 19.

In Ritchie v. City of Topeka, 91 Kan., 615, 138 P. 618, 621, it was contended that the city had paid the money on the sewer contract voluntarily and was therefore precluded from recovering it back. The court held that voluntary payments had no application and we quote: "Being unauthorized, the officers' act was void, and the payment made by them cannot be treated as one made by or binding upon the city. Payments of municipal funds by public officers are not regarded as those made by individuals out of their own funds, and overpayments or other payments by public officers upon illegal demands against a muncipality may be recovered back. Board of Commissioners of Jefferson County v. Patrick, 12 Kan. 605; Village of Ft. Edward v. Fish, 156 N.Y. 363,50 N.E. 973; Allegheny County v. Grier, Appellant, 179 Pa. 639, 36 A. 353; County of Wayne v. Reynolds, 126 Mich. 231, 85 N.W. 574, 86 Am. St. Rep. 541; State v. Young, 134 Iowa 505, 110 N.W. 292, 13 Ann. Cas. 345; Board of Commissioners of Huntington County v. Heaston, 144 Ind. 583, 41 N.E. 457, 43 N.E. 651, 55 Am. St. Rep. 192; Frederick v. Douglas County et al., 96 Wis. 411, 71 N.W. 798."

I do not believe that this court should permit the defendants to retain the money paid over to them under the facts presented to the court. To do so might, I am afraid, encourage others to travel the same route. I am not satisfied that the majority opinion will accomplish the result to curb illegal transactions such as are now before us.

The findings, conclusions and judgment of the trial court are sustained.