This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Different statutes of the same general class differ in their phraseology. Courts differ, further, in their views of the intent of the legislature in enacting such statutes. There is accordingly a hopeless diversity of opinion as to the effect of similar statutes upon contracts entered into in violation thereof. Statutes which forbid public corporations to incur indebtedness in excess of certain limits apply in their spirit and terms to liabilities for reasonable compensation as well as to express contracts. Since they are intended to compel municipalities to do business on a cash basis, no recovery can be had for reasonable compensation for property or services furnished to the corporation.1 If the statute absolutely forbids incurring any indebtedness, no liability exists if property is bought on credit, even for a reasonable compensation therefor.2 So if by statute the dispenser is authorized to buy and sell liquors for cash only, the city is not liable for the value of liquor sold to it on credit.3 This rule has been applied even where the liquor has been sold and the city retains the proceeds thereof.4 So where the city cannot contract obligations in excess of its annual income except by popular vote, it is not liable for a reasonable compensation for hydrant rentals, if in excess of such income.5 This does not prevent recovery for property retained by the corporation in cases where it can be surrendered to the party furnishing it. Where an installment contract is held to be invalid if all the payments to be made added together will, when added to the other debts of the public corporation, exceed the limit of indebtedness, but no one installment will cause such excess, such a contract has been held good from year to year until renounced by either party.6 If the statute or constitution requires that a provision for a tax must be made to meet the liability imposed by the contract, a contract entered into in disregard of such provision is a nullity. No recovery can be had for a reasonable compensation for property furnished under such a contract.7 If the statute requires a contract of a certain class to be in writing, an oral executory contract is unenforceable.8 On the question of the effect of performance of such a contract there is a conflict of authority. In some jurisdictions it is held that performance by the adversary party creates no liability against the public corporation in quantum valebat.9 Thus if by statute extras can be ordered only by written agreement signed by both contractor and public officers, the contractor cannot recover in any form of action for extras furnished on oral order.10 In other jurisdictions performance by the adversary party is held to create a liability in quantum valebat.11 So where the statute requires a contract to be in writing, a city is liable in quantum valebat for gas furnished after the written contract expired, a tax having been levied which was available only for paying for gas.12 So extras furnished on oral order of the proper public officer must be paid for even if the statute requires a written order therefor.13 So if no written acceptance of an ordinance for lights is made as provided for by statute the city must pay for benefits received.14 If the statute requires advertisement for bids, contracts made in violation of such provisions are nullities.15 If advertisement is omitted when the law requires it, the contractor cannot enforce payment of his warrant by mandamus, if a warrant is given him after performance.16 Statutes which require advertisement for bids are intended to protect the public from collusion between contractors and public officials, and to secure to the public the best terms possible. The policy of such statutes would be violated as well by permitting recovery for a reasonable compensation as by allowing recovery on an express contract. Accordingly if bids are not advertised for no recovery can be had on quantum meruit.17 No liability attaches to a municipal corporation by reason of a contract entered into by it for the construction of a sewer, when the cost exceeds $500, and there is neither advertisement for bids nor certificate that there is sufficient money in the treasury to the credit of such fund.18 So no liability exists for supplies bought by the secretary of state for the legislature and used by the state if bids are not advertised for.19 So if the contract is not let to the lowest and best bidder,20 or if the contract is in excess of the amount authorized by law,21 or is made before an appropriation is made for the contract,22 where such acts respectively are mandatory, no recovery can be had either on the contract or on quantum meruit. If the statute requires an election as a condition precedent a contract made without such election is a nullity.23 It cannot be ratified,24 nor is there any liability on quantum meruit.25 But a contract is valid if a proposition made by proper authority is accepted by the water company to which it is made and a favorable vote is then taken upon it.26 Amendments in a contract made by the council after acceptance do not avoid the contract, but are themselves invalid.27
3 Lincoln Land Co. v. Grant, 57 Neb. 70; 77 N. W. 349; distinguishing, Tullock v. Webster Co., 46 Neb. 211; 64 N. W. 705.
4 Litchfield v. Ballou, 114 U. S. 190; State Trust Co. v. Duluth, 104 Fed. 632; Gamewell Fire Alarm Telegraph Co. v. Laporte, 102 Fed. 417; Morton v. Nevada City, 41 Fed. 582; City Improvement Co. v. Broderick, 125 Cal. 139; 57 Pac. 776; Zottman v. San Francisco, 20 Cal. 96; 81 Am. Dec. 96; Moss v. Sugar Ridge Township, 161 Ind. 417; 67 N. E. 460; Ryce v. Osage, 88 Ia. 558; 55 N. W. 532; Niles Waterworks v. Niles, 59 Mich. 311; 26 N. W. 525; McBrian v. Grand Rapids, 56 Mich. 95; 22
N. W. 206; Maupin v. Franklin County, 67 Mo. 327; Atlantic City Water Works Co. v. Read, 50 N. J. L. 665; 15 Atl. 10; McDonald v. New York, 68 N. Y. 23; 23 Am. Rep. 144; Goose River Bank v. School Township, 1 N. D. 26; 26 Am. St. Rep. 605; 44 N. W. 1002; Capital Bank v. School District, 1 N. D. 479; 48 N. W. 363; Springfield Milling Co. v. Lane County, 5 Or. 265; Bryan v. Page, 51 Tex. 532; 32 Am. Rep. 637; McGillivray v. Joint School District, 112 Wis. 354; 88 Am. St. Rep. 969; 58 L. R. A. 100; 88 N. W. 310.
5 Office, etc., Co. v. Washoe County, 24 Nev. 359; 55 Pac. 222.
1 Litchfield v. Ballou, 114 U. S. 190; Prince v. Quincy, 128 111. 443; 21 N. E. 768; Chicago v. McDonald, 176 111. 404; 52 N. E. 982; State v. Helena, 24 Mont. 521; 81 Am. St. Rep. 453; 51 L. R. A. 336; 63 Pac. 99; Keller v. Scranton, 200 Pa. St. 130; 86 Am. St. Rep. 708; 49 Atl. 781; State v. Pullman, 23 Wash. 583; 83 Am. St. Rep. 836; 63 Pac. 265; Balch v. Beach, 119 Wis. 77; 95 N. W. 132; Merchants' National Bank v. Spates, 41 W. Va. 27; 56 Am. St. Rep. 828; 23 S. E. 681.
2 Bluthenthal v. Headland, 132 Ala. 249; 90 Am. St. Rep. 904; 31 So. 87; Mosher v. School District, 44 Ia, 122; Fox v. New Orleans, 12
La. Ann. 154; 68 Am. Dec. 766; Niles Water Works v. Niles, 59 Mich. 311; 26 N. W. 525; Detroit v. Robinson, 38 Mich. 108; Detroit v. Paving Co., 36 Mich. 335; Earles v. Wells, 94 Wis. 285; 59 Am. St. Rep. 885; 68 N. W. 964.
3 Bluthenthal v. Headland, 132 Ala. 249; 90 Am. St. Rep. 904; 31 So. 87.
4 Bluthenthal v. Headland, 132 Ala. 249; 90 Am. St. Rep. 904; 31 So. 87.
5 Niles Water Works v. Niles, 59 Mich. 311; 26 N. W. 525.
6 Dawson v. Waterworks Co., 106 Ga. 696; 32 S. E. 907.
7 No recovery for a bridge. Berlin Iron Bridge Co. v. San Antonio, 62 Fed. 882.
8 See Sec. 756.
9 Murphy v. Louisville, 9 Bush (Ky.) 189; Boston Electric Co. v. Cambridge, 163 Mass. 64; 39 N. E. 787; McBrian v. Grand Rapids, 56 Mich. 95; sub nomine McBrian v. Grand Rapids, 22 N. W. 206; Schumm v. Seymour, 24 N. J. Eq. 143; Dickinson v. Poughkeepsie. 75 N. Y. 65; Addis v. Pittsburg, 85 Pa. St. 379; McManus v. Philadelphia, 201 Pa. St. 619; 51 Atl. 320; Watterson v. Nashville, 106 Tenn. 410; 61 S. W. 782.
10 Watterson v. Nashville. 106 Tenn. 410; 61 S. W. 782.
11 Cincinnati v. Cameron, 33 O. S. 336.
12 Memphis Gaslight Co. v. Memphis, 93 Tenn. 612; 30 S. W. 25. To the same effect see San Francisco Gas Co. v. San Francisco, 9 Cal. 453.
13 Cincinnati v. Cameron, 33 O. S. 336.
14 Baxter Springs v. Light & Power Co., 64 Kan. 591; 68 Pac. 63.
15 State v. Butler, Mo. - ; 77 S. W. 560; McCloud v. Columbus, 54 O. S. 439; 44 N. E. 95; Lancaster v. Miller, 58 O. S. 558; 51 N. E. 52.
16 State v. Yeatman, 22 0. S. 546.
17 City Improvement Co. v. Brod-erick, 125 Cal. 139; 57 Pac. 776; Zottman v. San Francisco, 20 Cal. 96; 81 Am. Dec. 96; Mulnix v. Ins. Co., 23 Colo. 71; 33 L. R. A. 827; 46 Pac. 123; McBrian v. Grand Rapids, 56 Mich. 95; sub nomine Mc-Brien v. Grand Rapids, 22 N. W. 206; McDonald v. New York, 68 N. Y. 23; 23 Am. Rep. 144; Buchanan Bridge Co. v. Campbell, 60 O. S. 406; 54 N. E. 372 (nor was the contracting company allowed in this case to recover the material furnished) .
18 Lancaster v. Miller, 58 O. S. 558; 51 N. E. 52.
19 Mulnix v. Ins. Co., 23 Colo. 71; 33 L. R. A. 827; 46 Pac. 123.
20 People v. Gleason, 121 N. Y. 631; 25 N. E. 4.
21 Black v. Detroit, 119 Mich. 571; 78 N. W. 660.
22 Roberts v. Fargo, 10 N. D. 230; 86 N. W. 726.
23 Smith v. Dublin, 113 Ga. 833; 39 S. E. 327; Grady v. Pruitt, 111 Ky. 100; 63 S. W. 283; Harrods-burg v. Water Co. (Ky.), 64 S. W. 658; Painter v. Norfolk, 62 Neb. 330; 87 N. W. 31; Duncan v. Charleston, 60 S. C. 532; 39 S. E. 265.
24 State v. Pullman, 23 Wash. 583; 83 Am. St. Rep. 836; 63 Pac. 265.