Hamilton County v. Davis

278 F. 593, 1922 U.S. App. LEXIS 2850

• Court: Court of Appeals for the Sixth Circuit
• Decided: March 17, 1922
• Docket: No. 3531
• Status: Published

Opinion

DENISON, Circuit Judge

(after stating the facts as above). The questions which are specially presented are whether the committee had authority to make with Davis a contract which would entitle him to commission upon more than §500,000, and whether, if there was lack of authority, there was subsequent ratification. We take up the latter question first.

As the necessity for additional work developed, the committee accepted the situation and proceeded with the work, some of it by application of the unit clauses in existing contracts, and some of it by new and additional construction contracts. After the proceeds of the $500,000 bond issue were exhausted, the county court, on the credit of the county, borrowed from New York banks an additional $550,-000, and gave the notes or obligations of the county therefor, and thereupon paid, as far as this fund would go, the surplus cost. The county accepted and used the bridge. However, at about the time the $500,000 limit was reached, Davis was discharged, and he rendered no further service, although continually offering to do so. It is not clear — to sa.y the least — that the county ever received the benefit or result of Davis’ services beyond the extent to which they would have been due under a contract limited to $500,000.

In this situation the Legislature of Tennessee passed chapter 26 of Private Acts of 1917, the pertinent parts of which are as follows:

“Whereas, said Hamilton county, Tennessee, also owes a balance of S550,-000.00 for the work of completing the Market' Street bridge across the Tennessee river at Chattanooga, which amount it is obligated by contract to pay: * * *

“Section 1. Be it enacted by the General Assembly of the state of Tennessee, that the several contracts and obligations of said county, as set forth in the preamble thereto, be, and the same are hereby in all things ratified, validated and confirmed.

“Sec. 2. Be it further enacted, that for the purpose of paying its said indebtedness, and meeting its said obligations, the said county of Hamilton, in the state of Tennessee, through its quarterly county court, be, and it is hereby authorized, empowered and directed to issue and sell 1'our separate issues of its negotiable coupon bonds, as follows: * * *

“S550.000.00, the proceeds of which shall be used in paying off (he balance of expense of completing the work of building the Market Street bridge across the Tennessee river at Market street.”

The bonds were issued and sold, and with the proceeds the New York loans paid off. It is in this conduct of the county, and in this act of the Legislature, that the trial court found unquestionable ratification. We think this finding did not sufficiently distinguish between the contract with 'Davis and the construction contracts for the bridge, which construction contracts had been developed into and succeeded by the New York loans.

The invalidity of the Davis contract, on the theory of ultra vires, cannot be determined once for' all by the mere words of the contract. They disclose no excess of promise beyond power. There was no doubt of the authority to make the contract to pay commissions upon any sum not exceeding $500,000. It is only after the contract has been rightfully applied to an expenditure of that amount, and it is sought to apply the general language to a further sum, that the question of ultra vires arises. There is no necessary inconsistency between a concession that the contract was, for certain applications, valid from the beginning, and the claim that, for the application now involved, it was invalid from the beginning. It might need ratification for the latter effect, though not for the former.

Undoubtedly, by accepting and- using the bridge (if not before), the county ratified' the action of the committee in building the greater structure. Undoubtedly the Legislature ratified the — perhaps—unauthorized acts of the county in borrowing the additional-$550,000 and pledging its credit therefor. But if, in truth, the committee had been authorized only to make a contract with Davis to pay him not to exceed $25,000 in commissions, and if, in truth, it had made a contract under which he might become entitled to claim $50,000, we see nothing in the action of the county, or of the state, which would ratify the expanded or unauthorized portion of that contract. The proposition seems to be that where the committee had agreed to- pay Davis commissions on $1,000,000, and where it had power to agree to pay him only half that amount, and where it had pledged the credit of the county to others than Davis for $550,000 more than.it had any right to do, but had not used his continuing services during the excessive expenditure, the ratification of the latter unauthorized act is also a ratification of the former. We cannot accept that conclusion. We think the court was in error in charging that there had been ratification as matter of law, and in withdrawing from the jury the question of original lack of authority. Of course, in reaching this result we have recited only the tendency of the evidence.

It does not seem advisable to undertake to determine the question of authority by the county or by the committee to make a contract which would be valid upon any basis of computation above the $500,-000 limit; nor to determine whether, when all the transactions are taken together, a limitation of this kind ought to be read into the contract as being a part of the identification of the bridge about which the parties were dealing. We cannot be sure that this record satisfactorily and completely presents any issue save that of ratification.

Accordingly, the judgment is reversed and the case remanded for a new trial.