2

a subsequent act of the legislature,' but such unauthorized contract is not ratified by a special act authorizing the contractor to sue for the value of extras. It has been held that the legislature could require county commissioners to provide funds to pay for the erection of public buildings' if in good conscience the county or city ought to pay, although there was no legal liability. A city cannot, it seems, be compelled to stand the whole cost of county buildings. Money raised by taxation for the special purpose of erecting a school-building cannot be diverted by an act of the legislature to the purchase of a site for a normal school in said city, without the assent of the city or its inhabitants. For the legislature to require a claim to be paid there must be an obligation either moral or equitable.' The constitution of the United States and of the states denies the legislature the power to pass laws impairing the obligation of contracts, and this limitation applies as well to contracts made by the state as to those made by individuals."

An injunction will not lie against a builder to prevent him from proceeding with the work; the owner's remedy is to refuse to ratify or confirm the contract and defend against an action for the contract price."

47. Cases Where Appropriation has been Exceeded. In determining whether the limit has been exceeded numerous decisions have been made that shed some light on the question. It has been held that certificates issued by a city against lots in payment for the construction of sewers, the same being payable in seven annual installments with interest, do not create. an indebtedness within the meaning of an act limiting the indebtedness to 5 per cent of the value of its taxable property." Charges that have been improperly made against the fund should be rejected and deducted to ascertain the maximum balance available." If a special tax for paying rent for waterworks, together with the general tax, exceeds the constitutional limit, the contract is void." Indebtedness beyond the constitutional limit at the time of the injury is no defense to an action against a city for damages on account of an injury caused by negligence in the construction and maintenance of its streets." The issue of bonds is an indebtedness."

The disbursement of the fund should be watched by the contractor, that

Joint School Dist. v. Reid (Wis.),51 N. W. Rep. 1089.

10 Davis v. Des Moines (Ia.), 32 N. W. Rep. 470 [1887]; Grant v. Davenport, 36 Iowa 395; Clinton v. Walliker (Iowa), 68 N. W. Rep. 431; but see Soule v. Seattle (Wash.), 33 Pac. Rp. 384.

"Kingsley v. Brooklyn, 78 N. Y. 200 [1879].

12 Lamar Water Co. v. Lamar (Mo.), 26 S. W. Rep. 1025.

13 Bartle v. Des Moines, 38 Iowa 414 [1874].

14 Scott v. Davenport (Ia.), 34 Ia. 208.

1

the fund be not exhausted and his labor be without remuneration; and when the contract price is the full amount of the appropriation he should ascertain by what fund any extra work ordered is to be paid before performing it. Changes and alterations imposing a greater liability are void, and pay therefor cannot be collected.'

48. Unincorporated Organizations as Parties. Such are associations, societies, clubs, and congregations who get together and agree to undertake or promote certain plans and schemes for their own or the public benefit. Usually the powers and resources of such organized bodies are indeterminate, and even when the necessary funds are subscribed it is a question as to how many of the subscriptions can be collected. Contractors and engineers who undertake work for such associations, and who are not well protected by liens, bonds, or paid-up subscriptions, or are not well acquainted with the subscribers, will in making their estimates allow for losses and the possible failure to carry out the project. When an unincorporated association enters into a contract, the individual members are liable either upon the ground that they held themselves out as agents of a principal or because they are themselves principals. Persons who engage in an enterprise are liable for the debts they contract, and all who assent to the undertaking or who subsequently ratify it are included in such liability. If a committee has been appointed to make arrangements they become individually liable for work done and which was procured by a subcommittee of their number, although in making the contract the subcommittee assumed to act as officers of the association. If a joint signer of a contract who represents the other signers in superintending the work makes changes in the terms of a contract he is personally liable, even though the contractor had full knowledge that the change was unauthorized and unknown to the other signers. If the contractor, architect, or engineer be one of the promoters and is himself a member of the association and has to bring suit for his services it may puzzle him as to whom he shall sue. If the relations of the subscribers partake of the nature of a partnership, then they are liable both joint and severally.' In dealing with incorporated religious associations special caution should be exercised, for in several states they cannot be sued.**

49. Subscribers to a Project. It has been held that an association of subscribers to a project to obtain a bill through the legislature to build a railroad was a partnership, and that the engineer, who was one of the sub

1 Turmey v. Town of Bridgeport (Co n.), 12 Atl. Rep. 520.

2 Turmey. Town of Bridgeport (Conn.), 12 Atl. Rp. 520; Richardson v. Grant Co., 27 Fed. Rep. 495.

3 King v. Mahaska Co. (Iowa), 39 N. W. Rep. 636 [1888]; but see Shea v. Town of Milford (Mass.), 14 N. E. Rep. 764 [1888].

* See Secs

Б

4 Lewis v. Tilton, 64 Iowa 220 [1884]. Fredenhall v. Taylor, 23 Wis. 538; Landiskowski v. Lark (Mich.), 66 N. W. Rep. 371.

Gutherless v. Ripley (Iowa), 67 N. W Rep. 109.

Davis v. Shafer, 50 Fed. Rep. 764. 8 29 Amer, & Eng. Ency. Law 864. 555–7, infra.

scribers, could not sue one of his associates in the scheme, a copartner, for the value of his services. He should have sued the firm.' It might make some difference whether the subscriptions were for stock or merely a donation. The mere act of subscribing to a project does not ordinarily create a partnership unless it is the manifest intention of the parties. The signers of a subscription paper in the ordinary form are liable severally, and not jointly. Each subscriber is liable for the amount of his subscription, and in no way responsible for the payment of the sums subscribed by others."

Under a contract between several farmers and a construction company to build a factory, which containel the provision that "we, the subscribers, agree to pay" the agreed amount for the factory, and a provision that the subscribers should form a corporation, with stock in proportion to their paidup interest, each subscriber to be liable only for the amount subscribed by him, it was held that the contract was several, and not joint, and that each was liable only for his proportion. When subscribers have signed at dif ferent times and places, and without knowing what subscriptions will be subsequently made, or by whom, the contract does not bind each subscriber to pay the entire sum. If the amount of subscription is set opposite each subscriber's name, the liability of each is as effectually limited as if such. amounts had been (in words) limited in the body of the contract. A subscriber cannot escape payment of his subscription by an averment that he notified plaintiffs that he had canceled his subscription before they had expended money or performed labor under the contract, there being no averment that the cancellation was made before plaintiffs accepted the contract.' If a contractor would recover a balance due and unpaid for the erection of a structure he cannot sue all the subscribers jointly, but should proceed against those subscribers who are in default, or at least his declaration should allege certain subscribers in default. The question might be asked, How is he to know who are in default? If the association of subscribers has been incorporated, it seems the contractor may not have a mechanic's lien on the joint property for the balance of the price for work done under contract with the subscribers' unless it can be shown that the corporation adopted the contract of its promoters."

The payee named in the subscription may maintain an action, as can any

"Davis v. Hendrix, 1 Mo. App. Rep. 41. Davis v. Campbell (Ia.), 61 N. W. Rep. 1053.

Davis v. McMillan (Ind. App.), 41 N. E. Rep. 851.

'Davis v. Ravenna C. Co. (Neb.). 67 N. W. Rep. 436; semble Clayton v. Newton Academy, 95 N. Car. 298

10 Pittsburg & T. C. Co. v. Quintrell (T nn) 20 S W. Rep. 248; Weatherford, etc., R. Co. v. Granger (Tex.) 22 S. W. Rep. 70.

body selected to receive the money in the manner required by the terms of the paper.' If no person, committee, or board is designated in the paper the payment many be enforced in the name of the remaining subscribers, or by the association as a body, or by a building committee appointed by the association.' If the subscription paper stipulate that the sums subscribed would be paid to any person who would erect a structure it is like a note payable to bearer, and the subscriptions, may be collected by any one who builds in accordance with the specifications of the paper. If the associa tion has been legally incorporated the action should be in the name of the corporation. If one of the subscribers has been authorized to act for the others and has incurred expense or advanced money on the faith of the subscriptions he may sue other subscribers refusing to pay and in his own name. Such is the case where one has acted as superintendent or a contractor and carried out the plan contemplated. A good illustration is afforded in a case where a college class at a class meeting voted to publish a class-book, the members voting or assenting to the vote were held personally liable for the expense, at the suit of one who printed it, under a contract with a member of the class elected business manager of the publication. Agreements by subscribers to pay a person their respective subscriptions upon the erection by him of a certain structure may be enforced when the structure has been completed, even though the subscribers among themselves have not performed their mutual agreements."

*

Subscribers are bound by stipulations and conditions contained in the subscription paper, and none other can be shown in contradiction to them. The subscriber cannot go outside the written contract to show different terms, such as misrepresentations, not incorporated in the subscription paper. In the absence of fraud, parol evidence is not admissible to show that the subscriptions were not to be payable except on certain other conditions not mentioned in the subscription paper. Thus it cannot be shown that certain materials were to be used in a building to be built out of the fund subscribed,' or that the contract was to be let to the lowest bidder," or that the structure was to be completed by a certain date."

50. Second Party Not Named, but Determined by His Own Act. -In many cases the contractor or second party to the contract who is to perform or who has performed the consideration is not named in the offer, but anybody who may accept the offer or perform the consideration may become the contractor. Such contracts are those created by the performance of the

124 Amer. & Eng. Ency. Law 339. 24 Amer. & Eng. Ency. Law, 339, 340. Cooper v. McCrimmin, 33 Tex. 383. 4 Wilcox v. Arnold (Mass.), 39 N. E. Rep. 414.

Davis v. Johnson, 49 Mo. App. 240. $24 Amer. & Eng. Ency. Law 341.

Gerner v. Church (Neb.), 62 N. W. Rep. 51.

8

Cooper v. McCrimmin, 33 Tex. 387. Miller v. Preston, 4 N. Mex. 314; and see McCormack v. Reece, 3 Green (Ia.) 591.

* See Secs. 122-131, infra.

consideration stipulated, as by the apprehension and arrest of a criminal under a public offer of a reward, or by being the highest bidder at an auction sale, or the lowest bidder for the performance of public works. To become a party to such a contract the person must bring himself strictly within the terms and conditions of the offer, or the rules and regulations prescribed at the sale or in the advertisement for bids or proposals. In accepting an offer of reward a person must know of the offer, and perform the consideration with such knowledge, to become a party to the contract. In auction sales, as in bidding for contract work, the contractor becomes the offerer; and if the sale is "without reserve" or the letting absolutely to the lowest bidder, then his becoming a party to the contract depends upon whether he is the highest bidder in the former case and the lowest bidder in the latter case. The fact that his offer is the highest in the one case or the lowest in the other case does not make him a party to the contract, but it gives him a right to a contract. To become a party to a contract the offer of the bidder must be accepted either by the auctioneer knocking down the goods, or by the formal acceptance of the proposal, as by awarding the contract to the lowest bidder.

The subject of proposals and lowest bidder is of special interest to readers engaged in construction work. Considerable space has been given to the subject in Chapter VI. The custom of letting contracts to the lowest bidder, which is so universal in public work, has been prolific of law-suits. The large amount of money involved and the desire on the part of men in office to reward their constituents have promoted sharp practice of every color and design. Therefore such contracts receive the closest surveillance of the court when they come before it, and in consequence thereof the law regarding contracts to lowest bidders is pretty well determined.

51. Charter and Statute Requirements Must be Strictly Carried Out.— Where directions and proceedings are prescribed by which the corporation. is to let the contract or conduct the work, these directions and instructions are imperative, and any neglect or deviation from them will be fatal to the validity of the contract. In an act which declared that a board of public works "may" advertise for proposals and the contract be given to the lowest bidder the court declared that the word "may" "must be construed to mean "shall." The illegality of the contract may be asserted by any party

or interest.'

When it was left discretionary with commissioners to employ their own labor and purchase their own materials and construct waterworks, or they

Sedgewick on Const. and Stat. Law 368-378; Henderson v. United States Ct. of Claims, Dec. Term, 1868, per Casey, C.J., pp. 75-83.

McBrian v. Grand Rapids, 56 Mich. 95; and see Santa Cruz Co. v. Heaton (Cal.), 38

Pac. Rep. 693.

Knapp v. Swany, 56 Mich. 345; Dillon's Munic. Corps, § 382; Green's Brice's Ultra Vires 43: Elmira Gas Co. v. Elmira, 2 Alb. L. J. 392; Randolph Co. v. Jones, 1 Breese (Ill.) 103.