Hines v. Norcott, 176 N.C. 123 (1918)

Oct. 2, 1918 · Supreme Court of North Carolina

176 N.C. 123

JAMES M. HINES v. WILEY P. NORCOTT.

(Filed 2 October, 1918.)

1. Contracts — Lessor and Lessee — Municipal Corporations — Ordinances— Statutes — Sewers—Health.

Where an ordinance of a town, in pursuance of its municipal powers, makes the use and maintenance of surface privies unlawful upon lots abutting upon a street wherein a sewer-pipe has been laid, and requires the owners of such lots to connect with the sewer by a certain date, providing a penalty for its violation, the courts will examine the ordinance to ascertain the intent of the municipal authorities in passing it; and the validity of a contract of lease of premises adjoining a street wherein the pipe had been laid is not affected by the fact that the owner thereof has failed to comply with the ordinance, there being nothing in the lease transaction immoral per se, or inhibition in the contract of lease against making the connections required.

2. Same — Suitable Premises — Trials—Questions for Jury.

The owner of a lot in a town contracted to lease a part of a building to be erected by him thereon, providing among other things that the building should be “a suitable one,” and after its completion the lessee entered upon the leased premises and occupied the same without objection. Thereafter, an ordinance of the town required the owner of the building, under penalty, to connect with a street sewer, which he failed to do. The ordinance being interpreted as not affecting the contract, it is held that the lessee’s right to annul the lease was properly made to depend upon the question of fact whether the building was a suitable one within the intent and meaning of the contract.

ActioN tried before Allen, J., and a jury, at May Term, 1918, of Pitt. Tbe plaintiff sued for rent due under a lease, made 13 November, 1913, by bim to tbe defendant, for four stores and a hall in a building to be erected in tbe town of Greenville, at $12 per week, for a term of five years. At tbe completion of tbe building, in March, 1914, tbe defendant entered into possession and occupied tbe premises for about fourteen months, paying tbe rent regularly according to tbe terms of tbe lease, up to 12 April, 1915. Tbe building was to be of brick and “a suitable one.”

Tbe defendant denied liability, and, by amendment to bis answer, which was allowed by tbe court, be pleaded that the contract was unlawful and unenforcible, as being in violation of tbe following ordinance of tbe town of Greenville, passed in April, 1914, after tbe lease was executed and tbe defendant bad taken possession of tbe tenement: “Whereas tbe maintenance and use of surface and dry privies in tbe town of Green-ville is or may become a menace to tbe public health of tbe town: Now, therefore, be it ordained by tbe Board of Aldermen of tbe Town of Greenville in regular meeting assembled on 2 April, it shall be unlawful for any person, firm, or corporation to erect, maintain, or use any surface or dry privies upon any lot or premises in said town, abutting on any street wherein a sewer-pipe has been laid; and that all owners of said property shall connect with said sewer on or before 1 June, 1914. Any person violating tbe provisions of this ordinance shall be fined $5 for each offense, and each day said violation shall continue shall constitute a separate offense.”

There was evidence to tbe effect that tbe plaintiff, at tbe time of making tbe lease, and afterwards, bad promised to install a plumbing and sewerage system on tbe premises, connecting with tbe main sewer line on Cotancb Street, which is in front of tbe building, but that this was not done. Plaintiff denied that be made any such promise, or that anything was said about it. Tbe upstairs was to be used for a dance ball; tbe lower story was to be used for a pool-room, a barber shop, a cafe, and a drug store, one in each of tbe four rooms.

Plaintiff testified that defendant paid tbe rent up to 12 April,-1915, and there is nothing charged after 31 May, 1915, and that defendant quit tbe premises in 1915.

Tbe defendant requested tbat tbe following instructions be submitted to tbe jury:

1. As it is admitted tbat plaintiff did not put in sewerage as required by tbe ordinance of tbe town of Greenville, tbe plaintiff cannot recover on said contract since 1 June, tbe date said ordinance became effective.

2. As plaintiff admits tbe rental account bas accrued since 12 April, 1915, and since tbat time be bas been renting tbe building in violation of tbe ordinance, be cannot recover.

3. If you find from tbe evidence tbat plaintiff rented tbe building in violation of tbe ordinance, tben be cannot recover in tbis action.

These instructions were all refused, and defendant duly excepted.

Tbe court charged tbe jury as follows: “This action, as you will understand, is brought by tbe landlord, Mr. Hines, against tbe defendant for an amount which be claims to be due for bis building which be rented. Tbe only issue submitted to you is as to what amount, if any, is-due tbe plaintiff by tbe defendant, tbe plaintiff claiming tbat be is due tbe sum of $113, and tbe defendant claiming, tbat be is entitled to a counterclaim, or set-off, for failure to put in certain sewerage. Tbe first question to be considered is whether tbat was agreed upon, and whether it was necessary to make it a suitable building. You will remember tbe agreement tbat be was to provide a suitable building, and there was a controversy there, tbe plaintiff contending tbat it was a suitable building without- sewerage, and tbe defendant contending tbat it was not a suitable building without sewerage, and tbat by reason, of tbe failure to so provide sewerage be bas been damaged to tbe amount of $10 per month, which, be says, amounts to about $100. So tbe first question would be as to whether it was a suitable building without sewerage for tbe purpose for which it was being erected and used; and if you find it was suitable without it, tben be would not be entitled to a counterclaim. If you find tbat it was not suitable, tben you will further find whether be was. damaged by reason of tbe failure, and deduct from tbe amount due to tbe plaintiff, which plaintiff says is $113, tbe amount of such damage as you find. I shall not bold tbat by reason of not complying with tbe-town ordinance tbe plaintiff cannot recover, and I charge you not to consider tbat, it being a question between him and tbe town authorities as to. whether they would make him close bis business or comply with the-oi'dinanee. It would not affect tbis suit. So you consider what amount is due tbe plaintiff, if any," under tbe contract, and whether or not be erected a suitable building; and if be did, tben be would be entitled to. tbe full amount; and if be failed to do so, tben you would deduct whatever amount you find be bas been damaged by reason of tbe failure in máking it a suitable building.”

Defendant, in proper manner, excepted to the charge, and assigned several errors.

The jury returned the following verdict:

1. Is the defendant indebted to the plaintiff ? If so, in what amount ? Answer: $113.

Judgment upon the verdict, and defendant appealed.

F. G. Harding for plaintiff.

Julius Brown for defendant.

Walker, J.,

after stating the case: The defendant contends that there can be no recovery against him.in this case because the lease is an illegal contract, being violative of the ordinance of the town of Greenville, which we have copied in the statement of the case. For the purpose of deciding whether a contract is in contravention of a statute or ordinance, and void for that reason, we are at liberty to examine the statute and •ascertain what was the legislative intent, and whether it was the purpose to avoid the contract alleged to be contrary to its provisions, or whether it was intended that the penalty alone should be a sufficient punishment. The Court, b j Justice Wayne, held, in Harris v. Runnels, 12 Howard, 79 (13 L. Ed., 901), after stating the English rule: “Such we believe to be now the rule in England, but with many exceptions, made upon distinctions very difficult to be understood consistently with the rule — ;so much so, that we have concluded, before the rule can be applied in any case of a statute prohibiting or enjoining things to be done, with a prohibition and a penalty, or a penalty only, for doing a thing which it forbids, that the statute must be examined as a whole to find out whether or not the makers of it meant that a contract in contravention of it should be void, or that it was not to be so. In other words, whatever may be the structure of the statute in respect to prohibition and penalty, or penalty alone, that it is not to be taken for granted that the Legislature meant that contracts in contravention of it were to be void, in the sense that they were not to be enforced in a court of justice. In this way the principle of the rule is admitted, without at all lessening its force, though its absolute and unconditional application to every case is denied. It is true that a statute containing a prohibition and a penalty makes the act which it punishes unlawful, and the same may be implied from a penalty without a prohibition; but it does not follow that the unlawfulness of the act was meant by the Legislature to avoid a contract made in contravention of it. 'When the statute is silent and contains nothing from which the contrary can be properly inferred, a contract in contravention of it is void. It is not necessary, however, that the reverse of that should be expressed in terms to exempt a contract from the rule. The exemption may be inferred from those rules of interpretation, to. which, from the nature of legislation, all of it is liable when subjected to judicial scrutiny. That legislators do not think the rule one of universal obligation, or that, upon grounds of public policy, it should always be applied, is very certain. For, in some statutes, it is said in terms that such contracts are void; in others, that they are not so. In one statute there is no prohibition expressed, and only a penalty; in another there is prohibition and penalty, in some of which contracts in violation of them are void or not, according to the subject-matter and object of the statute; and there are other statutes in which there are penalties and prohibitions in which contracts made in contravention of them will not be void unless one of the jmrties to them practices a fraud upon the igno- . ranee of the other. It must be obvious, from such diversities of legislation, that statutes forbidding or enjoining things to be done, with penalties accordingly, should always be fully examined before courts should refuse to give aid to enforce contracts which are said to be in contravention of them.”

In Dunlop v. Mercer, 156 Fed. Rep., at p. 556, the Court follows the rule laid down in Harris v. Runnels, supra, and thus comments upon it: “The rule announced in this case has been repeatedly applied by the Supreme Court, notably in Fritts v. Palmer, supra, and the cases cited in that opinion, and has become an established canon of interpretation in the national courts. The true rule is, that the court should carefully consider in each case the terms of the statute which prohibits an act under a penalty, its object, the evil it was enacted to remedy, and the effect of holding contracts in violation of it void, for the purpose of ascertaining whether or not the lawmaking power intended to make such contracts void; and if from these considerations it is manifest that the Legislature had no such intention, the contracts should be sustained and enforced; otherwise, they should be held void,” citing cases, and among them Fritts v. Palmer, 132 U. S., 287 (33 L. Ed., 317). See also 6 Ruling Case Law, sec. 109, and cases in note 20 to the text; 13 Corpus Juris, pp. 422 and 423, sec. 352, and note 84 (a) to text; Levison v. Boas, 150 Cal., 185 [S. c., 12 L. R. A. (N. S.), 575], and elaborate note; Neimeyer v. Wright, 75 Va., 239; Union & Mining Co. v. R. M. Nat. Bank, 96 U. S., 640 (24 L. Ed., 648) ; O’Hare v. Bank, 77 Pa., 96.

The case of Harris v. Runnels, supra, is analogous to our case, for there the suit was upon a promissory note given for slaves carried into Mississippi and sold there, in violation of a statute of that State which prohibited their sale without a certificate. The Court sustained a recovery upon the note against a plea that it was given in violation of the law. In the case under consideration the ordinance, which is entitled “Dry or Surface Privies,” declares that they are a menace to the public health, of the town; forbids that they be erected, maintained, or used upon any lot, or premises, abutting on any street wherein a sewer-pipe has been laid, and requires that “The owners of said property shall connect with said sewer on or before 1 June, 1914.” There is nothing there said, .expressly or impliedly, to the effect that leases of such premises shall be void, but the ordinance only provides for a penalty of $5 for each day’s violation of its provisions. The imposition of a penalty for not doing an act which is required to be done may of itself render the doing of the same illegal; but still, if upon a fair construction of the statute it appears to have been the intention of the legislative body to confine the punishment or forfeiture to the penalty prescribed for a violation of it, that intention will be enforced. And the same may be said as to the prohibition of an act, but it does not follow in either case that the illegal act will vitiate a contract which is connected with it only incidentally because it relates to property affected, in some degree, by the statute or ordinance prohibiting or enjoining the act and annexing a penalty for its violation. This ordinance was intended to forbid the “erection, maintenance, or use of surface or dry privies” in the town, and required, in order to prevent any injury to the public health, that they should be connected with sewer-pipes laid in a street adjoining the premises. The lease in this case did not refer at all to the subject-matter of the ordinance, and especially did not stipulate that no such connection should be made, or that such privies should or might be used on the premises. The town council, in passing the ordinance, surely did not have in mind the prohibition of a lease or sale of the premises, but only the punishment by way of penalty for the violation of its ordinance. The Court said, by Justice Harlan, in Fritz v. Palmer, supra, at p. 288 : “It may also be assumed, for the purposes of this case, that this company violated the law of that State when it purchased the premises here in controversy without having, in the mode prescribed by the statutes of Colorado, previously designated its principal place of business in that State, and an agent upon whom process might be served. But it does not follow that the title to the property conveyed to the Comstock Mining Company remained in Groshon, notwithstanding his conveyance of it to that company in due form and for a valuable consideration.” And in Dunlop v. Mercer, supra, Judge Sanborn, in referring to that case, said: “The Supreme Court held that the deeds were illegal, but that they were valid, and that they conveyed the property, and it sustained the title on the ground that the imposition of the penalty of the personal liability of the officers and stockholders, without any imposition of the penalty that contracts and deeds in violation of the statute should be void indicated that the Legislature did not intend to make and did not make such deeds and contracts void by statute.” And again: “The object of it was not to prohibit or to avoid contracts of foreign corporations for tbe sale of merchandise. The evil which the Legislature sought to remedy was not the making or the performance of such agreements. Such contracts were not deleterious to the citizens or to the State, but they were beneficial to both. The purpose of the Legislature was to subject foreign corporations doing business in the State to the process of its courts, and perhaps to a license tax. . . . The effect of the statute was to provide that if such a corporation would not subject itself to the process of the courts of the State, it should not be permitted to resort to such courts for relief, and it should pay a penalty of $1,000. There is no declaration- in the statute that contracts of unqualified corporations doing business in the State without complying with the prescribed conditions shall be void.”

It cannot be supposed, upon a proper reading of this evidence, that the council intended to invalidate leases and sales of property merely because the owner of the premises had failed to make the sewer connections, and it is to be noted that nothing in the case shows that there were any dry or surface closets on the premises, or anything else that would “menace the public health.” The jury have found, when we interpret the verdict in the light of the evidence and the charge, that the building was suitable, within the meaning of the contract, for all the purposes of the defendant, under a charge which required the jury to find, before deciding for the plaintiff, that the building was suitable without sewerage, that being the controversy between the parties. If the council intended to invalidate leases or sales of the property until the proper-sewer connections were made, if there were dry or surface closets on the-premises, it was very easy to say so; but that was not the purpose, as the council manifestly intended that the ordinance should provide only for a penalty for erecting, maintaining, or using such closets without having made the connection after the date named therein. The lease was entirely collateral to and independent of the object for which the ordinance was enacted, as the cases already cited by us clearly demonstrate. It would be pressing the ordinance by forced construction beyond its proper and intended scope to hold that it was fairly within the contemplation of the council to destroy contracts made with reference to-the premises described in the ordinance, especially when the leasing and conveying of property is of itself perfectly legal, and, the freedom of such traffic exchanges is in large measure beneficial to the public interests, and contributes to the prosperity of the town. Such a holding is not required by public policy, and the consequences of it to legitimate interests repels the idea that it was intended by the council that the ordinance should embrace such sweeping forfeitures. Union & G. M. Co. v. R. M. Nat. Bank, supra.

There is nothing in this record to show that the evil recited in the ordinance as affecting the public bealtb existed in this instance, or that the premises could not be occupied safely without the sewer connections.

The ease of Courtney v. Parker, 173 N. C., 479, does not conflict with our decision, and is not an authority in support of the defendant’s contention. There the defendant had done the very thing which was, in express terms or by the clearest implication, forbidden by the statute, and which it was unlawful to do, and every time he made a sale in the same manner, he did the same thing which the statute was intended to prohibit, and which it declared should be unlawful and a misdemeanor, punishable by fine and imprisonment. In other words, the statute declared that he should conduct his business in a certain way, and not otherwise, and that he should not conduct it at all “unless” he complied with the provisions of the statute. He did not pursue the prescribed method, but the one denounced, and his act was therefore held to be illegal and his contract tainted by it. That is not our case.

There is nothing in the lease transaction which is immoral per se, and therefore it is our right to search out the intention of the council and the meaning of the ordinance, in the language of the latter, and discover, if we can, what was its purpose, and not destroy contracts, with perhaps disastrous results, unless we find that to have been the real meaning and object in view. Courtney v. Parker, supra, and cases cited therein. The ordinance does not, in terms or by implication, forbid the sale or leasing of premises having no sewer connections, but is restricted to the injunction that in certain instances the owner should make such connections under a penalty for his failure to do so. There is no inhibition in this contract against the making of such connections, and the owner is perfectly free to make them at any time. There is not even a reference to the matter, one way or another.

The learned judge decided correctly upon the validity of the contract.

No error.