Meiliana Anggelia (05120120028) Miftachul Jannah(05120120066) Renyta

Margaretha(051201200130
Group 2 : Illegality Contract
1

ILLEGALITY OF CONTRACT, THE NORBECK & NICHOLSON
COMPANY AGAINST THE STATE OF SOUTH DAKOTA


I. Issue
1. Norbeck & Nicholson Company acted against the State of South Dakota
Legal / Illegal? Why?
2. Are the complaint statement valid/ not? Why is it?

II. Background Facts
a. In brief
- Original action by the Norbeck & Nicholson Company against the State of South
Dakota, to recover upon a contract for sinking and furnishing equipments for an
artesian well by plaintiff. Norbeck enjoy the allowance from the well, that
thereafter, on about the 1st day of May, 1911, the plaintiff presented its claim in the
sum of $ 2,602.89 to the State Auditor for allowance and issuance of a warrant upon
the State Treasurer. Demurrer to complaint, as not stating facts constituting a cause
of action, sustained.

b. Detailed account of case lead to illegality of contract
- Constitution os the highest law in South Dakota, followed by other codified rule such
as civil code
- Peter Norbeck ( President of Norbeck & Nicholson company is senator for Spink
county<legislative member state>, state of South Dakota ) prohibited to have
interest in contract with state during elected term(Art. 3, Sec. 12 of state
constitution) legislature shall never * * * authorize the payment [***12] of any
claims or parts thereof created against the state.
- Legislative authorization prohibited of payment of any claim against the state
under contracts (without express authority), making contract is absolutely
void(unauthorized& against public policy) so cannot be enforced (Art. 12, Sec. 3 of
state constitution
1
). So plaintiff cannot acquire any legal right of any kind.
- Contract that is illegal because expressly prohibited by law, is unenforceable as a
general rule, and where one party thereto has performed in whole or in part he
cannot avoid the contract and recover a reasonable compensation for performance.
- Under the provision of the Code of Civil [**848] Procedure, providing that when
the State Auditor shall refuse to allow any just claim against the state, that any
person deeming himself aggrieved thereby may maintain an action in the Supreme
Court against the state to determine the legality or justness of such claim.
- Some contracts are prohibited by law for the benefit of some particular class of
individuals, and it seems to be held that the persons for whose individual benefit
such contracts are prohibited may waive such prohibition, or by their acts may be
estopped from asserting such unlawfulness, and the courts grant recovery of the
consideration on the quantum meruit,, under the exception to the general rule we
are now considering, but this exception to the rule is not available when in
contravention of any public reason or public policy. (Section 2412, Civil Code)
- The illegality of some contracts consists in the fact that the subject-matter of the
contract is illegal without reference to the parties in contract , arose from express
prohibition of law based on public policy, renders the contract wholly null and void

1
The highest law in state
Meiliana Anggelia (05120120028) Miftachul Jannah(05120120066) Renyta
Margaretha(051201200130
Group 2 : Illegality Contract
2

for any purpose, and precludes a recovery on an implied contract or on the
quantum meruit
2
.
- State is not in pari delicto
3
, but this would not apply to plaintiff nor to the state
officials who entered into this contract on behalf of the state.

III. Rule :
Art. 3, Sec. 12 of state constitution
Art. 12, Sec. 3 of state constitution
Provision of the Code of Civil [**848] Procedure
Section 2412, Civil Code

IV. Analysis & Conclusion:
- Peter Norbeck is legislative act , In the case of a contract entered into by an
administrative officer though forbidden by law(Art. 3, Sec. 12 & Art. 12, Sec. 3 of state
constitution). The public could often be protected by simply holding the express
contract void and allowing a recovery on quantum meruit, it being the contract only
that is tainted, and the evil to be guarded against being an unfair contract or a failure
to fairly perform the contract have since Norbeck and Nicholson company is
enjoying the full and exclusive use and benefit of said well. Furthermore, Legislator
was influenced by a hope of benefiting through an express contract, means it has
breach the civil code(Section 2412, Civil Code). The difficulties in determining the
motives which may influence the legislator in his vote renders it not only
impracticable but impossible to insure the purity of legislation except by the
enforcement of provisions it may remove the source from which might spring wrong
motives. It follows that, under the constitutional provision in question, we can
neither inquire into the motives of the legislator, nor into the value of the services
rendered under the forbidden contract. Therefore, under the facts pleaded in the
complaint, conceding it can be concluded Peter Norbeck influenced in his vote, or in
anything that he may have done or failed to do as a member of the Legislature in
relation to the bill which authorized the contract in question, by any motive of gain,
and conceding that the state has been greatly benefited by the services performed,
this court can grant it no relief, and the demurrer to its complaint must be sustained.




2
Latin for "as much as he deserved," the actual value of services performed.
determines the amount to be paid for services when no contract exists or when there is
doubt as to the amount due for the work performed but done under circumstances
when payment could be expected.
3
In equal fault