City Council of Montgomery v. Montgomery & Wetumpka Plank-Road Co. , 31 Ala. 76 ( 1857 )

STONE, J.

— The authority of the city council of Montgomery, to make the contract sued on in this case, is claimed under the 14th section of its charter, which reads as follows:

“The said city council of Montgomery shall have full power and authority to make, ordain and enact such laws and regulations, (not contrary to the constitution and laws of this State,) as may be deemed necessai’y in relation to the streets and highways, public buildings and powder magazine, and every other matter and thing which they may deem necessary for the good order and welfare of said city.”

In section 1, it is declared, that the city council of Montgomery has authority “to do and perform any other acts incident to bodies corporate.”

The act incorporating the city of Montgomery creates it a municipal corporation, and confers on it the usual powers of such bodies. No power, except for a few specified objects, is conferred on its functionaries,, which in its exercise looks beyond the limits of the city.

At an early day, Judge Safi'old, speaking of the powers of corporations, employed the language, that “the act of incorporation is to them an enabling act. It gives them all the power they possess.” — State v. Stebbins, 1 Stew. 299-308. The principles asserted in the case cited have become the settled rule of construction in this court.— State v. Mayor and Aldermen of Mobile, 5 Porter, 279 ; Mayor and Aldermen v. Allaire, 14 Ala. 400 ; Ex parte Burnett, 30 Ala. 461, and authorities cited.

In Ex parte Burnett, supra, we considered the question of the powers of corporations; and we there held, that such bodies can only exercise such powers as are expressly conferred on them, and such as are necessary and proper to carry into effect the granted powers. To these we may add, “the creation of a corporation, for a specified purpose, implies a power to use the necessary and usual means to effect that purpose.” — Angell & Ames on Corporations, 200.

In the case last cited, we showed that the same rules for the determination of their powers prevailed both as to public and private corporations. — See that ease, and the numerous authorities in support of these propositions.

Looking into the charter of the city of Montgomery and its amendments, we find no express authority to enter into the contract declared on; neither is the exercise of such power necessary to carry into effect any of the expressly granted powers ; nor was the exercise of the power under consideration a necessary means of effecting the purpose for which this corporation was created. The question then arises, do the general clauses, copied in the opening of this opinion, aid the appellant in this case ?

In the case of Beaty v. Lessee of Knowler, 4 Peters, 152-171, the supreme court of the United States held the following language: “The provision in the tenth section, that,the ‘directors shall have power to do whatever shall appear to them to be necessary and proper to be done for the well ordering of the interest of the proprietors, not contrary to the laws of the State,’ was not intended to give unlimited power, but the exercise of a discretion within the scope of the authority conferred. If the words of this section are not to be restricted by the other provisions of the statute, but to be considered according to their literal import, they would vest in the directors a power over, the laud, only limited by their discretion. They could dispose of the land, and vest the proceeds, in any manner which they might suppose would advance the interest of the proprietors. It is only necessary to state this consequence, to show the danger of such a construction.” See, also, The People v. Utica Ins. Co., 15 Johns. 358, 383 ; Stetson v. Kempton, 13 Mass. 272, 278-9 ; State of Ohio v. Washington Social Library Co., 11 Ohio, 96; Angell & Ames on Corporations, 3d ed., 84-5-6.

The language found in the charter which was construed, in the case of Beaty v. Lessee of Knowler, supra, strikingly resembles the clause from the act incorporating the city of Montgomery, which we are considering. -The grant of power in the one case is, that “the directors shall have power to do whatever shall appear to them to be necessary and proper to be done,” ¿•c. In the other, it embraces “every other matter and thing which they may deem necessary for the good order and welfare of said city.” In this ease, as in the case from 4th Peters, supra, if the words of the charter “are not to be restricted by the other provisions of the statute, but to be considered according to their literal import, they would vest in the corporate authorities a power, * * * only limited by their discretion.” We cannot believe it was the intention of the legislature to confer on the city council of Montgomery “unlimited power”; but only to grant to that body the right to exercise “a discretion within the scope of the authority conferred.” In other words, we limit the words, “every other matter and thing,” as found in the act, to such subjects as are cognate to the powers expressly conferred.

Arriving at these conclusions, it follows, that the city council of Montgomery had no authority to construct, or aid in constructing, a plank-road or bridge outside of the corporate limits of the city, unless such road or bridge should become necessary to carry into effect some power expressly granted. No clause of the act of incorporation has been pointed out, to which this implied power would attach, and we have not been able to find such clause. Indeed, this argument has not been urged before us.

One of the causes assigned in the demurrer to the complaint, is, that it contains no avern^ent “that the Montgomery and Wetumpka Plank-Road Company ever received the proceeds of said bonds or any of them.” Both the complaint, and the bond declared on, show that the city council of Montgomery “hath loaned” to the planlc-road company bonds to the amount of twenty thousand dollars. The plank-road company having received the bonds, if those bonds were in a condition that they could not be made available, the question should be presented by a proper plea. We cannot presume such to have been the case.

The demurrer also asserts, that the bond declared on was given upon an illegal consideration. What was the consideration of the bond ? Evidently, twenty thousand dollars of the bonds of the city of Montgomery. We think it clear that there are purposes for which the city could issue its bonds. In fact, the act “to amend the charter of the city of Montgomery,” approved February 2, 1856, expressly authorized the city council to raise a sum of money not exceeding seventy-five thousand dollars, by the sale of the bonds of said city for that amount. Neither the bond declared on in this case, nor any part of the pleadings in the cause, informs us that the bonds which were the subject of this loan were issued for a purpose not authorized by law. In the absence of all averment, showing that the bonds were issued for an unauthorized purpose, we cannot presume that the bond under discussion was given on an illegal consideration.

The legality of the issue of those bonds, and the liability of the city for their redemption; and, as affecting this last inquiry, the question whether the bonds are in the hands of first or subsequent holders, — will, perhaps, present grave questions, should they arise. None of them are presented by this record, and it would be improper in us now to consider tbem.

But the demurrer raises another question: namely, the power of the city council to make the contract declared on, and to maintain an action for its breach. In our opinion, the latter inquiry is dependent on the former. In other words, we think it clear that, if the city council had no authority to have the work done which the bond requires the defendants to perform, no action can be maintained by the former for the breach of the contract. "We base this, not on the want of consideration to support the contract; on the contrary, the same rule would prevail if the city had paid out gold and silver as the consideration for the bond. It rests on the naked want of authority in the city to have the work done; and this want, of authority, if it exist, renders the bond invalid. We think these results flow inevitably from the principles above settled.

It may be contended that, although the bond declared on is invalid so long as the city bonds remain in the hands of the plank-road company, yet, when that com- • pany negotiates the bonds, and in this way, as it is contended, fixes a liability on the- city for their redemption, then the consideration of the bond becomes complete, and a right of action upon it accrues to the city council. We confess our inability to perceive the force of this argument. The general rule is, that contracts depend for their validity on the facts of the case as they exist when it is entered into. With the exception of a few cases dependent on peculiar circumstances, we know of no rule by which a contract which is invalid at the time it is entered into can become binding by the happening of any subsequent event. At all events, we cannot admit that a subsequent sale of the city bonds by the plank-road company, can have the effect of supplying the want of power in the city authorities to make the contract.

The contract in this case purports to bind the obligors to apply the proceeds of the city bonds faithfully to the completion of the Montgomery and Wetumpka plank-road, and the building of a bridge over the Tallapoosa river; the work to be completed by the first day of March, 1853. The breaches assigned are, that the road has not been completed, and the bridge has not been built. The question arises, had the city council authority to contract to have these works done? 'We judicially know that no part of the Tallapoosa river is within the corporate limits of the city of Montgomery; and so far as the contract declared on binds the defendant to build the bridge across the Tallapoosa river, we hold that no recovery can be had. The 'charter of the Montgomery and Wetumpka Plank-Road Company is not brought before us, and we cannot learn the termini or route of that road, further than the names of the places Montgomery and Wetumpka indicate the same. Whether any, and if any, what portion of the road is intended to be within the corporate liipits of the city of Montgomery, we do not know.

It is a clear proposition, that the corporation of the city of Montgomery has authority to improve the streets and highways within its limits. It may make valid contracts to have these works performed. There is nothing on the face of this bond, or in the complaint, which shows that said road, or at least a portion of it, is not within the city of Montgomery, and, therefore, under the jurisdiction of the city authorities. On demurrer, we do not think the court was authorized to presume such was not the case ; but, on the contrary, in the absence of anything apparent on the pleadings, or in the contract, showing such to be the case, we think the court should rather have presumed that the city council, in making said contract, did not transcend its powers.

This ease, then, presents the question of a contract or promise, based, so far as we are informed, on a good and valuable consideration, to do and perform certain works, a part of which the city of Montgomery had authority to contract for, and a part of which was without the pale of their powers. In such case, is the contract invalid in toto, or is it valid in part, and invalid in part ? Where a bill of exchange was accepted, to secure the payment of a sum of money, consisting partly of a debt from which the acceptor had been discharged under the insolvent debtor’s act, and partly of a new debt, it was beld, that the bill was a valid security as to the latter, although it was void as regarded the former deht. — See the authorities to this effect collected in Addison on Contracts, (2d Am. ed.) 147-8. So, a contract, on a valuable consideration, not to engage in a particular trade in London or "Westminster, or within six hundred miles thereof, was held binding as to London and Westminster; but, as to the six hundred miles, it was held void, because it was in general restraint of trade. — See Price v. Green, 16 Mees. & Wels. 346; Doe v. Pitcher, 6 Taunt. 359 ; Grand Gulf Bank v. Archer, 8 Sm. & Marsh. 151. We think these authorities are decisive of the question we are considering; and that, if any of the work which the contract required the obligors to perform was within the city of Montgomery, the bond, • to the extent of the damages sustained from that breach, was and is recoverable. This question cannot be determined absolutely without inspecting the charter of the Montgomery and Wetumpka Plank-Road Company. That being a private corporation, and its charter no.t brought before us, either in the pleadings or proof, we cannot look to it in determining these questions.

It is further urged in favor of the maintenance of this action, that inasmuch as the plank-road company has had the benefit of the city bonds, and obtained them on the faith of the contract which is the subject of this suit, the obligors in this bond should be held estopped from disputing the authority of the city to make the contract'. If this doctrine be established, then corporations, no matter how limited their powers, may make themselves omnipotent. They have only to induce persons to contract with them beyond the scope of their powers, and their very usurpations have the effect of conferring powers on them which the legislature have withheld. A proposition so erroneous can scarcely need argument to overturn it. — See, on this point, Penn., Del. & Md. Steam Nav. Co. v. Dandridge, 8 Gill. & J. 248, 319-20, and authorities cited; Albert v. Savings Bank of Baltimore, 1 Md. Ch. Dec. 407-13; Smith v. Ala. Life Ins. & Trust Co., 4 Ala. 558; Hodges v. City of Buffalo, 2 Denio, 110; Life & Fire Ins. Co. v. Mechanics’ Fire Ins. Co., 7 Wend. 31; N. Y. Firemens’ Ins. Co. v. Ely, 5 Conn. 560. It will be remembered that, in this case, it is the corporation itself which sues. The suit is an attempt to enforce a contract which the corporation had no authority to make, save as above indicated. We cannot apply the doctrine of estop-pel to such a case as this. It is not necessary that we should now go further.

Eor the reason above stated, the judgment of the circuit court is reversed, and the cause remanded.

Rice, C. J., dissenting.