Edwards House Co. v. City of Jackson , 138 Miss. 644 ( 1925 )

^* Headnote 1. Municipal Corporations, 28 Cyc., p. 670. Declaration filed by the plaintiff suing the city of Jackson for a total of nine thousand, nine hundred and fifty dollars for the use and occupation of the lands in the city of Jackson, Miss., which we will designate as "Esau street," claiming that the city enjoyed the use and occupation of the street for the city's benefit, from April 9, 1920, to June 1, 1923, and alleging that by virtue of a contract which had been entered into between the hotel company and the city for three thousand dollars per year that was a reasonable rental value, making a total of nine thousand dollars for the fair rental value of the lands; and, further, for two hundred and fifty dollars because the city constructed curbs and gutters along the sides of said street, and claiming that two hundred and fifty dollars was fair damages for removing same therefrom; and three hundred dollars for removing a sidewalk; and one hundred dollars for releveling and reconditioning the ground. The contract of date April 7, 1920, is attached as "Exhibit A" to the declaration.

The defendant, the city, interposed a demurrer challenging the declaration on the ground that the city, having entered upon said lands by permission of the plaintiff under a void contract of purchase prohibited by law, was not bound as tenant, nor as a purchaser upon quantum meruit, nor could there be an implied promise to pay arising from a void contract the making of which was prohibited by law. The demurrer was sustained by the lower court, and the plaintiff declining further to amend its declaration, the case is here for final adjudication upon the demurrer.

The contract involved in this controversy was before this court in cause No. 23135, Edwards House Co. and Enochs Flowers,Ltd., v. City of Jackson, and is reported under said title in132 Miss. 710, 96 So. 170, where the contract, which is voluminous, is set out in full in the opinion of the court. The contract was declared null and void by this court in that case because the contract was in violation of the Laws of 1920, chapter 326, section 1, amending chapter 209 of the Laws of 1918, section 3, providing:

"``That no warrant shall be issued or indebtedness incurred by any . . . municipality unless there is sufficient money in the particular fund from which the allowance is or must be made to pay such warrant or indebtedness. Provided, however, that such indebtedness may be incurred upon petition of a majority of the qualified electors,' etc. A city cannot without such petition purchase property on a credit basis extending over a number of years, and a contract by the city to pay annually a sum equal to the entire tax on designated property for each year is ultravires and void."

The above is the syllabus of the opinion in that case.

We shall call attention to some of the peculiar provisions of that contract, one of which was that the taxes upon the adjacent property of the Edwards Hotel Company were to be paid by the city for a full period of twenty years, apparently without regard to value of property or rate. In other words, the board of mayor and aldermen not only pledged the credit of the city, but mortgaged the taxes to be collected from the plaintiff here upon its adjacent property in payment of the purchase price of this property. The contract was peculiar, in that it provided for noiseless pavement, and not only bound the board which made the contract, but bound all future boards as to the payment of taxes and as to the building of pavements and as to the use of the street. However, the court contended itself, in the former report of this case, with declaring that the contract was null and void because the city had violated the mandate of the legislature with reference to creating an indebtedness in certain cases, not authorized by the electors in an election.

It is further important to note that within less than one year from the date of the contract the city, by its officials, repudiated the contract — declined to comply with the conditions to the extent that on March 8, 1921, the hotel company filed its bill setting up the contract and the breach thereof, and praying that a decree for specific performance of the contract be made, and for injunctions requiring a compliance on the part of the city with the terms of the contract.

Section 3 of the contract is in the following language: "Should said deed be returned hereunder before delivery or become void after delivery, then the city shall have the right to use and occupy said parcel of land as a street, and shall, for the use and occupation of said parcel of land, pay unto the seller the sum of three thousand dollars ($3,000) per annum, for the collection whereof as rent the seller shall have all of the remedies vouchsafed by law, and the possession of and title to said property shall re-vest in the seller as of the date of the execution of these presents, and there remain as of said date, as fully and completely as though these presents had never been executed.

"Sec. 4. Said seller shall have the right forthwith to cause to be removed therefrom all property of every kind and character thereon placed by the city."

After the opinion was rendered by the supreme court denying relief upon the bill for specific performance of this contract, the hotel company then filed a suggestion of error and represented to the court that rents should be adjudged to it for the occupancy of Esau street by the city, which was denied by this court with a statement in the opinion by Mr. Justice ETHRIDGE that the bill was dismissed without prejudice to any right, if any, of the hotel company to sue for and recover for the use and occupation of the said land which it might have.

It will be noted from the case just above quoted that the city declined to perform the contract within a very few months after its execution, upon the ground that it was ultra vires, void, and illegal. It will be observed, also, that under this contract the seller, the hotel company, voluntarily placed the purchaser, the city, in possession of this land. It will be further noted that it agreed itself to remove the obstructions complained of in the instant case from the lot at its option.

The authority of a municipality is limited by the authority granted to it by the legislature, and all persons who deal with a municipality are presumed to know the powers thereof, and the plaintiff in this case was aware of this rule of law. SeeEdwards Hotel City St. R. Co. v. City of Jackson, 96 Miss. 547, 51 So. 802:

The Edwards Hotel Company also knew that the city of Jackson could not contract except in pursuance to the authority given to it by legislature. See Steitenroth v. City of Jackson,99 Miss. 354, 54 So. 955:

"It is elementary law that municipalities have no powers, except such as are delegated to them by the state, either expressly or by necessary implication; and there is no distinction in this respect between governmental powers and those of a private or business nature. The powers of a municipality are granted to it, and must be exercised solely, for the benefit of the inhabitants thereof." Steitenroth v. City of Jackson,99 Miss. 354, 54 So. 995.

"The charter powers of a municipality are to be construed most strongly against a right claimed by it and not clearly given by the statute. When there is any doubt as to whether or not a municipality has the power to do or not to do a particular thing, this doubt should be solved against its charter powers, unless it is plainly manifest that the power is confided to the municipality to act."

See Crittenden v. Town of Booneville, 92 Miss. 277, 45 So. 723, 131 Am. St. Rep. 518.

The sections of the void contract above quoted are, in our opinion, void because they undertook to have the city lease or rent property for street purposes, and there is no express or implied power in a municipality in Mississippi to thus establish a street. The only power conferred is to acquire a street in the statutory manner, and leasing a street for a stipulated price of three thousand dollars per annum, or for any other sum as to that particular stipulation, was of itself ultra vires and void.

We desire to emphasize that this contract as a whole was entered into, according to the former opinion passing upon the contract, in violation of an absolute prohibition of the act of the legislature partially quoted above, and, in our opinion, it will be well for those dealing with municipalities and for municipal boards to be governed by the specific prohibitions of the legislature, because a failure to so govern themselves will render the contract void, and no action may be based upon it and no relief accorded for injury accruing by virtue of it.

This court will raise no implied contract where the contract itself is prohibited by law so far as municipalities are concerned. If there be no implied contract, there can be no recovery upon a quantum meruit for use and occupation. There can be no relation of landlord and tenant except by contract, express or implied.

The plaintiff has been refused a specific performance of its contract with the city. This contract has been declared void for the reason that it was prohibited. There can be no recovery by an action in tort because the plaintiff put the defendant, the city, in possession, and whatever occupancy there was by the city was with the permission, knowledge, and consent of the hotel company, so that no action in tort could be based upon the relation of the parties to this suit.

Counsel for the hotel company, the appellant, cite the case ofChurch v. Vicksburg, 50 Miss. 605, and we shall refer to it briefly.

In that case the street commissioner appropriated, without any express contract, certain brick which belonged to the Methodist Church, and the church sued the city therefor, and this court said:

"The doctrine of implied municipal liability applies to all cases where money or other property of a party is received under such circumstances that the general law, independent of express contract, imposes the obligation upon the city to do justice with respect to the same. If the city obtain money of another by mistake or without authority of law, it is her duty to refund it, not from any contract entered into by her on the subject, but from the general obligation to do justice, which binds all persons, whether natural or artificial. If the city obtain other property which does not belong to her, it is her duty to restore it, or if used by her, to render an equivalent to the true owner, from the like general obligation, the law, which always intends justice, implies a promise. As a general rule, undoubtedly, a city corporation is only liable upon express contracts authorized by ordinance or other due corporate proceedings. The exceptions relate to liabilities from the use of money or other property which does not belong to her, or to liabilities springing from the neglect of duties imposed by the charter, from which injuries to parties are produced. Argenti v. San Francisco, 16 Cal. 255; 1 Dillon on Municipal Corporations, 476, section 384.

"In Seagraves v. Alton, 13 Ill. 371, the court held that a contract was implied on the part of a city, which was bound to support its paupers, and which had refused to pay a person who had furnished a pauper with necessaries. Here it will be noted that there was no express refusal on the part of the city to support the pauper, and yet a promise was implied. This implication is a pure fiction to support what the court regarded as a just claim.

"It may be observed, that when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, and can control them in the discharge of their duties, can continue or remove them, can hold them responsible for the manner in which they discharge their trust; and if those duties relate to the exercise of corporate powers, and are for the peculiar benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim ofrespondeat superior applies. 2 Dillon, sec. 772."

Our observations as to this church case are that it has no application to a case where specific performance against a city is denied because the contract was in positive, open violation of an express statute under which and by which the city was controlled; nor does it apply to a contract which has been declared to be illegal and void. In the case supra, the city had the right to purchase brick and use them on its streets; and it was right to hold it liable for that which it assumed to do without a contract when it might have done the thing if it had contracted to do so.

How different from the case at bar! The suit is maintained here for the use and occupation by the city of a piece of land which it undertook to use as a street, according to the declaration, which it had no right to do — never had authority to lease a street — never had authority to make this contract, as held by this court.

The general law would not set up an implied contract where the contract cannot in any event be entered into, is prohibited, and has been declared ultra vires and void; and more especially where a court of equity has refused to require specific performance or grant any relief. The general rule, it may be with some rigidity in the instant case, must be applied here, and there is no obligation on the part of the taxpayers to pay taxes upon an implied contract when that contract has been declaredultra vires, illegal, and void by the courts of the land. And the parties entering into such contract with notice of the peril must suffer the consequences.

It would serve no good purpose to review the authorities in other states. Suffice it to say that the cases cited seem to be actions based upon torts, and no case where implied contracts are set up and damages awarded is based upon facts like those here where specific performance of the contract, including reasonable rents, had been denied in a court of equity because the contract was ultra vires and prohibited by law.

We quote with approval this statement from the text 19 R.C.L. 1061:

"While the power to contract is inherent in every municipal corporation with respect to any subject-matter within its corporate powers, the doctrine of ultra vires has, with good reason, been applied with greater strictness to municipal bodies than to private corporations, and, in general, a municipality is not estopped from denying the validity of a contract made by its officers, when there has been no authority for making such a contract. Since the powers of a municipal corporation are wholly statutory, every person who deals with such a body is bound to know the extent of its authority."

It is generally held that when a contract has been entered into by a municipal corporation with respect to subject-matter which was not within its corporate powers, the corporation cannot be held liable for the contract whether the other party thereto has fully carried out his part of the agreement or not, and since the corporation cannot bind itself directly it cannot be held liable, upon an implied contract, to pay for benefits received under an agreement entered into by it in relation to subject-matter beyond the scope of its corporate powers.

As analogous to the situation here, we cite the cases of AmiteCounty v. Mills (Miss.), 102 So. 465, Smith County v.Mangum, 127 Miss. 192, 89 So. 913, and the authorities referred to in the Mangum case wherein this court has held as to counties, that the county is not liable on a quantum meruit for the construction of roads where mandatory provisions of statutes granting powers to boards of supervisors have not been complied with. The rule is much more rigid as to municipalities and would certainly apply strictly where the act not only is not authorized but is specifically prohibited.

The demurrer was properly sustained by the court below.

The judgment of the lower court will be affirmed.

Affirmed.