Egan v. City & County of San Francisco

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The plaintiff, as a taxpayer of the city and county of San Francisco, brought this action to enjoin the carrying out of the terms of a certain agreement, entered into between the city and county and the Musical Association of San Francisco, and looking to the erection and management of an opera house. He also sought to have the agreement, and an ordinance authorizing its execution, declared null and void. A demurrer to the complaint was sustained, and judgment in favor of the defendants entered. The plaintiff appeals from the judgment.

The agreement in question, briefly stated, after reciting the incorporation of the Musical Association of San Francisco (which we shall hereinafter designate as the "Association") for the purpose of fostering and promoting the art of music, and encouraging a taste therefor, and declaring the desirability of these purposes, provides as follows: The association agrees to build, erect, furnish and equip upon a described block of land owned by the city and county, and forming a part of the tract set apart as a Civic Center, an opera house, and to expend in the construction, decoration, and equipment thereof not less than seven hundred and fifty thousand dollars. The opera house, when completed, is to become a part of the realty, and title to the land and building shall be vested in perpetuity in said city, "but in trust for the uses, trusts and purposes hereinafter set forth." The building to be erected is to be used exclusively for the production of operas, music dramas, ballets, and concerts, and other musical and dramatic purposes. When not in use for these purposes, it may, for the purpose of deriving a revenue to be applied to such purposes, be rented by the trustees hereafter named. The perpetual use of the land and building, as above stated, shall never be changed except by the consent of both parties to the agreement. The construction, decoration, furnishing, and equipment of the opera house is to be under the direction, control, and supervision and at the expense of the association, but the exterior design is to be approved by the board of supervisors of the city and county. The city agrees, so far as it has power so to do, that no taxes shall be assessed or levied on the building or its contents, or upon the box, loge, or seat privileges in the opera house. The expense of parking and gardening the grounds about the building is to be borne by the city.

The 7th paragraph of the agreement provides that "the occupation, conduct, control, management and possession of said opera house and its contents shall be vested in perpetuity in a board of fifteen trustees, or their respective successors, to be constituted as follows": Nine trustees to be appointed from the membership of the association by the board of governors, one to be the mayor of the city and county of San Francisco, one the head of the department of education of said city, one a supervisor of the city and county appointed by the mayor, one a citizen, not in public office, to be appointed by the mayor, one a professor of the University of California, and one a professor of Leland Stanford Jr. University, the two last named to be appointed by the presidents of the respective universities. The following paragraph declares that "the said trustees for all the purposes herein contemplated shall be vested with the full control, possession and management of the said opera house and its contents, and except as hereinabove provided, of the land above particularly described. . . ." The trustees are authorized to lease the opera house to companies, managers, or individuals for the purposes contemplated by the agreement; they are to have the sole right to direct and prescribe the quality of performances to be given, and the amount to be paid for admission, except that at least four hundred seats are to be reserved for sale to the public at a price not exceeding $1.50 per seat. The agreement contains a number of further provisions, but what we have set forth will sufficiently illustrate the principal points which are to be here considered.

In the final analysis, there is but one question to be decided, and that is, has the city and county of San Francisco, acting through its board of supervisors, the power to enter into an agreement like the one here attempted to be made. If the requisite authority is lacking, this court has, of course, no concern with the desirability of such an arrangement. No doubt the citizens who, by their subscriptions to the association, have made it possible for that body to undertake to erect, without cost to the city, a monumental structure, dedicated to the encouragement and advancement of artistic effort, are actuated by motives of altruism and civic pride rather than by any purpose of personal advantage. No doubt, too, the supervisors, in authorizing this contract, were impelled by the laudable desire to add to the attractions and benefits which the city has to offer to its inhabitants. But, however worthy the motive, however advantageous to the public the result sought to be attained, it must always be remembered that municipal corporations are public bodies of limited powers, and that the validity of their acts must be judged by an examination of the charter or law defining their powers, rather than by a view of the purposes or results of those acts. If the city and county has not the power to enter into such a contract as the one before us, that contract must fall, even though every member of this court should be convinced that the construction of an opera house on the agreed plan would be of the greatest benefit to the city and those residing within it. Notwithstanding the earnest and able arguments advanced on behalf of the respondents, we are unable to find any legal warrant for upholding the validity of the agreement. The effect of the transaction is, simply, that the city and county agrees with a private corporation that the latter may erect a building upon land belonging to the city, and that the entire control and management of the land, with the building, are to be turned over to a board composed, for the main part, of persons whom the municipality has not selected and whose actions it cannot direct. It is true that, under the terms of the agreement, the ownership of the land and building is to be vested in the city and county. But the beneficial attributes of ownership, over and above the naked legal title, are taken from the city and county, and are placed in the hands of private persons. The trustees have the "occupation, conduct, control, management and possession" of the opera house in perpetuity; they are authorized to lease the premises, they are to prescribe the performances to be given, and to regulate the prices to be charged for admission to the house. In short, they exercise virtually every right which could be exercised by one holding under a perpetual lease which contained no restriction except that the building was to be used only for the purposes of an opera house. And, as has been already suggested, this exclusive control and possession, in the nature of things as well as by the express terms of the agreement, extends to the land to be covered by the building no less than to the structure itself.

In endeavoring to ascertain whether the arrangement here sought to be consummated is authorized, we need not consider, at any length, the contention of appellant that the construction and conducting of an opera house is not, under any circumstances, a municipal function. Even without relying upon a specific provision of the San Francisco charter, to be mentioned hereafter, we should hesitate to say that the providing of a place for the production of musical performances was not within the proper scope of municipal activities, as now understood. The trend of authority, in more recent years, has been in the direction of permitting municipalities a wider range in undertaking to promote the public welfare or enjoyment. Thus, the appropriation of money for public concerts has been held to be proper under a statute authorizing appropriations for armories, for the celebration of holidays, and for "other public purposes."(Hubbard v. Taunton, 140 Mass. 467, [5 N.E. 158].) So, too, the erection of an auditorium has been regarded as properly falling within the purposes for which a municipal corporation may provide by charter. (Denver v. Hallett, 34 Colo. 393, [83 P. 1066].) Similar views have been expressed in a case involving the levy of taxes for the purpose of building a hall to be used as a memorial to soldiers and sailors who served in the War of the Rebellion.(Kingman v. Brockton, 153 Mass. 255, [11 L.R.A. 123, 26 N.E. 998].) Generally speaking, anything calculated to promote the education, the recreation or the pleasure of the public is to be included within the legitimate domain of public purposes.(Hubbard v. Taunton, 140 Mass. 467, [5 N.E. 158]; see Spires v.Los Angeles, 150 Cal. 64, [11 Ann. Cas. 465, 87 P. 1026]; Laird v. Pittsburg, 205 Pa. St. 1, [61 L.R.A. 332, 54 A. 324].)

Assuming, then, that authority to erect and conduct an opera house may be conferred upon a city, the question whether a given municipality has that authority must be answered by a reference to the charter or law defining the powers of the particular municipality. The rule is elementary that municipal corporations have only the powers expressly conferred and such as are necessarily incident to those expressly granted, or essential to the declared objects and purposes of the corporation. (Dillon on Municipal Corporations, 5th ed., sec. 357; Von Schmidt v. Widber,105 Cal. 151, [38 P. 682]; Gassner v. McCarthy, 160 Cal. 82, [116 P. 73].) Whether or not the grant of powers contained in the charter of San Francisco, as originally adopted, is broad enough to authorize the city and county of San Francisco to conduct an opera house, it seems clear that the power to engage in such enterprise, at least under certain conditions, is necessarily implied from the language of section 10 of chapter II, article II, added to the charter by an amendment ratified by legislative resolution on January 27, 1913. The section, after empowering the board of supervisors to acquire land within a certain district for the purpose of establishing a civic center, and giving the board certain powers with respect to such land, provides that "it (the board of supervisors) may authorize the erection of an auditorium by the Panama-Pacific International Exposition Company, or of an opera house, museum, or other structure, provided the ownership of such structure shall always be vested in the municipality." We cannot agree with appellant's contention that the use of the alternative "or" limits the grant to that of the right to erect only one of the various buildings described. There is more force, however, in the claim that the requirement that the building shall be erected by the Panama-Pacific International Exposition Company applies to all of the structures designated, and not merely to the auditorium. This question need not, however, be here resolved. Assuming that the section gives authority for the construction by others than the Exposition Company of an opera house, museum, or other structure of like kind (but not an auditorium), the provision constitutes an express grant to the supervisors of power to authorize the erection of an opera house to be owned by the city, and this carries with it, as a necessary incident, the power to use the building so owned for the purposes to which it is adapted.

But, granting that the city and county has the right to own and to conduct an opera house, has it the power, after acquiring the ownership of such structure located upon land belonging to the municipality, to turn over in perpetuity to a private corporation, or to a body of private citizens, the absolute control and management of such land and building? There is nothing in the amendment quoted above to indicate that it was designed to authorize the supervisors to provide for anything other than public structures and activities. On the contrary, the proviso that the ownership of the structure shall always be vested in the municipality shows clearly that it was intended to permit the construction of public buildings only. The charter does not here or elsewhere, so far as we have been able to discover, contain any clause authorizing the city to delegate or part with its right and duty of managing, through its own officers or agents thereunto authorized by law, city property applied to public purposes. It would certainly not be claimed that property devoted to the more familiar municipal purposes, such as policing, fire protection, or the assessment and collection of taxes, could be turned over to be administered by private agencies. How, then, can such action be justified in this case? The public use of public property cannot, under any provisions of charter or statute to which our attention has been directed, coexist with private management and control of such property. This principle is well illustrated by several decisions of this court. In California Academy of Sciences v. SanFrancisco, 107 Cal. 334, [40 P. 426], the board of supervisors, assuming to act under the ordinance relating to the "outside lands," ratified by the legislature in 1868 (Stats. 1868, p. 379), set apart a lot "for the use of the Academy of Sciences," a private corporation organized for scientific research. The ordinance authorized the board to set apart lots "for public uses." It was held that the "Academy of Sciences," although its activities were beneficial to the public, was essentially a private, and not a public, corporation, and that land could not be set apart to it as for a "public use." A like conclusion was reached in Home etc. of theInebriate v. San Francisco, 119 Cal. 534, [51 P. 950]. In each of these cases it was held that the plaintiff had no right to the possession of the land so sought to be set apart to it. Similarly, in La Societa etc. v. San Francisco, 131 Cal. 169, [53 L.R.A. 382, 63 P. 174], the court denied the power of the board of supervisors to grant a part of the city cemetery to a benevolent society for burial places, although the society agreed to and did expend money in improving the grounds, and buried a number of persons without charge. The essential ground of the decision, in the three cases just cited, was that a use by a private corporation was not a public use. For this reason the property of the city, held in trust for public uses, could not be turned over to such corporation. And the conclusion was not altered by the circumstance that the purposes to which the property was to be applied were, to some extent at least, within the scope of municipal activities. The same reasoning applies here. If the management of an opera house constitutes a public use, the public character of the use can exist only so long as the control is retained in the hands of some public agency. The powers of control vested in the board of trustees by the agreement before us undoubtedly require the exercise of judgment and discretion. Insofar as the proposed use is public, these powers necessarily devolve upon some officer or board of the municipality, and, under the well-settled rule, powers of this character cannot be delegated. (Scollay v. County of Butte,67 Cal. 249, [7 P. 661]; Holley v. Orange, 106 Cal. 420, [39 P. 790]; Knight v. Eureka, 123 Cal. 192, [55 P. 768].)

There may, of course, be power to lease public property, but the agreement under consideration does not purport to be a lease, and besides, the proceedings requisite for the leasing of city lands (charter, art. II, chap. II, sec. 1, subd. 32) were not followed. It is suggested, in one of the briefs, that there is no provision prohibiting the city and county from disposing of its property. But, in the case of a municipal corporation, power to do an act is not to be implied from the fact that the act is not expressly or impliedly prohibited. As we have already stated, the power does not exist, unless it is granted in express terms or by necessary implication.

The objection now under discussion is not met by the consideration that the city is given a representation on the board of trustees which is, under the contract, to have the possession and management of the opera house. A majority of the board is to be appointed by the Musical Association, and the city is given no voice in the selection of such majority, or of its successors. It goes without saying that the association, naming nine members of a board of fifteen, exercises a power which cannot be effectively disputed by the city and county, having a direct representation of not over four members. Whatever might be said of an arrangement under which the representation was equal (see Laird v. Pittsburg, 205 Pa. St. 1, [61 L.R.A. 332, 54 A. 324]), it cannot be disputed that the purpose and effect of the contract before us was to vest the management and direction of the opera house in a board that should be essentially beyond the control of the municipality or its officers.

The respondents advance, as a distinct ground for sustaining the transaction, the argument that the erection of the opera house, under the terms of the agreement before us, amounts to a gift to the municipality, in trust for purposes germane to the objects of the corporation. It is well settled that municipal corporations may accept such gifts (Estate of Robinson, 63 Cal. 620; Worcester v. Eaton, 13 Mass. 371, [7 Am. Dec. 155]; Jones v.Habersham, 107 U.S. 174, [27 L. Ed. 401, 2 Sup. Ct. Rep. 336];Phillips v. Harrow, 93 Iowa, 92, [61 N.W. 434]; Beurhaus v. Cole,94 Wis. 617, [69 N.W. 986]), even where the gift is made subject to the performance of certain obligations by the municipality.(Budd v. Budd, 59 Fed. 735.) Section 1 of article I of the San Francisco charter provides in terms that the city and county may "receive bequests, gifts and donations of all kinds of property, in fee simple, or in trust for charitable and other purposes, and do all acts necessary to carry out the purposes of said gifts, bequests and donations, with power to manage, sell, lease or otherwise dispose of the same, in accordance with the terms of the gift, bequest or trust." In so far as it is proposed to make a gift to the city, it is not to be doubted that the section quoted authorizes the city to accept the gift, in trust, and subject to the conditions agreed upon by the donors and the city. But the charter does not purport to authorize the city to make gifts, or to subject its property to a trust. The "trust" here sought to be created embraces not only the building to be erected by the association, but the land upon which that building is to stand. So long as the opera house is in existence, the land is withdrawn from any other use. It is as completely dedicated to the purposes of an opera house as is the structure standing upon it. Giving the fullest effect to the claim that the city may accept a gift of an opera house, upon condition that the management of that opera house shall be for all time vested in a private body, we cannot see how this argument tends to sustain the position that the city may turn over its land to be used, controlled and managed by such private body for the purposes of an opera house. If it were proposed to erect this building upon private property, and then to present the land and the building to the city, upon the conditions embodied in the agreement, the transaction might well be sustained upon the ground suggested by respondents. But the case before us is a very different one, and, however, much we may regret the result of our holding, we feel bound to declare that, in our judgment, there is no authority in law for the carrying out of the agreement here attacked.

The judgment is reversed.

Angellotti, J., Shaw, J., Lorigan, J., Melvin, J., and Henshaw, J., concurred.