Opinion ID: 1057954
Heading Depth: 3
Heading Rank: 1

Heading: The immunity of municipal corporations

Text: from quantum meruit claims. Jean Moreau contends that municipal corporations are not immune from quantum meruit claims, regardless of whether the claims arise out of the exercise of governmental or proprietary functions. To make this argument, it relies on Mount Jackson v. Nelson, 151 Va. 396, 145 S.E. 355 (1928). In that case, the town of Mount Jackson contracted with the owners of a gas station to build a water main. Id. at 399, 145 S.E. at 355. The main was intended to allow the town to sell surplus water to new customers at a profit, an exercise of its proprietary or business function. Id. at 404, 145 S.E. at 357. The owners built the main, but the town refused to pay. Id. at 399, 145 S.E. at 355. The owners thereafter sued the town. On appeal, we held that they could recover on a quantum meruit claim, Id. at 407, 145 S.E. at 358. We explained: The town has retained and controls this main designed for the benefit of consumers generally through which they can deliver water at a profit. In such circumstances the obligation to pay is as complete as it would be to pay for a right of way bought and held for this pipe. No one would claim that it could keep such an easement and not pay for it. 12 Id. Roughly ten years later, we confronted similar facts in Leonard v. Town of Waynesboro, 169 Va. 376, 193 S.E. 503 (1937). There a homeowner sued the town of Waynesboro to recover the costs of constructing a water main. Id. at 378, 193 S.E. at 503. The town was using the main without the homeowner's consent to sell water to her neighbors. Id. at 380, 193 S.E. at 504. Relying on Mount Jackson, we held that where a town takes over and controls a water line built by others and uses it for the benefit of the town and consumers generally, and through it delivers water for a profit, it is obligated to pay, on a quantum meruit, those who constructed the line. Id. at 383, 193 S.E. at 506. We reasoned: When a municipality enters into the business of operating a water plant it is acting in its proprietary, or quasi private, capacity for the private advantage of its inhabitants and of the municipality itself. It exercises business functions rather than those governmental in their nature. In the exercise of those functions the municipality is governed largely by the same rules as those applicable to private corporations or individuals engaged in the same business. Transactions touching such business should receive the same construction by the courts as like ones between private corporations or individuals. Id. at 383-84, 193 S.E. at 506. In a more recent decision, citing Mount Jackson and Leonard, we noted that [r]ecovery on the basis of quantum meruit has been allowed against a municipality exercising a 13 proprietary function. Flory, 261 Va. at 237 n.3, 541 S.E.2d at 919 n.3. We have not before now, however, specifically addressed whether recovery on the basis of quantum meruit is also allowed against municipal corporations exercising governmental functions. Jean Moreau urges us to hold that [t]he rationale set forth in Mount Jackson applies equally to proprietary or governmental functions. We disagree. In Flory, we reaffirmed that the Commonwealth is immune from quasi-contractual claims. Id. at 237, 541 S.E.2d at 918. We began our analysis by summarizing the applicable principles: Under the common law, sovereign immunity did not shield the sovereign from liability for its valid contracts. However, quasi-contractual doctrines are premised on the absence of a valid contract. The Commonwealth's common law liability for its contracts does not encompass quasicontractual claims, and any relief based on such claims must be authorized through a statute abrogating the Commonwealth's sovereign immunity. Id. at 236-37, 541 S.E.2d at 918 (internal quotation marks and citation omitted). Finding no statutory or case authority . . . for the proposition that the Commonwealth has waived its immunity from liability under theories of quasi-contract, we went on to conclude that it could not be held liable on claims for quantum meruit or contract implied in law. Id. at 237, 541 S.E.2d at 919. 14 When municipal corporations exercise governmental functions, they act as arms or agencies of the State. Southern Railway Co. v. City of Danville, 175 Va. 300, 305, 7 S.E.2d 896, 898 (1940). For this reason, we have long held that municipal corporations share in the Commonwealth's immunity from tort claims when they are performing such functions. See, e.g., Carter, 259 Va. at 590-91, 527 S.E.2d at 785. We see no reason why we should hold differently for quasi-contractual claims. If municipal corporations act as arms or agencies of the State when they exercise governmental functions, then they should be protected — like the Commonwealth — from both tort and quasi-contractual claims. We therefore conclude that municipal corporations performing governmental functions are immune from quantum meruit claims and that recovery against municipal corporations on a quantum meruit basis is limited to proprietary functions.