Court Opinion

ID: 8781873
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:21:35.675223+00
Date Added: 2024-06-11T17:02:52.446120
License: Public Domain

GRUBB, District Judge
(after stating the facts as above). The judgment of dismissal presents for decision but the single issue: Whether, prior to the bringing of the suit, the defendant corporation had been dissolved either by the recited proceedings of disincorporation or by nonuser of its corporate powers for a period of 10 years.
[1] 1. It is well settled that a municipal corporation can only be dissolved by legislative action. 1 Dillon on Municipal Corporations (5th Ed.) § 332; State v. Dunson, 71 Tex. 65, 9 S. W. 103; Largen v. State, 76 Tex. 323, 13 S. W. 161; Harness v. State, 76 Tex. 566, 13 S. W. 535; Ex parte Cross, 44 Tex. Cr. R. 376, 71 S. W. 289. Judge Dillon’s statement of the rule is as follows:
“Since all of our charters of incorporation come from the Legislature, a municipal corporation cannot dissolve itself by a surrender of its franchise. The state creates such corporations for public ends, and they will and must continuo until the Legislature annuls or destroys them, or authorizes it to be done. If there could be such a tiling as a surrender, it would, from necessity, have to be made to the Legislature, and its acceptance would have to be manifested by appropriate legislative action.”
In State v. Dunson, supra, the court said:
“Tbe inhabitants of a given territory have no inherent power to create therein a municipal corporation. This can be done only by a special act of the Legislature, or by compliance with the general law providing a manner in which the inhabitants may give life to such a corporation. The inhabitants of a municipal corporation are as powerless to dissolve it, unless this bo done in the mode prescribed by law, as they are to create such a corporation in a inode not xirescrihod by law.”
_ The proceedings of disincorporation were had in 1899. At that time the legislation in Texas authorizing the disincorporation of towns and villages was comprised in articles 615, 616, and 617 of the Revised Statutes of 1895, as amended by the acts of 1897 (General Laws of 1897, cc. 61, 131). At that time the legislation relating to the disincorporation of cities and towns was comprised in an act of the Legislature of Texas of 1895, as amended in 1899.
[2] Each statutory system provided a method for the settlement of the affairs of the dissolved corporation, the payment of its debts, and the levy and collection of taxes for that purpose through the board of county commissioners of the county in which the corporation was located. Article 616, R. S.; section 4 of the act of 1895 (Acts 24th Leg. c. 109). The provision that was made by the Legislature for the winding up of the affairs of dissolved cities, towns, and villages by the commissioners’ courts was declared unconstitutional by the Supreme Court of Texas because of the fact that the Texas Constitution limited the duties of county commissioners exclusively to county business, and the delegated duties with reference to dissolved municipal corporations were held not to constitute county business. Vapor Electric Light Co. v. Keenan, 88 Tex. 197, 30 S. W. 868; *600Ranken v. McCallum, 25 Tex. Civ. App. 83, 60 S. W. 975. This construction of the Texas Constitution and statute will be followed by this court. Norton v. Shelby County, 118 U. S. 425, 6 Sup. Ct. 1121, 30 L. Ed. 178.
[3] The result of these decisions was to leave a system of disincorporation as to cities, towns, and villages which made no provision for the winding up of their affairs and the payment of their debts. Without a provision for the payment of the debts of dissolved corporations, there could be no constitutional method of disincorporation. The result of such an incomplete system of disincorporation would be to irripair the obligation of the contracts of the corporation by destroying the remedy for their enforcement or collection. Mt. Pleasant v. Beckwith, 100 U. S. 514, 25 L. Ed. 699; Shapleigh v. San Angelo, 167 U. S. 646, 17 Sup. Ct. 957, 42 L. Ed. 310; Morris & Cummings v. State, 62 Tex. 728.
In view of the construction given the statutes by the Supreme Court of Texas, it seems clear that both systems provided by the statutes must fall in their entirety. The legislative history, relating to the dissolution of municipal corporations in Texas, indicates that the Regislature has invariably provided for the payment of the debts of the dissolved corporation in each instance in which it has established such a system. This is persuasive that it would not have enacted the disincorporation legislation in question independently of the provision for taking care of the corporate indebtedness. This is also made plain from the fact that promptly upon the method of settlement actually provided being declared unconstitutional it provided in 1905 another to take its place. It may also be assumed that the Regislature of Texas would not have'enacted legislation which it knew, in the absence of the debt settlement provision, would encounter the provision of the federal Constitution against state legislative impairment of the obligation of contracts. Even if the Regislature can be considered as having intended to enact such an incomplete system, it could not stand against this constitutional objection. So, whatever conclusion may be arrived at as to the intention of the Texas Regislature, it is clear that the entire disincorporation system in each instance must fall by reason of the declared unconstitutionality of the settlement, provision; and the result is that in 1899, when the attempt wa's made to disincorporate the city of Hempstead, there was no valid legislation in Texas under and by which a-city, town, or village could be disincorporated. Valid legislation is essential to dis-incorporation. This conclusion, if correct, makes it unnecessary to determine whether or not the attempted disincorporation proceedings were taken under the appropriate statute for a city such as Hemp-stead then was.
[4] The Regislature of Texas by an act passed in 1905 provided a method for settling the affairs and paying the debts of' dissolved municipal corporations through a receivership in the District Court. General Laws of Texas 1905, p. 325. The act made '-he method applicable to theretofore dissolved, corporations, if app.ied for within two years of the passage of the act. The question presents itself as *601to the effect of this subsequent legislation upon the prior invalid dis-incorporation proceedings, taken by Hempstead in 1899 under an unconstitutional law. The court below held that it operated to ratify and give vitality to the void proceedings.
Mere irregularities in legal or quasi legal proceedings can be cured by subsequent legislation. What could have been done with legal authority. but was not, can be ratified by subsequent legislation. If, however, the tribunal acting had no authority in law to act at all in the premises, then its attempted action cannot be validated by subsequent: legislation. In this case the only authority claimed for the attempted disincorporation proceedings was an unconstitutional statute. It was therefore done without legislative authority, when legislative authority was indispensable. An unconstitutional law is null and void, and proceedings had under it afford no basis Eor subsequent ratification or retroactive validation. Justice Field, in the case of Norton v. Shelby County, 118 U. S. 425, 6 Sup. Ct. 1121, 30 L. Ed. 178, said:
“Ail uncoilstitutional law is not a law: it confers no rights; it imposes no duties: it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.”
The proceedings under which Hempstead was attempted to he dis-incorporated in 1899 were without authority of law and void, and could not have been retroactively validated by express legislation, much less by implication from the passage of a general act, the effect of which was to supply a necessary step in the original disincorporation system, made necessary by the court’s elimination from the system of the plan for which it was substituted. It was not possible for the Legislature to revitalize void proceedings had six years before the supplementary legislation was enacted. Ex parte Bockhorn (Tex.) 138 S. W. 706; Seneca Mining Co. v. Secretary of State, 82 Mich. 573, 47 N. W. 25, 9 L. R. A. 770; State v. Tufly, 20 Nev. 427, 22 Pac. 1054, 19 Am. St. Rep. 374; Norton v. Shelby County, 118 U. S. 443, 6 Sup. Ct. 1121, 30 L. Ed. 178; Cooley on Statutory Limitations (7th Ed.) page 259.
The disincorporation proceedings being without the support of valid legislation and legislation being essential to their validity, the city of -Hempstead retained its corporate capacity notwithstanding them.
[5] 2. In the absence of controlling legislation, nonuser of corporate powers does not effect a dissolution of a municipal corporation. The rule is thus expressed in Dillon on Municipal Corporations:
“In sliorl, unless otherwise specially provided by the Legisla ture, the nature and constitution of our municipal corporations, as well as the purposes they are created to subserve, are such that they can, in the author's judgment, only be dissolved by the Legislature, or pursuant to legislative enactment. They may become inert or dormant, or their functions may be suspended, for want of officers or Inhabitants; but dissolved, when created by an act of Legislature, and, once in existence, they cannot be, by reason of any default or abuse of the powers conferred^ either on the part of the officers or Inhabitants of the incorporated place. As they can exist only by legislative sanction, so they cannot: be dissolved or cease to exist except, by legislativo consent or pursuant to legislative provision.” Dillon on Municipal Corporations (5th Ed.) § 333; State v. Dunson, 71 Tex. 65, *6029 S. W. 103; Buford v. State, 72 Tex. 182, 10 S. W. 401; Largen v. State, 76 Tex. 323, 13 S. W. 161.
[6] The only legislation in Texas providing for the dissolution of municipal corporations by nonuser of its corporate powers is contained! in chapter 114, General Laws 1897, and is limited in its operation to towns and cities incorporated under special acts of the Legislatxtre. The history of the city of Hempstead, as appears from the statement of this case, shows that it was originally incorporated tinder a general law, that afterwards its incorporation was continued by a special law, and, still later, it surrendered its special charter and accepted in lieu thereof, pursixant to legislative authority, the provisions of the general incorporation law of Texas, under which it was acting when dissolved. For this reason, the Texas nonuser statute of 1897 seems inapplicable. , ' ,
[7] Again, the Texas statute of nonuser declares a forfeiture only in cases “where such town or city has been chartered by special act of the Legislature, and said town or city contains more than two thousand or less than five thoxxsand inhabitants, and the offices have been vacant for a period of ten years or more.” Section 17 of article 16 of the Texas Constitution provides that:
“All officers within this state shall continue to perform the duties of their offices until their successors shall be duly qualified.”
Article 387 of the Revised Statutes of Texas, 1895, after providing for the election of municipal officers, including mayor, aldermen, and secretary, further provides as follows:
“The above-named officers shall be elected by the qxialified electors of said city, as hereinafter provided for, shall hold their offices for two years and until the election and qualification of their successors.”
In view of those provisions, mere failure to elect municipal officers does not create vacancies within the meaning of the nonuser statute, since the incumbents hold over until their successors are elected and qualified!.
If it be conceded that the charter-of Hempstead became subject to forfeiture in February, 1909, for nonuser under this statute, yet the statute provides no method of winding up the affairs of the corporation and paying its debts, and the forfeiture could only be declared and made effectual in a judicial proceeding in which the rights of creditors were also cared for and the affairs of the coi-poration finally settled up.
[8] 3. A supplemental question relates to the sufficiency of service. Service was obtained upon the officers who were holding office at the time of the attempted disincorporation of the city. If the corporation was- not abolished by the attempted disincorporation, these officers hold over until the election and qualification of their sxiccessors. They could not,, under the constitutional and statutory provisions of Texas, by ceasing to perform*the functions of their- offices, divest themselves of their official character and responsibility. They were, therefore, officers at the time' of the service upon them, and were of a kind authorized to receive service for the corporation under the state stat*603utes. Service upon them, therefore, was sufficient to bring the defendant into court.
[9] If the corporation was not dissolved, it is in court, independently of the service, by its appearance in the cause through its attorney and the plea of the statute of limitations filed in its name by him.
Our views, as expressed, require the reversal of the judgment of dismissal, and the remanding of the cause for further proceedings in the District Court.