Court Opinion

ID: 5435491
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:53:29.965956+00
Date Added: 2024-06-11T08:31:48.546083
License: Public Domain

By the Court, Sanderson, C. J.
The appeal in this case comes before us on demurrer to the complaint. The facts as alleged in the complaint are substantially as follows :
By the Constitution, the Pueblo of San José was declared the seat of government until removed by law. The first session of the Legislature was held at that place. There was then no building belonging to the State or the Pueblo of San José adapted to the purposes of the Legislature, and the citizens of the pueblo petitioned the Ayuntamiento, or Town Council, to procure one. This the Ayuntamiento endeavored to do, but failed for the want of means and credit. Thereupon, seventeen citizens of the pueblo purchased a lot and building, situated within the pueblo, for the accomodation of the Legislature. In accordance with an understanding to that effect, the deed was made to Aram, Belden & Reed, in trust for the purchasers, who were to convey the property to the pueblo whenever the pueblo could pay for the same. On the 9th day of April, 1850, the Ayuntamiento purchased the premises from Aram, Belden & Reed, at the price of thirty-four thousand dollars, payable within six months, with interest at six per cent per month; and to secure the payment of that sum, pledged the State scrip or temporary loan bonds in the Treasury, and the revenues which might be raised that year by taxation, and mortgaged what is known as the pueblo lands. The first Legislature met in the building thus purchased by the Ayuntamiento, and on the 27th day of March, 1850, it passed an Act incorporating the City of San Jose. By the provisions of the Act the City of San José succeeded to all the legal rights and claims of the pueblo, and became subject to all the liabilities incurred and obligations created by the Ayuntamiento. The city government was limited in the exercise of its municipal powers to the geographical boundaries established by the Act; and over the pueblo lands situ*600ated outside of those limits the city government could exercise no authority, except to “ rent, lease, or sell” the same. The City of San José thus became the successor in interest of the Pueblo of San José to the lot and building in question, on which the purchase money, or a part of it, was still unpaid, and the pueblo lands mortgaged by the Ayuntamiento to secure its payment. The city authorities took possession of the lot and building, and afterwards sold them to the County of Santa Clara for the sum of thirty-eight thousand dollars, payable in three months, with interest at the rate of four and a half per cent per month, and directed the proceeds of the sale to be applied toward the payment of the debt due to the trustees, Aram, Belden, and Reed; but the moneys, when collected from the county, were not so applied, but were expended by the city government for other purposes. Thereupon, the trustees sued the city, and in December, 1850, recovered a judgment and a decree of foreclosure of the mortgage executed by the Ayuntamiento, under which the pueblo lands were sold by the Sheriff to Branham and White, trustees, etc., plaintiffs in this action. The proceeds of this sale were more than sufficient to satisfy the judgment, and the same was duly satisfied of record, and the overplus was paid to and received by the city. On the 26th of May 1851, the Sheriff conveyed the pueblo lands to the purchasers.
After this purchase some dispute arose between the city and the purchasers concerning the lands in question, and the City Council, by ordinance, authorized the Mayor to settle and arrange the dispute with the purchasers. Under this ordinance the Mayor entered into a contract with the purchasers on the 12th of June, 1851, whereby, after reciting the purchase by the trustees at the Sheriff’s sale, it was agreed that the trustees and the Mayor should conjointly sell the pueblo lands in such a manner as to realize to the trustees the amount of the purchase money paid by them and all costs and expenses. If the money thus realized should prove insufficient ■ for that purpose, the city was not to be bound for the deficit. If, on the contrary, there should be a surplus, the same was to be *601invested for the benefit of the city and trustees in a railroad then contemplated between San José and San Francisco, the same to be investedffn the proportion of three to one in favor of the trustees. The contract also contained certain provisions touching “ town lots” and “five hundred acre lots,” and the confirmation of the pueblo title to the land; and in consideration of the covenants of the contract the city ratified and confirmed the title acquired by the trustees at the Sheriff’s sale, and released to them all the right and title which the city then had or might thereafter acquire to the whole or any portion of the land.
This contract was duly ratified by the Common Council of the city, and the Mayor was directed to carry the same into effect. But the city afterwards refused to do so, and conveyed all the right, title, and interest in the land to the Commissioners of the' Funded Debt of. the City of San José. Upon this state of facts the plaintiffs ask for various kinds of alternative relief: First—A decree setting aside the conveyance from the city to the Commissioners of the Funded Debt; Second—Or, if that cannot be done, a decree for the specific performance of the contract of the 12th of June, 1851, against the city and the Commissioners, and an injunction perpetually restraining them from making further sales or conveyances of said lands, except in the manner and on the conditions specified in said contract of the 12th of June, 1851, and also a decree requiring them to account with, the plaintiffs for all moneys received by them or either of them from sales of land already made; Third—And inasmuch as the purchase money paid by said Branham and White liquidated the debt of the city to Aram, Belden and Reed, if for any reason it shall be adjudged that the Sheriff’s deed and the contract of the 12th of June are invalid, plaintiffs ask that the satisfaction of the judgment in favor of Aram, Belden and Reed, and against the city, may be set aside, and the Sheriff’s sale held for naught, and that they be subrogated to all the rights which Aram, Belden and Reed had in and to said judgment and mortgage prior to the satisfaction thereof, and that they have *602leave to proceed under said judgment, by execution or otherwise, to collect the whole of said judgment, both principal and interest, with a prayer for general relief.
Several points are made on the demurrer, which we shall notice, so far as it may be necessary for the purposes of this case, in the order in which they are presented in the briefs of counsel:
I. Had the Ayuntamiento power to mortgage the pueblo lands to Aram, Belden and Reed, under the circumstances and for the purposes narrated in the complaint ?
This question is not discussed by counsel for appellant, under the pretense that it cannot be made upon demurrer; holding that, inasmuch as he has averred that the Ayuntamiento had full power and authority to make the mortgage, such power and authority is admitted by the demurrer. The Ayuntamiento, being a municipal body, could take and exercise only such powers as were conferred by the will of the sovereign, as expressed in the laws creating it. Every question as to what power has been conferred by such laws is a question of law and not of fact; and the averment in the complaint that the Ayuntamiento had full power and lawful authority to do the act in question, is but an averment of a conclusion of law, and does not tender an issue of fact,
' A demurrer admits the truth of such facts as are issuable and well pleaded; but it does not admit the conclusions which counsel may choose to draw therefrom, although they may be stated in the complaint. It is to the soundness of those conclusions, whether stated in the complaint or not, that a demurrer is directed, and to which it applies the proper test.
That the Ayuntamiento had the power to execute the mortgage to Aram, Belden and Reed, does not seem to be seriously claimed by the learned counsel for appellant. Obviously, such a position could not be upheld without a complete overthrow of the law, as clearly and explicitly declared in the able and learned opinion of Mr. Justice Baldwin, in Hart v. Burnett, 15 Cal. 580. The opinion in that case is a monument to the *603learning and industrious research of the Justice by whom it was delivered. It is a clear and explicit exposition of the law as to the powers of municipal bodies under the Spanish and Mexican regime, and of the tenure by which their lands were held, and must now be regarded as a finality upon those subjects. At page 590, Mr. Justice Baldwin says: “These lands are held for the inhabitants in perpetuity, for their use and benefit, to be used in building up, sustaining, and supporting a town, whose interests and rights are lodged in the hands of certain agents, acting under defined and expressly limited powers, given for the carrying out of the objects and uses prescribed ; but with no power to alienate or change, much less to destroy the trust. That these agents were clothed with the power to make grants to settlers or others of limited quantities of this land, or to dispose of portions of it for the support of the municipality, implies no power to sell it out in gross or even to mortgage it; for if this were the case, the prosperity, if not the existence of the town, would depend, not on the laws, but on the will of those agents, acting in violation of their spirit and letter.”
Such being the law, it follows that the mortgage upon the pueblo lands made by the Ayuntamiento to Aram, Belden, and Reed, was an absolute nullity, and vested in the latter no interest whatever in the lands. If the Ayuntamiento had no power to mortgage, it follows that all the subsequent proceedings, up to and including the Sheriff’s deed to Branham and White, were utterly void. Upon this point, also, at page 580, Mr. Justice Baldwin says: “If it be true, as seems clear from the citations we have given, that the municipal officers could not mortgage or sell these lands to pay a debt created by them, we do not see how it can be contended that they could accomplish the same result by borrowing money and then confessing judgment, or suffering it to be entered, or submitting to suit, and thus indirectly doing through the Sheriff what they could not do by their direct action.”
But it is contended by counsel for appellant that the city is precluded from setting up the invalidity of the mortgage to *604Aram, Belden, and Reed, by the proceedings on the foreclosure. That inasmuch as the city was a party to those proceedings, duly served with process, and had an opportunity to attack the validity of the mortgage, but failed to do so, its validity has become res adjudicate, and the respondents are estopped by the decree of foreclosure from further question upon that point. In aid of this theory counsel invokes the general principle announced by Chancellor Kent in La Guen v. Gouveneur et al., 1 John. Ca. 436, to the effect that: “ The judgment or decree of a Court possessing competent jurisdiction is not only final as to the subject matter thereby determined, but also as to every other matter which the parties might litigate in the cause, and which they might have decided.” The soundness of this general doctrine, that a party cannot litigate his rights by piecemeal, is not doubted by us; but it does not reach the real question involved in this case. It is obvious that the Ayuntamiento, being merely the agents of the pueblo, in the language of Mr. Justice Baldwin, “ acting under defined and expressly limited powers,” could not bind the property held in trust by them for community purposes by any act not strictly within those powers, either by way of contract, or by the mere sufferance of judicial proceedings. Were such the case, the law of corporate power would he made subservient to the adversary will of those in whose hands its temporary-exercise is placed. The subsequent judicial proceedings imparted no sanctity to the transaction, nor added thereto any validity in law which it did not previously possess. Whatever right or interest the mortgage created and vested in Aram, Belden, and Reed, the decree of foreclosure operated upon and subjected to the payment of their debt, but nothing more. If the pueblo’s interest in the land was unaffected by the mortgage, and nothing passed, it was equally unaffected by the decree and subsequent sale. Parties dealing with the authorities of a municipal corporation are chargeable with full knowledge of their powers, and act .at their peril. If the authorities transcend their powers, the act is a nullity, by which the municipality are as much unaffected as if it were the act of a *605stranger, and it cannot be transformed into a validity except by the will of the sovereign. In all such cases there is involved only a question of power, which lies at the foundation, and if that fails the superstructure must fall with it. We hold, therefore, that all the proceedings, up to and including the Sheriff’s deed to Branham and White, were utterly void, and that the interest of the pueblo, and its successor, the city, in the lands in question, were wholly unaffected thereby.
II. We now come to the consideration of the question as to what rights, if any, the trustees, Branham and White, acquired as against the city by virtue of the contract of the 12th of June, 1851, executed by and between them of the one part and the Mayor of the city of the other part. That contract, so far as its legal effect upon the title to the pueblo lands is concerned, is a contract of confirmation and release. In terms it confirms unto Branham and White all the rights and interests in said lands which they acquired by their purchase at the Sheriff’s sale, and releases unto them all the right and title which the city then had or might afterwards have therein. Aside from all questions of power in the city government to make the contract, it is ineffectual so far as it attempts to confirm unto Branham and White the rights and interests which they acquired at the Sheriff’s sale, for the obvious reason that there was no estate in them upon which the confirmation could act. Qui confirmed nihil dat. Confirmation may make good a voidable or defeasible estate, but cannot operate upon or aid an estate which is void in law, but only “ confirms its infirmity.” Gonfirmatio est nulla, ubi donum ¡precedáis est invalidum, et ubi donatio nulla est, nec valebit confirmatio. The only exception to this rule is where the confirmation is the act of sovereign will. (Comyn’s Digest, Vol. 3, p. 139 ; D. I. p. 140; Blessing v. House, 3 Gill and John. 290.) It was upon this view that the Act of 1858, confirming the so-called “ Van Hess Ordinance” was passed, and the validity of that ordinance upheld in Hart v. Burnett.
For much the same reasons, that part of the contract in which the city authorities attempt to release the title of the *606city to Branham, and. White is ineffectual. There was no privity between the city on the one hand and Branham and White on the other; nor had the latter, as we have already seen, any estate or interest whatever in the land, nor had they the possession. There was, therefore, no estate to support the release, or upon which it could operate. “ So a release to him who has no estate or right is void, though there may be a privity between them” (which is not the case here); “as, if a tenant in fee makes a feoffment, and afterwards the lord releases to the feoffer, his seigniory is not extinct,” (Comyn’s Digest, Vol. 7, p. 222,) because, at the time the release was made, the releasee, having parted with his estate by enfeoffing another, had no estate to support the release. So a mere release, unless the releasee is in possession, is void. (Bennett v. Irwin, 3 John. 363.) Under the contract in question, Branham and White occupy the position of confirmees and releasees only. The instrument contains no terms of grant, and they acquired thereby no new or further interest or estate in the land, conceding, as claimed by counsel for appellants, that the city authorities, by virtue of the provisions of the Act incorporating the city, acquired power of absolute disposition over the pueblo lands. Their rights to the lands were, in law, unaffected by the contract of the 12th of June, 1851, and remained the same after the execution of that instrument as they were before. Whether the city government acquired, by the Act of incorporation, greater power of disposition over the pueblo lands lying outside of the city limits than was possessed by its predecessor, the Ayuntamiento—a question which has been ably argued by counsel upon both sides—becomes immaterial in the view which we have taken of the case.
III. Failing of any relief upon the contract of the 12th of. June, 1851, plaintiffs next ask that the Sheriff’s sale and deed may be held for naught, and the satisfaction of the judgment against the city and in favor of Aram, Belden, and Reed, may be set aside, and that they may be subrogated to all the rights of Aram, Belden, and Reed, with leave to proceed, by execution or otherwise, to collect the judgment.
*607According to Bouvier, there are three kinds of subrogation: First—that made by the owner of a thing of his own free will; as, for example, when he voluntarily assigns it. Second—that which arises in consequence of the law, even without the consent of the owner; as, for example, when a man pays a debt which could not be properly called his own, but which, nevertheless, it was his interest to pay, or which he might have been conqselled to pay for another, the law subrogates him to all the rights of the creditor. Third—that which arises by the act of law, joined to the act of the debtor; as for example, when the debtor borrows money expressly to pay off his debt and with the intention of substituting the lender in "the place of the old creditor. It is not easy to perceive how the present case can be brought within either of these definitions.
Up to the time the plaintiffs purchased at the Sheriff’s sale, and until the 12th day of June, 1851, about one month after the sale, there had been no treaty or negotiation between them and the city touching the foreclosure sale. There was, so far as appears from the complaint, no understanding between them and the city as to the purchase about to be made, nor were any representations whatever made by the city to induce them to purchase. On the contrary, they acted, so far as appears, entirely upon their own judgment, uninfluenced by any one. They were not asked to purchase by the city or any one else, and no promises were made to them in the way of inducement. They stand, therefore, in the attitude of naked purchasers at a judicial sale.
In the case of Laws v. Thompson, 4 Jones, N. C. 104, it was held that a purchaser at Sheriff’s sale who acquired a defective title has no right to take the place of the creditor. In Maryland, it is held that Chancery sales are made subject to all incumbrances and defects, and the rule of caveat emptor applies. In the case of “The Monte Allegre," 9 Wheat. 615, the petitioner claimed to have refunded to him the purchase price of a quantity of tobacco, (which he had purchased at a judicial sale,) because it was rotten and worthless when he bought it, and the defect was unknown to him at the time he *608purchased. The money which he had paid for the tobacco was still in the hands of the Court and undistributed; nevertheless, the relief was denied, the Court holding “that generally in all judicial sales the rule caveat eniptor must necessarily apply from the nature of the transaction.” In Arkansas, debts contracted by a steamboat for work, supplies, and materials furnished, are made by statute a lien on the boat to the exclusion of certain other enumerated claims; yet it was held in White v. Levy, 5 Eng. 411, that where a party loaned money to the boat, which was borrowed and actually used for the purpose of paying off such preferred debts, the lender was not entitled to be substituted to the rights of the parties whose debts had been thus paid. And in Gadsden v. Brotan, Spear’s Chan. 37, it was broadly declared that the doctrine of subrogation only applies to the case of a payment by a person previously holden for the debt. In Sanford v. McLeane, 3 Paige, 122, the Court said: “ It is only in cases where the person advancing money to pay the debt of a third party stands in the situation of a surety, or is compelled to pay it to protect his own rights, that a Court of equity substitutes him in the place of the creditor, as a matter of course, without any agreement to that effect. In other cases, the demand of a creditor which is paid with the money of a third party, and without any agreement that the security shall be assigned or kept on foot for the benefit of such third person, is absolutely extinguished. Such is also the rule of the civil law, although by that law a surety paying the debt is subrogated to the rights of the creditor ipso facto."
Against the plaintiffs’ claim to be reimbursed the amount paid by them at the Sheriff’s sale, by reason of the failure of the title which they purchased, and their right to maintain this, an independent action therefor, the case of Boggs v. Hargrave, 16 Cal. 562, seems to be conclusive.
Judgment affirmed.
Mr. Justice Rhodes, having been interested in the matters involved, did not sit on the trial of this case.