Court Opinion

ID: 5433367
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:49:27.669899+00
Date Added: 2024-06-11T08:31:43.564787
License: Public Domain

Murray, C. I
I am compelled to dissent from the opinion of a majority of the Court in this case, and shall state my views the questions involved as briefly as possible.
I shall assume in the outset, that every sale of lands made by the city of San Francisco, must be in conformity with an ordinance previously passed. This, I think, is evident from the language of the fourth and thirteenth sections of the third article of the charter.
Let us next inquire into the capacity in which a municipal corporation acts with reference to her private property, and how such acts should be evidenced.
It is contended, upon the authority of several American cases, that the acts of a municipal corporation are of a twofold character : the first political, where they relate to matters which are purely governmental; and the second private, where they relate to its private property. That in the former, its ordinances are to be regarded and construed as laws; in the latter, as mere con*381tracts, subject to the same rules and intendments which would govern the contracts of private individuals. That when a city-deals with its property, the doctrine of estoppel, by matters in pais, would apply, and that it is responsible in the same manner as other corporations or private individuals are, on their promises, express or implied.
At common law, a corporation could only act by deed under seal, and was not liable on an implied assumpsit. 1 Black. Com., 475, Viner’s Abridg.; and Kyd on Corporations. See, also, the case of Breckill v. Turnpike Company, 1 Dali.; and Gray v. The Portland Bank, 3 Mass. In the case of the Mayor of Ludlow v. Charlton, 6 Meeson & Welsby, which involves the legality of an executed contract not under seal, the Court say, that the rule of law on this subject, as laid down in all the old authorities is, that a corporation can only bind itself by deed. The exceptions pointed out rather confirm than impeach the rule. “ In modern times, a new class of exceptions has arisen. Corporations have of late been established, sometimes by royal charter, more frequently by act of Parliament, for .the purpose of carrying on trading speculations; and where the nature of their constitution has been such as to render the drawing of bills, or the constant making of any particular sort of contracts, necessary for the purposes of the corporation, there the Courts have held that they would imply in those who are, according to the provisions of the charter or act of Parliament, carrrying on the corporation concerns, an authority to do those acts, without which the corporation could not subsist. This principle will fully warrant the recent decision of the Court of Queen’s Bench, in Beverly v. Lincoln Gas-Light, and Coke Company, 6 Ad. & El., 829.
“ Before dismissing this case, we feel ourselves called upon to say, that the rule of law requiring contracts entered into by corporations to be generally entered into under seal, and not by parol,. appears to us to be one by no means of a merely technical nature, or which it would be at all safe to relax, except in cases warranted by the principles to which we have already adverted. The seal is required as authenticating the concurrence of the whole body corporate. If the Legislature, in erecting a body corporate, invest any member of it, either expressly or impliedly, with authority to bind the whole body, by his mere signature, or otherwise, then, undoubtedly, the adding a seal would be matter purely of form, and not of substance. Every one becoming a member of such corporation, knows that he is liable to be bound in his corporate character by such an act; and persons dealing with the corporation know that by such an act the body will be known. But in other cases, the seal is the only authentic evidence of what the corporation has done, or agreed to do. The resolution of a meeting, however numerously attended, is, after all, not the act of the whole body. Every member knows he is *382bound by what is done under the corporate seal, and by nothing else. It is a great mistake, therefore, to speak of the necessity for a seal, as a relic of ignorant times. It is no such thing. Either a seal, or some substitute for a seal, which, by law, shall be taken as conclusively evidencing the sense of the whole body corporate, is a necessity inherent in the very nature of a corporation, and the attempt to get rid- of the old doctrine, by treating as valid, contracts made with particular members, and which do not come within the exceptions to which we have adverted, might be productive of great inconvenience.”
In the subsequent case, of Arnold v. The Mayor of Poole, 4 Man. & Gran., the same question came before the Court of Common Pleas, and the case of Ludlow v. Charlton was cited with approbation—the Court holding that the old rule had not been relaxed, except as to trading corporations, and that it would be unwise to extend it to municipal corporations.
I have cited these authorities for the purpose of showing that whatever may be the rule in the United States, the Courts of England recognize a distinction between mere moneyed or trading corporations, and those of a municipal character; that with regard to the latter they have refused to relax the rule, holding, upon grounds of obvious policy, that they are not liable, except in cases where their intention to contract is authenticated in the modepointed out by the law. The wisdom of this rule is apparent. If a corporation could bind itself in any other way than the mode prescribed, of what use would be its charter Í It would be continually working outside of its charter, by invoking the doctrine of implied assumpsit, estoppel, ratification, and the like, and the singular anomaly presented of an inferior creature of legislative creation, accomplishing, indirectly, what it was expressly prohibited from doing.
In this State, where it is not necessary that the acts of a municipal incorporation should be done under seal, but where the body corporate acts through the medium of its agents, the mayor and aldermen, whose will is manifested by laws or ordinances, it would seem but reasonable, following the doctrine of the English Courts, that in all cases the intention of the corporation should be promulgated in the form of an ordinance, and without ■which it ought not. to be held legally liable.
Assuming, then, for the present, that an ordinance is necessary • in all cases to enable the city to act, and also, that it is expressly required by the charter, in the sale of lands by the city; let us first inquire if such an ordinance is a public act or law, or whether, on the other hand, it is a mere power of sale, to be construed like the acts of individuals. Admitting, for the purposes of this argument, that the functions of the corporation are, as a general rule, two-fold, still it will not be denied, that the Legislature, which is the creator, can give such color or charac*383ter to the acts of an incorporation as it may deem fit; it may permit it to act through its executive officers or forbid it from acting except by ordinance; it may limit or enlarge the powers of the common council, and may determine that its acts shall only be of a public legal character.
The thirteenth section of the third article of the charter provides, that “ the common council shall have power to pass all proper and necessary laws for the regulation, improvement, and sale of the city property, etc.” Mow, if the words of the charter mean anything, it is, that the property of the city can only be disposed of by law, and if an ordinance for this purpose is a law, then it must be governed by the same rules of construction as any other legislative act. In other words, the charter provides that the will of the common council shall be made manifest, by means of law or an ordinance. An ordinance is defined to be a law of an inferior jurisdiction or corporation, and the words law and ordinance are used in the charter as synonymous. If, then, a law must be first passed to enable the city to dispose of her property, by what mode of reasoning can it be maintained, that after its passage it shall not be construed as a law, but only as a contract; that though defective as an ordinance, it is good as a power. The virtue of the power must certainly depend on the legality of the ordinance.
What is the difference between a disposition of lands belonging to the State by an act of the Legislature, and the disposition of lands belonging to a corporation by the common council ? They both hold them alike in trust for their citizens. If the State should sell her property to A, who paid the price agreed upon, and the act was void for some reason or another, would any one contend that the receipt of the money estopped the State from denying the validity of A’s title ? Or if A, by fraud and collusion obtained a grant from the State through her Legislature, and the act was regular, would the fraud of A, or of the agents of the State vitiate the grant ? Certainly not. There is no reason in the nature of things, why there should be any difference in the two cases, or why an act, which is confessedly political when done by the Legislature, should not be so when performed by a municipal incorporation. The argument in some of the cases cited, seems to proceed on the supposition, that the officers of a city are less honest than those of a State, and therefore less to be trusted. This may be true in fact, but has not been so long recognized or accepted as to become a legal maxim or presumption.
If the act of the common council is to be considered as a law, then it would follow that Ordinance 481, not having passed by the requisite number of votes, and being void, as before declared, was not adopted, affirmed, or ratified, by Ordinance 493; as a law can never be passed or ratified by mere relation. And further, *384because 493 does not in any way attempt to ratify or confirm the previous ordinance. Admitting, however, for the purpose of argument, that these ordinances are not laws, but simple powers to be construed like the written contracts of private individuals, it then becomes a question of construction as to what was the intention of the council in passing 493.
It is assumed that 481 is a power of attorney, well drawn, but defectively executed; that the common council had full power to ratify or confirm it; that they were bound to know the law, as to how many votes were necessary to pass an ordinance, and, knowing the law, they were acquainted with the fact that 481 had not been passed, and, in view of the presumption that every one knows the law, it is assumed that the common council, knowing, when they passed 493, that 481 had not passed, must be supposed to have acted upon that knowledge, with the intention of affirming Ordinance 481. The law and the logic of this proposition are equally bad.
The error is two-fold : First, in assuming, as a matter of fact, that each member of both boards knew that 481 had not passed; and, Second, in supposing that a knowledge of the law, viz.: that 481 had not legally passed, is to be presumed, and that therefore the passage of 493 must be construed as intended to pass 481. The common council, or rather the members, were bound to know that a certain vote was, necessary to pass an ordinance, but the members of one board were not bound to know the vote by which the ordinance was passed in the other. If the ordinance is to be construed as a law, they would be charged with notice of the vote by which it jtassed, but if as a power of attorney, then they are only bound to know the general law- with regard to the execution of the power, and the power being regular on its face, all facts and' circumstances which may tend to vitiate, or render it null, must be brought home to the knowledge of the parties, by actual notice. To illustrate the proposition : if I should receive a power of attorney, executed and acknowledged in due form, I could not be charged with notice, as a legal consequence, following from the power, that it had been obtained by fraud or duress.
Again, 481 was not “ a power of attorney, well drawn but defectively executed.” It was, for all intents and purposes, a blank paper; its validity depended wholly on its execution, and not having been executed in the manner pointed out by law, it was void and worthless. It is perfectly clear that, in passing 493, the common council had no intention to ratify or adopt 481, but simply to dispose of the money arising from the sale,-which they supposed was properly ordered by that ordinance. If such had been their intention, how easily they could have expressed it. A single word would have been sufficient. But, says the appellant, the council knew that 481 had not passed; they must *385be presumed to have acted on this knowledge.. Grant the fact that they did; this presumption could only be used for the purposes of construing the second ordinance, and ascertaining the intention of the council. It could not be used for the purpose of overthrowing or disproving the intention, as manifested by the paper itself. Such a rule would force a legal fiction over the truth, and thereby alter the true character of the contract.
Ordinance 493 does not, in terms, or by implication, adopt, or purport to adopt, 481. It refers to the latter ordinance as having passed, not with a view to ratify it, but to appropriate the proceeds of the sales arising under it, and treats it as an antecedent act, properly done; and the plain inference from the language itself, aside from any legal presumption, is, that the council supposed that the ordinance had passed by a legal vote, and that there was therefore no necessity for its adoption, as their minds were not drawn to the fact of its illegality. Under these circumstances, some of the very members who had voted against the sale, believing that it was valid, might have, and doubtless did, vote for the appropriation of the proceeds of such sale, without ever supposing that their acts were to be considered as confirmatory of an ordinance which they had opposed.
The error consists in supposing that a person or corporation acts with knowledge of the law, and is to be held as if so acting, when it is proved by the paper that he has acted in ignorance of the law.
We are not now construing a contract, for there was no contract at the time; but we are seeking for a power of sale, and to do this it is only necessary to ascertain the intention of the party making the alleged power. This can only be done by looking at the instrument itself and the surrounding circumstances ; these may* show an intention to give a power or not; and this intention necessarily refers itself to the state of the mind, the knowledge or ignorance of the party, as shown by the paper and the facts. But it is contended that we cannot examine the ordinance to prove that there was no intention to give the power, by showing that the counsel had, as they thought, already given it. In other words, that the fiction of the law which supposes any one knew it, is to be carried to the extent of supposing the party knew what he says on the paper; he did not know, indeed, more than this. It is carried to the extreme of holding, by inference, that the council knew the law had not passed, when the paper shows that they supposed it had passed. Row, as this is a question of construction, and construction follows intention, why cannot a mistake of law be shown in the ordinance to be construed as well as any fact, with the view of showing what was the intention of the parties ? If A made a deed to C, reciting that he had made a will in his favor, which was by law irrevocable, and vested an immediate estate in C, *386and, therefore, by way of confirmation, he made the deed, I apprehend that this mistake of law, being recited in the instrument, would not be controlled by the legal fiction, that he was presumed to know that he had made no present disposition of the property by will. But suppose that he merely recited that he had made such disposition, would any one contend that this recital was evidence of, and validate it ?
In construing a power, it is true, you may look to the law bearing upon anything embraced within the power; and so in seeing whether a paper is a power, you look to the law, but you must look to the words and germain facts, too, to see what the maker intended to do. Admit that the council did act with knowledge of a certain legal principle, viz.: that 481 had not passed, does it follow that when a sale was about to be had, that the mere disposition of certain proceeds of sale, was meant to order a sale, or a mere recital that an ordinance had passed, shows a present intention to pass the ordinance ?
The whole question involved is one of intention, viz.: whether the council meant, in 493, to pass 481; and when we see, from the face of it,'that no such intention existed, it matters nothing whether the council were laboring under a mistake of fact, or law. The intention, whatever it was, is to prevail; and it makes no difference in this respect, whether the ordinance 493 is to be construed as a law or as a power. 9 B. Monroe, 416.
In this case it was held, that in a suit upon a note, not executed by the defendants, but which, it was contended, they had recognized and assumed, “ to render the note their note, the defendants must have recognized it with the intention of thereby making it their note, with the knowledge of the fact that without such recognition they would not be responsible. But if the recognition was made under a mistaken apprehension of their liability, either as to the factor to the law, then such recognition would not be obligatory upon them, and the note would not thereby become their note." In Cockerel v. Cholmely, 3 Eng. Oh. Rep., 1 Russell and Mylne, it was held in order to work a confirmation, that the party said to confirm must know the law and fact.
In discussing this point, the Court say : “ It has been argued that the defendant, being aware of the facts in the lifetime of Sir Edward Engeldfield, has, by his silence, and by being a party to the application of the party to Parliament, confirmed the title of the plaintiffs. In equity, it is considered, as good sense requires it should be, that no man can be held by an act of his to confirm a title, unless he be fully aware, at the time, not only of the fact on which the defect of title depends, but of the consequences in point of law. And here there is no proof that the defendant, at the time of the acts referred to, was aware of the law on the *387subject, nor was it even alleged in the argument.” See, also, the case of Portman v. Mill, 2 Russell.
If these cases are to be regarded as authority, they establish the conclusion, that in cases involving a question of confirmation, a party is not presumed necessarily to know the law; that this is a question of fact to be established, and that even admitting the presumption may arise, it is not conclusive as against the facts, which go to establish ignorance of the law.' If these conclusions are correct, and I am unable to see wherein they are erroneous, then the argument drawn from the supposed knowledge of the law, upon the part of the common council, must fall to the ground.
But, again, I am of opinion that, in the sale of this property, the city acted in the capacity of a trustee, or agent, of the State, under a delegated statutory power; that the law, having provided the mode in which the power shall be exercised, that mode, and none other, can be pursued.
In all the cases cited by the appellant, the corporation was the sole owner of the land or property, and in no case was she an agent, trustee, or tenant, in common with another. While I might be willing to admit, that as to her separate property, her acts were to be construed like those of ordinary individuals; in a case like the present, where the State has given to the city, lands to be disposed of for them mutual benefit, in a certain way, viz : ®by law, I think that the power must be strictly followed, and the ordinance construed as a law affecting the property of the State and city; otherwise the city, a mere co-tenant or trustee, might defeat the interest of the State in the property, by attempting to deal with it as a private proprietor.
There are several other points involved in this case, none of which are of serious importance, and I shall not therefore consider them at any length. It is contended that the plaintiff cannot recover, because the city is prohibited from contracting a debt of more than fifty thousand dollars, over and above her outstanding or aggregate indebtedness. This provision applies to the acts or contracts of the city, not to liabilities which the law may cast upon her. It was designed to prevent an extravagant expenditure of money, by limiting the common council in the matter of contracts and appropriations, not to authorize the city to commit torts, and to obtain the property of her corpora-tors, without being legally liable. According to the argument, if the city had obtained judgment for an hundred thousand dollars against A, and had sold his property and made the money, which was then in the treasury, and the judgment should afterwardsbefinallyreversed,neither A, nor the purchaser, would have any right to recover back the amount. Such never was the intention of the Legislature, and the proposition is not worthy of serious consideration.
*388With regard to the question of ratification: if Ordinance 493 did not adopt 481, the sale was void, and the plaintiffs were not estopped by their acts. Estoppels must be mutual, and as the city was not bound, neither could the plaintiffs be. Phelan v. the County of San Francisco, October Term, 1856. See also, Port-man v. Mill, 2 Russell.
It will hardly he necessary to adduce any argument to establish the proposition that the former opinion of this Court was erroneous. A mere reference to it is sufficient, and the point on which it was predicated seems to have been abandoned by the unanimous consent of the Court and counsel.
For the foregoing reasons, I am of opinion that the judgment should he affirmed.