Coit v. City of Grand Rapids

Grant, C. J.

The common council of the defendant city is, by its charter, given the exclusive control over the construction and maintenance of sewers. It is also clothed with the express power to purchase lands for that purpose. Charter, tit. 3, § 10, subds. 39, 76 (Act No, 270, Local Acts 1891). The common council deemed it necessary for the public health that the Prescott-street sewer be extended so as to empty into Grand river at a greater distance below the city than it then did. The proposed extension was for 80 rods, across lands owned by the plaintiffs. These lands were low (from 7 to 14 feet below the established grade of the streets), subject to overflow, were not then suitable for residence purposes, and were occupied only for pasturage. The mouth of the sewer is at about the center of the plaintiffs’ lands, where it empties into the river. A committee was appointed to obtain, by purchase, if possible, lands for the construction of the sewer, which was large, having an inside diameter of seven feet. The right of way and necessary land, with the perpetual right of ingress and egress, was obtained from the plaintiffs, as well as others; deeds were executed, recorded; the sewer constructed; and the city put in possession. The consideration of the deeds from the plaintiffs was one dollar, and the agreement that they should not be assessed for the construction and maintenance of the *495 sewer. All the proceedings for the purchase of the land were regular. The common council at first undertook to carry out the agreement, and, under the authority conferred upon it, established an assessment district, leaving out the lands of plaintiffs. This assessment was again revised, excluding the land. ' The council met the third time, ignored the contract with plaintiffs, included their lands in the assessment district, and assessed their portion of the expense of construction at $2,611.22. It is just to the council to assume that they repudiated the contract because of a supposed want of power to make it. The court below, however, finds that the council carried out similar contracts with other parties, by redeeding to them, without consideration other than this agreement, their lands which had been sold for nonpayment of the assessment.

The contract was one of sale and purchase. The deed was not intended as a gift. The sole defense is that it was ultra vires. If this be so, it is because the consideration was exemption from taxation. It does not exempt from taxation generally, — either State, counter, or municipal,— but only from liability to assessment for the construction of the sewer. We need not consider that part of the contract exempting from taxation to maintain the sewer. That is not before us. The charter does not provide for maintaining sewers by assessment districts, but they are to be maintained at the common expense, paid from a common fund. For this purpose the city is divided into two districts, — one on each side of the river. Special assessment districts are provided for only to pay the cost of construction. If, however, this .clause in regard to maintenance were ultra vires, the contract is divisible, and the remainder will be enforced.

“ There is no rule of law or of morals which relieves the recipient of the substantial benefits of a partially executed contract from the obligation to perform or pay that part of the consideration which he can perform or pay because the performance of an insignificant portion of it is beyond his powers. On the other hand, the true rule is, and ought *496 to be, the converse of that proposition. It is that when a part of a divisible contract is ultra vires, but neither malum in se nor malum prohibitum, the remainder maybe enforced.” Illinois Trust & Sav. Bank v. City of Arkansas City, 22 C. C. A. 171, 76 Fed. 271.

If the council could not purchase, it would be compelled to resort to condemnation proceedings. All the other lands owned by plaintiffs, and supposed by the parties at that time to be specially benefited by the sewer, were included in the assessment district, and the assessments paid. The council could have agreed with plaintiffs to pay a money consideration. If the contract had been that the city would pay whatever amount should be assessed as their share of construction, would it not have been valid? Practically, this is what was done. By this means litigation was avoided. Plaintiffs received nothing for the land conveyed, or for the damage by emptying the filth of the city into the river at the center of their lands. The contract would not vitiate the assessment. Plaintiffs are not exempt from a share of the burden. On the contrary, they have contributed land, and suffered damage, as their share of it. Who shall say that it is not their full share ?

“It is easy to perceive that there may be a difference in principle between a complete exemption from a necessary burden of government, and an agreement that the burden shall be laid and borne in a particular manner only. Mr. Justice M’Lean has hinted at this distinction in State Bank of Ohio v. Knoop, 16 How. 389.” East Saginaw Manfg. Co. v. City of East Saginaw, 19 Mich. 259.

Another taxpayer could not well show that he was injured by the arrangement, or that his proportion of the assessment was less than it would have been had the council condemned, or agreed upon a specific amount as' damages and the value of the land. Page v. City of St. Louis, 20 Mo. 136; Williams v. Inhabitants of School Dist. No. 1, 21 Pick. 75. In the latter case the assessors omitted to tax an inhabitant who was very poor. The validity of the assessment was attacked for this reason. *497 Chief Justice Shaw said, “If this was done through error of judgment, or any error and mistake of law in this respect, it does'not invalidate the whole tax.” The constitution of Iowa provided that the property of corporations should be liable to taxation the same as the property of individuals. A private corporation entered into a contract with the city of Davenport to supply the city with water, and the city agreed to exempt it from municipal taxation for 25 years. It was held that the arrangement did not amount to exemption from taxation, but, in effect, applied “the taxes, as they would otherwise become due, in part payment of, or in part consideration for, the water rent. * * * It might have required the payment of the taxes, and then returned the amount as part pay for water rent. The manner of doing It cannot defeat the power to do it.” Grant v. City of Davenport, 36 Iowa, 406. See, also, City of St. Louis v. Armstrong, 56 Mo. 298; City of Palestine v. Barnes, 50 Tex. 538.

It is said, however, that the authority to determine the amount of the benefit is not reposed in the common council, but in the board of review, acting as a board of commissioners. To this I reply: First, that the common council possesses the power to purchase, and to fix the compensation; and, second, that the power to fix the assessment is finally vested in the council. The council fixes the assessment district, and the cost. The board of review and equalization, consisting of three, then apportions the cost among the residents of the district according to supposed benefits. A report of their proceedings is then made to the common council, who sit as a board of review, and have the entire control over the matter. The commissioners have no power to assess damages, or fix the boundaries of the assessment district. Plaintiffs appealed to the council, sitting as a board of review; and, as already stated, the contract was ignored.

The case of Weeks v. City of Milwaukee, 10 Wis. 242, does not, in my judgment, affect the question here presented. The question was not there involved. In that *498 case the assessing officers undertook to suspend the law, and absolutely relieve a very valuable piece of taxable property, and impose additional burden on the rest. In. this case there is no attempt to relieve the plaintiffs from taxation, or from their share of the public burdens. The common council, the final arbiter in the matter, agreed upon what their fair share was; and plaintiffs paid it, by deeding the lands, with the perpetual right of ingress and egress, and agreeing to perpetually charge their adjoining lands with the damage resulting Trom the construction of the sewer and emptying it into the river opposite. In re First Street, 66 Mich. 42, is not applicable here. The principle there established is that the common council cannot enter into a contract by which the city in all future time may be precluded from extending its streets, and that was the sole question involved.

If, however, the common council exceeded its authority, it was in form only, not in substance. It did nothing which might not have been accomplished in another and legal manner, under the charter. The contract was fairly and in good faith made, and is fully executed. The city has derived, and is in the full enjoyment of, all its benefits. It cannot and does not offer to restore the consideration, or place plaintiffs in statu quo. If we conceded the premises assumed by defendant, viz., that the contract was wholly ultra vires, we might be compelled to reach the conclusion that the city could not be estopped to set up its invalidity.

The defense of ultra vires in this case is most inequitable and unjust. It should not be sustained unless the rigid rules of law require it. “The good faith of government should never be held less sacred than that of individuals.” Where the executed contract is neither malum in se nor malum prohibitum, but can only be avoided because of. defects in the manner of its execution, the corporation cannot retain the benefits and deny its authority. Dewey v. Railway Co., 91 Mich. 351; Day v. Buggy Co., 57 Mich. 151 (58 Am. Rep; 352); Carson City Sav. *499 Bank v. Elevator Co., 90 Mich. 550 (30 Am. St. Rep. 454); Turner v. Cruzen, 70 Iowa, 204. “The doctrine of ultra vires, when invoked for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice.” Ohio, etc., R. Co. v. McCarthy, 96 U. S. 267. In a suit to recover rent upon a lease made by a municipality, held, that the lessee could not defend upon the ground that it had no legal right to enter into it. Starin v. Edson, 112 N. Y. 206. Where all leases were required to be made at public auction, and this provision was ignored, held to constitute no defense to an action upon the lease, where the defendant had had the full benefit of the contract. Mayor, etc., of New York v. Sonneborn, 113 N. Y. 423. Where a municipality leased property, and agreed to refund to the lessee the value of improvements, although the contract was ultra vires, it was held:

“Assuming that the agreement of August 4, 1888, was at its inception, and while it remained wholly executory, ultra vires, and therefore unenforceable against the municipality, because in excess of its lawful authority to incur an indebtedness, it remains that the agreement was fully performed on the part of the Staten Island Rapid-Transit Company; such performance in reliance upon the promise to indemnify the latter corporation having resulted in the defendant municipal corporation’s gain of valuable improvements to its wharf property. Under such circumstances, a plea of ultra vires must be regarded as inequitable, and would be unavailable to the defendant municipal corporation as a defense to the Staten Island Rapid-Transit Company’s demand for payment of the value of its improvements.” Wilkins v. Mayor, etc., of New York, (Com. Pl.) 30 N. Y. Supp. 424.

Herman says:

“The same result is produced in like manner in many instances where a corporation, having enjoyed the fruits of a contract fairly made, denies, when called to account, the existence of the corporate power to make it. The principle of estoppel, thus applied, has its foundation in a wise and salutary policy. It is a means of repose. It promotes fair dealing. It cannot be made an instrument of *500 Wrong or oppression, and it often gives triumph to right and justice where nothing else known to our jurisprudence can, by its operation, secure those ends. Like the statute of limitations,'it is a conservator; and, without it, society could not well go on.” 2 Herm. Estop. § 1181.

See, also, City of Buffalo v. Balcom, 134 N. Y. 532.

“Mere irregularities of action, not going to the essentials of the power,” are not sufficient to defeat the exercise of the power. Cooley, Const. Lim. (6th Ed.) 269.

Stated most strongly for defendant, the situation is this: The result was legal, but the method by which it was reached was illegal. In such case the law does not permit a municipality to retain the fruits of its contract, and deny its validity.

I am for affirming the judgment.

Moore and Long, JJ., concurred with Grant, C. J. Hooker, J., did not sit.