Grogan v. City of San Francisco

18 Cal. 590, 1861 Cal. LEXIS 250

• Court: California Supreme Court
• Decided: July 1, 1861
• Status: Published

Opinion

Field, C. J. delivered the opinion of the Court

Cope, J. concurring.

This case has grown out of the attempted sale by the authorities of San Francisco, in December, 1853, of certain property known as the city slip property. On the fifth of that month, an ordinance for the sale of the property was presented to the Board of Assistant Aldermen of the city and put upon its passage. At the time there was a vacancy in the Board, occasioned by the resignation of one of its members, so that there were only seven members in office. Of this number four members voted for the ordinance and three against it. As a consequence, the ordinance was not passed, but was in fact rejected—the Charter of the city then in force declaring that no ordinance should “ be passed unless by a majority of all the members elected to each Board”—a clause which this Court has held required for the passage of an ordinance a majority of the votes of the entire number which the Charter provided should be elected. Notwithstanding the ordinance was thus rejected, the Board declared it passed, and it received the approval of the Mayor and was published as a valid ordinance of the city. It is designated in the official book of city ordinances, as Ordinance No. 481. Assuming to act under its provisions, the Mayor and Land Committee mentioned therein, on the twenty-sixth of December, 1853, put up the property for sale and struck it off in parcels to different parties. Among these parties were the plaintiffs ; they bid off four lots, and paid on account for the same the sum of $19,551.74 ; the greater portion of the amount on the thirtieth of December, 1853, and the balance in the months of February and May of the following year. It is for this amount the present action is brought.

The money paid by the plaintiffs went into the treasury of the city, and was afterwards appropriated to various municipal purposes. This appropriation, as we held in the case of McCracken v. The City of San Francisco, (16 Cal. 616) did not operate as a ratification of the sale, any more than the appropriation of moneys received for an illegal assessment would h'ave operated to validate such assessment. The resolutions and ordinances which made the appropriation did not purport to ratify the alleged ordinance, but on the contrary, proceeded upon the assumption of its original validity. Besides this, there were insuperable difficulties in the way of any ratification. The property offered for sale had been previously dedicated to public use as a dock, by an ordinance passed as early as 1852, and until the dedication was revoked no sale could be made, and of course none could be ratified. The alleged Ordinance No. 481 contained a clause directed to the repeal of the dedication, but as the ordinance itself was rejected, the repealing clause fell with it. Again, by the Charter, all sales of the city property were required to be made at public auction. This mode was essential to the validity of any sale. A ratification of an illegal public sale is in effect making a private one. The object of the ratification is to vest in the purchaser the title., as he had acquired none previously, and for that purpose to confirm to him the sale at the prices already offered—that is, to make a sale upon the consideration of the original bid. At public auction this could not be done, for the very essence of an auction sale is that every one is at liberty to bid, and that the property shall fall to the highest bidder. It could only be done by a.private arrangement, and as a consequence could not be done at all by the Common Council under the restrictions of the Charter. The case would be different if the Common Council had possessed authority to dispose of the municipal property at private sale. They could then have said: We will confirm the previous proceedings; we will take the money already advanced, and what is to be advanced upon the bid, as the consideration, and transfer the title. But as the power of disposition could only be exercised in one way—by a direct ordinance authorizing a public sale, after due advertisement of the time, place and terms—no other mode could be adopted in its stead. Appropriation of the proceeds, proceedings upon the assumed validity of the sale, reference to the ordinance as having been passed would, not answer the requirements of the Charter. The Common Council were not invested with any discretion to substitute a different mode for the disposition of the city’s property in place of the one provided. A private proprietor, having full power over his own property, may ratify an unauthorized sale of the same made by a person assuming to be his agent, without reference to its mode, whether made publicly or privately; he may in some instances be estopped from denying the act of the assumed agent, after appropriating its benefits with knowledge of the facts. So the State may ratify the acts of her agents upon a subject within the constitutional control of the Legislature, when they exceed their powers. She may do this by legislation directly affirming the acts, or by legislation proceeding upon their assumed validity. The reason is obvious; there is no limitation as to the mode in which the State may give her assent, except that it must be by an act or resolution of her Legislature. Hot so with a municipal body under restrictions such as controlled the action of the Common Council of the city of San Francisco. They could give their assent to the sale of the city’s property only in one mode. It is unnecessary to refer to adjudged cases in support of these views. They are in accordance with the general current of all the authorities.

The case of the plaintiffs, upon the facts we have stated as to the alleged ordinance and sale, is similar to that of McCracken v. The City of San Francisco. The Mayor and Land Committee acted without authority, and the proceedings taken by them were void; as much so as if they had been taken by strangers to the city and to her government. The plaintiffs acquired no title or claim of title by their bids and the payment of their money. The city obtained the money without consideration, and used it, and, unless some subsequent matter has released her from liability, she is legally and morally bound to refund it to them.

Such subsequent matter is alleged to exist—effecting the city’s . release from the' liability—in the Act of the Legislature of April 26th, 1858, entitled “An Act to authorize the Treasurer of the City and County of San Francisco to execute certain deeds and cancel certain claims,” and the acceptance by the plaintiffs of conveyances from the Treasurer purporting to be executed in pursuance of its provisions. That act provides that the Treasurer of the city and county shall receive from the purchasers at the sale of the twenty-sixth of December, 1853, or their assigns, any sum or sums remaining unpaid by them respectively for the real estate sold under Ordinance No. .481; that the same may be paid “ in cash or in any judgment against said city; or in any bonds of said city, or of said city and county, which have heretofore been issued, or may hereafter be issued; or in any genuine city Controller’s warrants that may have been issued on or after the first of May, 1851, or any three per cent, scrip issued by said city prior to the first of May, 1851; provided said judgments or bonds have not been paid ; and provided said Controller’s warrants and said scrip have not been funded under any of the Funding Acts heretofore passed; and provided further, that no judgments have been recovered on any of said warrants or scrip;" that upon the receipt of the amounts due in the manner thus provided, the Treasurer shall execute, in the name of the city and county of San Francisco, a deed of bargain and sale to the purchasers of the lots sold to them respectively ; that the deed shall convey the right, title and interest both of the city and of the city and county, and be prima fade evidence of the regularity of the proceedings of the city preliminary to the sale, and of the title and right of possession of the grantees against the city and the city and county; and that upon the deed, actions for the recovery of the property, and for injuries thereto, may be maintained. This act, as we construe it, contemplates two things: first, the payment by the purchasers of the balance of their bids at the sale in December, 1853, either in cash or in valid obligations of the city; and second, the conveyance to them, upon such payment, of the title which they would have acquired had the sale been originally authorized. The only doubt as. to this construction arises upon the meaning of the terms, “ genuine City Controller’s warrants.” All other obligations specified are such as the city was legally bound to pay, and could be properly taken as an equivalent for cash; but this clause, it is insisted, was intended to include not only warrants which were legally issued, but those which were issued without authority, and, therefore, not binding upon the city, provided the signatures of the officers attached to them were not forged. We do not give this meaning to the terms; we think they were intended to embrace only warrants representing a genuine indebtedness of the city, and issued by the authority of the city. It was not the object of the act to require deeds of gift from the city, or deeds without further consideration where any balance of the original bids remained unpaid, as would, in effect, be the case if warrants illegally issued were receivable in payment, but to authorize conveyances which the Common Council, under the restrictions of the Charter as to the sale of the city property, were incompetent to give, and the receipt of the unpaid balance in valid obligations of the city. This view as to the character of the warrants is strengthened by their connection in the act with other obligations of acknowledged validity, and the proviso that they had not been previously funded -or merged in judgments. The warrants, or “ city scrip,” as they are termed in the report of the referee, received by the Treasurer, upon which the conveyances to the plaintiffs were executed, did not represent any legal or equitable indebtedness of the city; their payment had uniformly been refused by the city, and two successive Boards of Examiners had rejected them as not entitled to any consideration whatever. The Treasurer did not, therefore, pursue the authority of the statute in receiving them, and his acts in executing the conveyances were in consequence illegal and void.

But independent of this view of the warrants, there is a fatal objection to the validity of any conveyance by the Treasurer. The Act of the Legislature was never accepted by the city. This is found as a fact in the report of the referee. The property conveyed is part of the beach and water lot property covered by the Act of the Legislature of March 26th, 1851, entitled “An Act to Provide for the Disposition of Certain Property of the State of California.” By that act a grant is made to the city of the use and occupation of the property for the period of ninety-nine years, with a proviso that the city shall pay into the State Treasury, within twenty days after their receipt, twenty-five per cent, of all moneys arising in any way from the sale or other disposition of the property. The proviso is not a qualification of the estate granted; it is only a reservation by the State of a portion of the proceeds received, creating an obligation on the part of the city, upon the acceptance of the grant, to pay such portion into the State treasury. The estate having vested in the city, ceased to be subject to the legislation of the State, except to the same extent that all property is thus subject. It could not be afterwards divested by the State, or by any proceedings instituted by her direction. “A law,” says Mr. Chief Justice Marshall, “ annulling conveyances between individuals, and declaring that the grantors should stand seized of their former estates, notwithstanding those grants, would be as repugnant to the Constitution as a law discharging the vendors of property from the obligation of executing their contracts by conveyances.” (Fletcher v. Peck, 6 Cranch, 137.) And between a law thus annulling the conveyances, and a law directing the execution of conveyances to third parties of the estate granted, without the consent of the grantees, it is not perceived that there is any substantial difference. The law might as well declare that third parties should possess the estate, and direct the mode of its transfer to them, as to declare that the original grantors should stand seized of the same. Nor is there any difference in the inviolability of the contract between a grant of property to an individual and a like grant to a municipal corporation. So far as municipal corporations are invested with subordinate legislative powers for local purposes, they are mere instrumentalities of the State for the convenient administration of the Government, and their powers are under the entire control of the Legislature ; they may be qualified, enlarged, restricted or withdrawn at its discretion. But these bodies, says Kent, “ may also be empowered to take and hold private property for municipal uses, and such property is invested with the security of other private rights.” (1 Com. 3 vol. 275.) “It may also be admitted,” observes Mr. Justice Story, in his opinion in the case of The Trustees of Dartmouth College v. Woodward, “ that corporations for mere public government, such as towns, cities and counties, may in many respects be subject to legislative control. But it will hardly be contended that, even in respect to such corporations, the legislative power is so transcendant that it may, at its will, take away the private property of the corporation or change the uses of its private funds acquired under the public faith.” (4 Wheat. 694.) “ The inhabitants of the city of New York,” says the Supreme Court of New York, “have a vested right in the city hall, markets, water works, ferries and other public property, which cannot be taken from them any more than their individual dwellings or storehouses. Their rights, in this respect, rest not merely upon the Constitution, but upon the great principles of eternal justice, which lie at the foundation of all free governments.” The authorities are all to the same purport. A legislative grant is an executed contract, and as such is within the clause of the Constitution of the United States which prohibits the States from passing any law impairing the obligation of contracts. This was expressly decided by the Supreme Court of the United States in Fletcher v. Peck (6 Crunch, 137). It cannot therefore be destroyed, and the estate be divested by any subsequent legislative enactment. And though a municipal corporation is the creature of the Legislature, yet when the State enters into a contract with it, the subordinate relation ceases, and that equality arises which exists between all contracting parties. And however great the control of the Legislature over the corporation, it can be exercised only in subordination to the principle which secures the inviolability of contracts.

These considerations, without reference to the character of the warrants received, furnish an answer to the position that the conveyances taken by the plaintiffs from the Treasurer operated as a release of their demand. That act directs the' Treasurer to convey the property attempted to be sold under the alleged ordinance of December, 1853, and thus to divest the city of her estate. The city, it is to be borne in mind, has never authorized a sale of her interest. The ordinance proposed for that .purpose, as we have stated, was not passed, but was in fact rejected, as it did not receive the requisite vote in the Board of Assistant Aldermen, under the provisions of the charter. The Legislature, however, steps in, and by the Act of 1858 says that the city’s interest shall, notwithstanding, be transferred to the bidders at the illegal sale, made in accordance with the rejected ordinance, upon considerations which she herself designates. To this act, as vs\e have stated, the city has never assented; and*, without such assent the act never acquired any force or efficacy whatever. The conveyances of the Treasurer were therefore inoperative to pass any interest in the property, and the title remains, as it did previously, in the city. The rights of the plaintiffs and the obligations of the city are both unaffected by the unauthorized acts of the Treasurer.

The remark in the concluding observations of the opinion in McCracken v. The City of San Francisco, upon the amount supposed to depend upon the decision in that case, that, as we were informed, many of the purchasers at the sale in December, 1853, had taken deeds under the Act of 1858, or the amendatory Act of 1860, and thereby released their claims to reimbursement of .their purchase money, was made upon the impression received from the information—for those acts were not under consideration at the time, nor was any question arising upon them—that the acts had been accepted by the city, and had been pursued in the execution of the conveyances by the Treasurer. As the acts were not accepted by the city, nor pursued by the Treasurer, the remark has no application.

The cases of Hart v. Burnett, (15 Cal. 530) and Payne v. Treadwell, (16 Cal. 222) cited by the counsel of the appellant, do not conflict with the views we have expressed as to the authority of the Legislature over the property of a municipal corporation. They both treat of lands held by the city of San Francisco as successor of the former pueblo, and of the power of the Legislature to validate a grant of such lands previously made by the act of the city. Those lands were held by the pueblo, and the city as its successor, in trust for public municipal purposes, and the trust was subject to the direction, supervision and control of the Government. The cases cited have no application to a case like the present, where the Legislature has undertaken to divest property, which is not held upon any such trusts, without the city’s previous consent, or the city’s subsequent acceptance of its act.

Judgment affirmed.