Holland v. City of San Francisco

7 Cal. 361

• Court: California Supreme Court
• Decided: July 1, 1857
• Status: Published

Opinions

Burnett, J.,

delivered the opinion of the Court—Terry, J., concurring.

This case was decided at the last October Term, and a rehearing had at the present term. The great importance of the question involved, the large interest to be affected, and the researches of the eminent counsel employed on both sides of the case, have thrown upon the Court a great amount of labor, and greater resposibility. I have given the case the most patient examination my other duties would permit.

The first question naturally presented by the record, and the briefs in the case, is, whether the city of San Francisco, under the provisions of her charter, can make a valid sale of her real estate, without the passage of an ordinance authorizing the sale ?

The thirteenth section of article forty-one, page three, of the charter of the city, passed April 15th, 1851, provides, among other things, that the common council “ shall have power within the city to pass all proper and necessary laws for the regulation, improvement, and sale, of the city property.”

The learned counsel for the city insists, that while the charter does point out a particular mode in which a given power may be exercised, it does not prescribe it as the sole mode; and that the power of sale being inherent in the very nature of the corporation, and being also given by the charter, the city is not precluded from exercising the power in other appropriate modes.

But in reference to this particular point, the authorities, as well as the reason of the case, seem clearly against it. In the case of Head and Amory v. The Providence Insurance Co., (2 Crunch, 166,) it is laid down as a general rule “ that a corporation can only act in the manner prescribed by law.” So in the case of the Farmers’ Loan and Trust Company v. Carroll, (5 Barbour S. C. R., 615,) it is substantially held that “ when a corporation relies upon a grant of power from the Legislature for authority to do an act, it is as much restricted to the mode prescribed by the statute for its exercise as to the thing allowed to be done.” If the charter confers upon the corporation a given power, and at the same time prescribes the mode of its exercise, the provisions must be held as dependent, and must be construed accordingly. This view seems to be fully sustained by the former decisions of this Court. 4 Cal. R., 146; 5 Cal. R., 169.

If the position that the city could only sell her real estate by virtue of an ordinance passed for that purpose, be correct, the question then arises, what ordinances were passed by the common council authorizing the sale of property to plaintiff.

An ordinance designated as Ho. 481, “ to provide for the sale of certain city property,” passed the board of aldermen by the requisite majority, and upon the vote in the board of assistant aldermen, there were four votes in the affirmative and three in the negative. The latter board consisted of eight members, and there was, at the time, one vacancy. As the four votes in the affirmative did not constitute a majority of all the members elected, this Court decided, in the case of The City of San Francisco v. Hazen, 5 Cal. R., 169, that the ordinance was not passed. The ordinance was approved by the mayor on the fifth of December, 1853. This rejected ordinance provided, “ that the mayor and joint committee on land-claims should sell, at public auction, certain city property” described therein, among which was the property purchased by the plaintiff. The mayor and land committee proceeded to advertise a sale of the property at auction, as prescribed by the supposed ordinance. The sale was had on the twenty-sixth day of December, 1853. Some half an hour before the sale took place, the common council regularly passed an ordinance, which was properly approved by the mayor, and designated Ordinance Ho. 493, “ appropriating one hundred and eighty-five thousand dollars from the cash proceeds of the second payment for the city property, ordered sold by ordinance numbered four hundred and eighty-one.” By the second section, it was provided, “ that the comptroller be authorized to issue, on the day of salé of the property ordered sold by ordinance numbered four hundred and eighty-one, his warrants upon the treasury.” “ Said warrants shall be payable from the cash proceeds of the second payment for the property ordered sold as aforesaid, or shall be received in payment for any purchases made at said sale in accordance with the terms of Ordinance 481.”

The first important inquiry regards the rules of construction justly applicable to this Ordinance No. 493.

In the case of Bailey v. -The Mayor and Corporation of Hew York, Helson, O. J., speaking of the distinction between the powers of a municipal corporation, as the owner of property, and as a subordinate government, says: “ But the distinction is quite clear and well settled, and the process of separation practicable. To this end, regard should be had, not so much to the nature and character of the various powers conferred, as to the object and purpose of the Legislature in conferring them. If granted for public purposes exclusively, they belong to the corporate body in its public, political, or municipal character. But if the grant was for purposes of private advantage and emolument, though the public may derive a common benefit therefrom, the corporation, quoad hoc, is to be regarded as a private company. It stands on the same footing as would any individual or body of persons upon whom the special franchises had been conferred.” 3 Hill, 539, and authorities there cited.

So in the case of Lloyd v. The Mayor and Corporation of Hew York, 1 Selden, 374, it was held by the Court of Appeals, in 1851, that “the corporation of the city of Hew York possesses two kinds of powers—one governmental and public, and to the extent they are held and exercised, it is clothed with sovereignty; the other private, and to the extent they are held and exercised, is a legal individual. The former are given and used for public purposes, the latter for private purposes.” And in the case of Milhan v. Sharp, 15 Barbour, 210, Edwards, C. J., held that the city of Hew York, so “ far as it acts in the exercise of its public political powers, and within the limits of its charter, is vested with ■the largest discretion; and whether its laws are wise or unwise, whether they are passed from good or bad motives, it is not the province of this Court to inquire. But as regards the acts of the corporation in reference to its private property, it stands upon a very different footing. Such property is held for the common benefit of all the corporators.” “ The mere fact that the forms of legislation are used, will make -no difference in the character of the act. It will be, in no sense, the exercise of a political power delegated for public purposes.” It was also held, in that case, that when a municipal corporation acts in reference to its private property, its acts are equally of a private character, and equally subject to judicial control with the acts of a private corporation. A municipal corporation, from the nature of the effds intend,ed to be accomplished by its creation, is a compound being, acting •. in different capacities. A private corporation—as, for example, a bank—acts directly only upon its own agents, and for its own-private business purposes. A municipal corporation exercises powers of government over others, not its agents. It can pass laws affecting the liberty and property of others, and compel obedience by the infliction of penalties. But in addition to this governmental power, it also possesses the capacity to own and dispose of property like an individual, and, like a private corporation, may be a trustee for others. When acting in the capacity of a limited government, and within the limits of its charter, the exercise of its delegated discretion cannot be controlled by the judicial department. But when acting as a trustee, either for the corporation, or for others, or for both, its acts are subject to judicial control. In the latter case its discretion must be exercised soundly, like the discretion of any other trustee.

And this distinction is not affected by the fact that by the law of its creation a municipal corporation can only act through its common council in the form of an ordinance. Eor is it affected by the fact that ordinances “ for the regulation, improvement, and sale of city property/' are called “laws” by the-charter of the city of San Francisco. Whatever name the Legislature may give such ordinances, does not change the nature of the ordinances themselves. Acts of Congress respecting the property of the United States, are properly called by the Constitution “ rules and regulations.”

The legitimate result of this distinction between the governmental and private capacity of a municipal corporation regards : 1. The right ■ and extent of judicial control. 2. The power to pass retrospective ordinances, and to make binding admissions. 3. The rules of construction applicable to ordinances.

As no judicial control is invoked in this case, it will only be necessary to inquire how far this distinction will affect the decision of this case under the second and third aspects, as above stated. By the act of March 26th, 1851, the State granted to the city of San Francisco, for the term of ninety-nine years, the use and occupation of the beach and water-lots, the State reserving twenty-five per cent, of all moneys arising from the sale or other disposition of the property. The lot purchased by the plaintiff was a part of this property. ' As the owner or trustee of this property, the city could do any act that a private corporation could with respect to its own property, consistent with the rights of the State, and of individuals, after they attached; provided, the forms prescribed by the charter were properly pursued. From this it follows that the common council, in the form of an ordinance properly passed, could adopt any precedent act or acts of the city officers, not prejudicial to the existing rights of the State or of individuals. So, also, it follows, that the city, in the proper form, could make the same binding admissions, not prejudicial to the rights of others, that individuals could make. And hence it also follows, that an ordinance in reference to such a matter is not subject to those rules of interpretation properly applicable to laws, as such, but is subject to the same rules of interpretation as the written instruments of individuals.

If these views be correct, the Ordinance 481 .was, in substance, a power of attorney, well drawn, but defectively executed. If it stood alone, any sale made under it would be void. It then becomes necessary to inquire how far Ordinance 493 adopted and sanctioned Ordinance 481; and to ascertain this, we must inquire as to what knowledge the council had in respect to the facts regarding the supposed passage and provisions of 481.

As to the provisions of 481, the council had full knowledge, as is shown by the provisions of 493 itself; and as to the facts regarding the passage of 481, the council had full means of information, and must be bound to know. The second section of the third article of the charter requires each board to keep a journal of its own proceedings, and upon the final passage of every ordinance the ayes and noes shall be taken and entered upon the journal. The council was bound to know the contents of its own journals, as it had the means of knowing, and it was its duty to know. As the organ of the city, in the disposition of city property, the council was bound to know whatever had been done, or not done, by it, in reference to that property. In the case of Alvarez v Brannan, we held that an individual was bound to remember his own acts. If he failed to do so, the misfortune or negligence was his own, as well as the consequences. So it is with a municipal corporation in its capacity as the owner of property. ■ If the act of the council be unjust in itself, then it will be controlled by the Courts, whether founded upon mistake or not. But if the act be beneficial, though predicated upon a mistake of facts (when knowledge is incumbent), it is still as binding as if actual knowledge existed. It would seem, however, that the only mistake, if any, which was made by the council, was one of law and not of fact. That the council, in passing 493, acted under the mistaken idea that a vote of four members in the board of assistant aldermen was sufficient to pass 481, may be true, and certainly is very probable. But will a municipal corporation, acting under a full knowledge of all the facts, and doing that which in itself is beneficial to its interests as the owner of property, and not at the time inconsistent with the rights of others, be allowed to plead ignorance of the law ? And if the corporation could not make this plea, then the party purchasing it could not make it. I cannot understand the practical reason upon which such a plea could be sustained. The law rewards the diligent and punishes the negligent. If such a ground could be admitted, it would lead a Court into a boundless field of inquiry. The plain, simple, and practical rule, is to require parties to know the law, except in some special cases, when fraud is practiced upon helpless ignorance.

From these views, it follows that the common council had the power to adopt 481, and to give it a retrospective operation, thus recognizing and sanctioning all that had been done up to that time under it, and all that should hereafter be done in pursuance of its terms. Had the council, in the exercise of its governmental powers, passed a retrospective ordinance, it might have been a very different matter. But as the Ordinance 481 only related to the disposition of the city property, and 493 related to the same matter, there could properly be no objection to such action. Ho rights of individuals had then attached so as to be

affected, and this action was no injury to the State, or to the corporators of the city. Whatever an individual could do in the mode appropriate to him, the corporation could do in the mode appropriate to it. Suppose A to make a well drawn power of attorney to B, but there should be a defective execution of the power; and suppose, by another instrument of equal solemnity, duly executed, A should expressly admit the power of attorney to be his act, and predicate the second instrument upon the ground of the validity of the power; and suppose, after this, B should act under the power, would not that action be fully binding upon A, as well as upon the person with whom B dealt as A’s attorney ? I can see no principle of reason or law that would deny the validity of the act of the attorney.

If, then, the common council must be held to have acted with a full knowledge of all the facts and of the law, and with the right and power to adopt 481, and all the precedent acts done under it, was the Ordinance of 493 a sufficient recognition and adoption of 481, to render the subsequent sale of the city property valid and binding upon all parties ? I think it was. The language of 493 is as strong a recognition of 481 as could well be made, not to be in the form of a re-enactment. It expressly assumes the validity of 481, as an ordinance, refers to the sale to be made under it, sets apart a large portion of the proceeds, and makes the warrants issued receivable in payment of purchases made at the sale. In short, the practical vitality of 493 is made to depend upon the expressly recognized validity of 481. Without assuming the validity of 481, there was no basis for 493 to rest upon. The intention to recognize and act upon 481, as a power to sell the city property, is apparent upon the face of Ordinance 493. And the fact that 493 was passed before the sale, and in reference to it, as appears from its provisions, is, in my view, a very strong circumstance to show the intention of the council. Had the ordinance been passed after the sale, and after the money had come into the city treasury, it would not afford the same index to the intention in passing it. In the case of Phelan v. The County of San Francisco, (6 California Reports, 531,) this Court held that taking care of property, already found in the possession of the county, did not make the county liable. And this Court also said in the same case, that the last and only evidence of the acts and intentions of the board of supervisors is to be drawn from the record of its proceedings. The same rule will apply to the ordinances of the common council, and from them, taken in connection with the rules of law applicable to such cases, I have been led to the conclusion that the sale of the city property, made on the day advertised, was valid and binding upon all the parties.

It may seem that this opinion is in conflict with the decision of this Court in the case of The City of San Francisco v. Hazen, 5 Cal. Rep., 169, but such is not the case. On the contrary, they are in no conflict whatever. That and the present case constitute a very apt illustration of a state of case not uncommon in Courts of last resort. We can only decide upon the case brought before us; and if parties neglect to bring up all the facts, we cannot supply them. In the case of Hazen, the ordinance of 493 was not before the Court, and is not alluded to either in the argument of counsel or in the opinion of the Court. The whole decision in that case turned upon the validity of 481, standing alone by itself.

It is unnecessary to decide the other important points made in the case, as those determined dispose of the whole matter.

For the reasons given, the judgment of the Court below should be reversed, and the case of plaintiff dismissed.