Pimental v. City of San Francisco

21 Cal. 351

• Court: California Supreme Court
• Decided: July 1, 1863
• Status: Published

Opinion

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

Cope, J. and Norton, J. concurring.

This is one of the numerous cases which have grown out of the attempted sale by the authorities of the city of San Francisco, in December, 1853, of the property known as the City Slip Property. The general facts in all of them upon which the liability of the city is asserted, lie within a narrow compass; but the defenses interposed have varied with the different cases, and have not always been consistent with each other. In some of the cases, the entire transactions giving rise to or connected with the alleged sale, including the receipt and appropriation of the moneys derived therefrom, have been treated as transactions to which the city was an absolute stranger; in other words, a want of privity between the bidders and the city has been asserted; in other of the cases, a subsequent adoption of the ordinance directing the sale has been alleged, and a ratification of the sale by the appropriation of its proceeds. In some the restraining clause of the charter against the incurring of liabilities has been relied upon, and in others, as in the present case, the length of time in which the claim against the city has existed is set up as a bar to its recovery. In the meantime the indebtedness against the city, if obligatory at all as such, has been increasing at a rapid rate by the accumulation of interest and the heavy expenses of protracted litigation, until the amount at present exceeds, it is believed, a million of dollars. It is desirable, therefore, not only for the claimants, but for the city, that the controversy between them should be brought to a termination. It may be well, therefore, before proceeding to consider the question immediately arising in the case at bar, to briefly state the different positions already considered and settled by this Court.

The facts out of which the litigation has arisen are briefly these: On the fifth of December, 1853, the Mayor of San Francisco approved of what purported to be an ordinance passed by the Common Council of the city, providing for the sale of the City Slip Property. This ordinance, so called, in terms authorized and required the Mayor and Joint Committee on Land Claims to sell the property at public auction after certain days advertisement, and provided that twenty-five per cent, of the purchase money should be paid on the day of sale, fifty per cent, in sixty days thereafter, and the balance in four months. At the time this ordinance was acted upon by the Board of Assistant Aldermen, there was a vacancy in the Board, occasioned by the resignation of one of its members, so that of the eight members elected only seven remained in office. Of this number four members voted for the passage of the ordinance, and three against it. As a consequence the ordinance was not passed, not having received the necessary vote required by the charter then in force. The charter vested the legislative power of the city in a Common Council, consisting of a Board of Aldermen and a Board of Assistant Aldermen, each Board to be composed of eight members, and fixed the limits of their authority. It empowered them to pass all “ proper and necessary laws ” for the sale of the city property—that is, all proper and necessary ordinances for that purpose, for “ laws ” and “ ordinances,” when applied to the acts of municipal corporations, are synonymous terms. But it declared that no ordinance should be passed “ unless by a majority of all the members elected to each Board.” The ordinance in question, therefore, not having received the vote of a majority of all the members elected, was never passed. It was, in fact, rejected—as much so as if every member had cast his vote against its passage. It was, therefore, for all purposes an absolute nullity. The Board, however, declared it passed, and it received, as we have stated, the approval of the Mayor, and was published as a valid ordinance of the city. It is designated in the official book of the city ordinances as Ordinance No. 481. Treating it as a valid ordinance, and assuming to act under its provisions, the Mayor and Land Committee, on the twenty-sixth day of December, 1853, put the property up for sale at auction, and struck it off in parcels to different parties. A portion of the purchase money was paid by the bidders at the time, or "within a few days afterward, and another portion, or the entire balance, within the following year. In the present case the plaintiffs bid off one of the parcels for $7,900, and paid the first installment, one-fourth thereof, on the day following the sale; the second installment, one-half thereof, in February, and the balance in April, 1854. For the amounts paid by the respective bidders, whatever they were, the several actions against the city were brought.

The moneys paid by the bidders went into the treasury of the city, and were afterward by different ordinances and resolutions appropriated to municipal purposes. To the different actions, as we have mentioned, various defenses have been interposed. In some of them, as already stated, the entire transactions giving rise to or connected with the alleged sale have been treated as transactions to which the city was an absolute stranger; in other words, a want of privity, as it is termed, between the bidders and the city has been alleged. This alleged want of privity, as we understand it, amounts to this: that inasmuch as the Mayor and Land Committee had no authority to make the sale, they had no authority to pay the money which they received from the bidders into the treasury of the city, and therefore no obligation can be fastened from such unauthorized act upon the city. The position thus restricted in its statement is undoubtedly correct, but the facts of the cases go beyond this statement. They show an appropriation of the proceeds, and the liability of the city arises from the use of the moneys, or her refusal to refund them after them receipt. The city is not exempted from the common obligation to do justice, which binds individuals. Such obligation rests upon all persons, whether natural or artificial. If the city obtain the money of another by mistake, or without authority of law, it is her duty to refund it, from this general obligation. If she obtain other property, which does not belong to her, it is her duty to restore it, or if used, to render an equivalent therefor, from the like obligation. (Argenti v. San Francisco, 16 Cal. 282.) The legal liability springs from the moral duty to make restitution. And we do not appreciate the morality which denies in such cases any rights to the individual whose money or other property has been thus appropriated. The law countenances no such wretched ethics; its command always is to do justice.

In the first case which came before this Court—Holland v. The City of San Francisco—the doctrine of a want of privity was announced. Had this doctrine prevailed, the purchasers would have lost both the property and their money, while the city would have retained both. This result was so manifestly unjust that a rehearing was granted without hesitation; and on the reargument the position was considered so unsound that it was not noticed by counsel. Mr. Chief Justice Murray, alluding to it, said: “ It will hardly be 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.” (7 Cal. 338.)

In some of the actions, the subsequent adoption of the ordinance directing the sale of the slip property has been alleged, as a defense, by the city. In Holland v. San Francisco, this Court held—Justices Burnett and Terry rendering the decision, Chief Justice Murray dissenting—that an ordinance which was passed within an hour previous to the sale, and which referred to the ordinance directing the sale, and appropriated a portion of its anticipated proceeds, did, in fact, by such reference and appropriation, recognize and adopt the first ordinance, so as to render the subsequent sale valid and binding upon all parties. This decision was overruled in McCracken v. The City of San Francisco, as it was too palpably unsound to stand the test of the slightest investigation. Indeed, we have never yet met with any lawyer who had the hardihood to attempt its justification. The reference in the second ordinance, independent of the appropriation it makes to the previous ordinance, did not add anything to the validity of that ordinance. There is no efficacy in the mere reference to previous legislation, whether valid or invalid. Nor did the appropriation designated in the second ordinance operate as an adoption of the previous ordinance. An ordinance cannot in this way be passed; it can only be passed in one way—by a majority of both Boards of the Common Council voting for it. The doctrine asserted in the decision, as we said in the McCracken case, “ is unsound in principle and is unsupported by any authority; and could it be maintained, would break down and destroy all the checks imposed by the Legislature upon the exercise of the powers of the Common Council. Upon this doctrine that body could at any time adopt the unauthorized acts of others—in the levy of taxes, in the sale of public property, in the opening of streets, in the infliction of penalties, and by admitting in one ordinance that it had previously passed an ordinance for those purposes, give validity to those acts.”

The subsequent ratification of the sale by the appropriation of its proceeds has also been alleged as a defense. But this appropriation did not operate, as we held in the McCracken case, as a ratification any more than the appropriation of moneys received from an illegal assessment would have operated to give validity to such assessment. The ordinances and resolutions making the appropriation did not purport to ratify the sale, but proceeded upon its assumed validity. But in addition to this, as we said in Grogan v. San Francisco, (18 Cal. 608) “ 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 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 the place of the one provided.”

In some of the actions against the city, the restraining clause of the charter of 1851 against the incurring of debts or liabilities exceeding in the aggregate, with former debts or liabilities, the sum of fifty thousand dollars, has been relied upon. This clause was the subject of extended consideration in the McCracken case, and we held that it referred to the acts or contracts of the city, and not to liabilities which the law cast upon her; that it was intended to restrain extravagant expenditures of the public moneys, and not to justify the detention of the property of her citizens, which she had obtained without authority of law. Her liability in this respect, we said, was independent of the restraining clause; “ and it may be well doubted,” we continued, “ whether it would be competent for the Legislature to exempt the city, any more than private individuals, from liability under circumstances of this character. Suppose, for example, that the city should recover judgment against an individual for $100,000, and collect the money upon execution, and upon appeal, the judgment should be reversed, would it be pretended that the money could not afterwards be recovered ? Could the city defend against the claim for restitution upon the pretense that she was already indebted over $50,000 ? Could she, to use the language of counsel, owe herself out of liability ? Suppose, again, an individual should pay the taxes upon his property, in ignorance that they had already been paid by his agent, could the city retain the amount thus paid by mistake ? Could she plead her previous indebtedness as an excuse for the detention of the money to which she had no legal or equitable right ? Suppose, again, the city should neglect to keep the streets in repair, and an individual should be injured in consequence—should break his leg, or be otherwise crippled—could she allege her insolvency against his claim for damages ? Would her pecuniary condition be an answer for the neglect of every duty, legal and moral ? If this were so, she would be the most irresponsible corporation on earth, and her treasury would be, in many instances, but a receptacle for others’ property, without possibility of restitution. The truth is, there is no such exemption from liability on her part. The same obligations to do justice rest upon her as rest upon individuals. She cannot appropriate to her own use the property of others, and screen herself from responsibility upon any pretense of excessive indebtedness.”

As will be seen from this brief statement of the questions settled in-the several cases heretofore before the Court, there is nothing to prevent a recovery of the claimants in the alleged want of privity between the bidders and the city, or in the alleged subsequent adoption of the ordinance providing for the sale, or in the alleged ratification of the sale, or in the restraining clause of the charter. The several cases stand simply upon this ground: The city has obtained the money of her citizens without any consideration, under a mistaken impression of her rights, and has appropriated it to municipal purposes; and they insist, and so we have held, that she is, under these circumstances, bound, both legally and morally, to refund it to them.

The suggestion, frequently made in the cases, that the claimants are taking advantage of a mere technical defect, and that had they remained contented with the sale they would not have been disturbed in their possession, is without force. That defect which vitiates entirely a sale, and leaves the title of the property in the city, can hardly be termed a technical one. It is a defect which goes to the substance of the whole transaction. Nor is it by any means certain that the bidders would have been left in undisturbed possession of the property had no question as to the validity of the alleged sale been raised. They could have no assurance that subsequent corporate authorities might not claim the property; or if the authorities did not move in the matter, that the creditors of the city might not attempt to subject the property to the satisfaction of their demands. But, independently of these considerations, it is enough to say that the bidders had a clear right to ask for a return of their money when they found that the title had not passed to them and could not pass by the proceedings taken. They were not under any obligation to wait a moment. The money was paid for a present not a future transfer of the title. But the bidders were more indulgent than this. It appears from the findings in one of the actions—Grogan v. San Francisco (18 Cal. 597)—that in January, 1855, they became aware of the invalidity of the sale, and apprised the then Common Council of the city of its invalidity, and requested them to pass an ordinance ratifying and confirming the sale, which they refused to do. It is true that the Common Council did not possess the power to ratify and confirm the sale, but they could have applied to the Legislature then in session for the power. No steps of the kind were, however, taken. There was only one alternative left to the bidders—to institute suits for the recovery of their money, which they subsequently did. Again, in 1858 the Legislature passed an act authorizing the Treasurer of the city to execute deeds to the purchasers upon receiving the balance, if any remained unpaid, of the original bids; and provided that such deeds should convey the right, title, and interest, both of the city and of the city and county, in the property. But this act the city neglected to accept, and without her acceptance it never acquired any force or efficacy whatever. It undertook to divest the city of her property upon conditions imposed by the Legislature, and not by herself. The conveyances of the Treasurer under the act, were, therefore, inoperative to pass any interest, and the title to the property remained as before in the corporation. (Grogan v. San Francisco, 18 Cal. 590.)

■ In the present case the city sets up as a bar to the plaintiffs’ recovery the Statute of Limitations. With the policy of a defense of this character on the part of the city we have nothing to do. The defense is a legal one, and our duty ends with a determination whether or not it has been sustained. The action is for the recovery of $7,900, paid upon the alleged sale of one of the parcels of the slip property. The complaint alleges, that $1,975 were paid on the twenty-seventh of December, 1853; $3,950 on the twenty-seventh of February, 1854; and the balance, $1,975, on the twenty-seventh of April, 1854; and that these several sums were received by the city on the respective days of them payment. The referee finds that the several payments were made to the city, and accepted by her as alleged in the complaint. In the other actions, which have been before this Court growing out of the alleged sale, it has appeared that the moneys were in the first instance paid to the Mayor and Land Committee, and by them paid into the treasury of the city, on or about the twenty-eighth of April, 1854. The payment at this date does not appear to have been proved in the present case. The defense is, therefore, sustained as to the first two installments, and is not sustained as to the third. The complaint was filed on the twenty-first of April, 1856, more than two years after the payment of the first two sums, and within two years after the payment of the last sum. The statute was a bar after two years from the receipt of the moneys by the city. Whether that receipt must be evidenced by a refusal to refund the moneys, or their appropriation to municipal purposes, it is not necessary to express any opinion. The allegation and the finding are both that they were received by the city at the several dates designated.

The position that the filing of the complaint, without the issuance of summons thereon, did not prevent the statute running, is not tenable. At common law there was no limitation to the period within which actions could be commenced, though a presumption was created that the claim was satisfied by the lapse of twenty years. It is the statute which prescribes the limitation; and in this State the same statute declares that an action shah be deemed commenced, within its meaning, “ when the complaint has been filed in the proper Court.” It was certainly within the legislative power to affix this qualification upon the provisions of the statute, though grave considerations as to its policy may be presented, as they have been by the learned counsel of the appellant in the present case. (Sharp v. Maguire, 19 Cal. 597.)

Judgment reversed and cause remanded for a new trial.