Board of Com'rs v. New Orleans Public Service, Inc.

O’NIELL, C. J. This is an action to compel the defendant, New Orleans Public Service, Inc., to carry out an agreement to buy from the plaintiff, board of commissioners of the port of New Orleans, at the stipulated price of $125,000, a square of ground in New Orleans. The square is described as bounded by Peters, Water, Orange, and Eichard streets, and is in what is called the First district. The Hibernia Bank & Trust Company, being the trustee named in certain mortgages that were granted by the plaintiff, was made party defendant and cited as such, in order to have it judicially determined that the mortgages did not affect the square of ground that is the subject of this suit. The recorder of mortgages was also made party defendant in order, as a safeguard, to have the mortgages declared canceled as to this square of ground. The defendant, Public Service, Inc., admits that it is under obligation to buy the square of ground at the price stated if the plaintiff has the authority in law to make the sale and if the title is not incumbered by the mortgages securing the outstanding bonds of the plaintiff, but 'avers that it is not certain that the plaintiff has authority in law to sell the land, and is not certain that the title is not affected by the mortgages referred to. The Hibernia Bank & Trust Company and the recorder of mortgages, answering the suit, admitted that the plaintiff’s allegations *743 of fact were true, and that the plaintiff’s conclusions of law were perhaps also correct, and submitted the matter to the judgment of the court. There was judgment for the plaintiff, declaring that the. square of ground was not affected by any of the mortgages granted by the plaintiff, and ordering the inscriptions canceled as to this square of ground, and ordering the defendant, Public Service, Inc., to carry out its obligation to take title to the property and pay the price. The Public.Service Inc., has appealed. This square of ground was bought by the plaintiff -from the New Orleans Water Supply Company for $85,000 nearly nine years ago, for the purpose of building on the land warehouses and other structures in aid of the commerce of the port, but the land has never been put to that or any other use by the plaintiff. It is a vacant square, behind the public wharves and landings, distant about 400 feet from the nearest wharf, and separated from the wharves by an intervening street or roadway and the tracks of several railroads. The property was therefore found not suitable to the use for which it was bought, or for any other use in aid of the commerce of the port. It is not and cannot be disputed that the plaintiff ought to be rid of -the idle investment, particularly now that the opportunity is presented, not only to avoid a loss, but to make a profit in consequence of the mistake that induced the board to buy the square of ground. The only question is whether, being without special or express authority in the provisions of the Constitution or of the statutes relating to the board, the board is forbidden to sell the land. Our opinion is that the case is controlled by the doctrine of the decision in the very recent case of Henderson v. City of Shreveport et al., 160 La. 360, 107 So. 139. In that case, the plaintiffs, ás resident taxpayers of the city of Shreveport, sought to enjoin the school board from selling and the city from buying a vacant lot which • the school board had bought with funds that were dedicated to the purchase of sites for school buildings, but which was after.-, wards found to be not suitable and not needed for such purpose. There was no statutory authority for a school board to sell real estate, except to “change the location of a schoolhouse, sell or dispose of the old site, and use the proceeds thereof toward procuring a new one.” The lot which the school board was about to sell to the city had never been used as a schoolhouse site, and the proceeds of the sale were not intended to be invested then or immediately in a new site. Nevertheless, it was held that, as the school board had no right to hold the vacant lot, and could be compelled by mandamus to dispose of it, after it was known to be of no use for school purposes, the board had the necessary authority to sell 'it. The court said: “Manifestly the school board has no right to acquire lands for any other than school purposes, and, since it has no right to acquire lands for any other than school purposes, it follows that it cannot hold lands indefinitely for other than school purposes; and hence it is the plain duty of the school board to divest itself of any land which admittedly, according to the judgment of the board itself, is unnecessary or unsuitable for school purposes; and mandamus would certainly lie to compel the board to divest itself of land so held.” The doctrine is stated more broadly in one of the headnotes of the decision thus: “Public boards and officers must be authorized to do voluntarily that which they could by mandamus be compelled to do, though not being specially authorized so to do.” In the second section of the statute creating the board of commissioners of the port of New Orleans, Act 70 of 1896, as amended by Act 36 of 1900 and Act 14 of Ex. Sess. 1915, it is declared that the board shall have and enjoy all of the rights, powers, and im *745 munities incident to corporations. In State v. Board of Commissioners, 153 La. 664, 96 So. 510, it was said that that provision in the statute meant merely thát the board had all of the incidental or implied powers needed by a political corporation to perform the duties that were expressly imposed upon it, or to carry out the objects and purposes for which it was created. The object and purpose for which the board of commissioners of the port of New Orleans was created was to have charge of and administer the public wharves and landings of the port of New Orleans; and, to that end, the board has authority to buy land on which to construct any building that the board may deem necessary in aid of the commerce of the port. The reason why the board has no statutory authority to sell real estate is that all of the real estate owned .by the board must be' dedicated to public use, and the board has no authority or right to buy land except what is necessary to be administered by the board for public use. To say that the board has no right or authority to sell real estate is merely to state the corollary of the proposition that the board has. no right or authority to' buy real estate except what is necessary to be held and administered by the board for public use. But, if the board makes the mistake of buying property that is afterwards found to be not necessary or suitable for any public use, the board is obliged and therefore has the right to dispose of it. Whether the board would have the right to sell any real estate that has once been actually dedicated to public use is a question which we do not decide, because the square of ground that is the subject of this suit was never actually dedicated to a public use. The principle on which we decided in State v. Board of Commissioners of the Port of New Orleans, 153 La. 664, 96 So. 510, that the board had the right to lease to a private corporation a warehouse which the board had no use for, is’appropriate to this case. The board had leased the warehouse, in connection with a wharf and wharfhouse, from the War Department, not because the board had use for the warehouse, but because the board had use for the wharf and wharfhouse and the War Department would not part with them without disposing of the warehouse also. Having so acquired the warehouse, the board found an opportunity to lease it to a private corporation on terms that made the whole transaction profitable. Notwithstanding there was no statutory or express authority for the board to dispose of by leasing any of the property under the board’s administration, we maintained that the board- had the right to dispose of the unused warehouse in that way because the disposition was a proper consequence of the original transaction by which the board had acquired the wharf and wharfhouse, and which the board had the right to make. The appellant cites the twelfth section of article 4 of the Constitution, which declares that the funds, credit, property or things of value of the state or of any political corporation thereof shall not be loaned, pledged or granted to or for any person or persons, association or corporation, public or private. In State v. Board of Commissioners, etc., supra, we ruled that the section was not applicable to the case. The transaction in question here is not a “grant” in the meaning of the word in the twelfth section of article 4 of the Constitution. It is not reasonable to suppose that the writers of the Constitution intended that this prohibition against the loaning, pledging or granting of the property of the state or of any political corporation in the state should apply to a transaction like this, for disposing of useless property belonging to a political corporation or board, because, if that was the intention, the Legislature itself could not sanction or authorize *747 the transaction. Surely that is not true. It is so manifest and so certain that the board of commissioners has the right to convert this idle investment into a profitable transaction that it is not necessary for the Legislature to say so in a special enactment. Our conclusion is that the judgment appealed from is correct in maintaining that the plaiutiif has the right to sell this vacant square of ground. The judgment is correct also in maintaining that the title to the square of ground is not incumbered or affected by any of the mortgages that were given by the plaintiff. The land was bought with a part of the proceeds arising from a series of bonds for $4,000,000, secured by one of the mortgages mentioned. This square of ground is not described in the act of mortgage. The lands mortgaged are described specifically in the instrument, and, after the description, is the clause, “and all lands which may be acquired with the proceeds of any bonds issued hereunder.” It was stipulated in the ordinance or resolution of the board authorizing the president to grant the mortgage that any property thereafter acquired with the proceeds of the bond issue should be covered by supplemental ordinances and acts of mortgage describing such property. No supplemental ordinance was ■ adopted or mortgage granted covering this square of ground. On the contrary, the fund that was derived from the bond issue was reimbursed the amount of the price paid for this land, with interest at the rate which the bonds bore — all of which was with the consent and approval of the trustee named in the act of mortgage and made defendant in this suit. The trustee had the right to demand of the board a supplemental mortgage covering this square of ground, but the original act of mortgage did not create a lien or an incumbrance upon the land because it was not described in the act of mortgage. Article 3306 of the Civil Cocfe provides: “To render a conventional mortgage valid, it is necessary that the act establishing it shall state precisely the nature and situation of each of the immovables on which the mortgage is granted.” The judgment appealed from is affirmed. THOMPSON, X, dissents. BRUNOT, X, dissents and hands down dissenting opinion.