Bishopric v. City of Jackson

*732 On Suggestion op Error. Anderson, J., delivered the opinion of the court on suggestion of error. This cause is here on suggestion of error. The parties to this cause are: Appellants, the Mark Twain Oil Company, a partnership composed of the appellant Bishopric and others, and the appellees, the City of Jackson, the Mississippi Power & Light Company and others, whose names it is unnecessary to mention. The appellants will be referred to as the Mark Twain Company and the appellees as the City and the Power Company. Sometime prior to 1940' the Power Company under a franchise from the City was furnishing its citizens with natural gas. There arose a controversy between them as to the rates that should be charged, which resulted in the City procuring the passage of Chapter 280, Laws of 1940, which follows: “Section 1. Be it enacted by the Legislature of the State of Mississippi, That municipalities of thirty-five thousand (35,000) inhabitants or over, according to the 1930 census, be and they are hereby authorized to operate gas systems, including gas distribution systems, and to that end said municipalities are authorized to drill or purchase a well, or wells, to supply said’ gas systems within the municipality, or within a radius of five (5) miles of said municipality, provided that the money used therefor is made available out of the gas system or some other public utility belonging to said municipality. ’ ’ *733 By authority of that statute the City acquired gas and oil leases in State lands and other lands and in conjunction with the Mark Twain Company drilled thereon four producing gas wells. The City assigned in writing to the Mark Twain Company a half interest in the venture. That Company and other parties to the suit, whose names it is useless to mention, contributed something over $20,-000 money and services to the enterprise. The City decided that it was not practicable to carry out the purposes of that statute, and treating its contract with the Marie Twain Company as ultra vires and void filed its bill to have the court so declare. The ground of the City’s case was that the statute violated Sections 87 and 88 of the Constitution prohibiting local legislation with reference to the matter. In the former opinion we so held, but in doing- so overlooked Section 89 of the Constitution as construed in Haas v. Hancock County, 183 Miss. 365, 184 So. 812, and State v. Jackson, 119 Miss. 727, 81 So. 1. Section 89 provides, among other things, that each House of the Legislature shall have a standing committee on Local and Private Legislation, and that no local or private bills shall be passed by either House until referred to such Committee thereof and shall have been reported with a recommendation in writing that it do pass, stating affirmatively the reasons therefor. It was held in those cases that the presumption was conclusive that that provision of the Constitution had been complied with. The City argues that nevertheless the decree appealed from should be affirmed because what took place between the parties under the' statute violated Section 183 of the Constitution, and for the further reason that it amounted to a surrender by the City of part, at least, of its governmental powers. Section 183 of the Constitution provides, among other things, that no municipal corporation shall make an appropriation or loan its credit in aid of any corporation or association. We are of opinion that both of those grounds are well founded, find we reach that conclusion upon the following considerations: The City *734 entered into a written agreement with the Power Company for the purchase and distribution by the Power Company of the gas output from these wells, disregarding any claim whatever by the Mark Twain Company. The City offered to do equity by reimbursing the Mark Twain Company, and others engaged with it, for the money and value of the services they had contributed in developing the enterprise. The final decree ordered that to be done, fixing the amounts, which aggregated something over $20,000. The Mark Twain Company contends that the assignment by the City of half interest in the enterprise was legal, and further that the City is estopped from contending otherwise. The contract between the parties provides that “the wells are to have supervision and the cost of the supervision to be paid jointly by us and the City of Jackson.” The City agreed not only to put in all leases it might obtain from the State, but in addition the Water Works property, the land in Livingston Park, the Airport, or any other lands as it might own. And further if rentals are to be paid to the state the City agreed to pay them. And the City agreed to obtain from the State Mineral Lease Commission such additional lands as the Mark Twain Company might designate, which were available to the City. The assignment covers the gas rights in apparently about 1,000 acres of land and provides that the wells- thereon shall be drilled jointly. In its answer and cross-bill Mark Twain Company. prayed for specific performance and that the City might be required to assign to it a half interest in the gas rights in all other lands it might own and prayed for an accounting of the proceeds of all gas which had been produced with interest thereon “figured at a reasonable rate.” At different times the City in order to aid the project necessarily made various appropriations out of public funds for that purpose. Cas can not be divided. In its nature it must all start out in one pipe. To distribute it the streets and alleys *735 of the City must be used for laying pipes. By its very nature the business is continuing, requiring bookkeeping and accounting. The enterprise is necessarily extensive. Everything had to be done with the mutual consent of the parties. It is the duty of the Mayor and municipal authorities to furnish the gas to its inhabitants at as low rates as practicable. On the other hand, the interest of the Mark Twain Company is to get as much out of the inhabitants of the City as possible. By this contract the City authorities have handcuffed themselves in their duties to the inhabitants. The latter part of Section 135, 37 Am. Jur. 751, is in this language: ‘ ‘It has also been held that where the municipal corporation may lawfully own and operate a public utility, it must be the sole proprietor of property in which it invests its public funds, and that it cannot unite its property with the property of individuals or corporations, so that, when united, both form one property.” To support this text, among other cases referred to, is Ampt v. Cincinnati, 56 Ohio St. 47, 46 N. E. 69, 35 L. R. A. 737, which holds with the position of the City on both grounds, namely that the statute violates Section 183 of the Constitution and also that the contract surrenders part of its governmental powers to another corporation and therefore its action was ultra vires. Section 6, Article 8 of the Constitution of Ohio provides, among other things, that no county, municipality or township shall become a stockholder in any joint stock company, corporation or association whatever, “or to raise money for, or to 'loan its credit to, or in aid of, any such company, corporation or association.” The digest to the case sufficiently shows what the court decided, which is as follows: “Under section 6 of article 8 of the constitution, a city is prohibited from raising money for, or loaning its credit to or in aid of, any company, corporation, .or association; and thereby a city is prohibited from owning part of a property which is owned in part by another, so that the parts owned by both, when taken together, *736 constitute but one property. A city must be the sole proprietor of property in which, it invests its public funds, and it cannot unite its property with the property of individuals or corporations, so that, when united, both together form one property. Section 8 of the Act of April 24, 1896, entitled ‘An.act to provide for water works purposes in cities of the first grade class’ (92 Ohio Laws, p. 606), is unconstitutional, being in conflict with section 6 of article 8 of the constitution. The remainder of the act, not depending upon said section 8, is a valid statute. ’ ’ The construction of Section 183 of the Constitution was involved in Jackson Ry. Co. v. Adams, State Revenue Agent, 79 Miss. 408, 30 So. 694. The City of Jackson made an appropriation to the Railway Company, to aid it in furnishing street railway transportation in the City. The City was to have no control over the operations of the railway company. The court held that the appropriation violated that section of the Constitution. In Carothers v. Town of Booneville, 169 Miss. 511,153 So. 670, although not exactly in point, is illustrative, our court again construed that provision of the Constitution. A statute authorizing the town to issue bonds payable from taxes, enabling the town to increase employment, and for that purpose build or lease a garment factory, was held to violate that section of the constitution; and, in addition, “by denying due processJ’ Clearly it appears that what took place between the Mark Twain Company and the City -is ultra vires and void on both grounds. That means, of course, that the Mark Twain Company got nothing whatever by the assignment and transfer by the-City of the half interest in the enterprise. The City was, therefore, left with the exclusive title to the property which it had the right to acquire and own. In that situation it was the duty of the City to the public to utilize the gas to the best advantage, which it did under the evidence in this case when it made the arrangement with the Power Company. Its act, therefore, in that respect was not ultra vires. The Mark Twain *737 Company argnes that the City is estopped to make the defense of ultra vires because of what took place after the assignment to it, consisting of the drilling of the four wells and the expending of time and money in doing so. There is no merit in that position. An ultra vires contract made with the officers of a municipality does not estop the municipality, since all persons dealing with it are charged with knowledge of the law governing it and limiting the powers of its officers. Edwards Hotel, etc., Co., v. City of Jackson, 96 Miss. 547, 51 So. 802; American Oil Co. v. Marion County, 187 Miss. 148, 192 So. 296; Bank of Commerce v. City of Gulfport, 117 Miss. 591, 78 So. 519; 19 Am. Jur. (Estoppel) Sections 166-168. There is no merit in the argument that the Mark Twain Company is entitled in addition to the return of the value of money, labor and material they put in the enterprise which was decreed by the court on the ground of doing equity, the value of a half interest in the yield of the wells. To so hold would mean that the contract and dealings thereunder between the Mark Twain Company and the City were valid up to the beginning of this cause and invalid afterwards. In other words, notwithstanding the action of the municipality was ultra vires from the beginning it would be valid up to the time the City filed its bill in this cause. Furthermore, it would be utterly impracticable, if not impossible, to put a value upon what Mark Twain Company would be entitled to under the contract if it were valid. The decree of the chancellor requiring the City to reimburse the Mark Twain Company for its outlay in doing the work does not mean that the City was legally liable therefor, but instead that in equity it was not entitled to the relief prayed for without doing so. The application of that principle has nothing to do with whether the contract was ultra vires or not. It is not advisable to go into the other questions involved in the case. The decree of the chancellor is so *738 manifestly correct that it would be of no interest to the Bench and Bar of the state. The former opinion in this case is withdrawn. Suggestion of error overruled.