City of Hogansville v. Farrell Heating & Plumbing Co.

Gilbert, J. The City of Hogansville insists that it is not a proper party defendant. This contention is based upon the theory that the municipality was not a party to the contract entered into with Farrell Heating & Plumbing Co.; that the school board is a separate, distinct, and independent board of school commissioners in whom is vested the control, management, pos — 786 — session, and title of all school property and school funds, not as agents of the City of Hogansville, but as a separate, distinct, and independent board created by the city and elected by the people. And from the above contentions it is argued that the school board is a corporation or quasi corporation, and may sue and be sued. It is conceded that the school board is not by express language used in the statutes made a body corporate capable of suing and being sued, but-it is insisted that the right to sue and be sued is necessarily implied. If the school board is in fact a corporation, it was not necessary for the General Assembly to expressly confer upon it the power to sue and be sued. The Civil Code (1910), § 2216, provides, among other things, that “All corporations have the right to sue and be sued.” The statute creating the board does provide that it may hold title “to all school property.” If, however, the school board is a corporation separate and distinct from the municipal corporation of Hogans-ville, this provision was unnecessary, for in the same section of the code just cited it is also provided that all corporations have the right “to receive donations by gift or will, to purchase and hold such property, real or personal, as is necessary to the purpose of their organization.” After all, the controlling question is whether the school board is in fact a separate entity, or whether it is merely an agency or arm of the municipal government created for the purpose of carrying out one of the functions of the municipality. From the fact that almost without exception Georgia municipalities of the present day are empowered by -their charters or by special legislation to establish and maintain public schools, and that school boards are created with power similar to this board to hold title to property, to elect teachers, and do all other things necessary for the purpose of maintaining a school, we conclude that the maintenance of a public school is a funetidn of every municipality, and a Very important one. The act of 1893 in terms authorizes the municipality, that is “Town of Hogansville,” to- organize a public-school system. It does not authorize the board of school commissioners to establish a school system. The Town of Hogansville is also ■ empowered by-statute to provide for the election of a board of school commissioners. The' act further provides and stipulates how: the. school board is to- obtaintyhe funds with-which to maintain the school. -The board — 787 — is to receive all money drawn from the educational funds of the State. But this fund alone obviously would not be sufficient to maintain the school; so that in the same statute it is provided “that all funds raised by taxation in said town as hereinafter provided for” are to be paid over to the school commissioners for the purpose of maintaining the school. The school board has no power, under the statute, to levy a tax for the support of the school. The tax is levied by the municipality. Without action by the municipality the schools, which are to be directed and conducted by the school commissioners, would cease to exist for want of funds. Thus it would appear that for this reason the school board is not independent of the municipality. Many cities also are provided by statute with other boards, such as police, parks, health, and the like. If boards of education are separate and independent corporations, why not other like boards? Why could not these boards be multiplied to the extent that every function of the city might be performed by a separate board? What, then, of the city’s financial operations; what of its debt limitations? Under the constitution of this State (Civil Code (1910), § 6563) a limit is placed upon the creation of debts by municipalities. This limitation applies to the total of debts created for or by all departments of municipalities under its charter and laws applicable thereto. If the school board, as contended, is a separate and independent corporation, it could be argued, and perhaps logically maintained, that the debts of the. school board could not be considered in estimating the amount of the municipal indebtedness; and furthermore, if the indebtedness of the school system could not be considered as an indebtedness of the city, it necessarily follows that there is no constitutional limitation placed upon the indebtedness that may be incurred by an independent school system such as the one under consideration. And the same could be said of debts incurred by other boards. It must be conceded that the General Assembly could incorporate an independent school system with power to sue and be sued, power to own and possess property of all kinds, having no connection with any municipality; and in such an event the constitutional limitations placed upon cities might or might not apply. Obviously the General Assembly did not do so in this instance. However, the mere fact that a board has power to sue and .be — 788 — sued would not of itself negative the fact that it was a mere agency of the municipal corporation. The legislature could provide that suits be brought against the mayor, or the chief of police, or any other officer or officers of the city, to recover on obligations or liabilities of the municipality. If anything is clear it is that this school system was established by the town, now the City of Hogansville, and is supported by taxation levied by the municipal government of Hogansville upon the property of citizens of Hogansville. The school system is coincident territorially with the City of Hogansville. Clearly it was not the purpose of the General Assembly to create two corporations separate and independent, covering the same territory, with the right and power to one of them to contract debts independent of the other, to own and hold title to property independent of the other, and at the same time to depend upon the other to levy and collect taxes to provide funds with which to maintain such other corporation. As we construe the statutes the school board, whether called a quasi corporation or simply a board, is an arm of the city government of Hogansville, created for the purpose of carrying out one of the main functions of the municipality, deriving its life-blood from the municipality, and holding the funds turned over to it and property purchased with such as a trustee of the municipality, the latter being the representative of the people of Hogansville. The school board is an agent of the municipality, a trustee, and in all that it does within the powers conferred it represents the “City of Hogansville.” It can enter into no obligation or contract not authorized by statute. When it does enter into a contract which it is legally authorized to do, it is an agent acting for its principal, the City of Hogansville, and the city is bound thereby. It would serve no useful purpose to comment upon the great number of cases involving similar questions in other States. Such decisions, as is well known, are only persuasive, and are cited and followed only where the reasoning and conclusions are deemed sound. Many of these cases turn upon the particular wording of statutes, and are valueless unless the statutes are also considered. Reference, therefore, will be made to only two of them. Plaintiff: in error cites Gross v. Portsmouth, 68 N. H. 266 (33 Atl. 256, 73 Am. St. R. 586). This was an action arising in tort for personal injury due to a defective and — 789 — dangerous highway, made so by reason of a ridge left in the highway by workmen constructing a system of waterworks. The complainant was thrown from her carriage and injured while driving over the ridge. It was held in that case that the water commissioners had entire control of their workmen, incident to the construction of the water system; and since the municipal government had no control over the workmen, the municipality was not liable for such negligence. The case is valueless as a precedent. On the other hand, in the case of Orvis v. Park Commissioners, 88 Iowa, 674 (56 N. W. 294, 45 Am. St. R. 252), we find an interesting discussion of a case somewhat similar to the instant case. The chief difference in the facts consists in the larger powers possessed by the park commissioners in the Iowa ease than by the school board in this case. The park commissioners, in addition to the powers possessed by the school board, were expressly empowered to “sue and be sued, and issue bonds for the payment of real estate.” In the opinion it was said: “Aside from the selection of the commissioners, the, city government, as distinct from the board, is divested of all authority in relation to the parks of the city. . . We think it is very manifest that the board is, by the act, invested with corporate authority, independent of the city government, that is, the general government of the city, while it seems to be in aid of it. But from what are we to infer that the legislature intended that these acts of tiie board, or the existence of the board itself, should be with reference to a new municipal corporation, instead of the one already existing? The act contains no words indicative of a purpose to create a new corporation, but it does treat of corporations already in existence. It is said by the appellees that it is to be inferred from the nature of the authority granted to the board, its powers being of a corporate nature. Why infer a legislative intent to create a new corporation merely from the nature of the powers delegated, when the exercise of those powers has precisely the same relation to, and effect on, the City of Des Moines, or other cities of that class, as it would have on the new corporation? There is not a power granted nor duty assigned under the law that can not as well be exercised or discharged in behalf of the present corporation as in behalf of those contended for under the limitations of the law as to indebtedness. It is well to — 790 — plainly say that, barring a supposed or real necessity for avoiding the constitutional inhibition as to the indebtedness of cities, there is neither motive nor reason to claim that the act ingrafts upon each of the cities of the class described another and independent corporate organization. It is true that such boards are sometimes incorporated, but in every instance coming to our notice it has been by an express provision to that effect.” As an instance of express power to sue and be sued being conferred upon a board of education, attention is called to the fact that the General Assembly did expressly confer such power upon the board of education of Jesup, that act being approved on the same day that the act creating the public school system of Hogansville was approved, Dec. 12, 1893. In the Jesup act power was conferred; in the Hogans-ville act the power was withheld. Neither in the title nor in the body of the act creating the school commissioners of Hogansville was there any reference to the creation of a distinct corporation. Discussing that feature in the Iowa case the court said: “The title of the act expresses its subject as ‘Board of Park Commissioners’ in certain cities. It makes no reference to a corporation to be created by the act, and no one, to read the title, would understand that such a purpose was intended by the act. . Hence, if so intended, it would be vulnerable to the constitutional provision. It can not properly be said that the board of commissioners is the subject of the legislation, if a new corporation was designed by the act, of which the board was to be the governing body. In such a case the corporation would have been the proper subject of the act, and the means of its government a matter ‘properly connected therewith.’ . . The existence of a municipal corporation, in the character of an organized board of persons, independent of a territory and people, could in no way subserve the purposes of the act in question. The board created by this act represents something, and that something is the City of Des Moines.” We hold that the board of school commissioners of the City of Hogansville, as to all matters falling within their statutory power, acted for the municipality. It must be understood, however, at the same time that they are without power to bind the city as to any matter without the scope of their statutory authority, or by any contract within or without their statutory authority forbidden by the constitution. It is utterly un — 791 — thinkable to credit the General Assembly with the intent of creating a separate and independent corporation with unlimited power to contract debts, with no power to levy and collect taxes within themselves with which to liquidate such indebtedness;such power might lead to extravagance and waste, and, as well, to imposition upon creditors. References above made to debts as contemplated by the constitution (Civil Code (1910), § 6563) are not to be construed as an intimation that the contract set out in this petition created a debt. The allegations show that no debt was created, and on demurrer this will be presumed to be true. The petition alleges that the agreement “was a cash transaction, and not on credit.” If this is true the contract did not create a debt. “The debt resulted from a breach of the contract, not from the making of it.” City of Conyers v. Kirk, 78 Ga. 480, 484 (3 S. E. 442). The petition set out a cause of action, and the court properly overruled the demurrer to the first count. We are of the opinion that the second count in the petition was subject to the general demurrer. The plaintiff, under the allegations in the petition, either had a contract with the municipality, made through its board of education, or it did not have such a contract. It has been ruled in the first division of this opinion that the petition set out a cause of action in the first count, which is based upon an alleged valid contract. The second count seeks a recovery on quantum meruit, or the recovery of a portion of the specific property installed in the school building by the plaintiff, on the theory that such is legally permissible if the contract alleged in the first count was held invalid. If the contract is invalid, it is only so because the board of education sought to create a debt in violation of the constitutional limitation contained in the Civil Code, § 6563. If the agreement was in conflict with the constitution, the alleged contract was void; in which latter event the plaintiff could not recover. “Powers of all public officers are defined by law, and all persons must take •notice thereof.” Civil Code (1910), § 303. It is true that the board of education, in so far as their acts did not conflict with the constitution, were, under the allegations, in the exercise of a power expressly conferred by law; and it has been held that where public .officers are acting ;within, the .powers expressly; conferred — 792 — by law, the public will be estopped by their acts. Citizens Bank of Moultrie v. Rockdale County, 152 Ga. 711 (8), 720 (111 S. E. 434). On the other hand, the constitution above cited limits the power of municipalities to incur debts, and “What a municipal corporation was without authority to do its officers could not make lawful by ratification.” Town of Wadley v. Lancaster, 124 Ga. 354, 356 (52 S. E. 335). And it was held in City of Dawson v. Dawson Waterworks Co., 106 Ga. 696, 734 (32 S. E. 907) : “Even if a benefit has been received by one of the contracting parties from a contract which is void because prohibited by the constitution, or because contrary to public policy, the receiving of such benefit will not prevent the party receiving it from setting up against a suit to enforce the contract the defense that the contract was illegal and void. See Covington & Macon Railroad Co. v. Athens, 85 Ga. 367 [11 S. E. 663].” Compare Litchfield v. Ballou, 114 U. S. 190 (5 Sup. Ct. 820, 29 L. ed. 132), and Rose’s notes. The facts alleged in this case differ from that class of cases where municipalities and counties have, without authority of law, borrowed money and executed notes therefor, and used the money to pay lawful county warrants or other contracts lawfully entered into. In such cases, while the obligations for the borrowed money were held illegal and void, the lenders, on the principles of subrogation, were allowed to recover the money actually expended in retiring the county war rants or other lawful contracts, thus placing the lender in the position of the party holding such lawful contracts. Butts County v. Jackson Banking Co., 129 Ga. 807 (60 S. E. 149, 15 L. R. A. (N. S.) 567, 121 Am. St. R. 244); City of Marietta v. Dobbins, 150 Ga. 422 (2), 426 (104 S. E. 444). It follows from what has been said, that the court erred in overruling the general demurrer to the second ground of the petition. The defendant in error clearly and correctly draws the distinction between “ (a) the want of authority and power to do a particular act or undertaking, and (b) the doing of such an act in a way not authorized by law.” While we agree to the distinction made, under the facts pleaded in this case we do not think there is any question of mere irregularity, such as that the board of education had power to make the -alleged contract but did not make it in a way authorized by law. We think the board were expressly authorized — 793 — to make the contract, and that it is either valid or invalid; valid if within the constitutional limitations, and invalid if not within that debt limitation. There were a number of special demurrers to the second count; but since the effect of the above ruling is to dismiss the second count, it is unnecessary either to state or rule on these special demurrers. Accordingly, the judgment is affirmed in so far as it overruled the general demurrer to the first count of the petition, and reversed in so far as it overruled the demurrer to the second count. Judgment affirmed in part and reversed in part. All the Justices concur, .except Bussell, G. J., and Atkinson, J., who dissent from the ruling in the second division.