Mauldin v. Council of Greenville

The opinion of the court was delivered by MR. Justice McGowaN. The plaintiffs, as citizens and taxpayers of the city of Greenville, instituted this, proceeding, to restrain the city council from purchasing and operating an electric light plant, to light the streets and public buildings of the city, and from using the same for lighting private residences ; and also to enjoin the council from issuing bonds of the corporation in payment therefor, upon the grounds substantially stated by the Circuit Judge as follows: “First. Because the city charter,, confers no authority on the council to purchase this machinery for the purpose of lighting the streets and public buildings. Second. Because the power of the city council to borrow money for the public use of the corporation has already been exhausted, and that to issue bonds to pay for this plant would be ultra vires. Third. Because seventy-five cents on the $100 of the assessed value of real and personal property of the corporation is the limit of taxation fixed by the charter, and, this enterprise will necessarily force the council to exceed that limit, and thus increase the burden of the plaintiffs and all the taxpayers. Fourth. Because the purchase includes a costly engine and dynamos for producing incandescent lights for the interior of private residences and places of business, and there is no authority conferred on the council by the charter to purchase and operate an electric plant for this purpose.” Such, briefly and substantially, are the grounds on which the plaintiffs ask relief by injunction. The city council, the defendant, answered fully to the merits, admitting paragraphs one and two of the complaint, but denying each and every other allegation contained in it, not so specifically denied, admitted, or explained; making no objection, however, by plea or demurrer, as to the manner in which the action was bro.ught, in the' name alone of the plaintiffs as corporators and taxpayers. The plaintiffs offered in evidence the charter of the city; that an effort had been made to obtain additional powers, which failed; the contracts the city council had made in reference to the electric plant; the value of the taxable property of the city, its bonded indebtedness, &c., &c. ;■ that the incandescent lights were suitable for lighting the interior of private residences and places of business, but not for lighting the public streets, &c. The city coun — 16 — cil, the defendant, offered no testimony, but moved orally at the trial to dismiss the complaint on the ground that it did not state facts sufficient to constitute a cause of action, which motion was considered in connection with the argument on the merits. The Circuit Judge remarking, among other things, “that he was not willing.to depart from what he considered the practice and doctrine of our own courts. If the complaint states good ground for equitable relief, and the injury complained of is peculiar to none, but common to all the citizens, then the action must be in the name of the State ex relatione the taxpayers, or in the name of the attorney general. The individual taxpayer, as such merely, can obtain a standing in court only by alleging and proving that the illegal act complained of will inflict damage special and peculiar to himself, &c.,” held that the complaint should be dismissed, for the reason that it did not state facts sufficient to constitute a cause of action. But, nevertheless, the judge proceeded to consider the case on its merits, and dismissed the complaint also on the ground that there was no right or equity in it. (The whole Circuit decree should appear in the report of the “Case.”) From this decree the plaintiffs appeal to this court upon the following grounds: “1. Because his honor erred in holding that the complaint did not state facts sufficient to constitute a cause of action. “2. Because if said complaint was demurrable at all, it was upon the ground that the plaintiffs had not legal capacity to sue, and the objection not being taken by demurrer on that ground was waived. “3. Because, in any event, the plaintiffs should have been allowed to amend by making the State a party on"the relation of the attorney general. “4. Because his honor erred in holding that the city council of Greenville have authority, under the police powers conferred upon them by section 12 of their charter, to purchase an electric light plant for the purpose of lighting the streets and public buildings of the city. “5. Because his honor erred in holding that said city council, under the provisions of section 31 of their charter, have authority to issue bonds to the amount of $100,000, exclusive of the $88,- — 17 — 000 of bonds heretofore issued in aid of railroads and graded schools. “6. Because the charter of the city, having limited the amount of the annual tax to be levied upon the real and personal property of the citizens to 75 cents on the $100, and it appearing by uncontradicted evidence that the income of the city is just about sufficient to meet the present expenses, his honor should have held that said council were without authority to levy an additional tax to meet the interest on any additional bonds, and, therefore, they had no right to issue them. “7. Because his honor erred in holding that the said city council have the right to furnish lights to individuals and others for private purposes, thus using the people’s money in speculation and trade. “8. Because it is manifest from the proof, that one of the chief purposes of the defendant in purchasing the incandescent system of the electric light plant, was not simply to light up the public buildings, but to furnish incandescent lights to private residences and places of business for compensation, for which there is no authority in the charter, and to that extent at least, it is submitted, their contract with the Brush Light Company was clearly ultra vires, and not binding on the city, and that his honor erred in not so holding. “9. Because, if the defendant is permitted to carry out this illegal contract, it will inevitably result in a large increase of the debt of the city, and a proportionate increase in the amount of taxes to be paid by the plaintiffs, and this fact, it is submitted, furnishes sufficient grounds for the relief sought by the plaintiffs, and his honor erred in not so finding.” Exceptions 1, 2, and 8 make the point, that it was error in the Circuit Judge to dismiss the complaint, upon verbal motion at the trial, on the ground that it did not state facts sufficient to constitute a cause of action, in that the plaintiffs had not legal capacity to sue in their own name without inserting as plaintiff the State ex relatione the complaining taxpayers. It will not be necessary to consider whether, as a matter of pleading, the defendant waived the objection by answering to the merits, without reference to the objection either by answer or demurrer. In the — 18 — view the court takes, the objection was purely formal, relating merely to the title of the case; for the plaintiffs might have brought their action acceding to the formula indicated. The State in sucli case never refuses the use of its name, which might have been added pro forma, by order of the court, at any stage of the proceeding. It is always desirable, when it can be done without a breach of principle or injury to others, that the controversies between parties should be decided on their merits alone. In considering whether the plaintiffs, as taxpayers of the city of Greenville, had the right to bring this action in their own name, for the benefit of themselves and other corporators, without alleging special damage to themselves, it will be proper to keep clearly in view the nature, scope, and object of the action. It must not be overlooked, that it is a proceeding in equity by a number of taxpayers of an incorporated city, to prevent certain acts by the municipal authorities, alleged to be beyond their authority under the charter, to the injury of plaintiffs and all other taxpayers of the corporation, somewhat in the nature of a bill quia timet. Can it be, that in such case a number of citizen taxpayers cannot be heard against the corporate authorities in a Court of Equity, asking for an injunction against the consummation of the contemplated wrongs, without alleging special damages to themselves individually ? There is a certain relation in the nature of agency between the municipal authorities and all taxpayers of the corporation. It does not strike us that the doctrines as to nuisances and public wrongs of that character have any proper application to the case. We cannot agree that there is any analogy between this case and those of the class of Steamboat Company v. Railroad Company, 30 S. C., 539. That was an action at law for damages on account of the obstruction of a navigable river, which was a public nuisance to all the world. The parties were in all respects strangers to each other. Here the taxpaying citizens of Greenville are not the whole public, but comparatively a small part of it. They are not strangers to the municipality. They, and they alone, are affected by their acts. As to them, this is more in-the nature of a private than public maber. We think the distinction was well stated in the case of Mayor and Council of Baltimore v. Gill, — 19 — 31 Md., 375-94. That was a proceeding to restrain by injunction the mayor and council of Baltimore‘from carrying out the provisions of an ordinance, authorizing the borrowing of money to build certain railroads. The plaintiffs were taxpayers on real •and personal property situated in Baltimore, and they sued in behalf of themselves and others similarly situated. It was maintained (as here), that the plaintiffs had no standing in court, and were not entitled to ask the interposition of a Court of Equity, to restrain by injunction the execution of the ordinance'. It was further maintained (as here), that the wrong complained of was of a public nature, affecting the whole public, in which the attorney general, as the representative of the State, was a necessary party. It was held that the interests of the plaintiffs ais taxpayers was sufficient to entitle them to maintain the action, and that the attorney general was not a necessary party. Bartol, Chief Justice, in delivering the judgment of the court, said: ‘‘The case is to be distinguished from cases of public wrongs, in which the general publicare alike concerned; the plaintiffs are taxpayers of the city, and others similarly situated constitute a class especially damaged by the alleged unlawful act, in the increase of the burden of taxation upon their property situated in the city. They have, therefore, a special interest in the subject-matter of the suit, distinct from that of the general public” — citing the cases of City of New London v. Brainard, 22 Conn., 552; Webster v. Town of Harwinton, 32 Id., 131; Merrill v. Plainfield, 45 N. H., 126 ; McMillan v. Lee County, 3 Iowa, 311, &c. In the ease of Newmeyer v. The Missouri & Mississippi Railroad Company (52 Mo., 81, s. C. 14 Am. Rep., 399), Mr. Justice Ewing thus vindicates the ruling: “I have examined the cases cited in support of the other side of the question, or such of them as we have had access to, and upon a careful consideration of the subject, I am of opinion that the decisions which affirm the right of plaintiffs (or those standing in the same relation to such controversies) to maintain the action, rests upon a more solid foundation of principle and reason than those holding the contrary doctrine. And they are commended to our approval as furnishing the only adequate remedy to the injured party for wrongs resulting from unauthorized or illegal acts, like those complained — 20 — of. The injury charged as the result of the acts complained of is a private injury, in which the taxpayers of the County of Macon are the individual sufferers rather than the public. The people out of the county bear no part of the burden, nor do the people within the county, except the taxpayers, bear any part of it. It is, therefore, an injury peculiar to one class of persons, namely, the taxpayers of the County of Macon,” &c. It is true, as indicated above, that all the authorities on the subject are not in perfect accord. But without encumbering this opinion with the numerous authorities, we think it will be sufficient to say that Judge Dillon (certainly our greatest authority on municipal corporations),' after a careful analysis and examination of the decisions, states, “as resting upon reason and the preponderance of judicial authority,” the following propositions: “(1) That in the absence of special controlling legislative provisions, the proper public officer of the commonwealth, which created the corporation and prescribed and limited its powers, may, in his own name or in the name of the State on behalf of residents and voters of the municipality, exercise the authority in proper cases of filing an information or bill, in equity, to prevent the misuse of corporate powers, or to set aside or correct illegal corporate acts. (2) That the existence of such a power in the State or its proper public law officer is not inconsistent with the right of any taxable inhabitant to bring a bill to prevent the corporate authorities from transcending their lawful powers, where the effect will be to impose on him an unlawful tax, or to increase his burden of taxation,” &c. See 2 Dill. Mun. Corp., § 922 (3rd edit.), and the authorities in the note. We know of no act of the legislature, or decided case, which declares the law of this State to be as contended for. All that is claimed is, that it has been “the practice” of the State until it has ripened into law. It does seem to have been the early practice, but we have not been referred to a case in which an action like this was dismissed, for the reason that it was not brought according to the indicated formula. Certainly, since the Code was adopted in 1870, the practice has not been uniform and unbroken. Gage v. Charleston (3 S. C., 491 — 1872) was an action for injunction to restrain the city council- of Charleston from sub — 21 — scribing to certain railroad companies, brought by Alva Gage and seven other named persons, “inhabitants and property holders of the city of Charleston, for themselves and other property holders of said city.” Glenn v. The County Commissioners of York (6 S. C., 412 — 1873) was an action to restrain the county commissioners from issuing bonds in aid of the construction of a railroad, brought by “E. L. Glenn and other taxpayers on real and personal estate in York County.” Trimmier v. Bomar (20 S. C., 354 — 1883) was an action to restrain the county commissioners of Spartanburg from issuing bonds in aid of a railroad, “brought by Trimmier, Yarborough, Pool, Tolleson, and Walker,” &e. So it seems that the law on the point of practice has not been absolutely settled in the State. We have no doubt that the plaintiffs might have given their proceedings the form required by the ruling below, but were they bound to do so, on pain of having it dismissed? Was the action brought absolutely inconsistent with the right of the State? We know of no principle or such unbroken practice in the State as requires the court to hold that the proceeding was unauthorized. We think the plaintiffs had a standing in court, and were entitled to have their case heard on its merits. The charter, of the city of Greenville, as amended in 1885 (19 Stat., 106), contains the following provisions for the government of the city : Section 12 provides that the council “may purchase, hold, possess, and enjoy, to them and their successors, in perpetuity or for any number of years, any estate, real, personal, or mixed, and sell, lease, alien, and convey the same: provided, that the same shall not exceed at any time the sum of ($100,000) one hundred thousand dollars. And the said city council shall have full power and authority to make and establish all such rules, bylaws, and ordinances respecting the roads, streets, market, and police department of said city, and the government thereof, as shall appear to them necessary and requisite for the security, welfare, and convenience of said city, for preserving health, life, and property therein, and securing the peace and good government of the same,” &c., &e. Section 19 gives the city council the right “to levy annually a tax on the assessed property of the city, suf-. — 22 — ficient to discharge and defray all expenses of carrying into effect the ordinances, rules, regulations, and laws made and established as above provided: provided, said tax does not exceed seventy-five cents upon every one hundred dollars of real and personal property as assessed and equalized.” And section 31 provides that the city council shall have power to borrow money for the public use of the corporation, by issuing from time to time, as occasion may require, the bonds of said corporation, bearing interest, &c., &c., for an amount not to exceed the sum of one hundred thousand dollars (§100,000), and for the payment of interest, &c., &c. In order to prevent confusipn, we will first dispose of the preliminary question as to the ordinary expenses of the city government of Greenville, and the prohibition claimed to exist in the charter against increasing the bonded debt of the city beyond §L00,000. It is urged that the debt already amounts to §88,000 (principally for subscriptions to railroads and public schools), and with the §21,000 now proposed to be added, it will be extended beyond the limit. Upon casually reading the provision, the first impression may be that it was intended to limit the whole bonded debt for an,y and all purposes to §100,000. Indeed, unless such was the purpose, it would hardly seem necessary to fix a limit at all. But upon close examination, we cannot say that such is the proper construction. The words are (in 1885), “to -borrow money for the public use of the corporation, by issuing bonds for an amount not exceeding §100,000” — omitting the words of the old charter (1880) — “but never in any form to make the city liable for exceeding that amount in the aggregate.” We agree that the framers of the provision intended to give the authority to issue bonds subsequent to the date of the charter, “for the public use of the corporation,” to the extent of §100,000. See Hitchcock v. Galveston, 96 U. S., 349. Then, the question is, whether, under the aforesaid provisions of the charter, the city council had the power to purchase, own, and operate at the expense of the city an electric light plant for the double purpose of lighting the streets of the city, and providing incandescent lights to individuals for the interior of private residences and business offices and purposes. Judge Dillon, in his Municipal Corporations, § 89 (3rd edit.), states as follows: — 23 — “It is a general and undisputed proposition of law, that a municipal corporation possesses, and can exercise, the following powers and no others: First, those granted in express words; second, those necessarily or fairly implied in, or incident to, the powers expressly granted; third, those essential to the declared object and purposes of the corporation — not simply convenient, but indispensable. Any fair reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied. Of every municipal corporation, the charter or statute by which it is created is its organic act. Neither the corporation nor its officers can do any act or make any contract, or incur any liability, not authorized thereby. All acts beyond the scope of the powers granted are void,” &e., &c. Now, tested by this principle, so clearly stated, how does the matter stand ? Clearly the charter does not give the power to purchase this plant in express words. It does not so give even the power to light the city, but we assume that this latter power may be fairly implied from the grant of the police power. The city council had previously lighted the city with gas, and we suppose that it might do so w'ith electricity as well. The lighting, however, with gas was done by contract, and the new feature .complained of is that the council now propose to purchase, own, and operate the engines, dynamos, and machinery which produce the electricity, and to pay for it by issuing municipal bonds. This seems to be a new question. It strikes us as remarkable, that in the multitude of cases cited by the distinguished counsel who argued the case, there should not be in one of them the least reference to this precise point. We have made diligent search, and have not been able to find one. We must decide it, but without any help from authorises. The city has the express power to own property, and it also has the implied right to light the city. Do these powers necessarily imply the right to make the city the owner of the plant and a manufacturer of electricity? It is quite certain that such power is not “essential” to the declared objects and purposes of the corporation, for heretofore the city has been lighted by contract, without owning the gas fixtures. The purchase of the electric plant was certainly a new departure, and it is to be hoped that it may not prove to be troublesome and — 24 — expensive to the city. , But considering that some discretion, as to the mode and manner, should be allowed the municipality in carrying out the conceded power to light the streets of the city, we hold that the purchase of the plant was not ultra vires and void, so far as it was designed to produce electricity suitable for and used in lighting the streets and public buildings of the city. But we cannot so hold as to the purchase of so much of that plant as furnished the incandescent light for use in the interior of private residences and places of business, which cannot be properly included within the power to light the streets of the city. The uncontradicted testimony was, that the incandescent light is not suitable for lighting the public streets. We are, therefore, unable to agree with the Circuit Judge, when he said, that “if the city, from the same plant, can provide incandescent lights to private residences and places of business for compensation, and thus make the system, in part, at least, self-sustaining, economy and good business.management should sustain the transaction,” &c. As we understand it, all the powers given to the city council were for the sole and exclusive purpose of government, and not to enter into private business of any kind, outside of the scope of the city government. In that very direction, especially in these latter times, is the dangerous and growing tendency of municipal corporations. It is very important for the interest of all to keep them strictly within the legitimate limits of their powers. The power given to the city council to issue bonds, so as to bind not only all the taxpayers of the city, but their children as well, is a very high confidence and trust, and can be properly exercised for no other purpose than “for the public use of the corporation,” no matter how great the temptation may be. Without regard to good “business arrangements,” which may present themselves, such a power must be strictly executed. We cannot suppose that it was intended to give the city council, as such, the right to go into commerce, to buy for the purpose of selling again, or to enter into any private business or speculation whatever. As, for instance, if the city council, owning horses in. the discharge of their police duties, should find it necessary to establish a blacksmith’s shop, we do not think they would be — 25 — within their corporate duties to open it for the accommodation of the public, with or without compensation. In the case of the City of Ottawa v. Carey (108 U. S., 110), the following propositions were announced: “(1) To the extent of their authority, municipal corporations can bind the people and the property subject to their regulations and governmental control by what they do, but beyond their corporate powers, their acts are of no effect. (2) Power to govern the city does not imply power to expend 'the public money to make the waters in the rivers available for manufacturing purposes.” Chief Justice Waite, in delivering the judgment of the court, said: “The charter confers all the powers usually given to a city for the purposes of local government, but that of itself has never been supposed to authorize taxes for everything which, in the opinion of the city authorities, would promote the general prosperity and welfare of the municipality. Undoubtedly, the development of the water power in the rivers that traverse the city would add to the commerce and wealth of the citizens ; but certainly power to govern the city does not imply power to expend the public money to make the water in the rivers available for manufacturing purposes,” &c. We cannot doubt that the purchase of the system producing incandescent lights, so far as it was to furnish lights to private persons, with or without compensation, was not a corporate act by the city council, and binding upon the corporators, but was beyond their authority as the governing body of the corporation. The judgment of this court is, that the judgment of the Circuit Court be reversed, and the cause remanded to the Circuit for such further proceedings as may be deemed necessary to carry into effect the conclusions herein announced.