Town of Providence v. Shackelford & Foxwell

JUDGE HOBSON delivered the opinion oe the court. These five eases, involving the same facts, have by agreement been heard together. In the classification of the towns and cities of the State by the Legislature the town of Providence and Sebree City fell in the sixth class. After this they were, by judgments of the circuit court of the county, pursuant to section 3661 of the Kentucky Statutes, transferred to the fifth class. Thereupon in each of these towns a city government, consisting of a mayor, city council, etc., was organized pursuant to the statute governing cities of the fifth class. These city authorities fixed the license for selling spirituous, vinous, and malt liquors at $1,000. Appellees took out a license, and paid the city $1,000 therefor. Subsequently this court [382] in the case of Jernigan v. City of Madisonville, 19 Ky. Law Rep., 1412 [43 S. W., 448], held the statute above referred to empowering the circuit court to transfer a town from one class to another to be in violation of section 156 of the Constitution. Towns of the sixth class are not authorized by statute to fix the license for selling spirituous, vinous, and malt liquors at over $500. Kentucky Statutes, sec. 3701. Appelleesthereupon filed these suits to recover $500 of the amount each of them had paid, on the ground that it was paid through mistake, and without authority of law. The contention of the appellees is that, as the attempted transfer of the towns from the sixth to the fifth class was void, because in violation of the Constitution, the towns remained in fact in the sixth class, and so had power only to charge $500 for the license; and, $1,000 having been paid on the assumption «that the towns had been legally placed in the fifth class, and so had the power of fifth-class cities, the excess over $500 should be paid back to them. They invoke the rule adopted in this State that money paid in ignorance of law may be recovered where, in equity and good conscience, it ought not to be retained. We do not think this principle applies here. The appellees have got all they bargained for. They wanted the privilege of selling spirituous, vinous, and malt liquors at a certain place. This they paid for, and this they have enjoyed. It is immaterial to them whether the «transfer of the town from the sixth to the fifth class was legal or otherwise. There was, in fact, a city government of the fifth class under which they conducted -their business and enjoyed all the rights they expected in taking out their ■ license. The action of this de facto city government of the fifth class protected «third parties dealing with it. Appellees could not be indicted for selling without license, and they can [383] not assail the regularity of the city government which they themselves, by their conduct, acquiesced in. In Dillon on Municipal Corporations, section 43a, the learned author says: “Where a municipal corporation is acting under color of law, and its existence is not questioned by the State, it can not be collaterally drawn in question by private parties; and the rule is not different although the Constitution may prescribe the manner of incorporation. . . . Hence, in an action by such a corporation to recover penalties imposed by its ordinances, mil tiel corporation is not a good plea.” In Atchison, &c., R. R. Co. v. Wilson, 33 Kan., 223 [6 Pac., 281], in disposing of a case something like this, the court, refusing to allow the regularity of the organization of a municipal corporation to be assailed, said: “The legality of the organization can not be questioned in a collateral proceeding, nor at the suit of a private party. The organization can not be attacked, nor any action taken affecting the existence of the corporation, except in a direct proceeding prosecuted at the instance of the State by the proper public officer.” In Clement v. Everest, 29 Mich. 19, in disposing of a similar objection, the court said: “It would be dangerous and wrong to permit the existence of municipalities to depend on the result of private litigation. Irregularities are common and unavoidable in the organization of such bodies; and both law and' policy require that they shall not be disturbed except by some direct process authorized by law, and then only for very grave reasons.” In Kuhn v. Port Townsend 29 L. R. A., 447 [41 Pac., 925], the Suéneme Court of Washington said: “A private citizen can not question the right of a municipal corporation to exercise the authority, powers, and functions of an [384] incorporated city. This can be done only in a direct proceeding prosecuted by the proper public officers of the State.” To same effect, see Cooley on Constitutional Limitations, (6th Ed.), 309, 310, and Thompson on Corporations, section 503. These principles have been recognized by this court, and it is well settled that one who deals with a corporation, and recognizes its existence, is not permitted to raise the question whether it has been legally organized or not. H. & N. R. R. Co. v. Leavell, 16 B. Mon., 363; Hughes v. Somerset Bank, 5 Litt., 46; Wight v. The Shelby R. R. Co., 16 B. Mon., 7; [63 Am. Dec., 522]; Gill’s Adm’x v. Kentucky, &c., Mining Co., 7 Bush, 739. Appellees, as citizens of the towns, not only acquiesced in their organization as fifth-class cities, but, by taking out licenses from them and acting under these licenses, they recognized the existence of the city government, and can not now raise the question whether they had been legally organized or not. The last Legislature passed an act tiansferring these cities to the fifth class (see Acts 1898, p, 81), and so all questions of irregularity has now been removed. The government of a sixth-class town is totally different from that of a fifth-class city. It is conducted by different officers. One has a mayor and city council; the other has only a board of five trustees. The cities in question had no government as towns of the sixth class when these licenses were taken out, and, if the de facto government as a city of the fifth class was void, there was no government at all. Appellees did not receive a license from a sixth-class town. They received a license from a de facto fifth-class city, and the regularity [385] of this fifth-class city government not having been questioned by the State can not be questioned by them. The judgments below are therefore reversed, with directions to the court below to grant the appellants a new trial in each of these cases, and for further proceedings in conformity to this opinion.