Laycock v. City of Baton Rouge

The opinion of the Court was delivered by Bermudez, C. J. The plaintiff seeks to hold the City' of Baton Rouge liable for a supply of gas during stated periods. . [476] To this end he instituted three suits: one in the name of the stockholders of the Gas Co., (of whom he was one) as holders of warrants issued by the City.for the gas supplied, and two others, in his own ñamó, also as warrant holder. After an exception to the first suit, requiring the disclosure of the, names of the stockholders which he claimed to represent, the plaintiff, filed a supplemental petition, alleging himself the owner of the war-, rants sued upon. . . Subsequently, the defendant asked that the eases be cumulated, and upon it being thus ordered, the City filed a general denial, specially charging absence of ownership in plaintiff and of liability on the part, of the corporation. The further defense of prescription was set up. , • From an adverse judgment the City appeals. We deem it unnecessary to pass upon the preliminary defenses, and will determine the, controversy from a different standpoint on the merits of the suit. It is clear that the plaintiff seeks payment of a debt averred to have been created by the City of Baton Rouge.. As it is not a claim ex delioto, it is necessarily one ex eontraetn. Under the features presented, a contract and a quasi contract would have to stand on .the same bottom. The question involved and to be decided is purely one of power on the part of the corporation to contract and to incur an obligation on the one hand, and of the cancellation of a right claimed to have been acquired by plaintiff’s assignors-and transmitted to him. Dillon, in his work on Municipal Corporation, expressive of the essence of the jurisprudence on the principles by which the liability of those juridical persons are to be tested, tersely sáys : “ In determining the extent of the power of a municipal corporation to make contracts and in ascertaining the mode in which the power is to be exercised, the importance of a careful study of the charter or incorporating act and the general legislation of the State on the subject, if there be any, cannot be too strongly emphasized. Where there are special provisions on the subject, these will, of course, measure, as far as they extend, the authority of the corporation. * * * “ It is a general and fundamental principle of law, that all persons contracting with a municipal corporation must, at their peril, inquire into the power of the corporation or its officers, and a contract, beyond the scope of the corporate power is void, although it be under the seal of the corporation. “Respecting the mode in which contracts by corporations should be made, it is important to observe that, when the mode of contracting is specially and plainly prescribed and limited, that mode is exclusive [477] and must be pursued, or the contract will not bind the corporation.” $$371, 372, 373, and authorities cited. Speaking on this subject of corporations, C. J. Marshall said: “ Tlie' act of incorporation is to them an enabling act. It gives them all t(ie powers they possess. It enables them to contract, and when it prescribes to them a mode of contracting they must observe' that mode, or the instrument no more creates a contract than if the body had never . been incorporated.” 2 Cranch U. S. 127. Cooley on Const. Lim., Sec. 196, p. 237, 4th ed.; says: “It must follow that if, in any case, a party assumes to deal with a corporation on the supposition that it possesses power which it does not, or to contract in any other manner than is permitted by the charter, he will' not be allowed, notwithstanding he may have complied with the' undertaking on his part, to maintain a suit against the corporation, based upon its unauthorized action.” Vide Green’s Ultra Vires, p. 42. ‘ “ It results from this doctrine, that unauthorized contracts are Void,' and in actions thereon the corporation may successfully interpose the plea of ultra vires, setting up as a defense its own want of power under its charter or constituent statute to enter into the contract.” Dillon, $ 381. “ The doctrine of implied municipal liability,” says Mr. Chief Justice Field, in a case where the .subject underwent thorough examination, “ applies to ©ases where money or other property of a party is'received under such circumstances, that the general law, independent of express contract, imposes the obligation upon the city to do justice with' respect to the same. * * * As a general rule, a city corporation is only liable upon express contracts, authorized by ordinance (or other due corporate proceedings). The exceptions relate to liabilities from the use of money or other property which does not’belong to her, or to liabilities springing from the neglect of- duties imposed by her charter, from which injuries to parties are produced.” Argenti vs. San Francisco, 16 Cal., 255, 282. It may well be, however, that sometimes an ordinance may not be indispensable. For instance, it has been held that a city is liable for gas furnished to it with knowledge of the council, though no ordinance or resolution was passed authorizing it to'be furnished. 8 Cal. 453, 466; but in this State the law prohibits, in negative terms, municipal organizations, police juries and the constituted authorities of incorporated towns and cities from contracting any debt or pecuniary liability, without adopting an ordinance to create the debt, and providing in it the means of paying the principal and interest of the debt so contracted. Act 263 of 1855; R. S. 2448; Charter of Baton Rouge, 114, 1874, Sec. 26. [478] In a number of instances, in which parties claiming to be creditors of municipal corporations, in the absence of a compliance with the requirements of this prohibitory and mandatory law, the Courts have uniformly exonerated the corporations. 12 An. 496; 15 An. 667; 23 An. 192, 232, 251; 24 An. 457; 26 An. 59; 27 An. 319; 28 An. 343; 29 An. 590, 673; 30 An. 40, 152, 461; 32 An. 180; 33 An. 386. In the case of Talbot vs. Parish of Iberville, 24 An. 135', the Court; however recognized the liability of an involved corporation for the payment of the fees of attorneys employed to relieve it from embarrassment, for which an appropriation appears to have been subsequently made in the budget of receipts and expenditures. The Court thought such to be contingent, expenses, which did not fall within the prohibition of the law, and which had to be incurred ex necessitate. The case also relied upon in 13 An. 430, was a writ against the City of Shreveport for damages said to. have been sustained in consequence of work done under an ordinance for the grading of a street, which ordinance, it was cláimed, the city had no right to pass and execute, because it was violative of the Act of 1855, in not observing its requirements., It was an action ex delicto for a quasi offense, not one, therefore, to draw money in satisfaction of a debt contracted, .without adopting an ordinance and- providing for payment. It was in order to repel a charge of trespass against the city, that the language referred. to, which is argumentative and obiter, was used. The Court was, nevertheless, careful in distinctly stating that the ordinance created no specific debt, thus differentiating the action under consideration from one ex contractu. The principles recognized in the authorities to, which plaintiff’s learned counsel have invited our attention are indisputable, but they have no application to a case where a prohibitory law lias been violated. Some of them expressly recognize the distinction, those in 15 Wall. 570 and 96 U. S. 258, particularly. In the present instance, no ordinance was passed and no provision was made for the payment of the gas to be supplied. It was beyond the power of the corporation to have incurred obli-. gations and conferred rights otherwise than by a rigid observance of the mods requiring the fulfilment of essential conditions precedent, Whatever may have been subsequently done cannot have the effect of infusing life .into that which was lifeless in embryo. An act ultra vires is not susceptible of ratification by the disabled corporation, If subsequent acts, however formal they might be, could be success? fully opposed and urged as supplying original fatal deficiencies, the prohibition would be a dead letter on the statute book, and corpora [479] tions, which have only jura minorum, could validly do indirectly that which they cannot legally do directly» The jurisprudence of this State, based on recognized principles and in accord with that of our sister States, has invariably proclaimed that the restraints plaeed upon municipal corporations, for the public good, were legitimate and had to be respected» The view which we have taken of this case dispenses us from passing expressly on the plea of prescription» ' The judgment of the lower court is erroneous. It is, therefore, ordered and decreed that the judgment appealed from be reversed, and that there be judgment in favor of defendant, rejecting plaintiff's demand with cost of both Courts.