Atlantic City Water Works Co. v. Read

The opinion of the court was delivered by Dixon, J. The facts of this case appear in the opinion delivered in the Supreme Court. 20 Vroom 558. The judgment of that court, setting aside and annulling two ordinances for providing a supply of water for Atlantic City, approved October 21st, 1880, and November 19th, 1880, and the contract between the city and the Atlantic City Water Works Company, dated November 23d, 1880, and embodying said ordinances, has been removed to this court by writ of error at the instance of the water company, and is here assailed for the following reasons: First. Because the writ of eertiorari, by which the municipal proceedings were brought before the Supreme Court, was improvidently allowed and should have been dismissed. Second. Because the prosecutor in eertiorari, now the defendant in error, was, by his laches, estopped, at the time of the allowance of the writ of eertiorari, from lawfully obtaining the same. Third. Because Atlantic City had, at the time of the passage of the ordinances and the making of the contract, full power and authority in the premises. So far as the laches of the prosecutor in applying for the writ of eertiorari is concerned, it must now be regarded as settled, that the determination of the Supreme Court is final— not subject to review here on error. It was so held by this court in State v. French, 4 Zab. 736, where die Supreme Court had allowed and sustained the writ, notwithstanding the allegation of laches, and in Weart v. Jersey City, 14 Vroom 662, where that court had dismissed the writ for laches. The other points of conti'oversy may be resolved into these three inquiries: First. Were the ordinances and contract [667] originally legal ? Second. If not, have they since been legalized ? Third. If not, are the tax-payers and residents of the city (of whom the prosecutor in certiorari is one), estopped from setting up the illegality ? The original illegality of these proceedings is manifested by the following considerations: When the ordinances were passed and the contract was signed, there existed a city ordinance, which prescribed the appropriations and limit of expenditure for city purposes, for the term beginning on the first Monday in September, 1880, and ending on the first Monday in September, 1881, and which provided funds to meet the various expenditures. This ordinance made no appropriation for the objects sought by the proceedings now under i'eview, and fixed a limit of expenditure within which the obligation incurred by those proceedings cannot possibly be confined. A statute of this state, approved February 7th, 1876 (Rev., p. 1294), renders it criminal for city councils to incur any obligation in excess of the appropriation and limit of expenditure provided by law. In speaking of this statute, the chief justice delivering the opinion of this court in Halsted v. State, 12 Vroom 552, said: “ The system clearly defined here is that a certain fund is provided for all the expenses and disbursements and obligations to be incurred during the current year, and that every obligation of debt incurred during such year is to be paid out of the fund so provided, and that all debts incurred, which are to be paid out of a fund to be raised in the future, are in excess, or what is the same thing, jn transgression of the limit of expenditure established by law.” The ordinance above referred to was the law of the corporation, and the appropriation and limit of expenditure fixed by it became those provided by law. There existed no others. The incurring of any obligation beyond the provisions of that ordinance was, therefore, plainly prohibited. Consequently, those councilmen who voted to incur the obligation assumed by the present ordinances and contract, committed a misdemeanor, State v. Halsted, 10 Vroom 402; Halsted v. State, 12 Vroom 552; the ordinances were unlawful, (Siedler v. Freeholders of Hudson, [668] 10 Vroom 632), and the contract or obligation itself was invalid. Crampton v. Zabriskie, 101 U. S. 601. Counsel for the plaintiff in error seem to contend that the statute under which the Water Company was organized, approved April 21st, 1876 (Rev. Sup., p. 650), modified the operation of the crimes act above mentioned in such a way as to prevent its application to the proceedings in question. But there is no ground for the contention. That statute confers on the city the right and power of consenting to the association of persons for supplying it with water and to their laying pipes in its streets (Davis v. Town of Harrison, 17 Vroom 79), but all that may be done in entire harmony with the purposes o-f the crimes act. Unless, therefore, some act of the legislature be found legalizing these unlawful proceedings, they must be adjudged invalid. Of course, statutes prior to the crimes act cannot have such an effect, for anything in them inconsistent with its provisions was abrogated upon its passage. Hence, we need not examine the city charter. The only other law referred to in this connection is an act approved March 15tli, 1881 (Pamph. L., p. 118), to authorize municipal corporations to contract for a supply of water for public uses, a supplement to which was passed April 7th, 1884. Pamph. L., p. 194. This act authorizes cities to make contracts for a water supply during a term not exceeding ten years, with a proviso that it shall not apply to any city which, at the time of its passage, was supplied with water for public use, pursuant to a contract or arrangement with some board or corporation. On this proviso counsel 'argues that existing arrangements for water supply, between cities and corporations, which did not amount to contracts, were recognized and rendered obligatory. We think the argument is fallacious for several reasons. In the first place, it should not be assumed that the legislature contemplated arrangements which, like this before us, were criminal. In the next place, the legislature, so far from indicating a purpose to validate any existing arrangements, has expressly declared that the act shall not apply to any city having a [669] water supply pursuant to such arrangement. And lastly, the title of the aet does not express or include the design of validating prior illegal arrangements. Our conclusion is, that the ordinances and contract were and remained unlawful. It is yet to be considered whether the tax payers of the city are estopped from setting up the illegality. The water company insists that such an estoppel arises from the fact that its incorporators became organized and the corporation constructed its works, in reliance on the validity of these municipal proceedings. But we think that the reliance here assumed was not justified, but, on the contrary, that the incorporators and the corporation are chargeable with notice that the proceedings were invalid. The illegality sprung out of a general, public, criminal statute, of the provisions of which all persons in the.state are presumed to be cognizant. The evidence in the cause does not indicate, nor do counsel claim, that the city authorities ever asserted, or the water company, its incorporators or agents, ever supposed that such facts existed, as, under this law, would warrant the city council in assuming an obligation to pay at least $7500 annually for ninety nine years. In view of the public policy which this statute embodies, persons dealing with municipal authorities must be required to exercise some reasonable diligence to ascertain, before attempting to bind the public by obligations far outrunning the official life of those boards who are willing to assume them, whether there be legally provided the funds from which the obligations may be met. In the absence of such diligence, contracting parties deal with these official bodies at their peril. The beneficent aims of the law cannot be otherwise attained. Inasmuch, then, as the Water Company had no reason for supposing this extraordinary contract to be within the lawful authority of the city council, it must be held to have had notice of its illegality, and the subsequent conduct of the company cannot, in law, be regarded as having been influenced by any reliance upon its validity. [670] A claim is also made that an estoppel arises from the fact that, after the company had constructed the hydrants called for by the contract, the fire companies of the city drew water therefrom for the suppression of fires. But assuming that these companies were the agents of the city in what they did,' it is not perceived how their acts could bind the city beyond the payment of a fair compensation to the water company for the services thus rendered. Their acts were certainly not referable to the contract now under consideration, for when they were performed the city council had itself formally repudiated the ordinances on which the contract rested. And it was no more within the power of the fire companies than it was within the power of the city council to incur obligations of the extent here claimed against the municipality. We find in the record no error, and the judgment of the Supreme Court should be affirmed. In reaching this conclusion we have not considered, and do not intend to pass upon, the validity of the mere consent which the city, by these ordinances, gave under the act of April 21st, 1876.