Lewis v. Shreveport

WOODS, Circuit Judge. The power of the city of Shreveport to issue the bonds in question is denied. The power, according to the claim of plaintiff, is to be found in section 17 of the city charter, which authorizes the council, when it deems it for the public interest to provide for the construction of a city hall, markets and other structures of public necessity and utility, and under certain circumstances, to issue bonds in payment thereof, and section 20, which says, “no ordinance for the purchase or sale of real estate shall be passed except by a majority of the council.” Under these provisions it is claimed that the city council had authority to issue and sells bonds of the city to the amount of $260,000 for the purpose of paying for real estate, to be given to a foreign railroad corporation, on which to establish and maintain its depots and machine shops. To my mind, the proposition seems utterly untenable. The power given is to erect a city hall, markets and other structures of public necessity and utility; clearly the purpose for which the bonds in suit were issued was not to erect a city hall or markets. Does the donation of land to a railroad company, on which to build its depot and shops, fall within the terms “other structures of public necessity and utility?” Lord Bacon observes that “as exception strengthens the force of a law in cases not excepted, so enumeration weakens it in cases not enumerated.” Hence the celebrated rule that “when particular words are followed by general ones, as it often happens after an enumeration of several classes of persons or things, there is added ‘and all others,’ the general words are restricted in meaning to objects of like kind with those specified.” 1 Bish. Cr. Law, § 275. Applying this rule to the interpretation of the clause of the charter relied on for authority to issue bonds, it is clear how perfectly baseless is the construction claimed. The charter, under this rule, means to authorize the city council to erect a city hall, markets and other like structures of public necessity and utility. This would include houses for fire engines, water works, gas works, houses for public schools, all to be owned by the city, and in which all the citizens should have an interest. To stretch the clause so as to authorize the purchase of land by the city to be given away to a private corporation, on which it was to erect structures for its own uses, is, to my mind, entirely unwarrantable. Can it be claimed for a moment that such a use of the power to issue bonds entered into the contemplation of the legislature? “A municipal corporation is but a subordinate branch of the government. It represents the state sovereignty in a limited district, and for specific purposes. These purposes are local government and police. The power of taxation is granted as a means of carrying out these purposes. The diversion of these revenues to other purposes is unlawful and ultra vires. If it is desirable that a municipal body should have the power of subscribing to railroads or plank roads, or of issuing commercial securities to be sold in the financial markets, it is time enough for it to do so when authorized thereto by legislation. It possesses no powers but such as are given to it expressly or by necessary implication.” Mr. Justice Bradley, in Chisholm v. City of Montgomery [Case No. 2,686]. See, also, Dill. Mun. Corp. § 106; Mayor v. Ray, 19 Wall. [86 U. S.] 468; Knapp v. Mayor, etc., of Hoboken, 34 N. J. Law, 374; Jones, Ry. Sec. §§ 222, 223. Applying this rule to the question in this case, can it be said that the power exercised by the city council of Shreveport in issuing bonds for the purpose mentioned is expressly given by the charter, or results from necessary implication? It seems to me that it is unnecessary to multiply words to show that the power is not conferred. It is perfectly obvious that such- was not the purpose of the legislature. The absence of such a power is too plain for argument. But the plaintiff claims that the people of the city and the judicial, legislative and executive departments of its municipal government have placed a construction on its charter and on the ordinance by virtue of whicn uie bonds were issued, which justifies the issue of the bonds, and that the city is therefore liable to pay them. This proposition amounts to this, that a municipal corporation can clothe itself with power to issue bonds for extraneous puiposes by asserting that it possesses it. On the other hand, the current of authority is unbroken that to authorize a municipal corporation to subscribe for stock in a public improvement and pay for it by the issue of negotiable securities, there must be a legislative grant of power either in express terms or by necessary implication. Thomson v. Lee Co., 3 Wall. [70 U. S.] 330; Dill. Mun. Corp. § 106. and many cases t-ere cited. The proposition that when the power has not thus been conferred, it may be acquired by a municipal corporation by a persistent assertion that it has the power, and by acting as if it had it, is inconsistent with all the cases cited. The intention of the legislature is-to be sought for; that whatever it may be constitutes the law. James v. Milwaukee, 16 Wall. [83 U. S.] 161. In deciding whether a municipal corporation has power to issue bonds for a specific purpose, the construction put upon the charter by all parties in interest, and where rights have grown up under that construction, is entitled to weight only in a case [497] where the power may be fairly inferred from the terms of the charter. In such a case doubts and ambiguities will be resolved in favor of the power. Thus, in Woodhull v. Beaver Co. [Case No. 17,974], Judge Grier says: ‘’But now, when all parties have given tneir construction to the act, and it can by its terms be made to include the power, the court will not exercise astutia to give it a stringent interpretation in order to enable a county to disown its obligations after having received their value.” To the same effect are the following cases: James v. Milwaukee, 16 Wall. [83 U. S.] 159; Van Hostrup v. Madison, 1 Wall. [68 U. S.] 297; Meyer v. Muscatine, Id. 393. But in all these cases there was reasonable ground in the acts of the legislature for the construction by which the power to issue the bonds was derived. In this case authority for the power exercised is wholly wanting, and by no reasonable or fair construction can it be presumed. The plaintiff further claims that by the acts of its people and officers set in the record, and by the fact that the city has received and still retains the consideration for which the bonds were sold, she is estopped from denying their authority to issue the same, and from denying their validity. [NOTE. The plaintiff in this action suing out a writ of error,- the judgment came up for review in the supreme court. Mr. Chief Justice Waite delivered the opinion of the court It is a well-settled rule, he said, that unless power has been given by the legislature to a municipal corporation to grant pecuniary aid to railroad companies, all bonds for the municipality, issued for such purpose, and bearing evidence of that fact on their face, are -void, even in the hands of bona fide holders, and this, whether the people voted the aid or not. In the case at bar there was no claim thai such power had been granted to the city of Shreveport, nor was there any provision in the charter from which anything of the kind could be implied. And as it appeared that the bonds carried on their face full notice that they were issued for a purpose not authorized by law. the court reached the conclusion that the decision of the court uelow should be affirmed. 108 U. S. 282, 2 Sup. Ct. 634.] [497] The authorities cited by counsel for plaintiff from the United States Supreme Court Reports to sustain their proposition do not sustain it. They only decide that when the power to issue bonds is given to a municipal corporation, the corporation is estopped from setting up irregularities in their issue. But where the power is wanting there is no es-toppel, and there can be no ratification by the municipal corporation or its officers. In Chisholm v. City of Montgomery, supra, Mr. Justice Bradley said: “The plea that the city is estopped by the acts of its officers, by the resolutions of the city council, or by the negotiable form or other matter in the bonds themselves, from denying the authority of such officers to pledge the faith of the city in aid of said plank roads and to issue the bonds in question, cannot be maintained. Public officers cannot acquire authority by declaring that they have it. They cannot thus shut the mouth of the people whom they represent. * * * No municipal or political body can be estopped by the acts or declarations of its officers from denying their authority to bind it.” In the case of Marsh v. Fulton Co., 10 Wall. [77 U. S.] 684, the supreme court of the United States says: “It is also contended that if the bonds in suit were issued without authority, their issue was subsequently ratified, and various acts of the supervisors of the county are cited in support of the supposed ratification. These acts fall very far short of showing any attempted ratification, even by the supervisors. But the answer to all of them is, that the power of ratification did not lie with the supervisors. A ratification is in its effect upon the act of the agent equivalent to the possession by him of a previous authority. It operates upon the act ratified in the same manner as though the authority of the agent to do the act originally existed. It follows that a ratification can only be made when the party ratifying possesses the power to perform the act ratified.” So in Loan Ass’n v. Topeka, 20 Wall. [87 U. S.] 667, the same court says: “We do not attach any importance to the fact that the town authorities paid one installment of interest on their bonds; such a payment works no estoppel. If the legislature was without power to authorize the issue of these bonds, and its statute attempting to confer such authority is void, the mere payment of interest which was equally unauthorized cannot create of itself a power to levy taxes resting on no other foundation than the fact that they have once been illegally levied for that purpose.” See, also, Town of South Ottawa v. Perkins, 94 U. S. 266. The want of power in the officers of the city of Shreveport to ratify the issue of bonds is as clear as their want of power to issue the bonds in the first instance. When contracts are ratified, it must be by a person or body having the power to ratify. Delafield v. Illinois, 2 Hill, 159; Hotchin v. Kent, 8 Mich. 526; Dubuque Female College v. District Township of City of Dubuque, 13 Iowa, 555; Estey v. Inhabitants of Westminster, 97 Mass. 324. The decisions' of the supreme court of the United States are uniform to the effect that a municipal • corporation' cannot without legislative authority issue bonds in aid of an extraneous object Marsh v. Fulton Co., 10 Wall. [77 U. S.] 676; Pendleton Co. v. Amy, 13 Wall. [80 U. S.] 297; Kenicott v. Supervisors, 16 Wall [83 U. S.] 452; St. Joseph Tp. v. Rogers, Id. 644; Harshman v. Bates Co., 92 U. S. 569; Town of Colomo v. Eaves, Id. 484; Town of South Ottawa v. Perkins, 94 U. S. 260. That power cannot originate or be derived from a vote of the people. The source of the authority is the legislature. In this case there was no power in the city of Shreveport to issue the bonds in question. All persons dealing in the bonds are bound to take notice of this fact. There can be no bona fide holders without notice when there is no power to issue the bonds. The bonds are void and the holders are presumed to have had notice of this fact when —ey purchased them. There must be judgment on the agreed facts for defendant.