Opinion
No. 40039.
April 23, 1956.
1. Municipalities — charter provision — prohibiting contracting of debt — where money in treasury is insufficient to pay same — purpose of provision.
Purpose of city charter providing that it shall be unlawful for city to contract any debt unless there is in the hands of the treasurer sufficient money to pay the debt, is to put city on a cash basis. City Charter of Greenville, Sec. 57, Chap. 301, Laws 1886.
2. Municipalities — contract with subdivision owner for installation of sewer mains — violated charter provisions — illegal — not susceptible of ratification.
Where City of Greenville was without funds to pay costs of installation of proposed sewer mains in subdivision, and city entered into contract with owner of subdivision that city would install sewer mains in subdivision, that owner of subdivision would pay costs thereof, and that city would repay such owner when houses were constructed on lots comprising subdivision and were assessed for taxes, under Section 57 of city charter referred to in Headnote 1, the contract was illegal and void and was not susceptible of ratification. City Charter of Greenville, Sec. 57, Chap. 301, Laws 1886.
3. Municipalities — statutes — charter provision not repealed.
Statute, which allegedly repealed statute providing that no warrant shall be issued or indebtedness incurred by any county or municipality unless there is sufficient money in the particular fund for which the allowance is or must be made, to pay such warrant or indebtedness, did not repeal Section 57 of Charter of City of Greenville referred to in Headnote 1. City Charter of Greenville, Sec. 57, Chap. 301, Laws 1886; Sec. 4321, Code 1942; Sec. 16, Chap. 241, Laws 1950.
4. Municipalities — statutes — charter provision not rendered inapplicable.
Statute giving governing authorities of municipalities the power to exercise full jurisdiction in the matter of streets, sidewalks, sewers, etc., did not render inapplicable Section 57 of city charter to contract referred to in Headnote 2, where City of Greenville was without funds to pay costs of installation of proposed sewer mains in subdivision. City Charter of Greenville, Sec. 57, Chap. 301, Laws 1886; Sec. 3374-129, Code 1942.
5. Municipalities — statutes — not in conflict with charter provision.
Statute providing that any municipality which owns or operates a sewer system, shall have power and authority to borrow money and issue its negotiable notes or certificates of indebtedness therefor, for purpose of improving, repairing or extending sewer system, in an amount not to exceed $10,000 in any year, without holding an election, does not conflict with Section 57 of Charter of City of Greenville. City Charter of Greenville, Sec. 57, Chap. 301, Laws 1886; Sec. 3519-26, Code 1942.
Headnotes as approved by Arrington, J.
APPEAL from the Chancery Court of Washington County; FORREST G. COOPER, Special Chancellor.
Wynn, Hafter, Lake Tindall, Greenville, for appellant.
I. The agreement of March 20, 1951, which was accepted by city is void under the provisions of Section 57 of the Charter of the City of Greenville (Acts of 1886, page 536). City of Greenville v. Laurent, 75 Miss. 456, 23 So. 185; Edwards House Co. v. City of Jackson, 132 Miss. 710, 96 So. 170; Greenville Municipal Charter, p. 536, Laws 1886.
II. The agreement of March 20, 1951, being void for the reason that the city had not the power to execute it but was strictly prohibited from executing the same cannot be ratified. Paine v. Mathews, 213 Miss. 506, 57 So.2d 148.
III. The agreement of March 20, 1951, being void and the city prohibited from executing the same or from entering into any such agreement, there cannot be a recovery on a quantum meruit or quantum valebant. Edwards House Co. v. City of Jackson, 138 Miss. 644, 103 So. 428; Methodist Church v. Vicksburg, 50 Miss. 605.
IV. There was no duty on city to furnish sewer mains to lumber company for its subdivision and lumber company could not then and cannot now compel city by mandamus to construct such mains, and, therefore, there cannot be any recovery on theory of reasonable compensation for use of lumber company's funds. Board of Suprs. Prentiss County v. State Highway Comm., 207 Miss. 839, 42 So.2d 802; City of Greenwood v. Provine, 143 Miss. 42, 108 So. 284, 45 A.L.R. 824; Vicksburg v. Vicksburg Waterworks Co., 202 U.S. 453, 472.
V. The lumber company has recovered in full its investment in McCorkle Subdivision, and recovery against city would be a windfall.
VI. The lumber company has paid city only $3,015.14, and recovery, if any, must be limited to that amount.
Kellner Kellner, Greenville, for appellee.
I. Section 57 of city's charter was repealed by Section 16, Chapter 241, Laws of 1950, and, therefore, on March 20, 1951, there existed no valid prohibition either in city's charter or in the general laws of Mississippi against city entering into an obligation to pay out money at a time when there were no funds on hand in city's treasury to pay such obligation. Quinn v. City of McComb, 212 Miss. 730, 55 So.2d 479; McClure v. City of Natchez, 151 Miss. 718, 118 So. 616; Sec. 4321, Code 1942; Chap. 241 Sec. 16, Laws 1950.
II. If not repealed, said Section 57 is not applicable to an agreement to construct sewers because such construction is a mandatory function of city. Choctaw County v. Tennison, 161 Miss. 66, 134 So. 900; State v. Stone County, 131 Miss. 689, 95 So. 683; City of Louisville v. Chambers, 190 Miss. 833, 1 So.2d 771; Sec. 3374-129, Code 1942.
III. The city did have funds on hand on March 20, 1951, because, under provisions of Section 3519-26 of the Mississippi Code of 1942, as amended, city had authority to borrow sufficient funds to extend sewer system and city borrowed those funds from lumber company. Choctaw County v. Tennison, supra; Secs. 3519-07, et seq., 3519-29, 4321, Code 1942.
IV. Even if city had discretion as to construction of sewers, city did construct sewers in lumber company's addition, thereby exercised said discretion in favor of lumber company, and Greenwood v. Provine does not apply.
V. An agreement or contract of a municipality involving the performance of a governmental function, as is involved in this case, whether funds were available therefor or not at the time of the making of the agreement or contract, is binding on the municipality and needs no ratification. Town of Magee v. Mallett, 178 Miss. 629, 174 So. 246; Choctaw County v. Tennison, supra.
VI. Under the general law creating an obligation upon every one, including municipalities, to do justice, appellant cannot obtain appellee's money and retain it under an allegedly illegal act on the part of appellant.
VII. The doctrine of implied municipal liability applies to all cases 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. Methodist Church v. Vicksburg, 50 Miss. 605; Edwards House Co. v. City of Jackson, 138 Miss. 644, 103 So. 428.
VIII. Money or property obtained by a municipality under a void contract, as here contended by appellant, must be returned together with reasonable compensation for the use thereof. American-La France, Inc. v. Philadelphia, 183 Miss. 207, 184 So. 623.
IX. We do not claim interest, eo nomine, but as damages or reasonable compensation for the wrongful retention of appellee's money by appellant. Town of Senatobia v. Ryan, 106 Miss. 413, 63 So. 680; American-La France, Inv. v. Philadelphia, supra; State Highway Comm. v. Wunderlich, 194 Miss. 119, 11 So.2d 437; Anno. 24 A.L.R. 2d 936, et seq.
APPELLANT IN REPLY.
I. Section 57 of the Charter of the city of Greenville has never been repealed.
II. Section 57 of the Charter of the city of Greenville applies specifically to the facts in this case since construction is not made mandatory on city.
III. Section 57 of the Charter of the city of Greenville is not inconsistent with the provision of Section 3519-26 of the Mississippi Code of 1942, as amended, and that even if it is inconsistent with said section, such inconsistency is no bar to the validity and effectiveness of said Section 57.
IV. Although city did have authority under Section 3519-26 to borrow money for sewer construction, it did not do so, and it cannot be said that city borrowed money from lumber company and thereby complied with Section 57.
V. City of Greenwood v. Provine, 143 Miss. 42, 108 So. 284, clearly holds that sewer construction is not a mandatory governmental function, and Choctaw County v. Tennison, 161 Miss. 66, 134 So. 900, clearly holds that Section 57 applies to the facts in this case.
VI. Paine v. Mathews, 213 Miss. 506, 57 So.2d 148, and Edwards House Company v. Jackson, 138 Miss. 644, 103 So. 428, are precisely in point as to the facts in the case at bar for the reason that in those two cases, as well as in the case at bar, the act attempted to be done was an act positively prohibited and therefore completely illegal.
A. Town of Magee v. Mallett, 178 Miss. 629, 174 So. 246, is not in point for the reason that the Court did not reserve a decision on the point at issue here but specifically stated that the point at issue in the case at bar was not then before it for decision.
B. American-La France, Inc. v. Philadelphia, 183 Miss. 207, 184 So. 623, is not in point for the reason that in the Philadelphia case the town had taken the property of American-La France and had refused to pay for it. In the case at bar, City has taken nothing from lumber company; city installed sewers in McCorkle Subdivision, and lumber company paid therefor and got full value for what it paid.
The appellee, Queen City Lumber Company, a corporation, filed bill of complaint against the City of Greenville, appellant, in the Chancery Court of Washington County seeking to recover $3,849.80, with interest at six percent from January 3, 1952. From a decree for the appellee in the amount sued for, with six percent interest from August 10, 1954, the city appeals and the lumber company cross-appeals, contending that it was entitled to interest from January 3, 1952. Briefly, the facts, which are not in dispute, are as follows:
The appellee was the owner of McCorkle Subdivision located in the City of Greenville, and being without sewerage, was desirous of developing said subdivision. Through its president, J.L. McCorkle, it applied to the city council on March 20, 1951 for the installation of sewer mains in said subdivision. At that time, it was admitted that the city was without funds to pay the costs of the installation of the sewer mains, and McCorkle proposed and agreed with the city that if the city would install the sewer mains in said subdivision under the supervision of the city engineer and in accordance with specifications to be provided by him, the lumber company would pay the costs thereof, which costs the city would repay to the lumber company when the houses were constructed on the lots comprising said subdivision and assessed for taxes. The order was duly entered on the minutes of the city council on March 20, 1951. On April 3, the city's attorney advised the council that the proposed agreement with the lumber company was illegal; whereupon the city council authorized the mayor to notify the lumber company that the city could not proceed under the proposed agreement. The notice was accordingly given, in writing, to the lumber company on April 5, 1951. Later, during July and August, the sewer mains were installed by the city engineer and the costs thereof paid by the lumber company. On November 6, 1951, the city council entered an order to refund the lumber company the amount spent on the sewer mains. On January 3, 1952, the city engineer reported to the city council that there was due and owing to the lumber company $3,849.80, the cost of installation of sewerage in McCorkle Subdivision. On August 3, 1954, the lumber company filed claim for the refund; the council denied the claim, which resulted in the filing of this suit.
The appellant contends, first, that the agreement of March 21, 1951 was illegal and void under the provisions of Section 57 of the charter of the City of Greenville (Acts of 1886, page 536), and, second, the agreement being illegal and void for the reason that it was beyond the city's power to execute and being especially prohibited by the charter provision could not be subsequently ratified.
Section 57 of the charter of the City of Greenville is as follows: "Sec. 57. Be it further enacted, That it shall be unlawful for said city council, the mayor, or the clerk thereof, to order to be issued or to issue any warrant or order on the city treasurer for the payment of money, or in any other manner to contract any debt or pecuniary liability, unless there is in the hands of the treasurer at said time, and that may be properly applied to the payment of said warrant, a sufficient amount of money to pay the same; and should any of the foregoing persons violate the provisions of this section, unless misinformed by the treasurer, he shall be deemed guilty of a felony, and shall be punished, on conviction thereof, by fine, . . . ."
This section of the charter was construed by the Court in the case of Greenville v. Laurent, et al, 75 Miss. 456, 23 So. 185. There the Court held that a contract for the purchase of lands by the City of Greenville was illegal and void under Section 57. The Court said: "It is declared unlawful for the council, or any of the officials, in any other manner, to contract any debt or pecuniary liability unless likewise there be in the treasurer's hands at the time, and that may properly be applied to its payment, a sufficient sum of money to pay the same."
(Hn 1) As to the purpose of the provision, the Court further said: "It seems clear to us that the purpose of this section was to put the municipality upon a cash basis, by forbidding warrants or orders for the payment of money to be issued, or debts and pecuniary liabilities to be contracted unless the money was, at the time the warrant or order was issued or the debt or liability was contracted, on hand with the treasurer in sufficient amount to then pay the warrant or order or satisfy the debt or pecuniary liability. . . . But if the municipality is not thus clearly forbidden to plunge the city into debt, and to us it seems that it is, it is nevertheless true that if there is doubt as to the legislative grant of power to contract debts, the doubt must be resolved against the exercise of the doubtful grant of power. The charters of municipal corporations, like those of other corporations, are not to receive a latitudinarian construction."
In the case of Edwards House Co. v. City of Jackson, 132 Miss. 710, 96 So. 170, in construing a similar provision of chapter 326, Laws of 1920, Section 4321 of the Code of 1942, the Court held that a contract between the Edwards House and the City of Jackson was illegal and void, "because no indebtedness can be incurred by any municipality when there are insufficient funds in the particular fund which must be drawn upon to pay the contract or indebtedness incurred." (Hn 2) The agreement being illegal and void, it was not susceptible of ratification. Paine v. Matthews, 213 Miss. 506, 57 So.2d 148. Cf. Town of Magee v. Mallett, 178 Miss. 629, 174 So. 246. We are of the opinion that the contentions of the appellant are well taken and that the City of Greenville was without power to enter into said contract at a time when it was admitted that there were no funds in the treasury.
(Hn 3) The appellee contends that Section 4321, supra, which provides that "no warrant shall be issued or indebtedness incurred by any city or municipality unless there is sufficient money in the particular fund from which the allowance is or must be made to pay such warrant or indebtedness," etc., was repealed by Chapter 241, Section 16, Laws of 1950, and that the repeal of this general statute was applicable to all municipalities and was a repeal of Section 57 of the charter of the City of Greenville. We do not agree. In the case of Mayor, et al v. Streckfus Steamers, 167 Miss. 856, 150 So. 215, the Court said: "General acts do not ordinarily repeal the provisions of charters granted municipal corporations, unless such repeal is in express language or by necessary implication. 1 McQuillin on Municipal Corporations (2d ed.), pp. 436-437."
(Hn 4) The appellee next contends that even if the charter provision was not repealed, it has no application to the indebtedness involved in this case, citing Section 3374-129, Code of 1942, which gives the governing authorities of municipalities the power to exercise full jurisdiction in the matter of streets, sidewalks, sewers, etc. The appellee relies on the cases of Choctaw County v. Tennison, et al, 161 Miss. 66, 134 So. 900, and City of Louisville v. Chambers, 190 Miss. 833, 1 So.2d 771. We are of the opinion that these cases are not applicable or controlling in the instant case for the reason that it was not mandatory upon the City of Greenville to install the sewerage system in McCorkle's subdivision.
"Mere statutory authority to construct sewers or drains does not impose any duty to exercise such authority; and, unless the duty is positively imposed by the state, the municipality has discretion to determine whether it will construct a system of drains or sewers, as well as discretion to determine the nature, extent, capacity, and cost of the system, the time and manner of its construction, the method of financing its construction and maintenance, and the length of the period for which a particular arrangement should be made for the disposal of sewage; and a city cannot be compelled to exercise its discretion regarding the construction or maintenance of a sewer system." 63 C.J.S., Municipal Corporations, Section 1049, page 657. Cf. City of Greenwood, et al v. Provine, 143 Miss. 42, 108 So. 284.
(Hn 5) Appellee further contends that under Section 3519-26 of the Code of 1942 the city was authorized to and did borrow from the lumber company the cost of installing sewer mains in McCorkle's subdivision; and that if Section 57 was not repealed and is applicable to the indebtedness involved, it would be in direct conflict and nullify this section, which reads as follows:
"Sec. 3519-26. Borrowing money for extension or repair of system. — Any municipality which owns or operates any system, as defined in this act, shall have the power and authority to borrow money and issue its negotiable notes or certificates of indebtedness therefor, in an amount not to exceed the sum of ten thousand dollars ($10,000.00) in any calendar year, for the purpose of improving, repairing or extending any such system, or systems, without the necessity of calling and holding an election upon such question or otherwise obtaining the consent of the qualified electors of the municipality, or giving any notice thereof. Provided, however, that in all cases where money is borrowed under the provisions of this section the same shall be repaid during the term of office of the governing authorities authorizing the incurring of the obligation."
There was no compliance with this section. The city did not borrow money and "issue its negotiable notes or certificates of indebtedness therefor," but agreed to reimburse lumber company for cost of sewer system. This was the assumption of a pecuniary liability and there being no funds in the treasury, was in direct contravention of Section 57 of the city's charter, which renders the agreement illegal and void. Section 57 of the charter, supra, does not conflict with Section 3519-26, supra, as this section authorizes the city to borrow the money and comply with the charter provision, but this the city did not do.
In view of what has been said above, we are of the opinion that the chancellor was in error in finding for the lumber company, and his decree is reversed and decree entered here for appellant.
Reversed and decree here for appellant.
McGehee, C.J., and Lee, Ethridge and Gillespie, JJ., concur.