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gotiable securities, for the corporation, so as to bind it, without “ordinance"; that is to say, without express authority from the legislative department of the corporate government in its collective official capacity ?
The weight of authority seems to be in the affirmative of each of these propositions so far as private corporations are concerned. Such corporations may borrow money and issue negotiable securities for corporation purposes. And the officers of such corporations may, under circumstances, bind their principals without express authority, or even against positive instructions, Furmer's Bank vs. Butcher's Bank, 14 N. Y., 623; Merchini's Bank vs. State Bunk, 10 Wall, 604.
The principle which underlies these decisions is, that private corporations, when once created, are like individuals, and may exercise the ordinary powers of individuals in carrying out the purposes of their organization, and will be bound by the acts cf its officers as an individual would be by the acts of his agents. If the officer be held out to the world as clothed with certain general authority, any act of his within the scope of such general authority will be binding ipon the corporation, although he may have positive instructions in the particular act to the contrary, for the public have no means of ascertaining the restrictions, and are not bound to take notice of the specific authority under which the officer should act. The proceedings of the Directors, or other governing body of private corporations, are not open to the public, nor are they ordinarily required to be made public. Persons who deal with such corporations have a right to presume that the officers are clothed with all the powers necessary to perfect the acts, and carry on the business usually transacted by them. The charters of such corporations do not usually prescribe the mode in which, as between the corporation and the public, the corporation shall do particular acts ; nor do they make it the duty of the public, at their peril, to take notice of the directions of the governing body to its subordinates.
And herein lies the leading distinction between public and private corporations. The charters of municipal corporations usually provide that the powers conferred shall be exercised by ordinance, or cnactment of the legislative department; and that these ordinances shall be published, or, at any rate, open to the inspection of the publie. And without any positive provisions on the subject, it seems to follow from the very nature and object of such corporations, as arms of the government, that they should proceed in analogy to the
government itself, by the enactment of laws, and the publication thereof. Such ordinances legally passed and published have all the force and effect of statutes. "Enactments of this kind,” says Saigwick, Stat. and Const. Law, p. 462, "within the sphere of their authority, have all the force of statutes." Again, he says, p. 473, that a statute of a local or municipal character is as fatal to the validity of all contracts based on a violation of it, as if the act be one of a general character; and a carporation ordinance is equally efficacous.
It will be found, we think, that much of the apparent discrepancy in the authorities has been occasioned by not always bearing in mind this distinction. When the cases come to be accurately examined, and the points actually decided separated from the argument or dicta of the judges, it will also be found that there are very few not entirely reconcilable in principle, when read by the light thus set before us. The corporate powers of a municipal corporation can only be exercised by its legislative department, and the corporation can only be bound ex contructu by the act of that department. The officers of the municipality, unlike the officers of private corporations, are, like the officers of the general government or the officers of the State governments, merely ministerial to carry out the will of the legislature, and can not charge the corporation except by its express authority. And all persons who deal with the corporation, or its officers, are bound at their peril to know whether an act is authorized, for the proceedings are open to the public, and its ordinances have all the force and effect of statutes.
The argument in favor of the power of a municipal corporation to borrow money, and to issue negotiable securities, starts out with the general proposition of Ang. & A. on Corp., $ 257, thus enunciated: “In general, an express authority is not indispensable to confer upon a corporation the right to borrow money, to deal in credit, or become drawer, endorser, or acceptor of a bill of exchange, or to become a party to any other negotiable paper. It is sufficient if it be implied as the usual and proper means to accomplish the purposes of the charter"—citing a number of authorities, only two of which are cases of municipal corporations : 7 Ohio, 31, and 4 Hill, 263. The learned author adds in the same section : “Where, however, the drawing, endorsing, or accepting such bills is obviously foreign to the purposes of the charter, or repugnant thereto, the act becomes a nullity and not binding on the corporation.” This qualification is very
material in view of the purposes of public municipal corporations, and the marked difference between the relation of the officers of such a corporation to their corporators, and the relation of the officers of private corporations to their corporators. The purpose of a municipal corporation is governmental. The purpose of a private corporation is individual gain. The corporators of a municipality elect their officers for a term of office to discharge functions of a public nature, and strictly analogous to those of the officers of government. The corporators of a private corporation elect officers to perform duties of an entirely different character, and analogous to those of the agents of an individual. It is difficult to conceive of a private incorporation for purposes of individual profit, where the burrowing of money and the execution of negotiable securities would be foreign to its purposes, or repugnant thereto. And it is equally difficult to conceive of a public corporation, created for governmental purposes, where the borrowing of money or the execution of negotiable securities is not foreign to its purposes or repugnant thereto. Ordinarily, the money raised by taxation, and orders upon the treasury, are the only modes of raising or paying money necessary or proper for such corporations. Express authority from the Legislature seems essential to authorize a resort to any other mode.
The general principle enunciated as above in a treatise professedly on private corporations, is borne out by the authorities so far as such corporations are concerned. The Supreme Court of Tennessee was one of the earliest of those Courts by whom this doctrine has been declared, and that, too, against a very strong argument by Chancellor Kent to the contrary : Union Bank vs. Jacobs, 6 Hum., 515. But it does not follow that this doctrine either has been, or ought to be, applied to municipal corporations. Private corporations are generally, and always where their powers have been construed liberally in regard to borrowing money or making negotiable securities, mere organizations for private emolument, to carry on a business by a combination of capital, and under special privileges which any individual would have the right to undertake. There is no particular reason why the corporate entity in such cases, should not be allowed to do all that the individual might do for like purposes. But it is altogether different with municipal corporations. They are created for public purposes which no individual could do, or could be authorized by law to do. They are arms of the State government, branches of the State sovereignty, created for governmental purposes.
Its officers are, like the officers of the State government, clothed with only such power as the organic law, (the charter) or the law of the corporate legislature (the Board of Aldermen or City Council) may conter upon them. They can do nothing without positive law from the one source or the other. Their acts are otherwise ultra vires and void. All the authorities recognize these distinctions.
Let us now see what are the general principles recognized by the authorities, and which may be considered as settled in regard to the general powers of municipal bodies, and the mode of exercising them “Powers of municipal corporations are express or implied. Implied powers are such as are necessary in order to carry into effect those expressly granted, and which must, therefore, be presumed to have been within the intention of the legislative grant": Cooley on Const. Lim., 194. All powers not expressly granted, or necessary to carry out those powers, are denied : Cook & Steadman vs. Sumner Man. Co., 1 Sneed, 698; Nichol vs. Nashville, 9 H., 263; 4 Cold., 106; 1 Kans., 432; 8 Ind., 31; 1 Clark Ch., 223; 30 Ala., N. S., 461; 14 Me., 375; 32 Conn., 118, 131 ; 22 Conn., 552; 51 Me., 174, 608; 53 Me., 416; 45 N. H., 7; 13 Ohio St., 311.
A town, in the New England sense, in its corporate capacity, will not be bound even by the express vote of the majority, to the performance of contracts, or other legal duties not coming within the senpe of the object and purposes for which it was incorporated : 13 Mass., 272; 16 Ind., 18; 11 Pick., 396; 1 Met., 284; 6 Allen, 152; 12 Cush., 103; 22 Conn., 552.
“The powers conferred upon municipalities must be construed with reference to the object of their creation, namely, as agencies of the State in local government. The State can create them for no other purpose, and it can confer powers of government to no other end, without coming in conflict with the Constitutional maxim that legislative powers can not be delegated": Cooley on Const. Limitations, 211.
Nor can the Legislature clothe a municipal corporation in the Stute of Tennessee, with any power which is not a corporate purpose : 1 Sn., 698, ut supra, with the comment of Caruthers, J., page 663.
The rule is general, and applicable to the corporate authorities of all municipal bodies, that where the mode in which their power on any given subject can be exercised is prescribed by their charter, the mode must be followed. If not done in the manner prescribed, the act is a mere nullity: Zottman vs. San Francisco, 20 Cal., 96 ;
McSpeden vs. Mayor of New York, 7 Bosw., 601; 20 How. Pr., 395; Abb. Corp. Dig., 869; City of Leavenworth vs. Runkin, 2 Kans., 357, 371; 16 Ind., 227; 7 Gray, 12; Abb. Corp. Dig., 522; Coo
; ley on Const. Lim., 196. .
A municipal corporation can not delegate the powers, which must be exercised by its legislative branch, to any of its officers or agents : Whyte vs. Nashville, 2 Swan, 364; Oakland vs. Carpenter, 13 Cal., 540; Smith vs. Morse, 2 Cal., 524; Cooley on Const. Lim., 204; Sedgwick Stat. L., 164.
The power of expending money for public purposes in municipal corporations is lodged with the lgislative, and not the executive authorities, and must be exercised by oridin ince legally enacted: City of Philidelphia vs. Flanigen, 47 Penn St. Rep., 21. “The power to contract is essentially a power to disburse. A valid contract is uncontrollable, demanding its performance at the hands of the judiciary, and calling to their aid the whole power of the government. It is manifest, therefore, that an independent, uncontrolled power to contract resting in the several departments, or chief officers of the city, would, in effect, take the control of their own finances out of the hands of the people themselves, and lodge it where it would be liable to the most pernicious abuses by extravagance, favoritism, and illegal expenditure”: 47 Penn. St., 23; and see Peterson vs. Mayor &c., of New York, 17 New York, 454; Johnson vs. C'ity of Philadelplia, 47 Penn., 382.
"Municipal corporations can exercise only conferred powers, and must exercise them according to prescribed rules. The charters of such corporations are public laws; their ordinances are published before taking effect; and all their business is conducted in the most public manner. All persons can inform themselves of their powers and the manner in which they are to be exercised; and if they propose to contract with them, are bound so to inform themselves at their peril”: City of Leavenworth vs. Runkin, 2 Kans., 357, 371; and see Mayor and C. C. of Baltimore vs. Eschbach, 18 Md., 276 ; 47 Penn., 23, and 382 ut supra.
Where, therefore, a contract required by the municipal charter to be made by the Common Council, was made by a special committee of that body, it was held that not only was this contract invalid, but that it could not be validated by any subsequent action of the Common Council: 20 Cal., 96, ut supra; and see 2 Kan., 357. of a notice to the owner of a lot to build foot pavements, which the