McCRACKEN v. THE CITY OF SAN FRANCISCO, 16 Cal. 591

Field, C. J. delivered the following opinion; This is an action to recover the sum of $2,100, with interest from the twenty-sixth of December, 1853, and arises upon the following facts: On the fifth of December, 1853, the Mayor of San Francisco approved of what purported to be an ordinance passed by the Common Council of the city, providing for the sale of certain city property. This ordinance, so called, is designated in the official book of the ordinances of the city, as Ordinance number four hundred and. eighty-one.

In terms it authorized and required the Mayor and Joint Committee on Land Claims of the city to sell the property specified at public auction, to the highest bidder, at such time and place as they might think advisable, after not less than ten days advertisement in three daily papers; and provided that twenty-five per cent, of the purchase money should be paid on the day of sale, and fifty per cent, in sixty days thereafter, and the balance in four months.

It is also provided that the Mayor, upon the first payment, should execute a bond to the purchaser, to the effect that upon the payment of the entire purchase money, the city should give a deed for the property purchased, and that upon payment of the last installment, the Mayor should éxecute the deed.' At the time this ordinance was presented to the Board of Assistant Aldermen, and was acted upon by that body, there was a vacancy in the Board, occasioned by the resignation of one of its members, so that there were, in fact, but seven members in office.

Of these seven, four members voted for the passage of the ordinance, and three against it. It is admitted that the sale, which took place on the twenty-sixth of December, 1853, was conducted in accordance with the directions of the ordinance. At the sale the plaintiff became the purchaser of a portion of the property, and paid at the time, as the first installment upon.his purchase, the sum of $2,100. It is for the recovery of this sum, and interest, that the present action is instituted.

It. appears from the record, that within one hour previous to the sale the Common Council passed the following ordinance: Ordinance Uo. 493, appropriating $185,000 to the Sacramento Central Joint Stock Clay Street Wharf Company and William E. Dennis: The People of the Oity of San Francisco do ordain as follows:

Section 1. That the sum of $185,000 be and it is hereby appropriated from the cash proceeds of the second payment for the city property ordered sold by Ordinance number four hundred and eighty-one, to the Sacramento Joint Stock Clay Street Wharf Company and to William E. Dennis. Sec. 2.

That the Controller be and he is hereby authorized to issue, on the day of sale of the property ordered sold by ordinance four hundred and eighty-one, his warrants upon the treasury, as follows: For the sum of $75,000, in favor of the Sacramento Street Wharf Company; for the sum of $75,000, in favor of the Central Wharf Joint Stock Company; for the sum of $35,000 in favor of William E.

Dennis; said warrants shall be payable from the cash proceeds of the second payment for the property ordered sold as aforesaid, or shall be received in payment for any purchases made at said sale, in accordance with the terms of Ordinance number four hundred and eighty-one. At the time of the passage of this ordinance, the land directed to be sold was covered by water, and was dedicated to public use as a free public dock for ships and other vessels by the following

section of an ordinance passed in 1852 : “

Section 8. All the space of land and water lying between Clay street and Sacramento street, and between Davis street and the deep waters of the bay, as laid down upon the public maps or plans of the city, is set apart and dedicated to the public use as a free public dock for ships and other vessels; provided, notwithstanding, that nothing herein contained shall prevent the Common Council from amending, altering or annulling this grant.” The last

section of Ordinance 481 in terms repealed this section, and the wharf companies and William E. Dennis, mentioned in Ordinance 493, claimed that they would be damaged by the filling up of the slips, of which the land directed to be sold formed a part, and it was to recompense them for such damage that the appropriation was made. On the day following the sale, the Mayor executed to the plaintiff the bond required by Ordinance 481, and on the sixteenth of March, 1854, the last installment of the purchase money having been paid, the Mayor executed to him a deed for the property purchased.

The plaintiff entered into possession some time in March, 1854, and was in possession at the institution of the present action. Since then, he has quit-claimed his interest to a party who was fully cognizant of all the circumstances of the case. The plaintiff bases his right to recover upon the ground that the sale was made without authority from the city, and that he did not in consequence acquire the title for which he parted with his money. If there were any authority for the sale, it is to be found in Ordinance 481.

At the time this ordinance was acted upon by the Board of Assistant Aldermen, there was a vacancy in that body, as we have already stated, occasioned bj the resignation of one of its members, and only four of the members remaining in office voted for its passage. The ordinance did not, therefore, receive the necessary vote for its passage required by the charter then in force. The second

section of the third

article of that charter declared that no ordinance or resolution should “be passed, unless by a majority of all the members elected to each Board; ” and in the case of The City of San Francisco v. Hazen (5 Cal. 171) this Court held, that inasmuch as the charter provided that eight members should be elected to each Board, the

section in question had reference to that number, and the vote of any number less than a majority of the entire Board—of its constituent number—was insufficient to pass an ordinance. The ordinance in question, therefore—number 481—was never passed. It was, in fact, rejected. It was, standing by itself, for all purposes whatever, an absolute nullity.

This conclusion is not controverted by the defendant; but to obviate its effect in the determination of the case, it is contended— First, that Ordinance 493 recognized and adopted the proceedings taken in accordance with the terms of Ordinance 481; and Second, that the sale of the property was subsequently ratified by the city. We will consider both of these positions: 1. It is not pretended that Ordinance 493 of itself conferred any authority to make the sale; it does not purport to confer any such authority; it only purports to appropriate certain proceeds of the intended sale.

The proposition advanced is that the recognition in 493 of the existence of the previous ordinance, and the appropriation of a portion of the proceeds, constituted an adoption and approval of all that had been previously done or might be subsequently done in pursuance of the terms of that ordinance, and thus gave validity to the sale. It is evident that whatever operation is to be attributed to Ordinance 493 must arise from the appropriation it makes. The recognition of the previous ordinance, independent of that appropriation, could have no possible effect.

There is nothing adoptive or approving in the mere reference to previous legislation, whether valid or invalid. It is, then, upon the'appropriation alone that the proposition must rest; and that this did not and could not operate as such an adoption of the proceedings taken under the rejected ordinance, as to give validity to the sale, is evident from the provisions of the charter relating to the disposition of the city property. The thirteenth

section of the third

article provided that the Common Council should “ have power within the city to pass all proper and necessary laws for the regulation, improvement and sale of city property; for the levy and collection of city taxes on all taxable property, not to exceed one per cent, a year upon the assessed value; for the laying out, making, opening, widening, regulating and keeping in repair all streets, roads, bridges, fences, public places and grounds, wharves, docks, piers, slips, sewers, wells and alleys, and for malting the assessments therefor; for regulating and collecting wharf-age, dockage and cranage upon all water craft and all goods landed; for securing the protection, health, cleanliness, ornament, peace and good order of the city; for the prevention and extinguishment of fires,” etc.

By this

section the power to sell the city property was placed on the same footing with the power to levy taxes, grant licenses and to pass laws for the government of the city. By this

section all the authority was conferred which could be exercised by the Common Council upon the subject. They were the mere agents of the corporation, and possessed only such powers as were specially delegated to them by the charter, and when that instrument granted a power with a specific designation as to the mode in which it should be used, the mode was restrictive—no other mode could be followed. In Head and Amory v.

The Providence Insurance Company, (2 Cranch, 169) Chief Justice Marshall, in speaking of bodies which have only a legal existence, said: “ The act of incorporation is to them an enabling act; it gives them all the power they possess; it enables them to contract, and when it prescribes to them a mode of contracting, they must observe the mode, or the instrument no more creates a contract than if the body had never been incorporated.” And in the case of The Farmers’ Loan and Trust Company v.

Carroll (5 Barb. 49) the Supreme Court of Hew York said: “ When a corporation relies upon a grant of power from the Legislature for authority to do

an act, it is as much restricted to the mode prescribed by the statute for its exercise, as to the thing allowed to be done.” (See also The New York Firemen’s Insurance Company v. Ely et al. 5 Conn. 568.) The power, therefore, in the sale of the city property could be exercised only by the passage of laws for that purpose. Ordinances and laws are synonymous terms when applied to acts of municipal corporations. They are thus used in the charter. (Art. 3, sec. 3.) Ordinance 493 is not a law providing for the sale of any property; nor does it purport to be anything of the kind.

It does not describe any property, or direct any sale, or confer authority upon any parties to sell. It assumes that an ordinance ordering the sale had already passed, and refers to it for the simple"purpose o£ appropriating certain proceeds of the sale. This assumption imparted no vitality to the rejected ordinance, which was referred to as having passed. The Common Council could not in this way recall the rejection and give validity to the supposed ordinance. This would be in effect to pass an ordinance by referring to it as passed, or by admitting that it had passed.

The Common Council could pass an ordinance only in one way, and that was by voting for it. To give validity to the sale, a law directing the same was requisite. Nothing less would answer under the charter. Again, the land directed by the terms of Ordinance 481 to be sold, was set apart and dedicated as a public dock, by an ordinance passed in 1852. The fifth

section of 481 was directed to the repeal of this latter ordinance; but of course the repealing

section fell with the rejection of the ordinance. In dedicating the land to public use, the Common Council exercised powers purely of a governmental nature, and not those of a mere property holder. Whilst the dedicating ordinance remained in force, no sale could be legally had. Number 493 makes no reference to that ordinance, and of course does not purport to repeal the same, either directly or otherwise.

The untenable character of the doctrine involved in the proposition advanced by the defendant will be apparent, when the doctrine is applied to the different subjects upon which the Common Council are authorized to legislate. They are authorized, for example, to levy taxes. An ordinance imposing a tax is introduced into one of the Boards, and rejected. The City Collector, however, proceeds upon the assumption of the passage of the ordinance, and advertises property for sale for the supposed taxes.

The owner of the property pays no attention to the proceeding; he knows that the ordinance was rejected, and the levy is illegal. The Common Council, however, previous to the time of the advertised sale, pass an ordinance appropriating a portion of the proceeds anticipated from the sale, and this appropriation gives validity to the levy, and to the acts of the officer, and the subsequent sale of the property. To this result the doctrine necessarily leads.

If a sale of the city property, without an ordinance directing the same, can be upheld from the appropriation of the anticipated proceeds, the levy and acts of the collecting officer must be sustained from the like appropriation. The distinction taken between the powers of a municipal corporation, when acting in its political and governmental character, and when acting with reference to its private property, has no application to the questions involved in the case at bar.

Its powers, whether regarded as political or governmental, or those of a mere private corporation, could be exercised only in conformity with the provisions of the charter. The Legislature could impose such restrictions as it thought proper ; and it saw proper to require the formalities of legislation for the disposition of the city property, as it did for the imposition of taxes, the regulation of the Fire Department, and matters connected with the general welfare of the city.

Besides, the repeal of the ordinance setting apart and dedicating the property as a public dock was necessary, as we have already stated, to the validity of any sale. It was by the exercise of governmental powers that the property was dedicated to public uses. It was by legislation, in the strict sense of the term, that the dedication was made, and only by legislation could the public franchise be destroyed. No such legislation was ever had.

It follows, from the views we have expressed, that Ordinance 493 gave no sanction to the proceedings of the Mayor and Land Committee, and that the sale made by them was without authority and void, as much so as if it had been made by strangers to the city and its government. The case of Holland v. The City of San Francisco is cited as authority for the proposition that the proceedings of parties, assuming without authority to act on behalf of the city, may be adopted by a subsequent ordinance. In that case, a claim similar to that of the plaintiff was passed upon, and held invalid.

The opinion was delivered by Mr. Justice Burnett, Mr. Justice Terry concurring, and Mr. Chief Justice Murray dissenting. In that case, the fact that the property had been previously dedicated to public use, as a public dock, was not presented. This fact distinguishes that case from the one at bar. Even upon the reasoning of Mr. Justice Burnett, it would hardly have been contended that the admission supposed to be contained in Ordinance 493 operated as a repeal of the public grant.

But aside from this consideration, even were the facts in the two cases precisely similar, we should not follow the ruling of that case, for, in our judgment, it is manifestly erroneous—setting aside fundamental principles of the law of corporations, which, however much distorted or departed from, will constantly reassert themselves. Mr. Justice Burnett first holds that the city, under the provisions of the charter, can only make a valid sale of the city property by the passage of an ordinance authorizing the sale. In this view we agree with him.

He further holds, however, that Ordinance 493 recognized and adopted Ordinance 481, so as to render the subsequent sale valid and binding upon all parties —that is to say, to be consistent with his first position, that Ordinance 493, by the fact that it recognizes the previous ordinance as having passed, and appropriates a portion of the anticipated proceeds of the sale, actually passed that previous ordinance, recalled its rejection, and made it as valid an ordinance as if it had originally received the vote required by the charter.

If this be not the doctrine advanced by the learned Justice, we confess ourselves unable to understand the opinion. To this doctrine we never can yield our assent. It is unsound in principle and is unsupported by any authority, and could it be maintained, would break down and destroy all the checks imposed by the Legislature upon the exercise of the powers of the Common Council.

Upon this doctrine that body could at any time adopt the unauthorized acts of others, in the levy of taxes, in the sale of public property, in the opening of streets, in the infliction of penalties, and by admitting in one ordinance that it had previously passed an ordinance for those purposes, give validity to those acts. But admitting that Ordinance 493 did adopt and pass 481, it did so only within one hour previous to the sale. Ordinance 481, upon that supposition, had validity only from that time. But this ordinance directs the sale upon ten days’ previous advertisement.

This means, of course, after the passage of the ordinance—that is, from the time it acquired validity, which was only within one hour previous to the time the sale took place. The authority to sell upon ten days’ notice was not, therefore, pursued, and the sale without such notice was void. 2.

The alleged subsequent ratification of the sale is based upon the following acts and proceedings of the Common Council: First: Upon the Ordinance numbered 505 in the official book of ordinances of the city, passed on the tenth of January, 1854, by which the Mayor and Land Committee were authorized to pay out of moneys in their hands arising from the sale ordered by Ordinance 481, the salaries of the members and officers of the police, for the months of November and December of the previous year.

Second : Upon joint resolutions passed in January, April and September, 1854, by which the sale was referred to, the proceeds were appropriated, and the Land Committee released from responsibility on account of promissory notes and warrants received as proceeds of the sale by their Secretary, and subjected to attachment in suits against the city whilst in his hands. Third: Upon the acceptance of the reports of the Land Committee and of the City Treasurer, in relation to the proceeds received from the sale.

To determine the effect of these acts, as a ratification of the sale, it is necessary to consider the conditions essential to a valid ratification. To ratify, is to give validity to the act of another. A ratification is equivalent to a previous authority. It 'operates upon the act ratified in the same manner as though the authority had been originally given. It follows, as a consequence, that where the authority can originally be conferred only in a particular form or mode, the ratification must follow the same form or mode.

Thus, if an authority to execute a deed of a private person must be under seal, the ratification of the deed must be also under seal; and where an authority to do any particular act on the part of a corporation can only be conferred by ordinance, a ratification of such act can only be by ordinance. In the case of the Dispatch Line of Packets v. Bellamy Man. Co. (12 N.

H. 232) a mortgage of real and personal property belonging to the corporation was executed by a person acting without authority, but assuming to be the agent of the defendants, and it was held that so far as the real estate was concerned, there could be no ratification of the mortgage without a vote of the corporation, as the authority to execute a mortgage of that nature could not be originally conferred except by a vote. “ There is here,” said the Court, “ no vote of ratification, either by the corporation or by the directors; and we are not aware of any authority which will justify us in going further, and holding that a deed of real estate may be ratified by a corporation without vote or writing.” And again: “A ratification of

an act done by one assuming to be an agent relates back, and is equivalent to a prior authority. (Story on Agency, 235, 239.) When, therefore, the adoption of any particular form or mode is necessary to confer the authority in the first instance, there can be no valid ratification, except in the same manner. If a sealed power were not necessary to this as a conveyance of the real estate, but a written vote would have been sufficient, because a corporation may constitute an attorney by vote for such purpose, then such vote at least must be held necessary to a ratification.” (See, also, Pratt et al. v.

Town of Swanton, 15 Vt. 147; and Chamberlin v. The Inhabitants of Dover, 13 Maine, 466.) It follows, also, from the general doctrine, that a ratification is equivalent to a previous authority, that a ratification can only be made when the principal possesses .at the time the power to do the act ratified. He must be able, at the time, to make the contract to which by his ratification he gives validity.

The ratification is the first proceeding by which he becomes a party to the transaction, and he cannot acquire or confer the rights resulting from that transaction, unless in a position to enter directly upon a similar transaction himself. Thus, if an individual, pretending to be the agent of another, should enter into a contract for the sale of land of his assumed principal, it would be impossible for the latter to ratify the contract, if between its date and the attempted ratification he had himself disposed of the property.

He could not defeat the intermediate sale made by himself, and impart validity to the sale made by the pretended agent, for his power over the property or to contract for its sale would, be gone. So, also, contracts made upon an assumed agency for a single woman cannot be ratified by her after marriage, without the consent of her husband, for her power to contract alone ceases with her marriage. If we apply these principles to the case at bar, the question of ratification will be one of easy solution.

By the charter, the Common Council could authorize a sale of lands only by an ordinance passed for that purpose, (art. 3, sec. 4) and such sale dould only be made at public auction (art. 6, sec. 6). The ordinance was required to be published in some newspaper of the city after its passage by one Board, before its consideration hy the other B.oard.

The object of this requisition was threefold : first, to guard against’ fraud on the part of the Common Council in the disposition of the • city property; second, to apprise the public of the terms of sale, that every one might have an opportunity of purchasing, if he desired, in case the sale was ordered ; and, third, to give an opportunity to the public to suggest objections or amendments to the sale or to its terms.

From this provision as to publication, the counsel of the appellant contends with great force that a sale of the city’s lands, without an ordinance previously passed, was incapable of ratification, independent of any consideration of the mode required by public auction. It is unnecessary at this time to express any opinion on the proposition. It is clear that no ordinance ratifying the sale was ever passed. The joint resolutions, and the acceptance of the reports of the Mayor and Land Committee and of the City Treasurer, in reference to the moneys received from the sale, may be laid out of consideration.

The authority for the sale could originally have been granted only by ordinance, and could only be ratified in the same manner—by ordinance. No ordinance referring to the sale was passed, except Ordinance No. 505, That ordinance is entitled “An Ordinance to provide for the Payment of the Officers and Members of the Police.” By it the Mayor and Land Committee were authorized to pay, out of the moneys in their hands arising from the proceeds of the sale ordered by Ordinance 481, the officers and members of the police, for the services rendered by them in the months of November and December of the previous year.

Its only purpose Ivas to dispose of certain proceeds of the sale. It contains no terms of ratification. It does not contemplate that any ratification was necessary. It assumes that Ordinance 481 was valid, and refers to it as the source of authority for the sale. It only appropriates certain moneys, and it is plain that the appropriation did not give validity to the mode by which the money was obtained. The appropriation of moneys collected for taxes illegally assessed would, to the same extent, give validity to the assessment and levy.

There is nothing, then, in the appropriation from which an intention to ratify the sale can be implied; and if the intention to ratify under some circumstances could be thus implied, the implication would be of no avail in the present case, since it is manifest that the Common Council were at the time laboring under the mistaken impression that Ordinance 481 had become law. Ratification, to be effective, must be made with full knowledge of all the facts relating to the act ratified.

To entitle, therefore, any proceedings of the Common Council to the slightest consideration as evidence of ratification, it must be shown that those proceedings were taken with full knowledge that the ordinance had never passed, and that the sale thereunder was an absolute nullity. (Owings v. Hull, 9 Pet. 629; Story on Agency, sec. 243; Fletcher v. Dysart et al., 9 B. Monroe, 415; Dunlap’s Paley’s Agency, 171, note q.) Again: the sale was required to be made at public auction. (Art. 6, sec. 6.) This mode was essential to the validity of any sale. A sale in any other mode would have been a nullity.

A ratification of a sale of this character can only be made where the party ratifying possesses such right with reference to the property that he can sell absolutely at private sale. He may then ratify the sale without reference to its mode, whether made privately or publicly. But when his power in the sale of the property can only be exercised by public auction, he cannot ratify a previous sale.

The object of the ratification is to vest in the previous purchaser the title; but at public auction there would be no certainty of this, for at the auction every one would be at liberty to bid, and the property would fall to the highest bidder. Apply this principle to the case, and it will be evident that a ratification by the Common Council of the unauthorized sale was impossible.

The purchasers at that sale acquired no title; the object of the ratification is to give them one, and for that end the sale must be confirmed to them separately at the prices already offered—that is, a sale must be made to them privately, which does not lie within the power of the Common Council. They can sell only at public auction, and this fact precludes the possibility of ratification by them of the previous sale.

The question of ratification being disposed of, it only remains to consider the objections taken to a recovery by the plaintiff, on the grounds: First: That the city is estopped as against the plaintiff from denying the sale. Second: That the plaintiff has not offered to surrender the possession of the premises. And third: That the city cannot become liable beyond the limit of $50,000, prescribed in the charter. 1. The subject of estoppel was fully considered hi the case of Biddle Boggs v. Merced Mining Co. (14 Cal. 279).

We there held that to conclude a party by his declarations or conduct from asserting a title to property against another, it must appear—“ first, that the party making the admission, by his declarations or conduct, was apprised of the true state of his own title; second, that he made the admission with the express intention to deceive, or with such careless and culpable negligence as to amount to constructive fraud; third, that the other party was not only destitute of all knowledge of the true state of the title, but of the means of acquiring such knowledge; and, fourth, that he relied directly upon such admission, and will be injured by allowing its truth to be disproved.” Tested by these rules, it is evident that there is nothing in the conduct of the city which can operate as an estoppel against her denial of the sale and her assertion of title to the prorerty.

The matters relied upon by way of estoppel, with the exception of Ordinance 493, occurred after the sale, and they could not, as a matter of course, have influenced the plaintiff in his purchase. Ordinance 493, directing an appropriation of a portion of the anticipated proceeds, was passed within one hour of the sale, and it nowhere appears that the same was ever brought to the notice of the plaintiff. Nor does it appear that there was any fraud or intention to deceive on the part of the Common Council.

They acted, in passing Ordinance 493, and in the subsequent use of the proceeds, upon the impression that a valid ordinance authorizing the sale had been passed. But if the city would be estopped from denying the sale and from asserting title to the property, it does not follow that the plaintiff would be estopped from claiming a return of the money he paid. The doctrine of eshyppel in pais is applied to prevent a wrong-doer from asserting claims against his declarations or conduct; not to prevent an innocent party from enforcing his rights.

It is the wrong-doer who is estopped, upon the principle that he shall not take advantage of his own wrong.

In the plain Saxon of the counsel, “ a man may tell a lie, and induce action by inducing the belief that it is the truth, but we have never heard that the liar could prevent the person to whom the lie was told from showing the truth.” It would, indeed, be against common honesty and common sense to permit a party to allege that he had done wrong; that he had made false representations, had obtained money from an innocent party thereby, and had used it; and being in consequence estopped from denying the truth of his representations, the innocent party is also precluded from questioning their truth.

If the Common Council could set up an acquiescence in their own wrongful acts as a defense to the assertion of rights consequent upon a reliance upon such acts, the limits imposed by the charter upon the exercise of their powers would be useless. They would only have to say, we have done wrong; we have violated the charter, and misled others; we are estopped in consequence from questioning the validity of our own acts; therefore, the parties misled are estopped also. There is no reason or authority for the proposition. (Bank of Chilicothe v. The Town of Chilicothe, 7 Ohio Ham. 358; Balkley et al. v.

The Derly Fishing Co., 2 Conn. 252; 2 Smith’s Leading Cases, notes to the Duchess of Kingston’s case, by Hare & Wallace.) 2. No surrender of possession of the premises was necessary to give the.plaintiff a cause of action. There was no contract on the part of the city, and the plaintiff derived no right from the city, and is not in possession by any permission from the city. The bond executed by the Mayor, and the deed subsequently delivered, were unauthorized acts, as much so as if they had been done by a stranger to the city. They were not the acts of the city.

They are to be regarded, therefore, as they were, in fact, for any efficacy which they imparted, as mere blank paper. The title remained unaffected in the city afterwards equally as before. The parties deriving posession from the plaintiff are simple trespassers, who can at any time be ejected from the premises by action on behalf of the city.

The cases where possession must be surrendered, before action for the purchase money can be brought, are those where a contract has been made, and possession has been taken thereunder, and the vendee seeks to rescind the contract, on the ground of defective title, or the inability of the vendor to perform the contract on his part, or of some fraudulent representations inducing its execution. In these cases, the vendee must first offer to restore whatever he has received, before he can call upon the vendor to refund the purchase money.

Where the contract is void, there is nothing to rescind; no rights are acquired, and there are in consequence no rights to restore. This distinction between the cases where the possession is taken under a contract, and where there is possession with a void contract—that is, where there is no contract—rests upon principle, and is fully recognized by the authorities. (See Barickman v. Kuykendall, 6 Black. 24.) 3. The objection that the city cannot become liable for more than $50,000 over and above her outstanding or aggregate indebtedness, is founded upon the fifth

section of

article third of the charter, which provides as follows: “ The Common Council shall not create, nor permit to accrue, any debts or liabilities which, in the aggregate with all former debts or liabilities, shall exceed the sum of $50,000 over and above the annual revenue of the city, unless the same shall be authorized by ordinance, for some specific object, which ordinance shall provide ways and means, exclusive of loans, for the payment of the inter-* est thereon, as it falls due, and also to pay and discharge the principal within twelve years; but no such ordinance shall take effect until it shall have been submitted to the people, and receive a majority of all the votes cast at such election; and all money raised by authority of such ordinance shall be applied only to the object therein mentioned, or to the payment of the debt thereby created; provided, that the present debt of the city, with the interest accruing thereon, shall make no part of the $50,000 aforesaid.” This

section was considered by the Board of Examiners under the Act of 1855, providing for funding the legal and equitable debt of the city of San Francisco, and in the report made by them the construction which it should receive is presented with admirable clearness and precision. An extra'ct of the report is embodied in the brief of counsel, which we adopt as expressive of the views we entertain upon the subject. “ The prohibitory words,” says the report, “ applied to the creation of a debt or liability, and the permitting one to accrue, are the same. If, then,

an act creating a debt or liability is void, and imposes no debt or liability on the city, permitting one to accrue by failing to discharge it when already created should, by force of the same prohibition, release the city from any obligation to pay it.

For example: the salaries of all the officers, whether created by the charter or by ordinances, 1 are fixed by ordinance ’ by the Common Council, and accrue as liabilities against the city, from month to month, and the result would be that after the indebtedness of the city reached a certain amount, these salaries could no longer be demanded, and all offices would be vacated, and the corporation virtually dissolved, or the officers held to have discharged their duties gratuitously. Neither of these results could have been intended by the Legislature. “ The limit prescribed is entirely uncertain.

In the charter of the year 1850, and in that of the present year, the restrictive clauses on this subject contain the words ‘ annual estimated revenues,’ and ‘ estimated annual revenue.’ In the charter of 1851 the word ‘ estimated’ is omitted, and there is nowhere any provision made for a preliminary annual estimate. The annual revenue of the city, under that charter, was the revenue which it received each year, and not to be known till the year had expired.

Persons dealing with agents are bound by every limitation of their powers, but the limitation must be an existing one at the time of their dealing, and one within the knowledge of the persons so dealing.

Assuming, then, all former liabilities to be known, there would be no existing limitation, unless this sum and the additional debts or liabilities exceeded the annual revenue by more than $50,000— a fact which not only could not be known, but would really continue entirely uncertain and contingent until the end of the year, when the productiveness of every source of revenue had been fully tested, and the revenues received. “ Under such circumstances all dealings with the city would be mere gambling, and the result would be that it would have no dealings at all, or only at the most exorbitant and ruinous rates. “ The intention of the Legislature in granting an incorporation to the city, was to create a corporation which should possess within itself the means necessary for preserving a continued existence, and on terms the least onerous to the corporators. “ But the amount of the debts and liabilities of the city at a given time, is as uncertain as the amount of revenue to be received during the year.

It would depend upon a settlement of its accounts with all its creditors, involving the adjustment of set-offs, counter claims and unliquidated demands generally.

The limitation, then, would be th difference between two quantities, both of which are unknown. “ And, finally, whether this amount, whatever it be, would be found to exceed the annual revenue by more than $50,000, might depend upon the judgment and good faith with which the Common Council had exercised its powers of raising an annual revenue, and applied this revenue, with all other means it might have derived from accidental sources, to the discharge of its liabilities.

The agents of the city may or may not have raised all the money by taxation and licenses, etc., which they had the power to raise and ought to raise, and may or may not have applied its resources to the discharge of its debts and liabilities, and yet upon this fact may turn the question whether the person with whom they have dealt holds a valid demand against the city or not. “ Such a construction would put the creditor absolutely in the power of the debtor, and the Legislature, in constituting a city government to act as the corporate agents of the city, cannot be supposed to have intended any such change in the fundamental principles of the law, even if we should admit, which we do not, that it possesses the power to have made it. “ For the reasons which we have given, gathered from the language of the

section itself—from the general and controlling purpose of the charter taken as a whole, and construed as any other public statute, and from well settled principles of law governing the relation of principal and agent, we have come to the conclusion that the charter of 1851 contained no limitation of the power of the Common Council to incur debts and- liabilities as to the amount to be incurred, and that the fifth

section of the third

article is to be taken as directory.

In our opinion, the Common Council, when they become satisfied that the event contemplated by the Legislature has occurred, or believe that it is likely to occur, are directed to apply to the people in the manner prescribed in this section, for authority to incur the further liability required by the wants of the city, and a failure on their part to do so would be a violation of duty, and that is the extent of the operation of this provision.” In addition to this, we are clear that the provision refers only to the acts or contracts of the city, and not to liabilities which the law may cast upon her.

It was intended to restrain extravagant expenditures of the public moneys; not to justify the detention of the property of her citizens which she may have unlawfully obtained. The plaintiff claims that the city has got his money without any consideration—by mistake —and has appropriated it to municipal purposes, and he insists that she is responsible to him for it, because the law—not her contract or permission—renders her liable.

Her liability, in this respect, is independent of the restraining clauses of the charter; it arises from the obligation to do justice—to restore what belongs to others—which rests upon all persons, whether natural or artificial. And it may well be doubted whether it would be competent for the Legislature to exempt the city, any more than private individuals, from liability under circumstances of this character.

Suppose, for example, that the city should recover judgment against an individual for $100,000, and collect the money upon execution, and upon appeal the judgment should be reversed; would it be pretended that the money could not afterwards be recovered ? Could the city defend against the claim for restitution upon the pretense that she was already indebted over $50,000 ? Could she, to use the language of counsel, owe herself out of liability ?

Suppose, again, an individual should pay the taxes upon his property, in ignorance that they had already been paid by his agent, could the city retain the amount thus paid by mistake ? Could she plead her previous indebtedness as an excuse for the detention of the money to which she had no legal or equitable right ? Suppose, again, the city should neglect to keep the streets in repair, and an individual should be injured in consequence—should break his leg or be otherwise crippled—could she allege her insolvency against his claim for damages ?

Would her pecuniary condition be an answer for the neglect of every duty, legal and moral ? If this were so, she would be the most irresponsible corporation on earth, and her treasury would be, in many instances; but a receptacle for others’ property without possibility of restitution. The truth is, there is no such exemption from liability on her part. The same obligations to do justice rest upon her as rest upon individuals. She cannot appropriate to her own use the property of others, and screen herself from responsibility upon any pretense of excessive indebtedness.

The law casts upon her the legal liability from the moral duty to make restitution. Admitting that the charter restricts her power to incur liabilities by her own acts—though, as already shown, its provision in this respect is merely directory—it still leaves her liable according to the general law. The restriction can, in any event, only apply to liabilities dependent for their creation upon the volition of the Common Council, and hence does not include liabilities arising from torts, or trespasses, or mistakes. (See also White v. The Franklin Bank, 22 Pick. 184; Beach v.

The Fulton Bank, 7 Cow. 485.) We have thus gone over the several positions taken by the defendant, and in none of them do we find any valid objection to the claim of the plaintiff. We have considered them at great length, from the fact that upon the decision in this case will depend, to some extent, the disposition of several other cases, which involve, in the aggregate, an amount little less than half a million.

The amount received upon the sale of the slip property exceeded a million, but many of the purchasers, as we are informed, have taken deeds under the Act of the Legislature of 1858, or the amendatory Act of 1860, and have thus released their claim to reimbursement of their purchase money. Be this, however, as it may, it can have no weight in the determination of the case. It is our duty to pronounce the law, and with the consequences which follow we have nothing to do—whether they be to cast upon the city a liability of one dollar or of a million.

The sale of December 26th, 1853, being, void, no title passed to the purchasers at that sale. The title to the property still exists in the city, except where deeds have since been taken under the Acts of 1858 or 1860. The property remaining can at any time be taken possession or be disposed of by the city in the same manner as any other property belonging to her, except where her right to assert her title has been barred by the Statute of Limitations; and that statute does not run in favor of parties who affirm that the title never passed from the city, and sue for the recovery of the purchase money.

The plaintiff, therefore, for his money has received no consideration. The city has obtained it and used it, and she is legally, as she is morally, bound to refund it to him. It is true, that the rejected Ordinance 481 contemplated that the first installment of the purchase money of the property should be paid to the State, pursuant to the Act of March 26th, 1851; and that the present action is brought for the amount paid by the plaintiff as the first installment of his purchase.

If this amount had been paid to the State, the question of the liability of the city would have presented itself under a different aspect. It is possible, that in that case the claim for the money could only have been asserted against the State, it being paid over as it was received, under a mistaken impression of the validity of Ordinance 481. Be this as it may, it is sufficient for the determination of the present appeal, that there is no evidence before us that the money was ever paid to the State.

It appears from the record, that in addition to the funds in the hands of the Land Committee appropriated to the payment of the salaries of the members and officers of the police, and in addition to the warrants and notes attached in the hands of their Secretary, upwards of $630,000 were paid by them, as the proceeds of the sale, into the city treasury, but that only $50,000 were paid over to the State, and in this amount it does not appear that the money received from the plaintiff was included.

If the facts are different from those disclosed in the record before us, they can be presented for consideration upon another trial. Judgment reversed and cause remanded. The above opinion was written three weeks since, and passed to my associate, Mr. Justice Cope, for examination.

After great consideration, he differs from the views taken in the opinion, as to the necessity of a surrender of the possession of the premises before the plaintiff can recover, and holds that such surrender must not only be made, but that the plaintiff must also procure a conveyance to the city of the property for the purchase money of which the suit is brought, before judgment can be had by him. If the plaintiff had received anything from the city, it would be only just and in accordance with the settled rules of the law to require its restoration before he could recover.

But I am unable to perceive that he ever received anything. There was no contract between him. and the city. There was no sale to him by the city. The Common Council had rejected the ordinance proposed, providing for the sale. They had declared, in effect, that the sale should not take place. Upon the belief that the contrary was the fact ; that the ordinance was passed; that the sale was ordered—the Mayor and Land Committee put up the property at public auction, and received the bid and the money of the plaintiff, and paid the money into the City Treasury; and the city used it for municipal purposes.

The Mayor executed to the plaintiff a bond for a deed, and subsequently a deed, purporting to convey the property. The plaintiff, finding that the sale was never ordered by the Common Council, and that the acts of the Land Committee and the Mayor were unauthorized—that the bond and deed might as well have been executed,' for all purposes of transferring the title, by a stranger to the city—sues to recover back his money. What has he got, then, to surrender ? He has acquired no rights. He has received no title.

He has obtained no deed from the city ; and if he has taken possession, it is not by any permission of the city. The bond of the Mayor was not the bond of the city; and the deed executed by him was not the deed of the city. If a stranger to the city had given them, would it be pretended, in a suit for the purchase money, that no recovery could be had until they were surrendered, or a conveyance of the premises were executed ?

The stranger could invest the plaintiff with no possible right or claim to the property; but he could do so just as effectually as the Mayor, where the latter was not first clothed with the requisite authority by ordinance duly passed. Nor is there anything, in my opinion, in the position that unless the possession be delivered, and the conveyance executed, the plaintiff or the parties receiving a*quit-claim from him, will acquire such a relation to the property as to be able to resist successfully the claim to it of the city.

The plaintiff bases his right to recover upon the ground that the title never passed to him, but that it still remains in the city. The theory upon which the action proceeds is, that the property belonged to the city, and was never sold by any authority emanating from her, and that the city has, in consequence, obtained the plaintiff’s money without any consideration. The parties receiving the quit-claim from him, took their deed about one week previous to the trial of the cause—in September, 1859—with knowledge of the pendency of the action, and of all the circumstances of the case.

The Statute of Limitations runs only in favor of parties in possession claiming title adversely to the whole world, and not in favor of those who assert the title to be in others. It therefore never run in favor of the plaintiff, and the grantees of the plaintiff are in no better position. Their possession at this day barely exceeds one year, and cannot be tacked on to that of their grantor so as to render adverse the possession for the entire period subsequent to the sale.

If there are any different facts in the other cases said to be pending against the city in the District Court, awaiting the result of this, it will be time enough to pass upon their effect when' they are properly presented before us. I will suggest, however, two considerations, which will show, to some extent at léast, that the apprehensions of the defendant’s counsel are groundless : 1. A large part of the property—for the purchase money of which suits are brought—has never been in the possession of the bidders at the alleged sale.

It remains, and always has remained in the condition in which it existed at the day of the sale, covered with water. As soon as it was discovered that the proposed ordinance, providing for the sale, never received the requisite vote in the Board of Assistant Aldermen for its passage, suits were instituted to recover back the money paid to the city. In Holland v. The City of San Francisco, the test case, Judge Norton, of the Twelfth District, held the sale invalid, and gave judgment against the city.

On appeal, this Court also held the sale invalid—• Judges Murray, Heydenfeldt and Terry all concurring in the decision— but reversed the judgment of the District Court, on the ground that as the Land Committee and Mayor had no authority to make the sale, they had no authority to pay the money over to the city—in other words, on the ground that there was no privity between the purchasers and the city. If this decision had stood, the purchasers would have lost both the property and them money, whilst the city would have retained both.

This was so manifestly unjust that a rehearing was granted, and the alleged want of privity was considered so untenable that it was abandoned by counsel on the reargument. In the meantime, the Bench had been changed—Mr. Justice Heydenfeldt having resigned, and Mr. Justice Burnett having been appointed in his place.

After the reargument, the sale was held valid by Judges Burnett and Terry—Chief Justice Murray dissenting—not on the ground that the proposed ordinance, providing for the sale, was ever passed, but on the ground that it had been referred to in a subsequent ordinance, appropriating certain proceeds of the sale, and that this reference and appropriation recognized and adopted the previous ordinance—in other words, recalled the rejection and gave validity to "the ordinance, thus rendering the sales binding upon all parties.

This decision never met the approbation of the profession and practical business men—who read in the charter, that for a sale of city property, an ordinance duly passed by a majority of the members of both Boards of Aldermen was required, and that an ordinance could only be passed in one way—by the Common Council voting for it—could not understand how a rejected ordinance could be called into life and efficacy by a reference to it as having passed, or by an admission that it had passed ; and they have been unwilling, in consequence, to trust to the sufficiency of the title resting upon this basis.

The natural result has foEowed—the property has remained to a great extent unimproved, covered with water, and, of course, in the adverse possession of no one. 2. To render possession adverse, so as to set the Statute of Limitations in motion, it must be accompanied with a claim of title; and this claim, when founded “ upon a written instrument as being a conveyance of the premises,” must be asserted by the occupant in good faith, in the beEef that he has good right to the premises, and with the intention'to hold them against all the world.

The claim must be absolute—not dependent upon any contingencies—and must be “ exclusive of any other right; ” and to render the adverse possession thus commenced effectual as a bar to a recovery by the true owner, the possession must be continued without interruption, under such claim, for five years. When parties assert, either by declarations or conduct, the title to property to be in others, the statute cannot, of course, run in their favor. Their possession, under such circumstances, is not adverse.

It would seem impossible, therefore, for the parties who have sued for the purchase money—basing their right to recover upon the ground that the title to the property never passed to them, but that it still remains in the city, and that the proceedings of the Mayor and Land Committee were unauthorized acts—to set up an adverse possession against the city.

No recovery can be had, in any of the suits pending, without facts of the character designated being estabEshed, and the attempted proof of them, and the asking for judgment in consequence, are declarations as expressive as any which can weU be imagined against any possible claim by adverse possession. I make these suggestions only in answer to the position of counsel, and not because I regard them as at all necessary to the disposition of the case.

I think they meet, also, to some extent, the objections arising from the supposed possible consequences in other cases, if a surrender of the possession and a conveyance' of the premises be not required as a condition of a recovery of the purchase money. With such possible consequences the Court has really nothing to do in determining the questions in the case at bar. It is plain that the plaintiff in the present case never held adversely, and that if the statute has ran at all in favor of his grantees, it has done so for a period barely exceeding a single year. The disagreement between Mr.

Justice Cope and myself existing, no judgment can be rendered in the present case, unless the plaintiff elect to accept the condition imposed by him; I cannot assent to a judgment imposing the condition without such election, as I do not regard it as required by the law. He cannot assent to the omission of the condition, viewing it as essential to the recovery.

The plaintiff must, therefore, take a judgment in the form indicated by him, reversing the judgment of the Court below, and remanding the cause for a new trial, and directing the Court below to dismiss the action, if at the trial proof be not given of a conveyance and surrender of the premises to the city, and pay the costs of the appeal, or the case must remain undetermined until there is a change on the Bench. The plaintiff can have twenty days to malee his election. This report was written by Edmund Randolph, Esq., of San Francisco.