Opinion
14002
February 13, 1935.
Before OXNER, J., Greenville, May 1934. Affirmed.
Complaint for injunction by W.W. Carter and others, individually, as residents and taxpayers of the City of Greenville, and on behalf of all other residents and taxpayers of the City, against the City of Greenville and others. From orders refusing an injunction pendent lite and a permanent injunction and dismissing the complaint, plaintiffs appeal.
The order of Judge Oxner follows:
By this action plaintiffs, as residents and taxpayers of the City of Greenville, seek to permanently enjoin the City of Greenville, its mayor and council, from carrying out a proposed scheme whereby the city would acquire the present post office property in Greenville for a city hall, the United States would acquire certain vacant property on East Washington street, known as the Ware property, for a new post office and courthouse site, and the owners of the Ware property would acquire the present city hall property and the sum of $15,000.00 from the City of Greenville.
This action was commenced on May 23, 1934, by service of summons and complaint, and on the same day a rule was issued against the defendants requiring them to show cause why a temporary restraining order should not be issued. Thereafter the plaintiffs served an amended complaint, and the cause came on to be heard on the return and answer of the defendants on June 9, 1934.
There is no dispute between the parties as to the facts of the case. By their return and answer the defendants admitted and set out in detail just what is proposed to be done, and assert their right to do so. So that the only question presented for decision is whether, on the admitted facts, an injunction pendent lite should issue.
The substantial admitted facts of the case are these: In 1873 the city of Greenville purchased the present city hall site, receiving fee-simple deed. In 1879 the present city hall building, a two-story structure, was erected thereon. In 1915 it was conveyed away, but was reacquired a few months thereafter by a fee-simple deed. The building has been used as a city hall since its erection, although in 1930, according to the United States census for that year, the population of the City of Greenville was 29,154, or five times that of the city in 1879 when the city hall was erected, and the municipal functions of the city have grown correspondingly. As a result, the city hall property is, and has been for a number of years, inadequate for the needs of the city government, and certain city officials and agencies — the mayor, the water commission, the public library — have been forced to find accommodations elsewhere in privately owned property, for which rent is being paid. The present building cannot be expanded, nor can it be adequately repaired, and it is not deemed advisable that the city incur the large indebtedness necessary for the erection of a new building commensurate with its needs, even if the funds could be made available. On the other hand, the condition of the present building is such as to make its continued use impractical and undesirable, if not dangerous.
Faced with this situation, the city of Greenville, through its council, has evolved a plan whereby the agencies of the city may be adequately accommodated, without, however, the necessity of an expenditure of a prohibitive sum of money. The plan, as outlined, is briefly as follows: The federal authorities contemplate the erection of a new post office and courthouse building in the City of Greenville, and the city authorities have been given to understand that the authorities consider the Ware property well adapted to this purpose. The present federal building is well built, is in an excellent state of repair, is fireproof, and is equipped with a number of fireproof and burglarproof vaults. It is entirely adequate to house the public library, the waterworks, the health and engineering departments, as well as the city's official and clerical forces. Agreements concerning the respective properties have been obtained, and, if the transfers of property contemplated therein are made, the federal authorities will erect a post office and courthouse building on the Ware property, the present city hall property will be passed to the present owners of the Ware property, and the present post office property will pass to the City of Greenville.
It appears from appraisals made by competent persons and attached to the return and answer that the post office property is worth approximately $200,000.00 more than the city hall property, and it further appears that rents now being paid private interests for quarters occupied by municipal agencies, which have been forced to find accommodations outside the present city hall property, would in three years equal the total amount of money which will be needed under the proposed plan for the city to acquire the present post office property.
On these facts two major questions of law arise:
(1) Does the City of Greenville have the power under Section 7431, Code of 1932, to carry out its part of the proposed scheme, as authorized by resolution of city council?
(2) If not, has the city the power under the common law, in the absence of a special act?
In considering those questions, it should be pointed out that the Court is not concerned with the advisability of the proposed change in the location of the city hall. This is a matter which rests solely within the discretion of city council, and, in the absence of illegality, fraud or clear abuse of their authority, their discretion governs, and, having exercised it by adopting the resolution and approving the present scheme, the Court is bound thereby. Stone v. City of Greenville, 113 S.C. 407, 102 S.E., 755; Green v. City of Rock Hill, 149 S.C. 234, at pages 262, 263, 147 S.E., 346.
1. The act of the Legislature which now appears in the Code of 1932 as Section 7431 was enacted in 1901 (Act Feb. 19, 1901 St. at Large, p. 652, § 11), and is as follows: "§ 7431. Corporate Powers. — The corporate name of every city or town incorporated under this article shall be `the city (or town) of .........,' and by such corporate name said city or town may sue and be sued, plead and be impleaded in any Court of law or equity in this State, and may purchase, hold, enjoy and possess, for the use of said city or town in perpetuity or for the term of years any estate, either real or personal, or mixed, and sell, alien and convey the same at will. The said city or town shall have and keep a common seal, which shall be affixed to all ordinances passed by the mayor and the aldermen thereof."
The charter of the city of Greenville was granted in 1907, and the powers conferred under the above statute became a part of the charter provisions of the city.
Counsel for the plaintiffs admit that under its charter the city of Greenville possesses the powers conferred by Section 7431, but denies that that section confers power to acquire property save for the use of the city, and it is said that the city is not acquiring the Ware property for the use of the city, but purely for trading purposes. The meaning of the word use, as it appears in the statute, would seem to be identical with the word benefit. Of course, all property owned by the city is held in a fiduciary capacity for the use or benefit of its citizens and residents, but it does not necessarily have to be used by the city.
It might be held for years as vacant property without being actually devoted to any particular purpose. There is no suggestion in the statute that it does not apply to property devoted to governmental purposes. Indeed, by an unbroken line of decisions in this state, the doctrine is established that all property of municipalities is held in a fiduciary capacity for the benefit of its citizens, and the distinction recognized by some jurisdictions between private and governmental functions of municipalities is not recognized. Irvine v. Town of Greenwood, 89 S.C. 511, 72 S.E., 228, 36 L.R.A. (N.S.), 363; Farrow v. City Council of City of Charleston, 169 S.C. 373, 168 S.E., 852, 87 A.L.R., 981; Looper v. City of Easley, 172 S.C. 11, 172 S.E., 705; Green v. City of Rock Hill, supra; Haesloop v. City Council of Charleston, 123 S.C. 272, 115 S.E., 596, 602.
It follows, therefore, that the statute in question must relate to all property held by the municipality, and the powers granted by the statute must include the right to dispose of the present city hall property.
Furthermore, the substance of the proposed transaction should be regarded rather than the form. Interpreting the city's proposal to the United States as requiring that the city must take title to the Ware property and then convey it to the United States, both deeds would be delivered at the same time, and the city would be nothing more than a mere conduit of title. The substantial thing under the proposed scheme is that the United States acquires the Ware property, the city acquires the post office property, and the owners of the Ware property acquire the present city hall property.
In addition, it is argued for the city, and not without reason, that there is nothing in the city's proposal or its option on the Ware property which prevents it from having that property conveyed by its owners directly to the United States. See Mathews v. Darby, 165 Ga. 509, 141 S.E., 304.
It is concluded, therefore, that the city has the power under Section 7431, and the resolution unanimously adopted by its council, to carry out the contemplated transaction, whereby the present city hall property will be disposed of and the present post office property acquired for a city hall.
2. However, even if the city were without statutory authority in the premises, nevertheless a careful consideration of the authorities requires the conclusion that the city does possess the right under the circumstances of the present case.
The general rule, as stated in 3 McQuillin, Municipal Corporations (2d Ed.) § 1242, is, "that property held in a governmental capacity, i. e., for a public use, cannot be sold without legislative authority but must be devoted to the uses and purposes for which it was intended. * * *" Haesloop v. City Council of Charleston; Green v. Rock Hill, supra.
This rule that property devoted to a government use cannot be sold without legislative authority is subject to well-recognized exceptions. One of these is that, if the governmental use has been abandoned or the property has become unsuitable or inadequate for the governmental use to which it has been put, it may be sold without legislative authority 3 McQuillin, Municipal Corporations (2d Ed.), § 1243; City National Bank v. Kiowa (1924), 104 Okla. 161, 230 P., 894, 39 A.L.R., 206 Drexler v. Com'rs of Town of Bethany Beach (1926), 15 Del. Ch., 214, 135 A., 484; Dix v. Port of Port Orford (1929), 131 Or., 157, 282 P., 109; Fussell-Graham-Alderson Co. v. Forrest City (1920), 145 Ark. 375, 224 S.W., 745; City of Williamsburg v. Lyell, 132 Va., 455, 112 S.E., 666; Palmer v. Albuquerque, 19 N.M., 285, 142 P., 929, L.R.A., 195-A, 1106; Marshall v. City of Meridian (1912), 103 Miss., 206, 60 So., 135, 136.
In the Marshall case, supra, it appears that the city of Meridian, having obtained in 1910 an amendment to its charter, by which it was empowered to construct a new city hall and to issue bonds to pay for it, issued bonds which, however, were insufficient to complete the new building. In 1911 city council adopted an ordinance providing for the sale of the old city hall in order that the proceeds of sale might be used to supplement the proceeds of the bond issue in the construction of the new hall. A bill was filed to enjoin the sale of the old city hall, which, in the language of the resolution of city council, was "unsightly, dilapidated and inadequate, and not commensurate with the progress of the other improvements of the city."
The Court found that "the city owns the lot upon which its present city hall and jail are located in fee simple, charged with no trust except such as follows by reason of its having been devoted to its present purposes. * * * The contention of appellants is that the city holds this property in trust for its citizens, and that it is without power to sell it."
The opinion of the Court contains the following:
"In the absence of legislative authority, a municipal corporation is without power to sell or dispose of property held by it for governmental purposes. By the city's charter appellees are empowered to `purchase and hold real, personal and mixed property, and may dispose of the same for the benefit of said city.' This provision of the charter clearly gives appellees power to sell property under some circumstances. It may be that this general grant of power carries with it no authority to sell property held and used by the city for governmental purposes, as to which we express no opinion; but when such property has ceased to be used for such purposes, the reasons for the rule prohibiting the sale thereof, cease, so that the rule itself ceases, and thereafter it can be sold under this general power to sell. There can be no question that, under a general grant of power to sell, a city has the power to sell property which it owns not charged with a trust. In the case at bar the only trust charged upon the property, other than the general trust under which all municipal property is held, is that which results from it being dedicated to a public use, and when this use shall lawfully cease this trust will cease also. It is true that the use of this property for public purposes has not in fact ceased, but provision has been made for the building of a new city hall and the sale of the old city hall is but a preliminary thereto, and in aid thereof, and when the new city hall is built the use of the old will cease.
"Where a city is empowered to build a new city hall, and the money which can be realized from a sale of its old hall will be of material aid to it in so doing, it ought to have power to sell its old hall for that purpose, and we are aware of no good reason for holding that it has not."
3. It is objected, however, that, even if under the statute, or apart from the statute, by reason of its inadequacy and contemplated abandonment, the city has the power to sell and convey the present city hall property, it has no power to exchange it for other property. It is true that the power to sell ordinarily means to sell for cash and does not include the right to accept property in exchange. However, the city has the power both to buy and sell, and these powers include the right to exchange. 3 McQuillin, Municipal Corporations (2d Ed.) § 1242.
In the Haesloop case, supra, the Court quotes with approval from the case of Roberts v. Northern Pacific Railroad Co., 158 U.S. 1, 15 S.Ct., 756, 761, 39 L.Ed. at page 879, the following: "In the first place, the transaction between the county of Douglas and the Northern Pacific Railroad Company did not involve the exercise of the taxing power of the county. The county did not issue bonds, or seek to subject itself to any obligation to raise money by taxation. The case, as already stated, was that of a sale. The county authorities had ample powers to sell and convey such of its lands as were not used or dedicated to municipal purposes. * * * It is, indeed, urged that the county authorities could only sell its lands for money. We do not accede to this proposition. If they possessed the power to sell for money, we are pointed to no express provision of law that restricts them from selling for money's worth. Even upon such a narrow view, it may well be contended that the consideration received by the county included a money payment. The deed recites the payment of money by the company to the county at the time of the conveyance, and it is a conceded fact that the lands since they came into the possession of the company have yielded considerable sums as taxes to the county. It is straining no principle of law or of good sense to regard the payment of an annual tax as equivalent, for the purpose of our present inquiry, to the payment of a rent. The amount, as well as the nature of the consideration received by the county in exchange for its lands, if it had the power to sell them, was a matter that concerned the county only."
All these matters have been reargued before me by the attorney for plaintiffs on the hearing on the merits, and the voluminous testimony taken before the master has been read. However, I find nothing in the testimony nor in the argument of counsel for the plaintiffs to justify any other conclusions than those reached in my order refusing the injunction pendente lite, and I am convinced that a permanent injunction should be refused for the same reasons.
The additional point is made that the proposed scheme should be enjoined because it is ultra vires as to the city. It is said that the proposal of the city to the United States contemplates that the city should convey the Ware property to the United States, and that it should do so by a general warranty deed; that the city does not have a valid option on the Ware property, because it is executed only by the administrator, and his signature does not bind all the owners of the property, one being a minor and another non compos mentis; that therefore, if the United States should accept the city's proposal, and the Ware heirs should not convey, the city would be liable to suit at the hands of the United States for breach of contract. In addition, it is said that the city has no right to make a covenant of general warranty.
It is true that the proposal of the city, i f and when accepted by the United States, would make a binding contract; and it is also true that the Ware option, in its present form, could not be enforced by the city so as to obtain good title to the property. But the city's proposal recites and has attached thereto the resolution of the city council of April 23, 1934, and that resolution clearly contemplates (1) that all three of the properties shall be simultaneously conveyed; and (2) that no one of the three parties shall convey unless the others do likewise. The proposal is predicated upon the authority conferred by the resolution, and we must therefore look to the resolution to determine the scope and effect of the proposal, and from the resolution it would seem to be clear that the situation suggested by counsel for the plaintiffs could not arise; and under such circumstances the point that the proposal is ultra vires as to the city falls to the ground.
Counsel for plaintiffs contends that the city has no right to contract to convey by general warranty deed. But the authorities he cites do not so hold. On the contrary, in 3 Dillon, Municipal Corporations (5th Ed.), § 998, p. 1596, it is said:
"CONVEYANCE BY MUNICIPALITIES"Power conferred upon a municipality to sell real estate imports power to sell and convey in the usual method, unless a mode is prescribed by statute. When a city has power to contract and to grant and convey real property, it may make a deed containing a covenant of general warranty."
(Author's italics.)
Inasmuch as the demurrer raises the same points as the other pleadings, it will not be necessary to consider it separately. I conclude upon the whole case that the city should not be enjoined from proceeding to carry out the proposed scheme. The demurrer is therefore overruled, an injunction is denied, and the complaint is dismissed, with costs to the defendants.
Mr. B.F. Martin, for appellants, cites: Power of municipality: 108 S.C. 244; 93 S.E., 934; 33 S.C. 1; 73 S.C. 83; 92 S.C. 374; 75 S.E., 687; 49 L.R.A. (N.S.), 958; 43 C.J., 195; 20 S.C.L., 575; 104 S.C. 328; 88 S.E., 801; 92 S.C. 378; 73 S.V., 89; 43 C.J., 195; 33 S.C. 23. Necessity of special legislative authority: 149 S.C. 234; 147 S.E., 346; 123 S.C. 273; 115 S.E., 596; 37 S.C. 327; 35 A., 253. As to ultra vires contract: 33 S.C. 1; 163 S.C. 242. Power to sell does not authorize exchange: 19 R.C.L., 773; 123 Ind., 47; 23 N.E., 1076; 7 L.R.A., 788; 140 U.S. 247; 35 L.Ed., 478; 63 U.S. 75; 87 N.E., 17; 39 Cyc., 845; 44 S.C. 322; 71 S.C. 457.
Messrs. B.A. Morgan, O.K. Mauldin and Nettles Poteat, for respondents, cite: Functions of municipal corporation are governmental: 89 S.C. 511; 149 S.C. 234; 169 S.C. 373; 172 S.C. 11; 87 N.E., 17. When property of municipality may be sold: 230 P., 894; 39 A.L.R., 206; 135 A., 484; 282 P., 109; 224 S.W. 745; 52 P., 697; 112 S.E., 666; 142 P. 129; L.R.A., 1915-A, 1106; 60 So., 135; 141 S.E., 304; 28 Cyc., 623.
February 13, 1935.
The opinion of the Court was delivered by
The elaborate and well-considered order of Judge Oxner refusing an injunction pendente lite covers all of the questions in this case except one, and that is covered in his final order.
A careful study of these orders and of the authorities shows that they correctly decide all questions raised.
These orders are affirmed and made the judgment of this Court. We would add to the authorities cited Section 7307 of the Code.
Let the first order of Judge Oxner be printed in full and of the second order the latter part, beginning at folio No. 543 of the printed case.
MESSRS. JUSTICES STABLER, CARTER, and BONHAM, and MR. ACTING ASSOCIATE JUSTICE C.J. RAMAGE, concur.