Farnham v. City of Lincoln

• Decision Date: 18 January 1906
• Docket Number: 11,049
• Citation: 106 N.W. 666,75 Neb. 502
• Parties: GEORGE O. W. FARNHAM, APPELLEE, v. CITY OF LINCOLN ET AL., APPELLANTS
• Court: Nebraska Supreme Court

106 N.W. 666

75 Neb. 502

GEORGE O. W. FARNHAM, APPELLEE, v. CITY OF LINCOLN ET AL., APPELLANTS

No. 11,049

Supreme Court of Nebraska

January 18, 1906

APPEAL from the district court for Lancaster county: LINCOLN FROST JUDGE. Reversed and dismissed.

Judgment of the district court reversed and action dismissed.

J. R Webster, John P. Maule, E. C. Strode and Clark & Allen, for appellants.

Burr & Burr, contra.

BARNES J. LETTON, J., not sitting.

OPINION

BARNES, J.

This action was commenced in the district court for Lancaster county by George O. W. Farnham, as a taxpayer of the city of Lincoln, to enjoin the mayor and city council from settling a pending suit between the Lincoln Street Railway Company and the city, which involved the validity of certain paving assessments levied against the property of the street railway company. The district court found for the plaintiff and awarded him a permanent injunction, and the defendants brought the case here by appeal.

An examination of the petition discloses that it contains no averment of facts constituting fraud, collusion, or unfair dealing on the part of any of the defendants, but after stating the situation of the parties, the levy of the paving assessments, the pendency of the action to establish the lien alleged to have been obtained thereby and to foreclose the same, the decree of the district court therein, amounting to upwards of $ 111,000, and the appeal by the defendants to this court, it concludes with an averment substantially as follows: "The defendants are about to settle and compromise the said paving taxes and the decree thereon for the sum of $ 65,000; and the said council has passed a resolution authorizing such settlement, and the defendant, the mayor of the city, is about to, and will, officially sign and approve of the resolution, unless prevented from so doing by the order of the court; and the said defendants will dismiss the action out of the supreme court, and will commute and release and discharge the said paving taxes and tax lien, and have stipulated to settle and dismiss the action and decree, and give away, donate and discount to the said street railway company the sum of $ 54,767, without payment thereof, notwithstanding the premises and the fundamental law of the state, which forbids any sum of money for taxes due to any municipal corporation being commuted in any form whatever; and the said city council and said defendants have usurped the functions of the courts of this state in the premises, and the said scheme, if carried out, would be, and is, a fraud, wrong and irreparable injury to the plaintiff and all taxpayers of the city of Lincoln." So it may be said that the plaintiff relied, for the relief prayed for in his petition, solely on the alleged lack of power on the part of the mayor and city council to compromise the suit, and accept a less sum than was claimed by the city, and found due by the district court, on account of the paving assessments in question.

Section 9, article I, chapter 13, Compiled Statutes 1903 (Ann. St. 7708) provides, among other things, that the city may sue and be sued, and the counsel shall have power to make contracts, and to do the acts relative to the property and concerns of the city, necessary and incident to the exercise of its corporate powers. This would seem to authorize the defendants to make the settlement complained of. But we are not without authority on this question. In Fuller v. Martin, 27 Neb. 441, 43 N.W. 244, which was an action to compel the mayor of the city of Friend to carry out a contract of settlement made by the city council with a waterworks company, by signing a warrant to pay the consideration named in such settlement, it was said:

"The power to compromise and settle claims of the nature and character of that involved in the case at bar, held to exist in the mayor and city council of cities in their legislative capacity growing out of their general corporate powers, and the necessities of such cases."

In the body of the opinion we find the following:

"While I am not aware that express authority is given to cities, or to the mayor and council, as legislators, to settle claims of this nature by compromise, yet the power of settlement and adjustment must be held to exist, and to grow out of their general corporate powers and the absolute necessities of the case."

The power to compromise grows out of, and is incident to, the power to sue and be sued. The power to sue and be sued is conferred on the city in express terms by its charter. This power would indeed be a snare, or its utility much impaired, if, having entered upon litigation, the city could not make an accord as to controverted matters, but must pursue the controversy to its ultimate result in the court.

In the case at bar, there was a controversy as to the validity of the assessments, and we may take judicial notice of the fact that the matter is still in litigation in an action now pending in this court. The case being pending and undetermined, the agreement to dismiss the appeal and terminate the litigation was a sufficient consideration for the settlement in question. 2 Freeman, Judgments (4th ed.), sec. 463, says: "If the debtor has the right to appeal, so that the judgment is not a finality, and its correctness is not conceded, an agreement between him and his creditor that the latter will accept a sum less than the amount of the judgment if the former will not prosecute an appeal is valid and enforceable." It would seem clear from the foregoing that the power to sue and be sued carries with it the power on the part of the mayor and city council to compromise a suit, if such compromise is made in good faith; and, unless restrained by some statute or express constitutional provision, the city of Lincoln possessed the power to make the compromise in question.

The plaintiff contends, however, that by force of section 4 article IX of the constitution, such power is denied the city in cases like the one at bar. That section reads as follows: "The legislature shall have no power to release or discharge any county, city, township, town, or district whatever, or the inhabitants thereof, or any corporation, or the property therein, from their or its proportionate share of taxes to be levied for state purposes, or due any municipal corporation, nor shall commutation for such taxes be authorized in any form whatever." The city insists that the provisions of this section do not apply to cases like the one at bar, and cites Collins v. Welch, 58 Iowa 72. There, the supervisors,...