L. Waterbury & Co. v. City of Laredo

• Decision Date: 14 December 1883
• Docket Number: Case No. 1424.
• Citation: 60 Tex. 519
• Court: Texas Supreme Court
• Parties: L. WATERBURY & CO. v. THE CITY OF LAREDO.

60 Tex. 519

L. WATERBURY & CO.

v.THE CITY OF LAREDO.

Case No. 1424.

Supreme Court of Texas.

Dec. 14, 1883.

APPEAL from Bexar. Tried below before the Hon. Geo. H. Noonan.

Appellants, as the assignees of Edmund J. Davis, brought this suit against the city of Laredo, C. M. Macdonnel and Raymond Martin. The suit was based upon two contracts between Davis and the city of Laredo, the first dated January 25, 1876, by which the city employed Davis as an attorney-at-law to defend its possession and secure its rights to certain ferry privileges, the employment to continue for a term of five years, he to have one-third of the annual rent of the ferry for the term of five years. The second contract was made and entered into by Davis and the city on April 19, 1876. This was in the nature of a supplement, declaring the meaning of the first, enlarging and extending its terms to other matters, and stipulating that Davis should have as his compensation one-third of the annual rent of the ferry for a term of twenty years.

It was in substance alleged that Davis had fully performed all his obligations and stipulations under the contract, and transferred his rights thereunder to appellants for a valuable consideration; that the city authorities combined and confederated with Macdonnel and Martin, and also others not known, to wrong, cheat and defraud appellants, and in pursuance thereof had repudiated the contract and refused to comply therewith, and also refused to pay appellants one-third of the rents or any part thereof, and denied that they had any right to it; that, in pursuance of said combination and confederacy, said authorities pretended to lease the ferry to their co-defendants for the term of five years for $5,050 per annum in Mexican money, whereas, at a fair renting, where there was proper competition, which would have been secured by proper notice of the time, place and terms of the leasing, the ferry would have rented for five years for the sum of $9,000 per annum.

Appellants sought to establish their rights under the contract; to have vacated and annulled the leasing; to recover the one-third of the revenues arising, then already due; to direct the manner in which said ferry privileges should be leased, and to enjoin the appellees from carrying out the lease, etc.

Appellees demurred generally and specially. The special demurrer claimed that the contract was ultra vires; that it was against public policy, and therefore void.

The cause was, by agreement, changed from the district court of Webb county to the district court of Bexar county.

October 10, 1881, the demurrers were sustained and the cause dismissed, with judgment against appellants for costs.

Davis & Ruggles, for appellants, cited: Charter of City of Laredo, Special Laws Second Legislature (1848), ch. 176, p. 337, secs. 1 and 5; City of Galveston v. Loonie, 54 Tex., 525;San Antonio v. Lewis, 9 Tex., 69;Williams v. Davidson, 43 Tex., 2; City of Brenham v. Becker, Commissioners of Appeals, December 14, 1881 (Law Journal, January 25, 1882); Memphis v. Brown, 20 Wall., 289, 321; 1 Dill. on Mun. Corp. (3d ed., 1881), § 479 and note 3; also, as showing what cases are ultra vires,Id., sec. 149, and cases cited in note 1; also sec. 457, and cases cited in note 2; City of Memphis v. Adams, 9 Heisk., 518;Smith v. The Mayor of Sacramento, 13 Cal., 531;Hornblower v. Duden, 35 Cal., 664;State ex rel. Bermudez v. Heath, Mayor, etc., 20 La. Ann., 172; Hugg v. Camden, 29 N. J. Eq. (2 Stew.), 6; Bethune v. Hughes, 28 Ga., 560;Gale v. Kalamazoo, 23 Mich., 344;Clarke v. Lyon Co., 8 Nev., 181;Ellis v. Washoe Co., 7 Nev., 291; State v. Patterson, 40 N. J. Law, 186; Thatcher v. Jeff. Co., 13 Kan., 182.

Jacob Waelder and A. L. McLeane, for appellee, cited: Section 5 of the Charter of Laredo; Williams v. Davidson, 43 Tex., 34; 1 Dill. on Mun. Corp., sec. 61; City of Brenham v. Becker, 5 Tex. Law Jour., 294; Williams v. Davidson, 43 Tex., 34et seq.; Green's Brice's Ultra Vires, 124 (note); Cool. Const. Lim., 206; Dill. on Mun. Corp., sec. 61; City of Eufala v. McNab, S. C. Ala., 1881 (Reporter, vol. 12, 484); Commonwealth v. Smith et als., 10 Allen, 455;Richardson et als. v. Sibley, 11 Allen, 66.

WATTS, J. COM. APP.

In the court below it was successfully asserted that the contract sued on was ultra vires; that is, not such as the authorities of the city of Laredo had the power to make; also that the contract was void as being against public policy. And these are the questions for consideration and determination in the disposition of this appeal.

With respect to the power of corporations, the rule stated by the supreme court of the United States in Dartmouth College v. Woodward, 4 Wheat., 578, in these words, “A corporation being a mere creature of the law, possesses only those properties which the charter confers upon it, either expressly or as incidental to its very existence,” is generally accepted in America.

A more elaborate, if not a more satisfactory, statement of the rule is given in Green's Brice's Ultra Vires, page 28, as follows: “It has been laid down that some, if not all, corporations exist for the attainment of certain objects only, and that, if their powers are not expressly, they are impliedly, restricted to such only as are necessary for the due attainment of those objects, and that, consequently, they can perform no acts, enter into no transactions and incur no liability but such as spring out of or are otherwise incidental to the purposes for which they have been created.”

In reference to municipal corporations, Judge Cooley, in his work on Constitutional Limitations, p. 235, says: “The powers of these corporations are either expressed or implied. The former are those which the legislative act under which they exist confers in express terms; the latter 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.”

The act of the legislature incorporating the city of Laredo, approved January 28, 1848, contains the following:

“Section 5. Be it further enacted, that the mayor and aldermen shall be invested with the following powers, viz., etc. Thirdly. They shall have authority to establish ferries; build levees, wharves and landings; fix the rates, fees and rents of the same; establish free schools; erect public buildings for the use of the city; pave and improve the streets, and sell and dispose of any property belonging to the city for the benefit thereof.”

From this the city would undoubtedly have the implied power to employ and contract with attorneys to prosecute or defend, in the courts of the county, the rights of the city with respect to the property mentioned in the above section. The express powers therein granted, by necessity carry with them...