36 N.W.2d 7 | Minn. | 1949
Defendant adopted a home rule charter in 1900 under Minn. Const. art.
Under the original charter, § 98, subd. 3, the debt of the city was limited to a maximum of five percent of the total value of taxable property in the city according to the last preceding assessment for the purpose of taxation. Under the revised charter (§ 88), the debt limit is permitted to be raised in an amount sufficient to authorize bonds, as provided in the ordinances for water and light plants and for a permanent improvement revolving fund.
The controversy on this appeal turns on whether the failure to comply with the provisions of Minn. Const. art.
Plaintiff assigns as error the trial court's refusal to grant his motion for judgment on the pleadings, in granting defendant's motion for judgment, and in declaring that defendant's revised charter is valid and in full effect.
The method of publication used in giving notice of the charter amendments was defective,4 and under Leighton v. Abell,
1. For defendant, the doctrine of de facto corporations is invoked to sustain the validity of the amended charter and acts done pursuant thereto.
A public or municipal corporation de facto exists when there is:
(1) Some law under which a corporation with powers assumed might lawfully have been created;
(2) A colorable and bona fide attempt to perfect an organization under such a law;
(3) User of the rights claimed to have been conferred by the law.
This rule has been adopted in substance as applicable to private corporations.5 The same rule applies whether the corporation is a public or private one.6
The reason for this rule, as accepted in this state, emphasizes the importance of stability and certainty in matters involving public corporate franchises and the serious consequences which might follow if the existence of a municipal corporation should be called into question and, perhaps, determined void in actions between the corporation and private parties. See, State v. Honerud,
"The fact that the organization was so defective as to be void in its inception does not change the rule. There is no room or place here for distinction between things that are voidable and things that are void. Neither the nature nor the extent of the illegality in organization can affect the application of these principles so long as the requirements above stated are met." (Citing cases.)
In the case of St. Paul Gaslight Co. v. Village of Sandstone,
"We have, then, a valid law under which the village might have been incorporated as a de jure municipal corporation, an attempt so to incorporate, and the continuous exercise of all of the powers of such a corporation for more than four years before issuing its bonds. The state has never questioned its existence as a de jure municipal corporation, but has recognized it as such. Such being the facts, the case is within the rule that, where a municipal corporation is acting under color of law and exercising all the functions and powers of a corporation de jure, and the legality of its incorporation is not questioned by the state, but it has been recognized as such by the state for some years, neither the corporation nor any private party can question the validity of its corporate existence in a collateral action or proceeding." (Citing cases.)
Plaintiff in the case now before this court seeks to distinguish between defects caused by failure to fulfill requirements of incorporation contained in Minn. Const. art.
Obviously, there has been a bona fide attempt here by defendant to perfect an organization by attempting to revise its charter under Minn. Const. art.
"* * * An election was held in due course. A mayor and councilmen were elected. The city has continued in the exercise of all corporate functions, exercising those additional powers provided for in the 'revision' submitted by the charter commission, as aforesaid, * * *."
Under these circumstances, the government of Moorhead, under the revised charter, was a valid de facto government.
2. Counsel for plaintiff also contends that the doctrine ofde facto municipal corporations is applicable only where the whole legal existence of the municipal organization is challenged and not where there is an abortive attempt to revise or reincorporate an existing de jure government. The case of State ex rel. Peterson v. City of Fraser,
As pointed out by counsel for amici curiae, other jurisdictions also have applied the de facto doctrine to amended or revised municipal charters or similar authority.8
In our cases involving private corporations, no distinction has been observed as to whether the challenged defect under the statutes took place in the initial creation of the corporation or in a subsequent amendment.9 In the leading case of East Norway Lake Church v. Froislie,
"* * * The plaintiffs are at least corporations de facto. Such a corporation, at least where there is a law under which a corporation might have been legally formed with such power, is capable of *43 taking and holding property as grantee as well as a corporationde jure, and conveyances to it are valid as to all the world, except the state in proceedings in quo warranto, or other direct proceedings to inquire into its right to exercise corporate franchises. And in an action by it to recover such property, no private person will be allowed to inquire collaterally into the regularity of its organization. This rule is not founded upon any principle of estoppel, as is sometimes assumed, but upon the broader principles of common justice and public policy. It would be unjust and intolerable if, under such circumstances, every interloper and intruder were allowed thus to take advantage of every informality or irregularity of organization."
Richards v. Minnesota Sav. Bank,
We conclude that the city government of Moorhead was empowered to do all acts authorized by the amended charter, adopted in 1947, as effectively as a de jure corporation with a like charter. *44 The ordinances and elections approving the contested bond issues were valid.11
Judgment affirmed.