Richmond & West Point Land, Navigation, & Improvement Co. v. Town of West Point

| Va. | Jun 17, 1897

Keith, P.,

delivered the opinion of the court.

In the summer of 1887 the town of West Point, Va., purchased certain lots of land situated within its corporate limits from the Richmond and West Point Land, Navigation, and Improvement Company, for which it agreed to pay in the aggregate the sum of $4,175, which was divided into three notes of $1,000 each, and a note of $1,175, all dated the 28th of September, 1887, and falling due respectively on the 1st of August, 1888, the 1st of August, 1889, the 1st of August, 1890, and the 1st of August, 1891. Default having been made in the payment of these notes when they severally fell due, the plaintiff in error, in April, 1892, instituted an action in the Circuit Court of King William county against the town of West Point, for the recovery of the debt evidenced by the notes aforesaid. To the declaration there was a demurrer, which was overruled, and then by leave of court the plaintiff, in December, 1892, filed an amended declaration, to which, and to each count thereof, the defendant again demurred, and the demurrer was again overruled.

We are of opinion that the cause of action is properly stated, and there is no error in the judgment of the Circuit Court in overruling the demurrer.

The defendant thereupon pleaded nil debet, payment, and non est factum. The plaintiff demurred to the plea of non est factum, and also moved to strike it out, which demurrer and motion the court overruled, and the plaintiff excepted, and thereupon issues were joined upon the several pleas.

The instrument sued on being a note, non est factum was not a proper plea, but its admission worked no injury to the plaintiff inasmuch as every defence relied upon by the defendant could have been made under its plea of nil debet. The ruling of the court, therefore, while erroneous, ’s not a ground for reversal. It comes within the class known as “harmless errors.”

Neither party requiring a jury, and the whole matter of law and fact being submitted to the court, a judgment was rendered for the defendant, which the plaintiff moved to set aside. This motion the court overruled, and thereupon the plaintiff excepted and tendered its bill of exceptions, which was duly signed, and, upon its petition, a writ of error was awarded by one of the judges of this court.

In the oral argument and in the briefs a good deal was said with respect to the power of municipal corporations to bind themselves by the execution of commercial paper, but the law in regard to this particular form of obligation need not be specially enquired into, because the evidences of debt in the case before us are promissory notes, not negotiable. It was strongly urged by counsel for the defendant in error that the town of West Point had no authority to make the contracts sued on. In this view we cannot concur. Municipal corporations have the power to contract and be contracted with, and to purchase and hold real estate, and where the charter is silent, the limit of the capacity to purchase is that the land so purchased must be necessary to the proper exercise of the powers conferred upon it, or essential to the purposes for which it was created. The purchase may be upon a credit, for, while a municipal corporation may not borrow money and issue its obligations therefor without authority of the Legislature, it may purchase property necessary for the discharge of the duties and functions reposed in it, and as a consequence of that power to purchase, may bind itself for the payment of the purchase money, and execute all proper evidences of debt except a negotiable instrument. This subject was carefully investigated, and the conclusions reached by the court presented in a very able opinion by Judge Selden in the case of Ketchum & others v. City of Buffalo, 14 N. Y. 359. It is there said: “A municipal corporation, therefore, may, at common law, unless restrained by some statute, purchase and hold all such real estate as may be necessary to the proper exercise of any power specifically conferred, or essential to those purposes of municipal government for which it is created.” And, in speaking of the right to purchase upon a credit and bind itself by bond for the payment of the purchase money, it is said, at page 363: “The power of corporations in general to make contracts and incur debts in the prosecution of their legitimate business, and to give their promissory notes for such indebtedness, would seem to be firmly established, not only by universal practice, but by repeated judicial decisions. * * * Sound reason, no less than authority, forbids that it should be held that a corporation may not incur a debt in the exercise of its appropriate powers, or may not purchase, upon a credit, property which, is required for purposes authorized by its charter. * *'* Having the power

to make the purchase, it had authority to do so upon a credit to which there was no limit but its owm discretion, and the right to give the bonds in question would follow as a necessary consequence, for power to contract a debt must carry with it power to giie a suitable acknowledgment of the indebtedness.” The distinction is very forcibly presented in that case between the right of a corporation to purchase property upon a credit and bind itself by'a bond or promissory note for its payment, and the right to borrow money in order to buy the same property. It is conceded that the power to contract to pay A. $10,000 at the end'of a year for certain work, and the power to borrow $10,000 of B., upon a credit of a year, for the purpose of paying A. for doing the work, might seem at first view, to be substantially identical. The amount is the same, and the time of payment the same; the creditor only is different. But, says the court: “A little examination will show that there is a very material difference between the two. If the power of the corporation to use its credit is limited to contracting directly for the accomplishment of the object authorized, by law, then the avails or consideration of the debt created cannot be diverted to any illegitimate purposes. The contract not only creates the fund, but secures its just appropriation. On the contrary, if the money may be borrowed, the corporation will be liable to repay it, although not a cent may ever be applied to the object for which it was avowedly obtained.”

To the same effect see the opinion of Justice Bradley in Nashville v. Ray, 19 Wall. 468" court="SCOTUS" date_filed="1874-03-30" href="https://app.midpage.ai/document/mayor-v-ray-88886?utm_source=webapp" opinion_id="88886">19 Wall. 468; 1 Dillon on Mun. Corp. (3d ed.), sec. 125, 561, 562, 56-3.

In Nashville v. Ray, supra, the power of municipal corporations to purchase property and to give evidences of indebtedness therefor is expressly recognized, but their tight to borrow money and to bind themselves to its payment by commercial securities, unless authorized to do so by the Legislature, is expressly denied as “being too dangerous a power to be exercised by municipal bodies indiscriminately managed by persons whose individual responsibility is not at stake. * * JSTo such power ought to exist, and no such power does exist, unless conferred by legislative enactment either expressly or clearly implied.”

We are of opinion, therefore, that the town of West Point could lawfully purchase and hold all the real estate necessary to the proper exercise and enjoyment of the powers conferred upon it, and as an incident of this power to purchase could bind itself by the execution of evidences of debt such as are sued on in this case.

We are further of opinion that the plea of nil debet put the whole of the plaintiff’s case in issue, and that the burden was upon the plaintiff to show that the real estate sold by it to the defendant in error was reasonably necessary to the exercise by the defendant in error-of the powers and duties conferred upon it by the Legislature in its charter. This is a question of fact, the decision of which depends upon the testimony, and the Circuit Court upon that issue found for the defendant. Its judgment is before us for review upon this writ of error as upon a demurrer to the evidence, the nature and effect of which have been so frequently seated that it would be super - flous to do more than to refer to some of the cases. Trout v. Va. & Tenn. R. R. Co., 23 Gratt. 619; Creekmur v. Creekmur, 75 Va. 430; and Johnson v. C. & O. R. R. Co., 91 Va. 171" court="Va." date_filed="1895-03-14" href="https://app.midpage.ai/document/johnsons-admr-v-chesapeake--ohio-railway-co-6809264?utm_source=webapp" opinion_id="6809264">91 Va. 171.

Applying this rule of decision we cannot say that the judgment of the Circuit Court was without evidence, or so plainly against evidence as to require its reversal, and it must therefore be affirmed.

Affirmed.