176 F. 86 | 8th Cir. | 1910
This is an appeal from a decree which sustained a demurrer to and dismissed the bill exhibited by H. O. Tut-tle, R. B. Tuttle, and George Q. Bruce, partners as Tuttle Bros. & Bruce, to avoid a contract between them and the city of Cedar Rapids,
Counsel for the complainants insist that the contract here in question is voidable, and that its performance should be enjoined, because, as they aver, it was without consideration. To the answer that one covenant or promise is a lawful consideration for another, and that for the covenant of the complainants to cause the $2,250 to be paid to the city the latter agreed (1) to approve and certify the plat, (2) to accept the dedication of the streets and alleys shown thereon, and (3) to expend the $2,250 in grading and to grade the streets and alleys, they reply that the first covenant of the city provided no consideration for the agreement, because it was the duty of the city to approve and certify the plat without compensation, that it refused to do so until it extorted from the complainants their agreement to pay it this $2,250, and that these acts rendered the entire contract immoral, illegal, and against public policy, and that as to the other covenants of the city it had no lawful authority to make them. It was undoubtedly the duty of the city to accept and certify the plat, and if its covenant to do so had been the only consideration for the agreement there is no doubt that it would be without consideration and void. But the city owed the plaintiffs no duty to accept the streets and alleys, to grade them, or to expend the $2,250 in the work of grading them (Code Iowa 1897, § 751); and its covenants to do these tilings provided ample consideration to sustain the agreement, unless they were ultra vires.
The truth is that a city has two classes of powers — the one legislative or governmental, by which it controls its people as their sovereign; the other proprietary or business, by means of which it acts and contracts for the private advantage of the inhabitants of the city and of the city itself. In the exercise of powers which are strictly governmental or legislative the officers of a city are trustees for the public, and they may make no grant or contract which will bind the municipality beyond the terms of their offices, because they may not lawfully circumscribe the legislative powers of their successors. But in the exercise of the business powers of a city the municipality and its officers are controlled by no such rule, and they may lawfully exercise these powers in the same way, and in their exercise the city will be governed by the same rules, which control a private individual or a business corporation under like circumstances. In contracting to accept the dedication of streets and alleys, to establish their grades, and to grade them, a city is exercising, not its governmental or proprietary, but its business powers. The purpose of such contracts is not to govern the inhabitants of the city, but to secure a private benefit for the city and its people. The grant to this city of the power to accept the dedication of, to improve, and to repair the streets and alleys, within its limits gave it plenary power to make the covenants in question in this case, or any other reasonable agreements relating to these subjects. Illinois Trust & Savings Bank v. City of Arkansas City, 76 Fed. 271, 281, 282, 22 C. C. A. 171, 181, 182, 34 L. R. A. 518, and cases there cited; Omaha
Water Company v. City of Omaha, 147 Fed. 1, 5, 77 C. C. A. 267, 271, 12 L. R. A. (N. S.) 736; Pike’s Peak Power Co. v. City of Colorado Springs, 105 Fed. 1, 11, 44 C. C. A. 333, 343.
There was nothing evil in itself or against public policy in the agreement. Concede that the.city’s refusal to approve and certify the plat
The result is that by the contract in hand the city gave three covenants, one of which was valueless and two of which were legal and valuable, for tlic plaintiffs’ promise that the $3,250 should be paid to the city; the plaintiffs were not induced to make this agreement by fraud, mistake, or accident; they knew it was the duty of the city to accept and certify the plat without compensation when they signed the contract; the covenants to accept and grade the streets and alleys constituted ample consideration for the plaintiffs’ undertaking; and there is no equitable ground upon which a decree to avoid this contract or to enjoin its performance can lawfully stand.
The decree which dismissed the bill must accordingly be affirmed, and it is so ordered.