
    Markley v. Village of Mineral City.
    
      Municipal corporation — Cannot acqtdre land for purpose of donating same to corporation or person — For manufacturing plant— Land so conveyed cannot be recovered.
    
    1. A municipal corporation is without capacity to acquire land by purchase for the purpose of donating the same to a corporation or person as an inducement to build and operate manufacturing plants within the municipality.
    2. Corporate funds paid out in the attempted purchase of land for such purpose are unlawfully expended, and a deed purporting to convey such land is without legal effect.
    3. And where, for the purpose stated, a village has undertaken to purchase and acquire title to laud and to convey it to a person on consideration that he will build and operate manufactories within the village, and afterwards brings its action against such person to set aside the conveyance and obtain a reconveyance of the property, with possession thereof, a court of equity will not lend its aid to either party, but will leave them where they have placed themselves.
    (Decided May 10, 1898.)
    Error to the Circuit Court of Tuscarawas county.
    • The cause of the Village of Mineral City ag’ainst George J. Markley was tried in the circuit court of Tuscarawas county, on appeal from the common pleas, and it is to the judgment of the circuit court that error is prosecuted here by Markley.
    The purpose of the suit was to obtain a decree setting aside a deed of three acres of land which had been made by the Village to Markley, to require him to reconvey the premises to the Village, ■ and for possession of the property. In its petition the Village alleged in substance, that on the first day of March, 1893, it was seized of the land in question; that on that day the council attempted to pass a resolution to convey the real estate to Markley; that on ■ that day the village mayor and the clerk executed and delivered a deed for the premises to him, which was then delivered to the county recorder and recorded. The resolution was not properly passed; the defendant paid no consideration for the land, hut it was attempted to he conveyed to him as a donation to procure him to construct and operate manufacturing plants in accordance with an agreement to that effect of that date, a copy of which is attached to the petition; that the defendant has violated his contract in this that he has not constructed and operated such plants as agreed, and has thus forfeited any rights that he otherwise might have had. The mayor and the clerk were never legally authorized to convey the land; no ordinance was passed giving such authority, nor were any of the necessary legal steps taken to make such attempted conveyance effective. The agreement and alleged deed are illegal and void, and of no effect, and plaintiff is entitled to a reconveyance.
    Markley’s answer contained four defenses. The first admitted the passage of the resolution, and execution, delivery and recording of the deed; admitted the purpose of the deed; admitted the making of the agreement set up in the petition, but denied every other allegation. The second averred actual possession of the land in defendant on and ever since March 1, 1893; denied that the Village was ever seized of the land, or the owner of it; averred that it took from the heirs of one George Lechner, deceased, who were seized in fee simple, a deed of the land and purchased the same for the sole purpose and with the sole intent of donating the same to some person, corporation or association, to induce them to construct and operate manufacturing plants within the Village and not for the legitimate use of the Village, all of which was in violation of the Constitution and laws of Ohio and was ultra vires, and the deed to the Village is void and of no effect. The third averred in terms a compliance with his contract, and alleged that before the commencement of the suit, with full knowledge and acquiescence of the Village, he had expended other large sums, in all $38,000.00, in manufacturing plants, and was then operating them within the Village, and that plaintiff should be barred and estopped of its action. The fourth set up that since the commencement of the action the heirs of George Lechner, deceased (naming them), being the same persons from whom the village obtained its supposed title to the land, have conveyed to the defendant, by their duly executed quitclaim deeds, all their right, title, interest and estate, legal and equitable, in and to the real estate, and that, by virtue of said deeds, defendant is the owner in fee of the real estate, and is still in the occupancy and possession thereof.
    To the second, third and fourth defenses respectively, a demurrer was interposed and sustained.
    The cause was then tried on the issues made by the petition and first defense, which resulted in a finding and judgment as follows:
    “And the court being fully advised in the premises, and on consideration whereof, finds its conclusions of fact separate from its conclusions of law to be as follows: That prior to the 1st day of March, A. D., 1893, and before and at the date of the deed to the defendant for the real estate described in the plaintiff’s petition, the plaintiff had purchased, and then held said real estate, from the heirs of one George Lechner, deceased, who conveyed the same to the plaintiff in fee simple by their deed duly executed and delivered; that said conveyance to the plaintiff was for a valuable consideration, and that said purchase and conveyance by and to the plaintiff from the said Lechner’s heirs were made for the sole purpose and with the sole intent on the part of the plaintiff to donate said real estate to some person, corporation or association of persons, to induce the same to build and operate certain manufactories within said village. And the court further find that said premises are described as follows, to-wit: (Here follows description of premises.) And the court further find that the plaintiff is a municipal corporation duly organized under the laws of Ohio. And the court further find that on said 1st day of March, 1893, said Village of Mineral City, without authority of law thereto, executed and delivered to the defendant an alleged deed of conveyance for the aforesaid premises and that said conveyance was without lawful consideration.
    “And as conclusions of law, it is considered by the court that the said pretended deed of conveyance, in the petition described, from the said The Incorporated Village of Mineral City to said George J. Markley, be and the same is hereby set aside, vacated and declared to be of no force and effect in law to effect or convey the title of said premises to the defendant, and that the title of the said plaintiff to said premises be and the same is hereby confirmed, and it is ordered that a writ issue to the sheriff of Tuscarawas county to put the plaintiff in possession of said premises. And the court further consider that the plaintiff recover of the defendant its costs herein expended. To all and to each of which conclusions of law, orders, judgments and decrees the defendant excepts.”
    
      A. W. Patrick and Neeley <& Patrick, for plaintiff in error.
    Could the plaintiff below, at the dates stated in its amended petition, legally acquire title to, by deed of purchase, and hold real estate for the sole purpose, and with the sole intent on the part of the said plaintiff, of donating the same to some person, corporation, or association of persons, to induce the same to build and operate certain manufactories within the Village of Mineral City? We affirm that it could not.
    The powers of the legislature of Ohio on this subject are limited, and the legislature restrained by section 6, of article 8, of the Ohio Constitution of 1851. Bates’ Revised Statutes of Ohio, volume 3, page 3556. And has been construed by this court to apply to individuals, as well as joint stock companies, corporations and associations. Walker v. Cincinnati, 21 Ohio St., 54; FranklÁn Bank v. Commercial Bank, 36 Ohio St., 355; Wysearner et al. v. Atkinson et al., 37 Ohio St., 80.
    Acting under the limitations and restrictions contained in this section of the Constitution, the legislature of Ohio, by sub-section 34, of section 1692, of Bates’ Revised Statutes of Ohio, Volume 1, page 785, has limited the powers of municipal corporations to acquire by purchase and hold real estate for the legitimate use of the corporation only.
    It is clear that no express power is given to the plaintiff below by this sub-section to acquire, by purchase, real estate to be donated for the purpose set forth in said defense No. 2, and equally clear that no such implied power was intended by the legislature. Bavenna v. Penna. Co., 45 Ohio St., 118; Cooley on Constitutional Limitations, 233, 234; MinPu/rn v. Larue, 23 Howard (U. S.), 435; Bloom v. Xenia, 32 Ohio St., 465; City of St. Louis v. Bell Telephone Co., 9 Am. St. R., 370 (96 Mo., 623.); Chicago Gaslight Co. v. Peoples Gaslight Co., 2 Am. St. R.; 124 (121 111., 530) Dillon’s Municipal Corporations, Volume 1, section 457, pages 450 and 451 (3rd Ed.); Volume 2, section 936, page 936; Dillon’s Mu. Cor., Volume 1, section 89, on page 116 (3rd Ed.).
    The transactions set forth in the amended petition, between The Village of Mineral City and George J. Markley being toltra vires and void, at common law and in equity, the village cannot maintain its action against Markley, and Markley may rely upon such illegality as a defense; both parties being in pari delicto, the court will not aid either of them, but leave them where they illegally placed themselves. Dillon’s Municipal Corporations, section 458, pages 453 and 454 (3rd Ed.).
    The following authorities support our proposition. The State v. Buttles, 3 Ohio St., 309; The Boat'd of Education, etc. v. Thompson et al., 33 Ohio St., 321; The Commissioners v. Andrews, 18 Ohio St., 49; Kahn, Jr., v. Walton et al., 46 Ohio St., 195; Thomas v. Cronise, 16 Ohio, 54; Moore v. Adams et al., 8 Ohio, 375; Boll v. Baguet, 4 Ohio, 400; Bond v. Village of Madisonville, 2 O. C. C., 449, s. c. 1 Circ. Dec., 581.
    
      E. S. Souers, for defendant in error.
    In this case real estate was sought to be conveyed illegally, as it is admitted, and the corporation seeks in this proceeding to recover possession of the property just as it was, and have its title to the same quieted by the decree of the court.
    This proposition of itself we think is so well recognized that it needs no citation of authorities, and has never been questioned in a court of equity; but the plaintiff need not wholly rely on this. The statutes of Ohio provide in distinct terms for such cases in section 21 of the Revised Statutes of Ohio. But it is admitted in this case that the conveyance to Markley was void, and therefore he never had any title from the corporation; but his possession is because of such attempted conveyance and must be illegal. Section 2673c, Revised Statutes of Ohio; 18 Ohio St., 50; 10 O. C. C., 629; s. c. 5 Circ. Dee., 107.
    The plaintiff, the village as such has obtained a conveyance from the Lechner heirs for value; whatever the validity of that title might have been, it was an equitable one at least, and the doctrine could not be invoked against the village by George J. Markley, the defendant below, who holds under it. 7 American and English Encyclopedia of Law, 27; 39 Ohio St., 309.
    The grantee is estopped from denying the grant- or’s title. Addison on Contracts, Volume 2, 314; 29 Bulletin, 317; 25 Bulletin, 391; Addison on Contracts, Volume 1, section 253.
    Cases cited by plaintiff in error upon this proposition were decided before section 21 was amended as it now is, and are not applicable at all.
    The demurrer to the third defense of the answer was properly sustained, because the doctrine of estoppel cannot be invoked against the village. It, like the king, can do no wrong; it has no personal existence; its officers and agents may be procured to plunder and defraud, but the corporation itself as such, cannot do any wrong, and none can be imputed to it, and the party benefited by such plunder, fraud, or misconduct of any such officer or agent can in no way claim any benefits derived therefrom; he cannot retain what he obtained by collusion with such officer or agent. He is legally bound to know that they are exceeding their powers, and in this .case, while the defendant Markley claims to have invested large sums of money at said village, ib is not claimed that one dollar of it was invested in the improvement of these premises, and in fact he did not. Estoppel is a novel mode of supplying a total want of power. Board of Education v. Sinton, 41 Ohio St., 512.
    If estoppel could avail, the courts might be used to enforce any nefarious transaction. 19 Bulletin, 293. Estoppels do not work in favor of a breach of trust. 22 Bulletin, 150; 25 Bulletin, 391; 15 Fed. Rep., 707; 32N. E.,7; 33N. W., 333; 134N.Y., 532.
    The rule of in pari delicto is inapplicable to municipal corporations (56 F., 867), for the same reason already stated, that the village as such could not be guilty, and the guilt of its officers could not be imputed to it.
    A conveyance pendente lite is good between the parties to the conveyance, but can not vary the rights of the litigants. Bennett v. Williams, 5 Ohio, 461; Hamlin’s Lessee v. Bevans, 7 Ohio, Part I, 161.
   Spear, O. J.

The pleadings and findings of fact present this question: Had the Village power, by deed of purchase, to legally acquire title to and hold real estate for the sole purpose and with the sole intent of donating the same to procure the construction and operation of manufacturing plants within its limits?

Two sections of the constitution seem to bear upon the subject. One, section 6 of article 13, makes it the duty of the general assembly, in providing for the organization of municipalities, to restrict their power of contracting debts, and loaning their credit, so as to prevent the abuse of such power. The other, section 6 of article 8, expressly denies to the assembly power to authorize any such corporation to become a stockholder in any joint stock company, corporation or association whatever; or to raise money for, or loan its credit to, or in aid of, any such company, corporation or association. And that this interdict applies as well to the case of an individual, as to the aggregations named, is without question. It is intended to prevent the union of public and private capital in any enterprise whatever.

In considering the attitude of the Village in this controversy, we must look at the entire scheme that was proposed to be accomplished. The first step was to pay out money of the municipality in the purchase of land. The next was a donation of the land so acquired to some one willing to contract, and that person, in turn,, to construct and operate the manufacturing plants for the supposed benefit of the people. The Village was not to share as a partner in the enterprise, nor to loan its credit for that purpose, nor did it do so; but it did propose, by the wrongful use of corporate funds, to make a purchase, intending thereafter to make a gift of the property so to be acquired, both of which things it undertook to do. It cannot be doubted that the scheme taken as a whole was clearly violative of the spirit of the sections of the constitution cited. And, notwithstanding this, the proposition of the Village is that a court of equity should aid it in recovering that which it has undertaken to acquire by a scheme forbidden by law, and has parted with in compliance with a contract which it had no power to make.

It is to be borne in mind that we are dealing with the status and capacity, not of a natural person, but of a corporate one, a mere creature of the law, an artificial entity which, having no natural rights or powers, exists and operates only by virtue of the law of its creation. And we suppose it to be settled that our municipalities have such capacities and powers, and such only, as are expressly granted, and such as may be implied as essential to carry into effect those which are expressly granted, and that doubtful claims to power are resolved against the corporation. Cooley’s Con. Lim-, 231, 232; Minturn v. Larue, 23 U. S., 435; St. Louis v. Bell Telephone Co., 96 Mo., 623; I Dillon’s Mun. Corp., sections 89, 457; 2 Dillon’s Mun. Corp., section 936; Ravenna v. Penna. Co., 45 Ohio St., 118. So that, the question resolves itself into this: Has the power been clearly granted to villages to accept title to land for the express purpose of donating it for the encouragement of local improvements? If not, is such power to be implied as essential to carry into effect other clearly granted powers?

The right of a municipality to acquire property, is given by paragraph 33 of section 1692, Revised Statutes, in these words: “To acquire by purchase, or otherwise, and to hold real estate, or any interest therein, * * * for the use Qf the corporation, and to sell or lease the same.” Here is specific mention of the purpose for which land may be acquired. The controlling idea is that the property must be for the use of the corporation. This idea of use implies power to hold; it implies, beyond this, a jus disponendi, a power to deal with the property. If such power does not exist, then its attempted acquisition would be an idle performance. The two ideas are inseparable; if the municipality is without power to hold and dispose of the property, then, by the same token, it is without power to acquire. And we are necessarily confined, in treating- of the purpose of acquisition, to the express purpose, viz: ‘ ‘The use of the corporation,” for, applying the maxim, expressio unius est exclusio alte?‘ius, all other purposes are excluded. It would follow, therefore, that if the land be for the use of the municipality, for some legitimate corporate purpose, then power is given by the clause quoted to acquire it, and necessarily power to hold and dispose of it. But if it be not for the use of the corporation, that is, for a use to which the corporation may lawfully devote it, then this clause gives no capacity to receive or power to hold. Another paragraph of the same section gives power to accept bequests, but that is not involved here, and so far as we are aware, there is no general power given to acquire real estate except by the paragraph quoted. Not only, therefore, is there no clear expression of a purpose to give power to acquire and hold real estate for speculative purposes, but the provisions upon the subject, statutory and constitutional, clearly establish that no such power is intended. The chief function of a municipality being to regulate local governmental affairs because they may be dealt with better by the people interested than by a distant central power, we cannot assume a purpose to invest such corporation with the powers or capacities of individuals, or of private corporations, for objects not pertaining to municipal rule, since that would be to pervert the institution from its legitimate ends, and to require of it duties which it is not adapted satisfactorily to execute, and which are not necessary to enable it to discharge the appropriate functions and duties of local administration. It follows that no such power is to be implied as essential to carry into effect the power which is in terms given.

If we are right in these conclusions, then it results that the attempted purchase by the Village of the Lechner heirs, gave to the municipality no title to the land, either legal or equitable.

This being the situation, how does it leave the parties? Markley is in possession. The attempted deed of the Village gave him no title, but, on the other hand, the Village has no title to be restored. It cannot prevail except through the medium and with the aid of the illegal transaction to which it was a party, and hence it can have no standing in a court of equity because it asks affirmative relief under circumstances showing that it is itself in the wrong. The defendant is equally in pari delicto. The court will, therefore, refuse aid to either, but leave them where, by their illegal acts, they have placed themseLves. Thomas v. Cronise, 16 Ohio Rep., 54; The State v. Buttles, 3 Ohio St., 309; Commissioners v. Andrews, 18 Ohio St., 49; Board of Education v. Thompson, 33 Ohio St., 321; Kahn v. Walton, 46 Ohio St., 195.

It is insisted that Markley, having taken a deed from the Village, is estopped to deny the title of his grantor. But Markley does not attempt to stand on that title. He distinctly repudiates it. But if he did, the contract which the plaintiff itself pleads, and the finding of the circuit court, disclose fully the illegal character of the transaction.

Attention is called to section 21, Revised Statutes, and the proposition is advanced that the attempt of the Village to convey to Marldey maj be treated as an illegal loan or deposit of the property of the Village, which, by this section, it is authorized to recover back. The section cannot apply. We have already found that the land in question was not the property of the Village. The spirit, if not the letter, of this statute was violated by the act of the municipal officers in unlawfully paying the money of the Village to the Lechner heirs, not in their futile attempt to convey what the Village did not own.

The case of the Village seems to rest upon the proposition that the municipality, while it is not bound by the illegal acts of its officers, nevertheless may affirm in part what they did, and thus reap whatever benefit may result from their acts. The proposition is not tenable. Its weakness lies in the unfounded assumption that the illegality of the transaction consists wholly in the unauthorized acts of the agents. We have already found that the scheme could have no legal basis because of the inherent incapacity of the municipality to enter into it.

But it is insisted that to deny the relief sought by the Village would be to put it in the power of village authorities to make wrongful use of corporate funds, and then refuse relief to the wronged corporation. We think not; at least not necessarily so. If the vendors, at the time of the attempted conveyance to the Village, and the receipt by them of the alleged purchase money, were aware of the purpose of the village authorities in their attempt to acquire the property, no reason is perceived why an action may not he maintained to recover of them the money thus illegally appropriated, and failing that remedy, it is not impossible that the village officers who thus undertook to make unauthorized use of the village funds, may be liable. Of course, however, we do not undertake to decide these questions. They are not involved in this controversy, nor are the proper parties before us.

Judgment of the circuit court reversed and petition below dismissed.

Beversed.  