Opinion
Hearing Granted by Supreme Court Oct. 3, 1927.
Appeal from Superior Court, Los Angeles County; C. W. Guerin, Judge.
Application by A. C. Brown and others against the City Council of the City of Long Beach and others for a writ of certiorari to review the acts of the defendants in connection with an annexation election. From an order denying the writ, petitioners appeal. Reversed. COUNSEL
Bauer, Wright & MacDonald and Alexander MacDonald, all of Los Angeles, for appellant Barnes.
L. D. Uhlman, of Long Beach, for other appellants.
Bruce Mason, City Atty., and Denio & Hart, all of Long Beach, for respondents.
Jess E. Stephens, City Atty., and Lucius P. Green, Asst. City Atty., both of Los Angeles, for City of Los Angeles, amicus curiæ .
OPINION
HOUSER, J.
This is an appeal from an order denying a petition for a writ certiorari.
It appears that, in accordance with the provisions of the "Annexation Act of 1913," as amended (Stats. 1915, p. 305; Stats. 1917, p. 26), an "initial" ordinance was passed by the city council of the city of Long Beach by which an election was noticed and held, by virtue and in pursuance of which certain territory was presumably annexed to said city. Thereupon the appellants herein sought, but were refused by the Attorney General of this state, a writ of quo warranto for the purpose of testing the ultimate question of the validity of the annexation proceedings. Thereafter, by means of an application for a writ of certiorari, petitioners applied to the superior court for substantially the same relief. After a hearing upon such application the issuance of the writ was denied; whereupon the petitioners therein appealed to this court from the order of the superior court in the premises.
The record shows that the territory sought to be annexed, in addition to comprising a comparatively small area of an inhabited community, included therein a strip of land (commonly and hereinafter designated as a "shoe-string strip") 100 feet in width, which connected at one end thereof with one of the boundaries of the city of Long Beach, and extended therefrom in the same width, in an irregular line, encircling or encompassing an uninhabited territory of some 33 square miles, and finally again connecting with another of the boundaries of said city.
The law under which the proceedings herein were instituted and which authorizes the annexation by a city of territory lying contiguous to the municipality proposing such annexation is to be found in the Statutes of 1915, p. 305. The provision of such statute having an important bearing upon the decision of this matter is as follows:
"The boundaries of any municipal corporation may be altered and new territory annexed thereto, incorporated and included therein, and made a part thereof, upon proceedings being had and taken as in this act provided. Any such new territory so proposed to be annexed to a municipal corporation must be contiguous thereto. ***"
In addition to the statutory requirement that any "new territory" proposed to be annexed by a municipality must be "contiguous thereto," another prerequisite (under the procedure adopted by respondents), as determined by a judicial construction of existing statutes, is that such "new territory" must be inhabited. Capuchino Land Co. v. Board of Trustees, etc., 34 Cal.App. 239, 167 P. 178; People v. City of Lemoore, 37 Cal.App. 79, 174 P. 93; People v. City of Monterey Park, 40 Cal.App. 715, 181 P. 825.
The petition in the superior court for the writ of certiorari contains allegations which in their ultimate effect show that within the intent of the statute, and the decisions by the court of this state, in no proper sense could the entire territory embraced solely within the "shoe-string strip," which encompassed and imprisoned 33 square miles of unincorporated and uninhabited territory, be considered either as inhabited, or as contiguous to any portion of the area included within the existing boundaries of the city of Long Beach, or even as contiguous to that portion thereof proposed to be annexed which in reality was inhabited; also, that at no time did the city council of said city ever find, ascertain, or determine that such questioned territory was either inhabited, or that it was contiguous either to the city of Long Beach as then constituted, or contiguous to that portion of the admittedly inhabited area proposed to be annexed. Among other things, it also appears that the "shoe-string strip" sought to be annexed does not constitute a single body of territory lying contiguous to said city of Long Beach, or to territory contiguous thereto, but in fact, by reason of natural boundaries and diversity of uses, is composed of 82 separate and distinct parcels or tracts of land; that of said 82 parcels, on each of 72 parcels thereof no person resided, and as to the remaining 10 parcels none of them was inhabited by more than 10 persons; that in several of said 82 parcels the line of the "shoe-string strip" cut houses into two parts, and in other cases divided houses from other buildings on such parcels of land; and that some of the uninhabited parcels of land consisted of portions of rights of way of different railroad companies or of portions of county highways. However, it also inferentially appears that each of the connecting ends of the "shoe-string strip" is contiguous either to an existing boundary of the city of Long Beach, or to a parcel of "inhabited" territory. This being an appeal from an order of the superior court denying the issuance of the writ of certiorari, so far as the decision by this court is concerned the merits of the original controversy are not here involved. The matter stands in a situation similar to that presented by a demurrer to a complaint. All the material facts well pleaded in the petition for the writ must by this court be presumed to be true.
The principles of law applicable to the situation presented by the assumed facts herein are considered in each of the cases of Capuchino Land Co. v. Board of Trustees, etc., 34 Cal.App. 239, 167 P. 178, People v. City of Lemoore, 37 Cal.App. 79, 174 P. 93, and People v. City of Monterey Park, 40 Cal.App. 715, 181 P. 825, and therein in effect it is ruled that no validity can attach to a proposed annexation by a city of new territory in the face of a situation such as it set forth in the petition and to which reference has been had herein.
In the Capuchino Case (34 Cal.App. 239, 167 P. 178) the territory proposed to be annexed consisted of two separate parcels, one of which was "inhabited" and contiguous to the boundaries of the city seeking the annexation, and the other parcel, although "uninhabited," adjoined the first parcel. It was held that in such circumstances the proceedings for annexation were invalid.
In the Lemoore Case (37 Cal.App. 79, 174 P. 93) the following language occurs:
"We consider it manifestly unjust and inequitable under the circumstances described by the complaint for the electors residing in the two inhabited parcels Nos. 4 and 9 to determine the annexation of the other parcels against the will of their owners."
In the case of People v. Monterey Park, 40 Cal.App. 715, 181 P. 825, where this court considered a situation in many respects similar to that presented herein, it is said, in part:
"On these facts it is too plain to admit any doubt that the annexation proceedings were on their face an attempt by the flimsiest subterfuge to treat as inhabited various uninhabited tracts of land, and to annex them to the city of Alhambra under the form of proceedings prescribed by a statute which applies solely to annexation of inhabited territory. It is likewise clear that such proceedings were a palpable fraud upon the inhabitants of the community through whose lands the cord of connection [likewise a ‘shoe-string strip’] was run from the land adjoining Alhambra to the limits of the new sewer farm. The annexation petition showed on its face that several of the parcels included were public highways and that therefore they could not be inhabited territory."
On the face of the record, therefore, we have the legally admitted facts that, as regards the provisions of the statute and the decisions of the courts of this state, the city of Long Beach was not directly authorized to annex to itself the territory included within the "shoe-string strip."
But the point is raised by respondents that the writ of quo warranto is the exclusive remedy, if any, that is available to the petitioners, and especially that certiorari will not lie in the instant case. Many authorities bearing generally upon the question are submitted by respondents in support of their contention. On the other hand, several other equally eminent and fully as persuasive authorities are cited by appellants which indicate that at least in the circumstances of the instant case certiorari is a proper remedy. As may hereinafter become apparent, a consideration of the appropriateness of either of such remedies, as applied generally to conditions of a nature similar to that here involved, becomes unnecessary.
It is conceded by both appellants and respondents that the act of adding new territory to a city amounts to a reincorporation of the municipal corporation. It is also at least inferentially admitted by respondents that as to the "shoe-string strip" herein involved, because of its state of uninhabitancy and its noncontiguity features, as hereinbefore referred to, a corporation de jure was impossible of organization. The result is that, as affecting such "shoe-string strip," the most that may possibly be claimed by respondents is that by the perfecting of the annexation proceedings in presumably attempted compliance with the provisions of the statute, and, by user, the municipal corporation acquired a de facto existence. With so much in mind, respondents urge that under the provisions of section 803 of the Code of Civil Procedure and section 358 of the Civil Code the only remedy available to petitioners was by quo warranto, and that, by virtue of the refusal of the Attorney General of this state to institute such a proceeding, the petitioners had no standing in court and were entitled to no relief. The language of the statutes on which respondents thus rely is as follows:
"An action may be brought by the Attorney General, in the name of the people of this state, upon his own information, or upon a complaint of a private party, against any person who usurps, intrudes into, or unlawfully holds or exercises any public office, civil or military, or any franchise, or against any corporation, either de jure or de facto, which usurps, intrudes into or unlawfully holds or exercises any franchise, within this state. ***" Section 803, Code Civ. Proc. "*** The due incorporation of any company claiming in good faith to be a corporation under this part, and doing business as such, or its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which such de facto corporation may be a party; but such inquiry may be had at the suit of the state on information of the Attorney General. ***" Section 358, Civ. Code. While by no means conceding that respondents’ point is well taken, but, to the contrary, resisting the claim with much vigor and earnestness, supported by eminent authority, appellants contend that, if it may be shown that, far from being a corporation de jure (which is admitted by respondents), the municipality in its attempted reorganization as a corporation does not constitute a corporation de facto, the statutes and authorities upon which reliance is placed by respondents have no application.
The first question, then, in that connection to be determined is whether the situation as presented warrants the conclusion that as to the "shoe-string strip" the city of Long Beach has a de facto existence as a municipal corporation.
By the definitions as contained generally in the authorities, and as stated by authors well versed in the law, a de facto corporation may exist only where its organizers, although failing in some particular, in good faith have attempted to comply, and have actually made a colorable compliance, with the requirements of a valid law authorizing the formation of the corporation, and thereupon such organization has entered upon the transaction of the authorized business of the corporation.
It thus appears that, aside from the requirement of user of the corporate franchise-which in the instant case, if not specifically admitted by appellants, is not denied by them-the two remaining essential elements in the creation of a corporation de facto, to wit, a valid law under which even a corporation de jure might be created, and an attempted compliance in good faith with the requirements of the law by the organizers of the corporation, remain for consideration.
It would seem a superfluity to state that, if under the provisions of an enabling statute a corporation de jure may not be created, the creation of a corporation de facto, which in its organization admittedly must be lacking in some particular regarding the requirements of the impotent statute, would be an utter impossibility. So that, if it be accepted as final that which is apparently conceded by respondents, to wit, that after even a substantial compliance by the organizers of a municipal corporation with the formal requirements of the statute a corporation de jure did not result, it would inevitably follow that no corporation de facto could come into being as an outcome of the acts of the organizers, which in the instant case admittedly amounted to something less than a full and complete compliance with the full demands of the statute. But aside from such admission, with its attendant consequences, it may be useful to inquire somewhat into the essential principles underlying the existence of a de facto corporation. Considering, then, first, the necessity of a valid law under the provisions of which the possibility of the creation of such a corporation may be had, it will be remembered that by the express terms of a part of the statute, as well as by judicial construction of other provisions thereof, before a municipal corporation may be reorganized, as affecting territory to be added to a municipal corporation already in existence, there must be present the two features of inhabitancy of the proposed added territory, together with its contiguity to the existing territory of the municipality proposing the annexation. Such being the requirements of the statute under whose provisions the annexation of the "shoe-string strip" was attempted, and by virtue of the facts set forth in the petition in the lower court for the writ of certiorari (which in this proceeding we are bound to assume as true), to the effect that as to such "shoe-string strip" neither the element of inhabitancy nor contiguity thereof was present, and invoking the maxim of construction of a statute that the inclusion of one thing excludes others, the conclusion must be reached that under the provisions of the statute under consideration the organization of a municipal corporation de facto, as affecting the territory embraced within the "shoe-string strip," was a legal impossibility. The law under which the respondents proceeded contains no provisions which permit the annexation to a city of "new territory" which is uninhabited and not contiguous either to the existing boundaries of such city or contiguous to a portion of the "new territory" sought to be annexed.
"It is fundamental that even a corporation de facto cannot exist in the absence of a law authorizing such corporation. On the same theory, for a corporation de facto to exist, the particular purpose for which such corporation is attempted to be organized must be authorized by law. That is, if a statute authorized corporations for certain specified purposes, a corporation organized under such a statute for a different purpose cannot be a de facto corporation. Thus, where a rifle club was organized under a statute authorizing corporations for scientific purposes only, it was held not to be a corporation de facto, as the purpose for which it was organized was not within the statute. So, in Indiana, a corporation organized for the purpose of buying and selling bonds was held not to be a de facto organization under a statute authorizing corporations for the purpose of buying and selling merchandise and conducting mercantile operations, as the term ‘merchandise’ did not include bonds"-citing authorities. Thompson on Corporations (3d Ed.) § 253.
If no law existed under the provisions of which the municipality of Long Beach might have reorganized in the manner in which it attempted to do so, it is manifest that no corporation, de facto or otherwise, could result from its acts in the premises.
The additional element of good faith in the attempted compliance by the organizers of the proposed corporation with the demands of the statute, so essential to the creation of a municipal corporation de facto, also requires some attention. Every one is presumed to know the law. Consequently the intending reorganizers of the municipal corporation, as affecting the proposed "new territory," knew, or should have known, that unless such territory within the meaning of the statute was inhabited and that it was either contiguous to the boundaries of the existing municipal corporation or contiguous to an inhabited and contiguous portion of the territory proposed to be annexed to such municipality, so far as such uninhabited and noncontiguous territory was concerned, no corporate existence could be created. Notwithstanding such assumed knowledge on the part of the intending reorganizers of the corporation, and in what must be legally regarded as a deliberate and intentional violation of the law as applied to the facts, such reorganizers proceeded with an attempted compliance with the remaining requirements of the statute. In such circumstances, it is plain that the term "good faith," as applied to the acts of the organizers, has no application. It necessarily results that both because there was no law under which the municipal corporation was authorized to reorganize as it attempted to do, and because in its attempted reorganization the element of good faith was lacking, notwithstanding the user by the pretended corporation of corporate powers, no municipal corporation de facto came into legal existence.
The effect of the ruling in the case of Brandenstein v. Hoke, 101 Cal. 131, 35 P. 562, is that, where an attempted organization of a corporation is had under an unconstitutional statute, such organization does not constitute a corporation de facto and its existence is even subject to collateral attack. Likewise, in Martin v. Deetz, 102 Cal. 55, 36 P. 368, 41 Am. St. Rep. 151, it is held in effect that the existence of an organization claiming to be an organization de facto, but which has no legal standing as such, may be attacked collaterally in a private action.
The question next to be considered is: Assuming the nonexistence of a municipal corporation de facto, together with the admitted fact that the remedy to petitioners by means of a writ of quo warranto was refused and denied them by the Attorney General of the state, is the writ of certiorari available in the premises?
"A writ of review may be granted *** when an inferior tribunal, board, or officer, exercising judicial functions has exceeded the jurisdiction of such tribunal, board, or officer. ***" Section 1068, Code Civ. Proc.
That the various acts of the city council of the city of Long Beach in connection with the annexation proceedings here under consideration, as set forth in the petition presented by petitioners to the lower court, were done in the exercise of a judicial function, is illustrated in the case of Capuchino Land Co. v. Board of Trustees of the City of San Bruno, 34 Cal.App. 239, 167 P. 178. It is there held that the initial action of the board of trustees of a city (or what in the instant case would be the city council) in determining the sufficiency of a petition for annexation of "new territory" to a city "was essentially judicial in its nature, and hence was and is the proper subject of review in this proceeding." And the following authorities were cited as sustaining such conclusion: Stumpf v. Board of Supervisors, 131 Cal. 364, 63 P. 663, 82 Am. St. Rep. 350; Great Western Power Co. v. Pillsbury, 170 Cal. 180, 149 P. 35; People v. Oakland, 123 Cal. 598, 56 P. 445; Levee District v. Farmer, 101 Cal. 178, 35 P. 569, 23 L. R. A. 388; People v. Ontario, 148 Cal. 625, 84 P. 205.
Assuming that, in acting upon the petition presented to the city council of the city of Long Beach praying for the holding of an election for the purpose of determining whether the proposed "new territory" should be annexed to said city, the said city council was exercising a judicial function, and that, because of the assumed facts herein and under the terms of the statute as hereinbefore set forth, no jurisdiction existed in said city council as to such "new territory" hereinbefore referred to as the "shoe-string strip," it would follow that the writ of certiorari would lie.
The case of Miller & Lux v. Board of Supervisors, 189 Cal. 254, 260, 274, 208 P. 304, 307, is also authority for the proper use of the writ of certiorari in the instant case. It is there said in part:
"It is contended that under this amended section the only way in which the validity of the order and of the formation of the district can be inquired into is in a quo warranto proceeding instituted by the Attorney General. The difficulty with respondents’ contention in that regard is that the jurisdiction of this court and of the superior court to entertain writs of review is given by the Constitution (art. 6, § § 4, 5), and this power cannot be taken away by the Legislature. Cameron v. Kenfield, 57 Cal. 550; Farmers’ Union v. Thresher, 62 Cal. 407; City of Tulare v. Hevren, 126 Cal. 226, 58 P. 530; Pacific Telephone, etc., Co. v. Eshleman, 166 Cal. 640, 652, 137 P. 1119, 50 L. R. A. (N. S.) 652, Ann. Cas. 1915C, 822; Great Western Power Co. v. Pillsbury, 170 Cal. 180, 186, 149 P. 35. *** The respondents contend that where the district has been exercising the powers of a de facto corporation, after the electors of the district have voted for incorporation, it is too late to inquire into the validity of the order calling the election by a writ of review. There is nothing in this contention."
It is suggested by respondents that the denial of the writ by the lower court was wholly discretionary, and consequently an act not subject to review by this court. But it is clear that, before a discretionary power may be exercised, some opposing facts or some sound legal reason must exist upon which such power may act. In the instant case, necessarily all the facts tend in favor of the issuance of the writ, and the law as applied thereto indicates no other course. In such circumstances the principle of judicial discretion has no application.
It is ordered that the order from which the appeal is herein taken be and it is reversed.
We concur: CONREY, P. J.; YORK, J.