Opinion
No. 566906.
1946-12-30
CITY OF CLEVELAND v. VILLAGE OF CUYAHOGA HEIGHTS et al.
Lee C. Howley, Director of Law, the City Law Department and James M. McSweeney, Asst. Director of Law, the City Law Department both of Cleveland, for plaintiff. Walter & Haverfield, of Cleveland, for defendants.
Action by the City of Cleveland against the Village of Cuyahoga Heights and others, for injunction.
Petition dismissed.
For opinion of the Court of Appeals of Ohio, Cuyahoga county, in favor of defendants, on subsequent trial de novo, see 81 Ohio App. 191, 75 N.E.2d 99.Lee C. Howley, Director of Law, the City Law Department and James M. McSweeney, Asst. Director of Law, the City Law Department both of Cleveland, for plaintiff. Walter & Haverfield, of Cleveland, for defendants.
McNAMEE, Judge.
On or about the 27th day of August, 1945, the Village of Cuyahoga Heights commenced the work of constructing a sewer within its territorial limits which it proposes to connect with the southerly intercepting sewer of the City of Cleveland located in said Village. When the Village had completed about 62% of the construction of said sewer, the City instituted this action seeking to enjoin the Village from making connection with the City's southerly intercepting sewer on the alleged ground that the Village had undertaken and was prosecuting said work in violation of an order of the Health Department of the State of Ohio dated November 4, 1944. This order by its terms required the Village as a condition precedent to the commencement of the work to secure the approval of the City of Cleveland as well as the approval of the Department of Health of the State of Ohio to the detailed plans of construction.
The answer of the defendants admits the issuance and terms of the order of November 4, 1944, but avers that said order was superseded by an order subsequently made by the Department of Health of the State of Ohio on March 26, 1945, which omitted the requirement that the Village submit the detailed plans of construction to the City for its approval.
By way of further answer the defendants allege that on August 11, 1916, the City and the Village of Newburgh Heights entered into a contract by the terms of which the City obtained the right to extend its southerly intercepting sewer into and through said Village, in consideration whereof the City agreed that the sanitary sewers of the Village of Newburgh Heights could be connected with the City's intercepting sewer, and that the City would dispose of all sewage of the Village free of cost or expense to the latter. Defendants further allege that in the year 1919 the territory now embraced within the limits of Cuyahoga Heights became detached from Newburgh Heights and that pursuant to said detachment proceedings and the circumstances to be hereinafter more fully recited, the Village of Cuyahoga Heights succeeded to all the rights and benefits of the contract of August 11, 1916. Defendants further aver that under and by virtue of said contractual rights the defendant Village may, without further permission or approval of the City, connect the sewer presently under construction with the southerly intercepting sewer of the City of Cleveland.
In its Reply the City admits the execution of the contract of August 11, 1916, with the Village of Newburgh Heights and the terms thereof but asserts that said contract is ultra vires and void. By way of further reply the City alleges that if said contract was valid when executed no rights or benefits arising thereunder passed to or vested in the defendant Village of Cuyahoga Heights after its detachment from the Village of Newburgh Heights.
While there are other allegations in the pleadings, the foregoing statement summarizes the points of dispute which present the issues to be decided.
The two principal issued to be determined are, first, is the contract of August 11, 1916, between the City of Cleveland and the Village of Newburgh Heights a valid and binding agreement, and, second, if said contract is a valid agreement between the original parties, did the Village of Cuyahoga Heights succeed to the rights and benefits therein conferred upon the Village of Newburgh Heights?
The pertinent provisions of the contract of August 11, 1916, are, as follows:
‘First: That the Village of Newburgh Heights, hereby grants to the City of Cleveland full permission and authority to construct an intercepting sewer and to convey sewerage therein upon and along one of the following routes, as said City of Cleveland may determine, to-wit:
* * *
‘C’: The Village of Newburgh Heights is hereby given the right to connect, at its sole cost and expense, any and all of its present or future sanitary sewers with said intercepting sewer, or with any portion of the City's intercepting sewer now constructed, by means of said manholes and said openings as shown on the said map hereto attached, and to discharge all of its present and future sanitary sewage into said intercepting sewer, subject only to the limitations hereinafter set forth, and said sewage shall be disposed of by said City of Cleveland in like manner as other sewage conveyed through said intercepting sewer without cost or expense to the Village of Newburgh Heights.
‘Third: In the event that the sewage conveyed through said intercepting sewer should be disposed of at any future time by the City of Cleveland, at any point within the Village of Newburgh Heights in a manner objectionable, to the public authorities of said Village, and the disposed of said sewage within the said Village should be permanently prevented by said Village by court proceedings or otherwise, then the future right of the Village to discharge any sewage in said intercepting sewer now built as provided in sub-paragraph ‘C’ herein shall thereupon cease and determine.'
No claim is made that the City was without the power to contract with the Village of Newburgh Heights for the extension of its sewer system through the territory of the latter but the sole claim of invalidity here asserted is that in agreeing to accept and dispose of the sewage of Newburgh Heights free of expense to the latter the City bartered away its governmental power.
Plaintiff relies upon the principles enunciated in Edwards v. City of Cleveland, 109 O.S. 598, 143 N.E. 181, 37 A.L.R. 1352. In that case a property owner conveyed land to the City of Cleveland for the construction of a portion of a boulevard system. The City agreed to exempt other lands of the owner abutting upon said improvement from assessments for the cost thereof, and further to exempt said abutting land from future assessments for certain purposes. No question was raised as to the validity of that part of the agreement which exempted other lands of the owner from assessments equal to the cost of the improvement, but as to the exemption of the abutting land from future assessments the Supreme Court held the contract to be ultra vires and void as being an unlawful attempt by the City to barter away its governmental power to levy assessments. The principles of law applied by the Supreme Court appear in the syllabus, as follows:
‘1. The levying of a tax, whether general or special, is an act of sovereignty, which the sovereign may not barter away.
‘2. A municipality, in acquiring real estate for public purposes, is not authorized to pay therefor more than its reasonable value. A covenant perpetually exempting real estate, other than that acquired, from special assessments for all purposes, except certain named purposes, is a covenant running with the land, the reasonable value of which is unascertainable, and therefore affords no criterion whereby the value of the consideration can be weighed against the reasonable value of the real estate acquired, and for that reason is ultra vires.
‘3. The exemption of certain real estate from special assessments necessarily results either in increasing the burden upon other real estate specially benefited or in depriving such other real estate of the benefit of needed improvements, thereby causing an unequal distribution of the burdens and benefits of government, and is both ultra vires and against public policy.’
That the situation here involved is distinguishable from the facts in the Edwards case, supra, is at once apparent. The instant case involves a contract between two municipalities, neither of which possessed any governmental powers over the inhabitants or in the territory of the other. The City possessed no power to tax or assess Newburgh Heights for any purpose whatsoever. Manifestly there could be no relinquishment by the City, of governmental powers which it did not possess. The principle that forbids discrimination between taxpayers or property subject to assessment can have no application in a case involving an agreement between two municipalities.
Plaintiff interprets the Edwards case (supra) as authority for the proposition that the consideration moving from the City in payment of property acquired by it must be of such a character that the value thereof can be ascertained, and inasmuch as the covenant of the City for free disposal of the Village's sewage for an unlimited period of time is incapable of definite evaluation, the contract of 1916 must be held to be ultra vires in that regard. The rule promulgated in the Edwards case is limited to transactions between a municipality and a property owner therein whereby the municipality acquires private property for public use. In such cases the municipality has the right under its power of eminent domain to appropriate the property acquired, upon payment of the reasonable value thereof. Having this right and being under the duty to apy no more than the reasonable value of the property, the municipality cannot agree to pay a price in excess of that amount of the detriment of its taxpayers generally. The public has the right to know the price agreed to be paid for private property acquired for public use. Consequently, when the consideration moving from the City in payment of private property is indeterminable and such as may be disproportionately greater in value than the property acquired by it, the law condemns the transaction because it denies the public an opportunity for comparison between value received and value agreed to be paid. Such seems to be the rationale of the rule. This rule evolves from circumstances where private property is conveyed to a municipality for public use in consideration of the exemption of other private property of the owner from future assessments. It ought not be set in a different context unless positive provisions of statutory law or consideration of public policy imperatively require such application. To extend this rule to transactions between two municipalities seems unwarranted. In such cases neither of the contracting parties has the right to compel the transfer of property or property rights in the territory of the other.
In seeking to acquire property rights from each other, municipalities necessarily must resort to the procedures of bargain and barter and agreements made under such circumstances will be upheld where they violate no statute and are not contrary to public policy.
It may be noted in passing that this case has been submitted upon the theory that the sole consideration received by the City under the contract of 1916 was the right to construct an intercepting sewer and convey sewage therein through and under the streets of the Village. However, an examination of part ‘Third’ of the contract of 1916 discloses an implied promise by the Village not to prevent the City from disposing of sewage within the Village territorial limits. The penalty for violation of such promise is the termination of the right of the Village to connect its sewers with the southerly intercepting sewer of the City. It seems clear, therefore, that in addition to the rights of way acquired by the City it was within contemplation of the parties at the time the contract was executed that the City would also acquire the valuable and substantial right to dispose of its sewage within the Village.
Plaintiff also relies upon City ex rel Diehm v. Lakeview Cemetery Association
(Common Pleas Court). In that case the transaction under review involved a conveyance of private property located within the municipal limits to the City, in return for the latter's agreement to furnish free water in perpetuity to the owner. The Court held the contract to be void as being in contravention of the specific provisions of 3959, G.C. which limit the use of surplus funds of a water works to purposes directly related to the establishment, maintenance, enlargement, etc. of the water works system. Also, in that case the evidence disclosed that at the time of trial, the value of the water theretofore received by the grantor was greatly in excess of the reasonable value of the strip of land conveyed to the city. No question touching the validity of a contract between two municipalities was presented or decided. For similar reasons the case of Ericksen v. John Morrell, S.D. 14 N.W.2d 88, cited and relied upon by plaintiff is inapplicable.
No opinion for publication.
The terms of the contract of 1916 have been fully performed and complied with during all of the intervening years by the City of Cleveland, and also by the Village of Newburgh Heights as the other contracting party in the first instance, and by the Village of Cuyahoga Heights as the latter's successor in interest since 1919. Prior to the institution of this suit no question was raised as to the validity of the agreement. Implicit in the argument now made by the plaintiff is the unexpressed idea that the value of the benefits granted to the Village is incommensurately granter than the value of the benefits received by the City. It is the apparent belief of the City that this supposed inequitable arrangement ought to be terminated but no statute or principle of law forbidding muncipalities from entering into continuing contracts with each other upon considerations deemed by them to be fair and adequate has been cited.
On the contrary, in Brunswick v. Milltown, 135 N.J.Eq. 310, 38 A.2d 288, the Court held that evidence showing an increased annual cost of $1,500 to the City for the disposal of sewage of the Village did not warrant the cancellation of the contract by which the City had agreed to dispose of such sewage free of expense to the Village. In this connection the Court said: ‘That the agreement as thus entered into now entails greater expense and renders performance of the same more burdensome to the complainant than contemplated at the time it was made is not a sufficient ground for relief by way of cancellation.’ (Opinion, 38 A.2d at page 290)
And again, in answering the complaint's contention that the contract in the cited case was invalid because it was indefinite as to duration, the Court said: ‘Complainant's contention that the agreement is void as against public policy because it is by its terms perpetual and imposes a never ending burden upon complainant is without merit. The power delegated to the contracting municipalities by the statute contains no limitation with respect to the length of time for which such agreement may be made; hence this agreement made pursuant to such statutory authority may not be condemned because its duration is without limitation.’ (38 A.2d at page 290)
In McNemry et ux. v. Bellevue Borough, 301 Pa.St. 568, 152 A. 563, 565, in commenting upon a contract by which the Borough of Bellevue was granted permission to lay sewer pipes in the territory of the adjoining Borough of Avalon in return for the privilege granted to twenty-five property owners of Avalon to connect and use the sewer belonging to Bellevue, the Court said: ‘The Borough of Bellevue had granted permission to twenty-five residents of Avalon to connect with the eighteen-inch sewer. This was the price the former paid to the latter for the privilege of laying the sewer in its territory.’
In the instant case the right to convey sewage through the dispose of the same within the territorial limits of an adjoining municipality was obtained by the City upon its promise to pay the price of servicing the present and future sewage of the territory of the Village without charge. This agreement cannot be held invalid for the reasons now urged by plaintiff. In executing the agreement of 1916, the City of Cleveland exercised its general power to make contracts necessary and proper to the accomplishment of its public functions and it has not been established that such contract violated any statute or that it contravened any established principle of public policy. It must therefore be upheld.
There can be little doubt that the defendant Village has succeeded to the rights of the Village of Newburgh Heights under the contract. That part of Newburgh Heights which was detached and later became Cuyahoga Heights constitutes by far the major portion of the territory of the original Village. Without disputing plaintiff's claim that the territory detached from a municipality acquires no property rights except under the provisions of Section 3577 et seq., G.C. it may be asserted that detachment proceedings cannot impair the obligations of existing contracts. Certainly the rights acquired by the City of Cleveland in the territory embraced within the original Village of Newburgh Heights were unimpaired by reason of the separation of that territory into two governmental units. After the detachment the City was fully entitled to assert and enforce such rights on behalf of its territory and the inhabitants thereof. Similarly, the covenants running with the land which were obtained for the benefit of the territory and inhabitants within the original Village of Newburgh Heights were unimpaired in their legal vitality, after the detachment of Cuyahoga Heights. Section 3577-2, G.C. provides, in part: ‘Apportionment of property, funds and indebtedness. When territory is so detached, an apportionment of the property, funds and indebtedness of said village, shall be made between said village and said detached territory upon the basis of the respective tax duplicate in said Village after such detachment, and in said detached territory.’
In 32 Ohio Jurisprudence, Section 2, page 604, ‘property’ is defined, as follows: ‘The word ‘property’ is a generic term and has a most extensive signification; in its strict legal sense it means the dominion or indefinite right of use, enjoyment, and disposition which one may lawfully exercise over particular things or objects, animate or inanimate, without control or diminution, save only by the laws of the land.'
The word ‘property’ also includes ‘every valuable interest which can be enjoyed as property, and recognized as such.’ Callen v. Electric Light Company, 66 O.S. 166, at page 176, 64 N.E. 141, at page 145,58 L.R.A. 782. The right of free disposal of its sewage by the City of Cleveland is ‘property’ within the above definitions. If at the time of detachment the apportionment of the property of Newburgh Heights was not made in strict conformity with the statute it nevertheless was made by the parties themselves in a manner satisfactory to all concerned. For more than a quarter of a century the City has recognized its obligation to the Village of Cuyahoga Heights under the contract of 1916. During all of this time the City has disposed of the sewage of Cuyahoga Heights without charge.
In 1922 the City and the Village of Cuyahoga Heights entered into an agreement by which the Village was granted permission to construct temporary sewage disposal facilities upon land owned by the City pending construction of the City's southerly disposal plant. In this agreement specific reference was made to the contract of 1916 and the rights of Cuyahoga Heights thereunder, as follows: ‘Under the terms of the agreement between the City of Cleveland and the Village of Cuyahoga Heights (formerly Newburgh Heights) for the construction of the Southerly intercepting sewer of the city through the said village, the said village was granted the right to discharge all of its sanitary sewage into the said intercepting sewer and to have its sewage disposed of by the city without cost to the village;’
And again in 1938 when the City adopted a sewage rate ordinance fixing the charges to other municipalities within the county, it was provided that: ‘Sec. 2. The provisions of this ordinance shall not impair the obligation of the city of Cleveland to furnish without charge to the village of Cuyahoga Heights the sewage treatment facilities of the city of Cleveland in accordance with an existing agreemententered into as a part of the consideration for permitting the location of the southerly sewage treatment works within the limits of the territory now included in Cuyahoga Heights.’
Building permits were granted by Cuyahoga Heights to the City of Cleveland for the construction and enlargement of a sewage disposal plant, and for the construction of sludge digestion tanks. The Village also granted the City rights of way for the construction of a sludge force main within which to pump sewage sludge from the northeasterly section of Cleveland to the southerly disposal plant in Cuyahoga Heights, and in addition Cuyahoga Heights granted the City of Cleveland a right of way within said Village for the City's southwesterly intercepting sewer. These extensions, improvements and treatment facilities, all of which were acquired since the detachment of Cuyahoga Heights, constitute an essential and important part of the sewage system of the City of Cleveland.
It cannot be fairly assumed that the acquisition of these rights and privileges was unrelated to the City's acceptance of Cuyahoga Heights as the successor to Newburgh Heights under the contract of 1916. Certainly it is not to be supposed that Cuyahoga Heights would have granted these rights with their concommitant burdens upon the Village were it not for the unequivocal acknowledgement by the City of its obligation to dispose of the Village sewage without charge. It would be inequitable and unjust to permit the City to repudiate a promise which for more than a quarter of a century it has expressly and repeatedly recognized as a binding and valid obligation.
In view of the foregoing it is unnecessary to determine the priority and effect of the orders of the State Board of Health which are referred to in the pleadings.
Plaintiff's application for an injunction restraining the Village of Cuyahoga Heights from connecting its sewer presently under construction with the southerly intercepting sewer of the City of Cleveland is denied.
A Journal may be prepared in accordance herewith.