THE APPEAL COURT.

New Zealand Times, Volume XXX, Issue 4309, 12 January 1875, Page 3

THE APPEAL COURT.

The following judgment was delivered during the late sittings of the Appeal Court:— HOKMIKV AND CREYMOUTH TRAMWAY COMPANV, APPELLANTS; AND COUNTY COUNCIL AND 'INHABITANTS OF THE COUNTY OK WESTLAND, RESPONDENTS.—JUDGMENT. This is an appeal from the judgment of the Supremo Court, Nelson district, in an action m which the appellants were plaintiffs, and the respondents were defendants. At the trial, the plaintiffs had a verdict. A rule to arrest the judgment was afterwards made absolute by the Court below; and it is against this judgment that the plaintiffs below appeal. , '■ We think it unnecessary to discuss the ■rrounds of the judgment below ; or the grounds upon which that judgment is impeached ; inasmuch as we are unanimously of opinion, that the contract sued upon, which is sot out in the third paragraph of the declaration, is one which the County Council of "VVestland had no authority to enter into. _ _ The contract, as set out in the third paragraph of the declaration, is as follows : ?< That on or about the said 6 th day of May, 1869 the defendants entered into a contract with' the plaintiffs that, in consideration that ■ the plaintiffs would construct and maintain the said tramway, for the use and benefit of the public, the defendants would, in the event of any Government road being opened that should compete with the said tramway to its detriment, pay to the plaintiffs reasonable compensation for their loss sustained thereby." The principle upon which the authority of the Westland County Council to enter into this contract must be decided is simple and well recognised, namely, that all authority, whether given by statute, deed, or other instrument, must be strictly pursued. The Westland County Council, as it existed at the time of the alleged contract, derived its powers solely from the County of Westland Act, 1868. We have been referred to the 73rd, 81st, and 116th sections of this Act, as imparting to the County Council, if not expressly, at least impliedly, the necessary powers to enable that body to make the contract sued upon. The 73rd section prescribes the mode in which the Council may enter into contracts. It provides for three classes of contracts:—(l) Those which by law, if made between private persons, are required to be by deed ; (2) those which by some statute are, in like case, required to be in writing signed by the party to be charged therewith ; (3) contracts valid in like case, although made by parol only. The former part of the section states,. in general terms, the purposes for which contracts may be entered into. The words are "The Council and every Koad Board may respectively enter into contracts with any persons for the execution of any works, directed or authorised by thi3 Act to be done by the Council or Board, or for furnishing materials, or for any other things necessary for the purposes of this Act." This provision contemplates mutually binding agreements, under which the contractors with the County or Road Board are to undertake the execution of such woiks as are referred to. Prima facie a mere guarantee, given by the county to the promoters of such an undertaking a 3 this tramway, and not binding the promoters themselves to anything, is not within the provision. The language of the last clause of the section is still more distinct, "and all contracts made according to the provisions herein contained, being duly executed by the persons contracting to perform the works tht-rein comprised respectivdy.shall be effectual in law," &c. But the terms of Bection 81 afford even stronger reasons for holding this contract to be utiravires. This section provides for the disposal of all moneys paid to the County Treasurer under the act of 1868, or under any Act of the General Assembly. The money so paid becomes the quasi consolidated revenue -of the county, and the "purposes" for which it is placed at the disposal of the Council are thus enumerated :—(1) Police or constabulary force ; (2) public gaols ; (3) harbor works ; (4) construction of main roads, bridges, ferries ; and (5) other public works ; (6) hospitals ; (7) education ; (8) other purposes of public utility, (9) distribution among Corporations of boroughs, and Road Boards. Now there are two general expressions in the above enumeration which admit of some latitude of interpretation, namely, "other public works," and " other purposes of public utility;" but all such general word 3 come within the well known rule, that general words are controlled by the previously specified or enumerated objects or purposes, and must be of the like nature. Touching the first of the two general expressions "other public works," there is, in our opinion, neither doubt nor ambiguity. They must be of the same nature as " main roads, bridges, and ferries;" and the expenditure must be for " constructing and maintaining " the same. A tramway would have come within the general words, if the work had been constructed and maintained by, or on behalf of the county, and money had been voted or disposed of for such construction and maintenance. ■ But this tramway is not constructed for the government of the county of Westland; nor is any money disposed of for such construction. Indeed no money has been disposed of at all within the meaning of the section under notice. This tramway has been undertaken by a private, or, as such companies are sometimes called, a public company—private as seeking profit, public as embracing an element of public utility. There is no appropriation of money for construction and maintenance; and not even any disposal of money for the purpose of the contract ; which is one of indemnity against a then future contingency, which might, or might never, happen. The othei" general words may seem, at first sight, to bo susceptible of somewhat greater latitude of interpretation—" other purposes of public utility." There is, in a certain limited sense, an element of public utility m most private commercial enterprises. To put an extreme case—the opening of a baker's shop in a locality which did not before enjoy one, has some public utility, upon which the trader relies for custom. If there were no public utility, there would be no remunerative custom. But that element is not the " purpose " •of the enterprise. The primary purpose is private profit. These words like those firat noticed must also be interpreted by the previous particular words, "hospitals," and "education;" and the purpose of public utility sought to be brought within the section must be " supported," or " promoted," by the present "disposal" of money previously paid to the Treasurer of the county. No ingenuity of construction can bring this .contract of indemnity against a future contingency within the meaning of the 81st section. jThaf section provides for the disposal, for the several purposes mentioned, of money already paid to the County Treasurer ; whereas this contract creates a contingent charge upon future funds. Yeai;s might have elapsed before the contingency happened. This alone is a fatal objection to the contract. There are numerous cases which, decide that bodies empowered to expend annual rates, and other annual receipts, in a particular manner, have no implied authority to charge future revenues. It may be sufficient to refer to the case of The King v. Dursley, 5 Adol. and Ell. 10, in which numerous authorities to the same effect are cited. " The jjayers," said Lord Denman in delivering the judgment of the Court, "being a fluctuating body, nothing, generally speaking, is more just, or more likely to conduce to economy, than to hold that they who create a charge shall themselves bear it." Accordingly, attempts to meet the expenditure of past years by retrospective rates have ever been held illegal by the English Courts. This of course implies the invalidity of prospective charges upon the rates of future years —a salutary doctrine, fully applicable in our opinion, to a body such as the late County Council. It is worth remarking that in section 73, giving power to contract, every Road, Board is put on the same footing as the County Council. In one respect, the power of a Road Board under the Act is even greater than that of the Council; since, under section 86, a' Road Board may levy rates, which the Council has no authority to do ; its function in this respect being limited to the sanction of rates made by the Boards—see section 93. It will scarcely be

argued, that a Road Board could enter into a future engagement such as the guarantee now sued upon. But it does not appear possible, in the language of the statute, to find any valid "■round for a distinction, in this respect, between the County Council and the Road Boards. The authority of decided" cases is scarcely needed where the language of the 81st section is so obviously confined to the disposal of moneys already paid to the County Treasurer. In the absence of express provision, it cannot be supposed that the General Assembly intended to invest such a body as the late County Council; a body without legislative power, and not even capable of imposing local taxes; with an authority so liable to abuse as that of charging upon the future, without limit or restraint of any kind, the proper burdens of the present. The endowment of such a body with an uncertain and perpetually varying portion of the colonial revenues, must surely be construed as a gift de anno in annum, without power of anticipation—more especially when it is considered, that no power of disallowing appropriations is reserved to the Governor as a check upon corrupt or improvident alienation of future revenue. The County of Westland Amendment Act, 186 D, was not passed until after the execution of the contract alleged in the declaration. Nevertheless, the terms of the 6th section may be properly looked at as throwing light on the probable intent of the earlier, statute ; and they are strongly confirmatory of the view which we take of the original limitation of the powers of the Council. The terms of the 6th section are clearly enabling, not restraining. We infer from them, that the Council had previously no power to create any charge whatever upon the accruing income of the county. The 116th section has been invoked by Mr. Newton as being in the appellants favor, but it has no bearing on the point in controversy. One power only does it add to thoss created by the 81st section, namely, the power of delegation mentioned in the proviso. The case of Taylor v. Chichester and Midhurst Railway Company, in the Exchequer Chamber; Law Rep. 2 Exch. 356; and in the House of Lords; Law Rep. 4 H.L. 628; was relied upon by the counsel for the appellants as showing that a corporation is bound by its contracts just as individuals are, unless it appear by the express provisions of the statute creating the corporation, or by reasonable inference from its enactments, that the contract was ultra vires. It might be enough to say that in the present case it does so appear by reasonable inference. But it is desirable further to point out, that there is no sort of analogy between the case of a contract made by the directors of a railway company or other trading corporation and the present. The members of such a corporation are, as in the case cited was said by Mr. Justice Blackburn—(Law Rep. 2 Ex. 378) —"in substance partners in a trading concern." It is their property which is dealt with, or affected by, the acts of their directors; and if they, individually, stand by and see such a contract made, without objecting, it is intelligible that they should not, as a body, be afterwards allowed to dispute it as a misapplication of the corporate funds. The present case is one in which the inhabitants of a district are incorporated for certain purposes of local government. The inhabitants, at any given- moment, are not proprietors of the district, to whom it would be just, or possible, to commit the power of encumbering its resources for all time to come. The shareholders in a railway company are, at all events, disposing of what is their own ; unless they are actually abusing powers given for some public,purpose. But the inhabitants of the county, at any given time, when, by their, representatives in the County Council, they affect to create engagements binding the future' revenues of the district, are, in truth, pretending to create obligations for others to discharge, and to dispose of what does not belong to them. Such legislative bodies as are the complete political representatives of a community, possess indubitably, in a sense, the power of burdening posterity. This, however, stands on ft totally different ground. In these cases there is properly no contract. A legislative body cannot abnegate its own powers. It cannot bind even existing members of its own body, much les3 future members, not to exercise those powers. It is incapable of contracting, and the sole security of the public creditor is the public faith. This Court is therefore of opinion that the contract declared upon is one which the County Council of Westland had no authority to enter into ; and this appeal must consequently be dismissed. Appeal dismissed with costs.