Washington Market Company v. District of Columbia (172 U.S. 361)/Opinion of the Court

It is difficult to determine precisely the theory upon which appellant predicates its right to relief at the hands of a court of equity. In the bill, what is termed a 'title to possession' of the market grounds is asserted to be in complainant, and its right not only to prescribe rules and regulations with respect to the market is averred, but also a right to the sources of revenue mentioned in the alleged contract. Despite, however, the position thus taken in the pleadings, and the fact that the complainant demanded that the District be compelled to account for the losses which it is alleged the complainant had sustained by claimed wrongful interferences of the District, counsel, in the argument at bar, bases the right to relief solely upon the prayer for general relief contained in the bill. In consequence of this abandonment of the specific grounds stated in the bill, the argument at bar is that while the market company, under the section above referred to, had not obtained a general power to regulate and control the market, it was by said section vested with the power to locate and assign stands therein, and that the facts averred and shown by the proofs established an implied contract by which the District constituted the company an agent to manage and control the market, and collect and disburse the revenues therefrom. And it is then argued that from these facts such a situation resulted as that it would be inequitable to permit the District to interfere in any wise with the possession, control, and management of the market, without antecedently 'reimbursing appellant for moneys expended as its agent in the administration of the wholesale market of Washington City.'

Disregarding the fact that the claims asserted in the pleadings on the one hand, and at bar on the other, are divergent, we shall examine the contentions urged in the order in which they have been made.

As to the claim that the market company is the corporation empowered by section 16 of the charter to establish rules and regulations with respect to the market therein authorized:

We do not find in the text of the statute anything justifying a construction of the words 'rules and regulations,' as employed in section 16, which would attach to them a less broad signification than is given to the word 'regulations' in the second section, in which section, with reference to the public market authorized to be constructed and maintained by the Washington Market Company, it was provided that 'the municipal government of said city shall at all times have the power to make and enforce such regulations with regard to said market and the management thereof as in their judgment the convenience, health and safety of the community may require.' The fact that the power to establish and enforce regulations with respect to the market to be erected by the market company was vested in the municipality, and the further fact that a voice in the establishment of the amount of rent to be paid for stalls in the market of the company was expressly conferred upon the District authorities, prevent the inference that, with reference to the market which the city itself was 'to hold and use,' the city was deprived of the power to make rules and regulations, or that a broad and comprehensive authority to establish such rules and regulations was vested in the market company. The grammatical structure of the sentence also aupports the view that the corporation referred to n the sixteenth section was the city government, for the nearest antecedent to the word 'corporation' is the city government of Washington; the market company not being named at all in the section.

As respects the alleged contract stated in the bill to have been initiated in 1871 and perfected in 1874:

By the written proposal concerning the use and occupancy of the open market space, bearing date November 8, 1871, addressed to the governor of the District, the Washington Market Company stated: 'This company proposes, with your permission, properly to grade the grounds, and to place thereon suitable platforms, of inexpensive construction, which will enable the marketmen to do business on the open space as contemplated by the act; charging them for the use of their stands such sums as you and the District authorities may prescribe, not to exceed the interest on the actual outlay, and the actual expenditures for keeping the market in order.' And it was added: 'There can be no possible objection to this course.' Upon this letter was placed the following indorsement: 'Approved, subject to such regulations as the legislative assembly may hereafter prescribe. H. D. Cooke, Governor.'

Irrespective of what may have been the power possessed by the governor concerning the market grounds or market, it is clear that there is nothing in this proposal of the market company, or in the qualified approval of the governor, importing a surrender by the legislative assembly of any rights which by law were vested in it, such as the power to establish and alter at pleasure the rules and regulations with respect to the manner of occupancy, and the tolls to he exacted for the use of stands. Certainly no easement was attempted to be created in favor of the market company in the land. At most, there was a mere revocable license to hold and use the grounds. So, also, the language of the communication was carefully framed to permit no inference that the District would incur any pecuniary liability for the cost of grading, or the erection of the 'inexpensive' platforms. The market company was evidently interested in the placing of the grounds in suitable condition for occupancy by dealers, and was willing to assume the risk of making expenditures, in reliance upon fair treatment and good faith on the part of the District authorities.

The communication of April 8, 1872, evidenced the fact that the market company had gone into possession of the grounds, had graded the surface and erected two platforms, one of which contained an eatinghouse and storehouses. The company solicited authority to collect certain tolls and charges, including storage fees, and agreed to keep an office upon the grounds, and furnish suitable watchmen, and after applying the revenues to the expenses of management, and keeping in repair and good condition to grounds, with 10 per cent. annually on the cost of improvements, promised to pay over the balance of revenue, if any, to the District. That the company did not consider itself in the light of an agent or employ e of the city, in making improvements on the grounds, is shown in the communication. Thus, the buildings for the use of which it solicited authority to charge storage rent are referred to as 'their' buildings. It is expressly stated, in connection with the stipulation that the company might retain from the revenue 10 per cent. annually on the cost of improvements, that such improvements were 'to be made at the company's charge'; and it is also stated that the company should be entitled to receive a fair compensation for 'its' buildings and improvements on the market grounds, if, by authority of congress, the company should at any time be dispossessed of the use and occupancy of the grounds. While this latter arrangement is said to have been orally acquiesced in, it was not until April 6, 1874, that formal official action was taken approving the same, with the proviso, however, that the arrangement was 'not to prejudice any lawful future action of the board, of t e legislative assembly, or of congress.'

Assuming that authority was vested in the governor and board of public works to enter into the arrangement suggested in the second proposition of the company, it is clear that thereby no easement was created in the land in favor of the market company, and the company recognized the fact that congress might lawfully dispossess the market company from the use and occupancy of the grounds. The qualified acceptance of the proposal, at most, only constituted an implied assurance on the part of the governor and board of public works that the company, so far as those officials had the power, would not be disturbed in its possession without just cause. There was no agreement that a source of revenue would be supplied adequate to meet the expenditures, or that the District assumed liability for any deficit in the revenue. If, however, the correspondence, and action taken thereon, could be construed as importing an agreement to impose a pecuniary liability on the District, an inspection of the terms of the organic act of February 21, 1871 (16 Stat. 419), providing a government for the District of Columbia, clearly establishes that it was without the power of the officials undertaking to enter into the arrangement. The making of regulations with respect to the use of the market grounds, and the establishment of a tariff of charges, with the power to subsequently alter or abolish the same, and the authority to incur a pecuniary liability with respect to the improvement of the market grounds, the erection of market buildings, and the operation of the market, were, beyond question, within the province of the legislative assembly; and any assumption on the part of the governor, either with or without the sanction of the board of public works, of authority to conclude the legislative assembly in such matters, would have been purely ultra vires.

There was nothing in the conduct of the District subsequent to 1874 which, if it possessed the power, could be construed as a ratification of the alleged contract, or as importing binding efficacy upon the District. There was certainly no recognition of the market company as a mere employ e making expenditures and disbursing revenues solely as the agent of a principal, and the District authorities were never notified that the market company would look to it for repayment of any deficit in revenues. So long as the company was willing to care for the grounds and to operate the market while the annual revenues were less than the ordinary expenses of management, as appears to have been the case, without calling upon the District to assume the responsibility for a deficit, there was no occasion for the District to take decisive action. The furnishing of accounts, beginning with 1888, possesses no weight, as manifestly the District was interested in the ascertainment of the fact whether or not there was any surplus revenue to which it was entitled.

The facts in the case at bar bear no analogy to those which were present in the cases referred to in 1 Pom. Eq. Jur. § 390, to which our attention has been directed by counsel for the appellant. There individuals, acting on the supposition that they had a title to or interest in lands, expended money in erecting buildings or other improvements thereon, while the real owner stood by and made no protest. No ground exists for the pretense that such was the case here. A court of equity will not relieve an individual from the operation of the statute of frauds, which requires that interest in lands be created by an instrument of writing, and imposes an equitable lien upon land in favor of one who makes improvements thereon, knowing that the title is in another, especially where the money is expended under an express understanding with reference thereto had with the owner, but will leave the party to the remedies, if any, which a court of law provides.

These views dispose of the case, and require an affirmance of the decree of the court of ap eals of the District of Columbia.

Decree affirmed.