|Legal Opinion: |
Text of Document: February 28, 1996
Recently you approached MTAS with, to say the least, a very interesting question. The facts, as I understand them, are as follows. Quite a few years ago the local Public Utility district bought some property for use in expanding the reservoir. Sometime in the 1980's the town and the utility district merged, and the town took over operation of the utilities. About five years ago the former mayor conveyed parcels of this land to various parties. Since then several homes have been constructed on these properties. You wanted to know if the town could recover the property. In short the answer is yes.
The question in this case is whether the title in the property has vested to those presently in possession. I think it is clear that it has not. Your city is a general law mayor-aldermanic charter city. Part of this is T.C.A. 6-2-201(8), which allows such municipalities to acquire or sell property either real or personal. As pointed out in a leading authority on the subject, McQuillens, generally, the power to enter into a contract on behalf of the municipality resides in the legislative body or council, acting as a body, at a properly noticed regular or special meeting. 3 McQuillen, Municipal Corporations, Vol. 10, ºº29.02,29.15. "...[N]o officer or board, other than the common council has power to bind the municipal corporation by contract unless duly empowered by statute, the charter, or authority conferred by the common council..." 3 McQuillen, Municipal Corporations, Vol.10, º29.15, p. 315. Likewise several Tennessee cases point out the mayor has only those powers granted to him under the municipal charter or general law. see Weil, Roth & Co., v. Mayor and Aldermen of Newbern, 126 Tenn. 223, 148 S.W. 680 (1912); Reeder v. Trotter, 142 Tenn. 37, 215 S.W. 400 (1919); Anderson v. Town of Gainesboro, 17 TAM 12-27 (1992).
The legal doctrine of ultra vires applies to actions by municipal officials outside the scope of authority granted them. What this says, in short, is that such actions are void. The leading case on this in Tennessee is City of Lebanon v. Baird, 756 S.W.2d 236 (Tenn. 1988). In that case the Board of Mayor and Alderman bought an option on some land for a city park. They did this by resolution though the charter specifically stated that all purchases of real property had to be by ordinance. Shortly thereafter a new administration took office and decided they did not want the property. They then sought return of the purchase price of the option from the defendant, who refused to return the money. The city then sued claiming the contract was ultra vires and thus void since it was not made in accordance with the charter. The Tennessee Supreme Court agreed. The court pointed out that a long line of Tennessee cases holds that a ultra vires act is void or voidable. When the municipality does not have the power to do an act, then ultra vires is readily seen. I think this applicable to the situation at hand. The charter clearly gives the power to buy or sell real property to the city, said power to be exercised by its legislative body. It clearly does not give this power solely to the mayor. I think that the sale of the property is thus void or at least voidable.
Several other cases, though from other jurisdictions, back my view on this. In Duckworth v. Town of Robertdale, 28 So.2d 182 (Ala. 1946), the mayor conveyed some property on his own in the name of the town. The court did not go into any lengthy analysis but simply stated that a deed conveyed in such a manner was ultra vires and void. Another case, Johnson v. City of Sylacauga, 304 So.2d 586 (Ala. 1974), it was held that when the mayor did not have the authority to convey land his signature and title on a contract to do so was simply a description of his job and in no way indicated his representative capacity and bound did not bind the municipality.
Thus we have established the fact that the prior mayor could not convey good title to the property in question we must look for a remedy. Since the persons who bought the property are presently in possession the city must, in order to take possession itself, remove them. In Tennessee property owners whose land is wrongfully being occupied by another have the legal remedy of ejectment, found at T.C.A. 29-15-101 et seq. Pursuant to this the true property owner brings a suit seeking a writ of possession to be put in possession of the property. To obtain this writ the plaintiff must demonstrate his chain of title. If he can show this and that he has a right to be in present possession of the property, that is he has not sold it or otherwise been legally divested of title, then the writ will be issued. This is the clear legal method for regaining possession. It does have a problem. Uhlhorn v. Keltner, 723 S.W.2d 131 (Tenn.Ct.App. 1986) highlights the proposition that defendants who have:
1. Made permanent improvements to property.
2. While in possession of it.
3. With good faith belief of ownership, and;
4. Color of title.
can recover the amount by which the improvements increased the value of the land.
The court noted that the defendant must prove all of these elements in order to receive compensation. With the facts of the present situation, I believe that three of these elements can be met but the city might have a pretty good claim that the original buyers did not have good faith belief of ownership. As pointed out in United States v. Certain Land in the City of Fort Worth, 232 F.Supp. 611 (N.D. Texas 1964), persons dealing with municipalities are charged with knowledge of the limitations of its powers. If the _____s presently occupy any of the property, it seems to me that the city has a good argument that they should have known or been put on notice to inquire as to whether the mayor had the authority to dispose of the property for the city. Since they evidently didn't investigate, then it would seem that the good faith prong of the test is a little tenuous. I believe this is clearly borne out by the deed in which they took the property in which the mayor signed, allegedly in his capacity as mayor. As the Johnson case points out, that just doesn't hold too much water.
As to the more remote property owners whether they had a good faith belief whether they were receiving a valid title would have to be established by a totality of the circumstances. My guess is that since they did not take from the mayor and received a warranty deed, they have a pretty good defense. In any event, even if the city has to pay for the cost of the improvements, I believe it could recover these sums from the title insurance companies involved in the transactions since the properties were conveyed by warranty deed all the way down the chain of title.
There is one thing the city needs to clear up prior to bringing an ejectment action. Its chain of title goes through the local Public Utility District. It is my understanding that several years ago the district merged with the city and the city took over its property and functions. The city needs to be sure and show in its chain of title when it became the legal assignee of the utility districts property.
I would certainly be remiss if I did not mention one last item. The city does needs to move on this. Possession for seven years under color of title leads to ownership by adverse possession. It is my understanding that most of this took place five years ago. In that event the city has two years before its claim would be denied thus the clock is running.
I have enclosed the cases cited in this letter. Please feel free to contact me if I may be of any further assistance on this or any other matter.