Holding a city to its promise

Most of us want to respect the government, especially local government. We expect local government to keep its promises.

But the law relating to cities, towns and villages (which are all lumped together in the category “municipal corporations” or “municipalities”) cuts them some slack. A city council, board of aldermen or village board can adopt an ordinance and lawfully repeal it later. Often voters elect new representatives because they promise to vote to change or repeal a previous ordinance.

The adoption of ordinances is how the city’s governing body exercises its legislative powers. A city should have the ability to correct mistakes or adapt to changing conditions for the benefit of the public.

But a city should be held to its agreement, said Missouri Court of Appeals for the Western District in its July 21, 2009 opinion in Kindred v. City of Smithville, even though 40 years had passed since the agreement was made and lots of things had changed.

In 1969, the City of Smithville asked the Kindreds for an easement so that the City could run water and sewer lines through the Kindreds’ property to serve a new school. The Kindreds asked that the City allow them to connect to the City’s water and sewer lines installed on the Kindreds’ property, rather than seeking payment from the City for the easement. The City agreed and prepared an easement for the Kindreds’ signatures. The recorded easement included the Kindreds’ right to connect without any limitations.

In 2002, the Kindreds decided to create 16 lots on their property and asked the City for a connection. The City refused, stating that the existing sewer mains were already operating at full capacity. The Kindreds sued the City for “specific performance,” a term used by lawyers to refer to a request that a court enforce the terms of a contract.  The Kindreds also asked for damages for the City’s breach of its contract.

The City argued that the easement, signed only by the Kindreds, was not a contract, having not been signed by the City. A statute, section 432.070 RSMo, says that any contract with a local  governmental unit (county, municipal corporation, or school district) is void if not within the powers of the governmental unit, in writing, dated, and signed, with the consideration for it to be given after the signing.

In addition, the City argued that the City’s board of aldermen did not clearly authorize the easement or approve the Kindreds’ exchange of the easement for their right to connect. Moreover, the grant to the Kindreds of the unlimited right to connect could not have been legal, because such a grant would put the Kindreds in the position of having the power to control the City’s utility system.

The trial court found for the Kindreds.

The Court of Appeals affirmed, stating that the absence of the City’s signature didn’t mean there was no contract. The easement was in writing, dated, and contained the terms, including the Kindreds’ right to connect. The City accepted the benefits of the contract, installing water and sewer lines. The City’s acceptance of the benefits of the Kindreds’ grant of the easement was considered “equivalent to the signature of the grantee [the City] to the contract.”

The City’s argument that the agreement with the Kindreds amounted to the surrendering of the City’s control was refuted by another Court of Appeals decision that held that the right to connect was simply that, not a delegation of control, noting that that City failed to present evidence of the lack of capacity of the existing sewer line.

The Court of Appeals pointed out that several statutes authorize cities to construct and operate water and sewer systems and obtain easements for their lines, on whatever terms the cities wish to negotiate. The City accepted the Kindreds’ easement without payment to the Kindreds other than granting the Kindreds the right to connect without payment of connection fees. The Court saw no reason to deprive the Kindreds of the benefits of the deal they had made.

Suppose the court had not granted specific performance, but had awarded damages to the Kindreds for the City’s breach of contract. The value of the Kindreds’ land would have been much less without City water and sewer. The financial burden of specific performance may be substantial, but damages for breach of contract might have been much more costly to the City than accommodating 16 more users of its water and sewer systems.