ON REHEARING.
AILSHIE, J.A rehearing was granted in this case for the purpose of enabling the appellants to make argument and present authorities on the question of equitable estoppel. It was contended on reargument that the respondents had not sufficiently pleaded an equitable estoppel to justify the court in applying that principle to this case. Our examination of the answer satisfies us that there is sufficient in the answer to justify and authorize the court in applying this principle to the case at bar. The defendants have pleaded all the facts surrounding the transaction, and also the fact that they have made large improvements on the property with the sanction, approval and consent of the city, and that the city has from time to time recognized their title and rights, and levied, assessed and collected taxes and special assessments against this property.
After hearing further argument in the matter, and examining the authorities cited, we are still of the opinion that there are exceptional eases in which the doctrine of estoppel and laches should be applied to a municipal corporation, and that this is peculiarly a case falling within the exceptions to the general rule. It is only applied in cases where its application is essential to prevent great wrong and injustice being committed against the adverse party. It may be conceded that both the city and the respondents and their predecessors in interest have acted with equal knowledge of the facts concerning the title.; but that is ordinarily true in cases of adverse possession. The respondents, however, in this case, have been allowed to alter their situation with *177reference to this property in the evident belief that they had the right to do so, and that the city would not interfere, and this belief has been generated, increased and, to an extent, confirmed by the long and continuous delay and acquiescence of the city. Not only this, but the city has from time to time done affirmative acts recognizing the respondents’ title and right of possession. This has been done in the way of levying taxes and special assessments on ■ this identical property in addition to the other acts enumerated in the original opinion in the case.
We recognize that, as a general rule, the doctrine of estoppel does not apply to municipal corporations, and we are not unmindful of the fact that the courts of many states have absolutely refused to apply it to such' corporations. We are not prepared, however, to announce an unalterable and unexceptionable rule in this state which would inevitably result in perpetrating wrong and injustice in exceptional cases like this. Courts of equity are established for the administration of justice in those peculiar cases where substantial justice cannot be administered under the express rules of law, and to adopt a rigid rule that recognizes no exceptions would be to rob such courts of much of their efficacy and power for administering even-handed justice. The people, in their collective and sovereign capacity ought to observe the same rules and standard of honesty and fair dealing that is expected of a private citizen. In their collective and governmental capacity, they should no more be allowed to lull the citizen to repose and confidence in what would otherwise be a false and erroneous position than should the private citizen.
In addition to the authorities cited in the original opinion in support of the position taken by the court, we call attention to the following cases which have been cited by respondent: Town of Searcy v. Yarnell, 47 Ark. 269, 1 S. W. 319; Arapahoe Co. v. City of Denver, 30 Colo. 13, 69 Pac. 586; New York N. H. & H. Ry. Co. v. City of New Haven, 46 Conn. 257; Logon Co. v. City of Lincoln, 81 Ill. 156; Martel v. City of E. St. Louis, 94 Ill. 67; City of Joliet v. Wer*178ner, 166 Ill. 34, 46 N. E..780; City of Chicago v. Ill. Steel Co., 229 Ill. 303, 120 Am. St. 258, 82 N. E. 286; City of El Paso v. Hoagland, 224 Ill. 263, 79 N. E. 658; Grant v. City of Davenport, 18 Ia. 179; Simplot v. City of Dubuque, 49 Ia. 630, 56 Ia. 639, 10 N. W. 221; Burroughs v. City of Cherokee, 134 Ia. 429, 109 N. W. 876; City of Troy v. Atchison & N. Ry. Co., 13 Kan. 70; Moore v. City of New Orleans, 32 La. Ann. 726; New Orleans Ry. Co. v. City of New Orleans, 109 La. Ann. 194, 33 So. 192; Union Depot Co. v. City of St. Louis, 76 Mo. 393; Schock v. Falls City, 31 Neb. 599, 48 N. W. 468; Baldwin v. City of Buffalo, 29 Barb. 396; Curnen v. City of New York, 79 N. Y. 511; Board of Supervisors v. Schenck, 72 U. S. 772, 18 L. ed. 556.
The judgment must be affirmed, and it is so ordered, with costs in favor of respondents.
Sullivan, C. J., concurs. Stewart, J., concurs in the conclusion reached.