108 La. 569 | La. | 1902
Lead Opinion
In the first of the above entitled cases, James A. Bren-nan and James H. Douglas seek, by injunction, to prohibit the consummation of a contract entered into between the Sewerage and Water Board and the New Orleans Sewer Company, and ratified by the City of New Orleans, whereby the Board has undertaken to acquire, for the City, certain tangible property, and franchises, of which the company claims to be the owner; the grounds relied on being, that the Board Í3 without authority in the premises, and that the price agreed on is excessive. When these plaintiffs appeared in court, there was already pending a suit which had been brought by the City, in July, 18D6, to annul the ordinance and contract under which, as transferree, the New
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And this agreement appears to have been carried into effect in all Tespects, save that separate judgments were rendered in the two cases, of which, however, no complaint is here made. There was judgment in favor of Brennan and Douglas “forever restraining * * * the defendants * * * from carrying into execution the proposed pur-chase of the property, rights and supposed franchise of the Sewer Company, and from paying them * * * any sum of money towards said purchase under the proposition” attacked by the plaintiffs. And there was judgment in favor of the City, and of certain intervenors who had joined the City, in the case last mentioned in the above caption, “annulling ordinance 6142 C. S., adopted March 22, 1892, and the contract thereunder by act before J. D. Taylor, notary public, April 13, 1892, as being illegal, null, and void, and of no effect. * * * Dismissing and rejecting the intervention of N. W. Jordan and of his assignee, the New Orleans Sewer Company,” and dismissing, as in ease -of non-suit, the claim of the City, for damages. And from these judg-ments, the parties cast have appealed. The facts, as we find them, from •the transcript and from the admissions of counsel, and which, in the main, are undisputed, .are as follows: Act 125 of 1880, amending cer
It further provides that such corporations may borrow the money “required for the construction, repairs, or acquisition of property, or franchises, and, for this purpose, may issue bonds, or other obligations, secured by mortgage upon the franchises and all the property * * *" of said1 companies, * * * with power to sell, pledge, or otherwise-dispose of, said bonds.”
On March 24, 1892, the City Council of New Orleans, by ordinance 6142 C. S., authorized the mayor to enter into a contract granting to A. A. Woods and his associates the privilege of constructing, and maintaining, for fifty years, a system of sewers through the streets of New Orleans; and the contract was entered into accordingly, by act before Taylor, notary, April 13, 1892. It was provided that, within six month® from the passage of the ordinance, Woods should transfer said contract to a corporation to be organized under act 125 of 1880; and he made the-transfer, within the time specified, to the New Orleans Sewerage Company, which was organized September 19, 1892. It was also provided that the company should begin its surveys within six months from the-date of its organization, and should complete one-fifth of the entire work contemplated by the contract within each year thereafter, for five-years. In January, 1894, however, an 'extension of “two additional years,” was granted to the company “within which to begin and to complete the sewerage system.” The company first undertook to accomplish-the work called for by its contract through the New Orleans Construction Company, but subsequently employed the contracting firm off Stewart & McDermott, who abandoned the job in October, or November, 1895. In the meanwhile, and in order to raise the necessary funds* the company had caused to be executed bonds, secured by mortgage on its property and franchises, to the amount of $2,000,000, of which some-
The case was not, however, brought to trial, and during the early part of 1897, all the assets of the company, including the rights, privi
In the meanwhile, the case (The City vs. The Sewerage Company) remained undisposed of, and no effort appears to have been made to fix it for trial until April of the present year, when one of the counsel for the plaintiffs in the Brennan case, having intervened in his capacity as a taxpayer, made a motion to that effect, and it was then transferred' and consolidated, as has been already stated. The explanation of this' inaction on the part of the litigants is, that negotiations looking to a compromise between the City and the New Orleans Sewer Company,, claiming to be the transferree of the New Orleans Sewerage Company, were begun and broken off, from time to time, but were never finally abandoned.
It is necessary, now, to a correct understanding of the questions at issue, that we should inquire into the origin, powers, and situation of the Sewerage .and Water Board, and into the action taken by that body which is here made the subject of complaint.
In April, 1899, there was' presented to the City Council of New Orleans a petition, signed by more than one-third of the property taxpayers, asking for the levy of a two-mill tax, for forty-three years, the?
“1. To acquiring title by the City, by construction or purchase, or both, to a system of waterworks; to the extension thereof throughout-the city; and to the purification of the water supply therefrom. 2. To-the construction, throughout the city, including the Eifth District, of a-free sewerage system, with free water therefor, the title whereof shall, be in the city.”
The petition further prayed the council to obtain legislative and constitutional authority for the capitalization of the tax to be levied and-' wth respect to other matters. An election was accordingly held, in order to take the sense of the property taxpayers, -and the tax was voted. • The General Assembly was, then, in August, 1899, convened, in extra session, and .an amendment to the constitution, in the form of an elaborate piece of legislation for the carrying into effect of the proposition of the taxpayers, was submitted to the electors of the entire state, and adopted, including a certain reservation, to the General Assembly, of the right to amend the same. This legislation, now embodied in the-constitution, establishes the Sewerage and Water Board and, .among other things, provides:
“Sec. 15. That said Board shall have power, by a vote of twelve of its members, to acquire, in the name and for the benefit of the City of' New Orleans, the plant and franchises of any water or sewerage companies in the City of New Orleans, but no contract for that purpose-shall be valid until ratified by ordinance of the Common Council of the • City of New Orleans. In case no agreement can be reached between said Board .and the City Council, on the one side, and the representatives of the said company on the other, as to the price to be paid said' companies for their property and franchises, and it shall become necessary for the City of New Orleans to expropriate the same, the price to be paid on such expropriation, shall be paid by said Board out of the proceeds of the -bonds aforesaid. The outstanding mortgage bonds of' such companies may be -assumed by the City as part of the price. Nothing in this act shall be held to affect the right of either the State of Louisiana or the City of New Orleans in the pending litigation against the New Orleans Water Works Company or the New Orleans Sewerage-Company.”
“The examination made of the sewers built in the City before 1895 by the New Orleans Sewer Company has given very satisfactory and gratifying results. It has demonstrated that a large brick sewer, twenty feet below the surface of the ground, and small pipe sewers, five to twelve feet below same, can be built so as to remain in a stable condition in the peculiar soil underlying. It has also produced sufficient evidence from which to assume that the amount of ground water seepage likely to enter the sewers may be taken at one million gallons per square mile of territory, per day, or one-third of the average rainfall. This seepage water will not only improve the condition of the upper layers of the soil in the city, but also facilitate the satisfactory carriage of the sewage during the early years, when comparatively few houses have been connected with the system and it will also give the sewerage agreat dilution. (Signed) B. Mi. Harrod, Rudolph Hexing, George W. Fuller, L. W. Brown, A. O. Bell, Board of Advisory Engineers.”
On July 18, 1901, the Sewerage and Water Board adopted the following resolution:
“Whereas, after duly authorized survey and investigation, it has been declared in the official reports of the general superintendent of the Sewerage and Water Board that certain property belonging to the New Orleans Sewer Company, consisting of real estate, material, and, more or less, completed work of construction may be made available in executing the adopted plans for the new sewerage system of this city, with marked economy and without impairment of the efficiency of the system, under these plans,
“Be it resolved, That the committee on sewerage and water, of thi3 Board, be instructed and fully empowered to have such additional and supplementary survey and investigation of the afore mentioned property made with the assistance or employment of disinterested exoert-1.*577 at their discretion, as will fully and definitely establish what portion, if any, of the said property may safely be acquired for utilization in the work of construction under the plans adopted for the new sewerage system, and that the said committee make report and offer recommendations covering the results of their labors, to be submitted to» this board, if practicable, not later than its next regular meeting in August.”
This was modified, in September, so as to provide that the experts .should make a careful appraisement of the value of the property and to authorize the committee to invite the Sewer Company to participate in the survey .and bear half of the expense, one expert to be appointed ■on each side. Agreeably to the action thus taken, A. C. Bell, former city engineer, was appointed on behalf of the Water Board and G. A. Nettleton on behalf of the Sewer Company, and they made the investi.gatioif together. Mr. Nettleton estimated the property to be worth .$229,444.80. Mr. Bell valued it at $169,619.83. During the course of this investigation, to-wit, on November 17, 1901, there was published in the Daily States of this city, a letter from the secretary of the Sewerage and Water Board calling the attention of the public thereto and inviting any persons who might see fit to do so, to avail themselves of the opportunity thus afforded to inspect the sewers. As soon as the investigation was completed, the reports of the experts were submitted to Messrs. Hering and Fuller, consulting engineers of the Board, who, upon January 14, 1902, gave their opinion in writing, as follows:
“* * * We beg to state that we have very carefully considered the various matters in the premises and have reached the following conclusions :
“1. As to the condition of the pipe and brick sewers of the Now Orleans Sewer Company, and, after minor repairs suggested by the ■experts, their fitness for incorporation into the new sewerage system for which plans were recently adopted, the evidence at hand shows they can be incorporated with absolute safety. The thoroughness of the -several inspections of these sewers, and the resulting records, place this matter in such a light that, on an engineering and physical basis, it Í3 no longer a question open for discussion.
“2. As to the value of the sewers and other tangible property of the Sewer Company, we have made a detailed examination of the two appraisements, by Mr. Bell, on behalf of the Sewerage and Water Board,*578 and by Mr. Nettleton, on behalf of the Sewer Company. Mr. Bell has-made a very conservative report in the interests of your Board, and we see no reason whatever for supposing that any reputable contractor would undertake to construct this work for a sum less than his estimate.Mr. Bell’s figures as to unit prices, correspond quite closely with tho3econsidered by your Board of Advisory Engineers, at their meeting in December, 1900, and applied to the average conditions and volume of work represented by the entire sewerage system now proposed for your city. Mr. Nettleton, on the other hand, appears to regard the value of the comparatively few existing sewers as having no connection with 'the-large mileage for the remainder of the city, and lays stress upon the difficult features which were encountered in the actual and pioneer construction of the first portion of the entire system. We believe that this explains, to a considerable degree, the discrepancies in the two estimates, due to differences in the prices usually prevailing in the same place for very large and for small volumes of work.
“3. We have no hesitancy in stating our opinion that the Sewerage and Water Board could well afiord to pay, at least, the amount estimated by Mr. Bell for these existing sewers. If they were to be replaced, independently of the remaining portions of the complete system^ we think it not unlikely that Mr. Bell’s figures might ¡be considerably increased, as shown by actual lettings. Rather than to hold in complete abeyance the construction of exceedingly important modem sanitary work for your city, by a disagreement as to their true value, woconsider that the discrepancy in the two appraisements is of small significance when viewed as a broad business proposition, and with reference to the vital interests associated therewith.”
On the witness’ stand, during the trial, the general superintendent, Mr. Earl, designer of -the plans for the constructed sewers and designer of the plans for the new system (in all essential particulars exactly similar); Mr. Crotts, his first assistant to-day, and his first assistant when the existing sewers were constructed; and Mr. Stephens, th®engineer of Stewart & McDermott, the contractors who built those sewers, expressed, in the most positive manner, the same views as Messrs. Bell and Nettleton and Messrs. Hering and Fuller, with regard to the condition of the existing sewers, their durability and absolute' safety, as well as easy practicability of incorporating them in the new system.
And that the city attorney has found no reason to change the opinion thus expressed is shown by the fact that whilst he has ably and earnestly argued on behalf of the City its case against the Sewer Company,
Basing its action, therefore, in so far as the availability and pecuniary value of the tangible property was concerned, upon the advice of civil engineers of the highest standing, employed and paid for that service, and, insofar as the claims of, and the pending litigation with, the Sewer Company were concerned, upon the advice of counsel, upon whom, under the law, and from any other point of view, it was fully ■authorized to rely, the Board, after some negotiations, in which the Sewer Company demanded $400,000, finally, upon February 20, 1902, closed, by its ratification, subject to the action of the City Council, a contract which had been agreed on between its executive committee and the Sewer Company, to the following effect: “The Sewerage and Water Board to pay the New Orleans Sewer Company, * * * in cash, the sum cf $295,000, with a warranty of satisfaction, by the Board, of all taxes unpaid and legally due by said company to the City of New Orleans or the State of Louisiana, on said property, and a pledge to effect immediate settlement of the suit now pending in the civil courts for the forfeiture of the charter and franchise of New Orleans Sewer Company.”
The taxes referred to amount to $9,173.20, so that, the total pries agreed on was $304,173.20. And the contract so made w.as ratified by the City Council a few weeks later.
It may be remarked, in concluding this résumé of the facts and of the evidence adduced, more particularly in the case against the Sewerage and Water Board, that, the two plaintiffs having taken the stand as witnesses, Mr. Brennan testifies, in substance, that his principal ground of complaint in bringing the suit was, that the Board was about to pay too much for the property to be acquired; that he would have been willing for it to have paid $200,000; but $95,000, for the franchise, was too much”; and Mr. Douglas testifies that he does not believe in sewerage.
Opinion.
There is no suggestion in the pleadings that the Sewerage and Water Board or the City Council were actuated by any corrupt motives in
Under Article 321 of the Constitution, it was competent for the General Assembly to have proposed an amendment to that instrument, without regard to any petition from the taxpayers of New Orleans; and the validity of an amendment, proposed as the General Assembly had the right to propose it, and adopted, as the electors throughout the State had the right to adopt it, is in no manner affected by any petition which may, previously, have been presented to a municipal council, or to the General Assembly. Assuming, then, for the purposes of the argument, that when the taxpayers of New Orleans asked that a tax be levied for the “construction,” throughout the city, of a free sewerage system, the language was selected with the deliberate purpose of restricting the use of the money to be raised to “construction” and of preventing its use, no matter how advantageous it might be, in the purchase of sewers already constructed, it, nevertheless, remains, that an .amendment to the Constitution has been proposed and adopted whereby the Sewerage and Water Board is established and is authorized to use the proceeds of the tax in question in acquiring, whether by construction or otherwise, “in the name, and for the ¡benefit, of the City of New Orleans, the plant and franchises of any Water or Sewerage Companies in the City of New Orleans,” subject only to the condition that any contract having that purpose in view shall he ratified by the City Council. If the taxpayers had any reason to complain that the amendment did not correctly interpret their petition, their remedy was to have made that fact known before it was proposed, or to have defeated if when it was submitted to the electors for adoption. It is not, however, suggested that there was any complaint, or that any effort was made in either of the directions indicated, and it is fair to suppose that it was considered desirable that it should he made clear that the proceeds of the tax to be levied might he used for the purchase, as well as the construction, of a sewerage plant, and it was made clear, accordingly, and beyond recall.
Considering the remaining ground upon which the plaintiffs rest their action — i. e., that the price which the defendant has agreed to pay for the property is excessive — it will be observed that the Constitution, as amended, in conferring authority on the Sewerage and Water Board to acquire the “plant and franchises” of any sewerage companies, imposes no other restriction or limitation than that the acquisition shall be ratified by the City Council. There is no provision as to the manner of the acquisition, or, if it should be by purchase, as to the price, or terms of payment. Whether, therefore, such property should be pur
“This discretion” (says Mr. Dillon) “where it is conferred, o-r exists, cannot be judicially interfered with or questioned, except where the power is exceeded, or fraud is imputed and shown, or there is a manifest invasion of private rights. Thus, where the law or charter confers upon -the City Council, or local legislature, power to determine upon the expediency or necessity of measures relating to the local government, their judgment upon matters thus committed to them, whilst acting within the scope of their authority, cannot be controlled by the courts. In such a case, the decision of the proper corporate body is, in the absence of fraud, final and conclusive, unless they transcend their -powers.” (Italics by the author.) Dillon on Mun. Corps., Vol. 1, pp. 151-2, See. 94.
The same doctrine is somewhat differently stated, as follows:
“The general rule is, that, where legislative or discretionary powers are conferred upon municipal corporations, the courts will not interfere, unless, in the exercise of such discretion, there is fraud, manifest ■oppression, or gross abuse * * *. The courts will not restrain, control, or coerce, the action of a municipal corporation on the ground that it is merely unwise, extravagant, or erroneous, or a mistake of judgment.” A. & E. Enc. of Law (2nd Ed.), Vol. 20, pp. 1229-30, and notes.
And, whether stated in the one way or the other, it finds support in -the jurisprudence of this court and of the country. First Municipality vs. Pease, 2 Ann. 542; Certain Inhabitants vs. City, 14 Ann. 452; Cannon vs. City, 27 Ann. 16; Watson vs. Turnbull, 34 Ann. 856; Handy vs. City, 39 Ann. 112; Conery vs. Waterworks Co., 41 Ann. 910; N. O. Gas Light Co. vs. City, 42 Ann. 192; Johnson vs. City, 105 La. 151; Hughes vs. Board, 108 La. 146; Semmes vs. Columbus, 19 Ga. 471; Shannon vs. O’Boyle, 51 Ind. 565; Athens vs. Carnak, 75 Ga. 429; Baird vs. Mayor, 96 N. Y. 567.
In the present instance, the Sewerage and Water Board did not ■exceed its powers in contracting for the purchase of the property in question; there is no fraud imputed to it, or shown, nor is there any invasion of private righf, manifest oppression, or gross abuse. The Hoard is composed of the nine members constituting the Drainage Com
Beyond this, it could, perhaps, be shown that the contract in question presents the essential features of a “transaction or compromise,” which is declared to be “An agreement between two or more persons, who, for-preventing or putting an end to a lawsuit, adjust their differences, by mutual consent in the manner which they agree on, and which everyone of them prefers to the hope of gaining, balanced by the danger of losing.” C. C. 3071.
And concerning which agreements it is provided, that they “have, between the interested parties, a force equal to the authority of things-adjudged. They cannot be attacked on account of any error in law or any lesion. * * *” O. O. 3078.
We, therefore, conclude that the contract in question should be sustained as valid and binding, and that the demands of the plaintiffs, Brennan and Douglas, should be rejected. In -this situation, it would" seem that the suit -brought by the City against the Sewer Company-must abate, since the City has acquired by contract all that it claims in that suit, and, by the same contract, is bound, with the Sewerage and Water Board, to “effect the immediate settlement” thereof. If, however, further action by this court should -be considered necessary, it may be taken in the future.
For these reasons, it is ordered, adjudged and decreed that the judgment appealed from, in favor of the plaintiffs, James A. Brennan and James H. Douglas, and against the defendant, the Sewerage and Water Board, be annulled, avoided and reversed, and that there n-ow be judgment in favor of the said defendant and against said plaintiffs, rejecting the demands of the latter at their cost in both courts.
Rehearing
In this case, it is ordered, adjudged and decreed that .the decree heretofore entered be supplemented by the addition of the following, to-wit: It is further ordered, adjudged and decreed that the judgment appealed from, in favor of said plaintiffs, James A. Brennan and James H. Douglas, and against the New Orleans Sewer Company and the Board of Liquidation of the City Debt, be annulled, avoided .and reversed, and that there now be judgment in favor of said defendants and against said plaintiffs rejecting the demands of the latter and dissolving the injunction issued at their instance, at the cost of said plaintiffs in both courts.