DEFIANCE WATER CO. V. CITY OF DEFIANCE.
DEFIANCE WATER CO. v. CITY OF DEFIANCE et al (Circuit Court, N. D. Ohio, W. D. December 30, 1898.)
Rev. St. Ohio, § 2702, prohibiting cities from maldng any contract involving the expenditure of money. unless the funds therefor are in the treasury, does not preclUde them from making contracts for improvements not Involving payment for a year and a half or more thereafter.
SAME-RATIFICATION BY ELEOTORS-CONSTRUCTION OF STATUTES.
CORPORATIONS CONTRAOTS FOR IMPROVEMENT HAVING FUNDS IN TREASURY.
Act Ohio, May 4, 1885, as amended by Act May 12, 1886, authorizing cities of a certain grade to make contracts with water companies for a term not exceeding 20 years, supersedes, as to such cltles, Act Jan. 29, 1885 (amending Rev. St. Ohio, § 2434), requiring contracts with water companies, the limitations whereof are not prescribed by the act, to be ratified by the electors. Therefore a 30-year contract .for hydrants, at a fixed price per year, made by a city of such grade, Is valid for 20 years without the ratification of the electors.
JURISDICTION ORDINANCE VIOLA'fING OBLIGATION OF
FEDERAL COURTS CONTRACT.
a city from executing an ordinance prOViding for supplying Itself with
water, and thereby Violating a previous contract with a private company.
The federal court sitting in equity has jurisdiction of a suit to enjoin
On Demurrer to Complaint.
The bill of the complainant, an Ohio corporation, sets up a contract entered into with the city of Defiance in 1887 to furnish the city with 130 hydrants at $40 each per year; that, to comply with this contract, and relying on the revenue to be derived therefrom, a large amount of bonds were issued, and a plant built; that said revenue is the only means of meeting the interest on these bonds; that on January 7, 1800, the council passed an ordinance or resolution attempting to rescind and annul the contract; that subsequently It passed ordinances looking to the construction of waterworkS by the city; that after $3,142.50 had become due under said contract, for the last half of 1897, the councll colluded with the city solicitor to bring suit against themselves, and procured an injunction against their paying any money under said contract; that such action of the city, a municipal corporation, impaired the obligation of its contract with the complainant, and deprived it of its without due process of law. The prayer of the bill was for an account, and for an injunction restraining the city and councll from denying the of the contract, and from abrogating or attempting to annul the same, an" other equitable relief. The defendants demurred to the bill on the ground that the court had no jurisdiction of the cause; that the bill contained no matter of equity; that, by complainant's own showing, it was not entitled to the relief asked; that there was an adequate remedy at law; that the court had no jurisdiction to grant the rellef asked against the city and counCil.
Henry & R<lbert Newbegin, for complainant. Harris & Cameron and Ge<>. T. Farrell, City SoL, for defendants. SEVERENS, District Judge. The conclusion which I reach in this case is that the demurrer should be overruled. There are three principal questions involved in this determination, which are deci«;led as follows: 1. Was it necessary that the city at the time of entering into the contract for water should have had in its treasury, or should have had in course of collection, the funds necessary to meet the expenditure contemplated by the contract, as provided for by the section of the Ohio statutes in that behalf (being Rev. St. § 2702)? My opinion is
90 FlilDERAL RlQPORTElR. , ..
that the statute did not apply to the contract in question, and that there is objection to the contract by reason of any.requirement of the statute referred to. No paYlIlent was to becoJPe due for a considerable time, ayear and a half or rnore, and the statute does not intend that the money shall be collected and hoarded for the expenses of the in future years. 2. Was it necessary to the validity of the said contract that it should have been l'atified by a vote of the electors, as was required by the act of January 29, 1885,being section 2434 of the Revised Statutes? I this question must be answered hl the negative,rnY opinion being that· the act of May 4, 1885, as amended by the act of May 12, 1886, relating specially to a certain grade of cities, to .which the city of Defiance belongs, must be regarded as having superseded, to the extent pi the cities of tllat grade, the general provisions of the statute of January 29, 1885. The general act prescribed no limitation in regard to the time for which such contract might be made. The special acts of May 4, 1885, and May 12, 1886, limited the time to a term not exceeding 20 years. The term for which the contract might be madebefng short,it may well be that the legislature should have thought so much precaution was not. necessary as if the time had been for a protracted period. The contract was, in terms, for a period of 30 years; but as its stipulations are to be performed annually, and it is sepal,'able by years, Ithip.k the conttact is valid £01'20 years from its date. . A, somewhat similar question was presented to the supreme court of,. the United states in the case of Oity of Walla Walla v. Walla Walla Water Co., 172 U. So 1, 19.5up. Ot. 77, where the city relied upon the provisions of a general act which it was contended was by implication catTied into the special act which gave the city power, in general to provide itself with water. In my judgment, the reasons for regarding the special act referred to in that case as sufficient to carry the power without limitation from the general law were not they are here. more cogent 3. With respect to the question of the jurisdiction of this court sitting in equity, t think there can be no reasonable doubt. The defendants are threatening to carry into effect an ordinance or resolution of the city which is manifestly designed to destroy the efficacy of the con· tract of Alignst 17, 18S7. The authorities upon this subject are collected,and the doctrine stated, in the apove-mentioned case of City of Walla Wallav. Walla·WallaWater.Oo. The demurrer will accordingly be overruled, and the defen.dants be allowed to answer, if they , . . shall . so elect.
BAYNE et itl. v. BREWER. POTTERY CO. et at
(Circuit Court. N.D. Ohio, W. D. No. 1,380.
1. INSOLVENT CORPORATIONS-RIGHTS OF
December 21, 1898.)
A the ,property of' an Insolvent corporation appointed in a su)t in belllllf at Its general succeeds to the rights of the creditors !is well as of the corporation. and may avoid a chattel mortgage given