Boise Development Co., Ltd. v. City of Boise

• Citation: 26 Idaho 347,143 P. 531
• Parties: BOISE DEVELOPMENT COMPANY, LTD., Appellant, v. BOISE CITY, a Municipal Corporation, Respondent
• Decision Date: 30 September 1914
• Court: United States State Supreme Court of Idaho

143 P. 531

26 Idaho 347

BOISE DEVELOPMENT COMPANY, LTD., Appellant, v. BOISE CITY, a Municipal Corporation, Respondent

Supreme Court of Idaho

September 30, 1914

CONTRACT OF MUNICIPAL CORPORATION-WHEN VOID-WHAT CONSTITUTES DEBT OR LIABILITY UNDER SECTION 3, ARTICLE 8 OF CONSTITUTION - CONSTITUTIONAL CONSTRUCTION - WHAT CONSTITUTES INDEBTEDNESS FOR ORDINARY AND NECESSARY EXPENSES - NEW DEBT.

1. When a city enters into a contract by the terms of which it becomes liable for a large expenditure of money, exceeding in that year the income and revenue provided for it for said year, without fully complying with all the provisions of sec 3, art. 8 of the constitution of Idaho relating to such expenditure, held, that said contract is void.

2. The word "liability," as used in said section, has its ordinary meaning, and signifies the state of being bound in law and justice to pay an indebtedness or discharge some obligation.

3. Where uncertain and contingent claims for alleged damages to the property of a corporation against a city are made a part of the consideration of a contract entered into between them and said claims have never been liquidated, settled, or reduced to a definite fixed amount of indebtedness against said city, before the date of the contract, by a judgment or decree of court, arbitration, compromise, nor in any manner whatever, if these sums are liquidated, settled and fixed as a definite amount of indebtedness against the city for the first time by the contract itself, held, that this would constitute a new debt.

APPEAL from the District Court of the Third Judicial District for Ada County. Hon. Carl A. Davis, Judge.

Action for damages for breach of contract. Judgment for defendant dismissing said action. Affirmed.

Judgment of the trial court affirmed, with costs in favor of the respondent.

Smead, Elliott & Healy and Hawley, Puckett & Hawley, for Appellant.

A claim for uncertain and unliquidated damages is not a debt. (Jackson v. Bell, 31 N.J. Eq. 554.)

Our supreme court has had sec. 3, art. 8 of the constitution under consideration many times. On every occasion when the prohibition has been applied, there has been a true indebtedness involved. (Ada County v. Bullen Bridge Co., 5 Idaho 79, 47 P. 818, 36 L. R. A. 367; Ball v. Bannock County, 5 Idaho 602, 51 P. 454; Dunbar v. Board of Commrs., 5 Idaho 407, 49 P. 409; Bannock County v. Bunting & Co., 4 Idaho 156, 37 P. 277.)

The case of Feil v. Coeur d'Alene City, 23 Idaho 32, 129 P. 643, 43 L. R. A., N. S., 1095, a case cited by the city, deals with a true indebtedness.

The California court, in which state the section is identical with our own, and the construction of which court has been quoted with approval by our own, has construed the section exactly as we contend for. (McBean v. City of Fresno, 112 Cal. 159, 53 Am. St. 191, 44 P. 358, 31 L. R. A. 794; Smilie v. Fresno County, 112 Cal. 311, 44 P. 556; Johnson v. Bank of Lake, 125 Cal. 6, 73 Am. St. 17, 57 P. 664; Doland v. Clark, 143 Cal. 176, 76 P. 958.)

Liability to pay money arising out of tort is not the creation of an indebtedness. (Ft. Dodge Electric Light & Power Co. v. Ft. Dodge, 115 Iowa 568, 89 N.W. 7; Conner v. Nevada, 188 Mo. 148, 107 Am. St. 314, 86 S.W. 256; Lorence v. Bean, 18 Wash. 36, 50 P. 582; Bloomington v. Perdue, 99 Ill. 329; Rice v. Des Moines, 40 Iowa 638; Little v. Portland, 26 Ore. 235, 37 P. 911; Cook v. Ansonia, 66 Conn. 413, 34 A. 183; Smith v. St. Joseph, 122 Mo. 643, 27 S.W. 344.)

The compromise of an action or claim is not the creation of a debt. (Chicago v. Pittsburg etc. Co., 244 Ill. 220, 135 Am. St. 316, 91 N.E. 422; Conyers v. Kirk, 78 Ga. 480, 3 S.E. 442.)

The contract does not create a new liability. Indebtedness already existing may be paid in a given year, though the sum so paid exceeds the income of that year. (Hickey v. Nampa, 22 Idaho 41, 124 P. 280.)

If the right to a compromise is considered best to the city's interest, the exercise of this discretion vested in the council will not be reviewed by the courts. (Pike v. State Land Board, 19 Idaho 268, Ann. Cas. 1912B, 1344, 113 P. 447; Murphy v. Chicago, R. I. etc. Ry. Co., 247 Ill. 614, 93 N.E. 381.)

Charles F. Reddoch, for Respondent.

It is safe to presume that if the city had sufficient funds available with which to carry out the scheme of improvement contemplated, an appropriation would have been made for that purpose, and in that event the contract might in some of its phases be legal, but the contrary conclusively appears. It provides for future improvements and future payments of at least $ 5,000 a year for at least five years, with no provision made at the time of the execution of the contract for defraying this expense, in direct violation of sec. 3, art. 8 of the constitution. (Hickey v. City of Nampa, 22 Idaho 41, 124 P. 280; Veatch v. City of Moscow, 18 Idaho 313, 21 Ann. Cas. 1332, 109 P. 722; McNutt v. Lemhi County, 12 Idaho 63, 84 P. 1054; Ada County v. Bullen Bridge Co., 5 Idaho 79, 47 P. 818, 36 L. R. A. 367; Dunbar v. Board of Commrs., 5 Idaho 407, 49 P. 409; Bannock Co. v. Bunting & Co., 4 Idaho 156, 37 P. 277.)

A city indebtedness incurred during one fiscal year cannot be paid from the income and revenue of a future fiscal year, unless a fund is specially provided for the purpose, and collected therefor in such future year. (Theiss v. Hunter, 4 Idaho 788, 45 P. 2; San Francisco Gas Co. v. Brickwedel, 62 Cal. 641; Feil v. City of Coeur d'Alene, 23 Idaho 32, 129 P. 643, 43 L. R. A., N. S., 1095; Ramsey v. City of Shelbyville, 119 Ky. 180, 83 S.W. 116, 1136, 68 L. R. A. 300; Eaton v. Mimnaugh, 43 Ore. 465, 73 P. 754; O'Neil Engineering Co. v. Town of Ryan, 32 Okla. 738, 124 P. 19; Campbell v. State, 23 Okla. 109, 99 P. 778.)

TRUITT, J. Sullivan, C. J., concurs.

OPINION

TRUITT, J.

This action was commenced by the appellant as plaintiff in the court below to recover damages from respondent, Boise City, for breach of a written contract entered into between appellant and respondent on the 27th day of December, 1911.

The complaint sets out said contract in full, and, though the same is quite lengthy, for the reason that it is the basis of the action and there is much controversy as to the meaning and legal effect of its terms, we think it proper to give it in full as follows:

"This agreement, made and entered into this 27th day of December 1911, by and between Boise City, a municipal corporation of the state of Idaho, acting herein by the duly elected and qualified mayor and clerk of said municipal corporation, by and through the authority of its duly elected and qualified common council, and Boise Development Company, Ltd., a corporation organized and existing under and by virtue of the laws of the state of Idaho, with its principal place of business at Boise City, Ada County, Idaho, Witnesseth:

"That whereas the said Boise City is the owner of certain real property commonly known and designated as the Julia Davis Park, lying and being along the north bank of Boise River, between the Ninth Street bridge and the Broadway bridge leading across said river from said city, part of which property is, at the present time bottom land of said Boise river, and being cut up by many small arms of said river, and said land is not in a compact form, and it is the desire of the said Boise City to fill in the wasted parts of said land and to establish a permanent park, and to grade and beautify said land, and otherwise improve the same, in order to get the same in shape, and in order to protect the same from the action of erosion of Boise river, and to place such embankments and structures, and to drive piles, and to do other necessary and proper work in order to protect the said land and to give the said river at this vicinity a uniform width and a uniform bank along the said north bank of said river between the said bridges hereinbefore mentioned;

"And whereas, the said Boise Development Company, Ltd., is owner of certain interests in certain real property lying along the south bank of said river and directly opposite and across said river from the property hereinbefore mentioned, belonging to said Boise City;

"And whereas, the said Boise City is desirous of reclaiming certain lands on the south bank of said Boise River, the same being opposite to the said Julia Davis Park and adjacent to certain property owned by the Boise Development Co., Ltd., and known as Boise City Park Subdivision, situate in Ada County, Idaho;

"And whereas, it is necessary and convenient, and to the best interests of said Boise City to establish a uniform width of said river between the said Broadway bridge and the said Ninth Street bridge, and also to establish uniform banks on the south and north banks of said river between the said bridges;

"And whereas, it is the intention of said Boise City from time to time to do such work and construct such dams, breakwaters and improvements as shall be necessary and proper to establish a uniform width, and to provide uniform banks on the said river between the said Ninth Street and the said Broadway bridges;

"And whereas, there is now pending in the District Court of the Third Judicial District of the State of Idaho, in and for Ada County, a certain action brought by the said Boise Development Co., Ltd., wherein Boise City has been made a party defendant, wherein it is sought to restrain the said city and others from the construction of a proposed wing dam or breakwater in the said Boise River between the said Ninth Street and Broadway bridges;

"And whereas, it is mutually desired between the said parties hereto to effect an amicable settlement of the controversy involved in said action, and to beautify and improve the north and south banks of...