City of Logansport v. Dykeman

• Decision Date: 21 June 1888
• Citation: 116 Ind. 15,17 N.E. 587
• Parties: City of Logansport v. Dykeman et al.
• Court: Indiana Supreme Court

116 Ind. 15

17 N.E. 587

City of Logansport

v.Dykeman et al.¹

Supreme Court of Indiana.

June 21, 1888.

Appeal from circuit court, Cass county; M. Winfield, Judge.

Action by David D. Dykeman and George C. Taber against the city of Logansport to recover compensation for the services of Dykeman in effecting a compromise of certain of the defendant's bonded indebtedness. The first and third paragraphs allege a contract for such services between the city and Dykeman, acting for himself and his copartners in the firm of Dykeman, Wilson & Taber, and the second paragraph is upon the common count for the same services. Wilson, who was alleged to have assigned his interest to plaintiffs, was joined as a defendant, and filed a disclaimer. A demurrer to the first and third paragraphs was overruled. The city filed a plea in abatement admitting the partnership between plaintiffs and Wilson, and alleging that Wilson was a member of defendant's common council from May 5, 1885, and was such at the time of answer; and that as such partner, subsequent to November 5, 1885, he received his proportionate share of the fees arising from the collection of certain bonds which formed a part of the consideration of the alleged contract with the city, and which were paid under such contract. A demurrer to the answer in abatement was sustained. At the trial the city asked for a continuance on the ground of the absence of one of its witnesses, Daniel W. Tomlinson, who was a councilman. The remaining facts are sufficiently stated in the opinion. Judgment was entered for plaintiffs, and the city appealed.Q. A. Myers, (D. H. Chase, of counsel,) for appellant. D. C. Justice, D. P. Baldwin, and D. D. Dykeman, for appellees.

Mitchell, J.

This was a suit brought by David D. Dykeman and George C. Taber against the city of Logansport to recover the amount which it is alleged the city agreed to pay the plaintiffs for the services of the appellee Dykeman in effecting a compromise and settlement of a large outstanding bonded indebtedness against the city in the year 1885. William T. Wilson, a partner in business with the plaintiffs, was made a party defendant to answer; it being alleged in the complaint that he had no interest in the claim against the city, he having assigned or surrendered his interest therein to the plaintiffs. It is averred that the Ætna Insurance Company of Hartford, Conn., held bonds theretofore issued by the city of Logansport, amounting to $80,000principal, and $61,000 of accumulated and overdue interest. Suit had been commenced, and was then pending against the city to enforce a payment of the bonds and interest, amounting to $141,000. Thereupon, on the 4th day of February, 1885, the city of Logansport, as it is alleged, entered into a contract with the plaintiff Dykeman, by the terms of which the latter undertook and agreed to effect a compromise, and settle with the holders of the bonds and coupons, and procure the indebtedness to be canceled and surrendered up to the city upon such terms as might be agreed upon by the common council of the city and the holders; for which services the city promised and agreed to pay him 5 per cent. of the amount of the reduction which he might secure from the principal and interest of the bonds and coupons. It was further provided that, in case the plaintiff should fail to secure a compromise and reduction satisfactory to the common council of the city, he was to receive no compensation for his services, except the sum of $100, which was to be paid towards his expenses. It is averred that he entered upon the performance of his contract; that the city paid him $100 out of its treasury for his expenses; and that he secured a compromise which was acceptable to the city,-the result of the settlement being that the bonds and interest coupons above mentioned were surrendered up and canceled upon the payment by the city of $95,000, thus saving the sum of $46,000. The plaintiffs claim that the city became indebted to them in the sum of $2,300; that amount being 5 per cent. of the reduction secured by the services of the appellee Dykeman. The complaint was held good on demurrer, and this ruling is one of the grounds on which error is predicated.

The argument on behalf of the appellant is based upon the proposition that “a common council of a city can only enter into a contract for personal or professional services by a record.” Hence it is contended, since it does not appear by averment in the complaint in the present case that the contract which the plaintiffs rely upon was entered of record, and adopted by taking the yeas and nays, as is required upon the adoption of a by-law, ordinance, or resolution, that it afforded no right of action, and that the court below erred in not sustaining the demurrer to the complaint. The averment in the complaint in that regard is general, and to the effect that on the 4th day of February, 1885, the city of Logansport entered into a contract with the plaintiffs whereby the appellee Dykeman undertook and agreed that in consideration, etc. Under this averment, it must be presumed that whatever was necessary to be done by the common council in respect to its records, in relation to entering into the contract relied on by the plaintiffs, was properly done. Over v. City of Greenfield, 107 Ind. 231, 5 N. E. Rep. 872. It is quite true that section 3099, Rev. St. 1881, declares that, “on the passage or adoption of any by-law, ordinance, or resolution, the yeas and nays shall be taken, and entered of record.” This is to the end that in acting upon matters of a quasi judicial or of a legislative character, in which the public is concerned, or which may affect the persons or property of citizens, each member of the common council shall be obliged to assume his full measure of responsibility by putting himself upon record, and thus indicating his attitude in regard to the matter in question. Steckert v. City, 22 Mich. 104. It is a mistake to suppose, however, that in the transaction of mere matters of business, such as the purchase of goods necessary for the welfare of the corporation, or the employment of persons or agencies to perform service for or to protect the interests of the municipality, a formal ordinance, by-law, or resolution must be adopted, and the yeas and nays taken and entered of record. Cities are authorized, upon conditions prescribed, to issue bonds, to incur liabilities, to purchase and own property, and to employ various agencies in conducting the business affairs which concern the municipality. City of Indianapolis v. Gas-Light Co., 66 Ind. 396;Leeds v. City of Richmond, 102 Ind. 372, 1 N. E. Rep. 711. As a consequence, they have the incidental power to compromise and adjust disputed claims, and to employ agents or attorneys to accomplish that end. The statute does not prescribe the method by which contracts of that character are to be made, nor that such contracts must be in writing. The method of adopting or the form of such contracts are therefore matters within the discretion of the council. Of course, the proper and business-like way would require that the employment should appear upon the record of the proceedings of the common council; but the record is not necessarily the contract, although it may afford the most satisfactory evidence of the fact that a contract was made. Where, however, a common council, properly convened, enters into a contract with an attorney, or where an attorney is employed through the agency of a committee or other authorized person, and has performed service, of which the municipality has accepted the benefit, it will be too late, when he asks to be compensated for the services according to the agreement, to object that the contract was not in writing, or that the vote of the council does not appear upon the record of its proceedings. In respect to such contracts, a municipal corporation may be bound by the acts of its properly authorized agents substantially as a natural person. Bank v. Patterson, 7 Cranch, 299;Township v. Township, 11 Iowa, 506. Cases involving contracts for street improvements, and those in which certain precedent steps are required to be taken before the common council can acquire jurisdiction to contract at all, or where the statute requires that the contract be made in a certain form, or in pursuance of a certain mode, bear no analogy to the present case. In such cases the common council exercise a special statutory power in relation to the contract; and where a mode of procedure is prescribed, and the conditions and form of the contract are matters of statutory regulation, both the mode of procedure and form of the contract must be substantially observed. City v. Humphrey, 84 Ind. 467;Turnpike Co. v. Board, 72 Ind. 226. On the other hand, where the contract is one which the corporation has the incidental power to make, independently of any statute, in order that it may execute powers expressly conferred, and carry out the purposes of its being, the rule that such contracts are not void merely because there is no written evidence of them, or because of the absence of some mere formality, is now too firmly settled to be shaken, Ross v. City of Madison, 1 Ind....