City of Memphis v. Brown

CourtUnited States Supreme Court
Citation87 U.S. 289,22 L.Ed. 264,20 Wall. 289
Decision Date01 October 1873

87 U.S. 289
22 L.Ed. 264
20 Wall. 289
October Term, 1873

[Syllabus from pages 289-291 intentionally omitted]

Page 291

APPEAL from the Circuit Court for the Western District of Tennessee; the case, as appeared from a master's report, and otherwise, having been thus:

By a general incorporation act of the State of Tennessee, all cities of the State have full power to provide for the paving of streets, alleys, and sidewalks.1

The charter of the city of Memphis, in the State just named, enacts that 'the board of mayor and aldermen shall have power to improve, preserve, and keep in good repair

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the streets, sidewalks, public landings and squares of the city.'2

It enacts also,3 that the city may require lot-owners to improve the streets fronting their lots, and that 'should any owner fail to comply with any ordinance requiring him to repair, grade, and pave the same, the mayor and board of aldermen may contract with some suitable person for repairing, grading, and paving the same, and pay therefor,' and collect the amount from the lot owner.

It enacts also that the city may issue its bonds 'for the construction and pavement of the principal streets of the city;' and an act amendatory of the charter authorizes the issue of bonds 'for any public improvement.' Nothing was said as to the rates at which it might sell these bonds.

The ordinances of the city require that 'the city attorney' should prosecute all suits to which the city might be a party, or in which it might be interested.

These provisions of law and this ordinance being in force, the city of Memphis, in the year 1866, being desirous to have certain of its streets paved with what is known as the Nicholson pavement, passed an ordinance directing the mayor to advertise for twenty days for paving the whole or parts of them according to the plans and specifications of the engineer's office, and further authorized the mayor and the finance committee to make and enter into contract or contracts with the lowest responsible bidder, as to payments and time of completion, with such restrictions as they might think best.

The ordinance went on:

'The city civil engineer shall forthwith proceed to make a plat of said streets and a plat of the lots bounding and abutting the same; and shall be actual measurement ascertain the number of feet front on each lot bounding and abutting the said streets; and shall mark upon his plat the names of the owners of such lot and the number of feet belonging to each. . . . He

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shall also prepare and lay before the board of mayor and aldermen at their first meeting after a contract shall have been made by them for the grading, constructing, and paving of the street, upon which such lots front, an estimate of the entire cost of said improvement under the contract aforesaid, as shall be opposite the respective lot or lots, and shall mark upon said lot the amount thereof; and such amounts are hereby declared to be a special tax upon such lots respectively, and a debt due by the owners thereof in such instalments as the board of mayor and aldermen may determine; and he shall make out and deliver to the attorney for the city a list of the owners and the amounts due respectively, with the number of the lot and time of payment, and the attorney shall proceed to collect the same, and in case the owner shall fail to pay on demand, to enforce the lien against the lots given by the charter of the city.'

The advertisements and surveys directed were made, and bids put in by different parties. Among the bids were one by Taylor, McBean & Co., and another by Forest, Mitchell & Co. These two bids were accepted.

Accordingly, on the 11th of March, 1867, the city entered into a contract with Taylor, McBean & Co. for the paving, in sections, certain streets. The contract said:

'Upon the completion of each section, the contractors shall receive from the owner or owners of lots fronting upon said section one-half of the price of the same in cash, the remaining half to be paid by the said owner or owners in thirty, sixty, and ninety days, they giving their notes for the same, with the lien fixed by the city charter retained in said notes.

'The accounts for said pavement will be made out upon the completion of each section, by the city engineer, against the property owner or owners and delivered to the contractors for collection, and if not paid according to the terms above specified, within ten days after said payment becomes due, said accounts shall be placed in the hands of the city attorney for collection under the city charter.

'The city of Memphis will and does hereby guarantee to the contractors the payment of said accounts, as so assessed against the property owner or owners for the pavement.'

This contract was called 'the cash contract.'-

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On the 16th of July, 1867, the city entered into another contract, this one being with Forest, Mitchell & Co., for paving, in like sections, certain other streets. This contract said:

'Upon the completion of each section the contractor shall receive from the city the whole amount due under the conditions of this contract for said section; the same to be paid in Memphis city paving bonds, payable in five, ten, and fifteen years, in equal proportions, with six per cent. coupons attached, payable semi-annually. Principal and interest guaranteed and provided for by a sinking fund set aside for that purpose. Bonds to be taken at par.'

This contract was called 'the bond contract.'

As the reader will observe, there was no provision in this contract for assessment, nor any reference to property owners, or guarantee of payment. The contract was, however, subsequently modified as to the amount to be paid for certain portions of the work and as to the form of payment, with a provision for assessment and collection of certain portions thereof, as had been made in the cash contract.

Both of the contracting firms above named were unable to perform what they had contracted to do, and with their consent and that of the city, a new firm, that of Brown & Co., was substituted in their places; succeeding to their obligations and to their rights. Brown & Co. paved the streets according to the contract.

The property-holders of the streets paved did not pay for the paving opposite to their respective lots; and this failure of theirs producing embarrassment on the part of Brown & Co., these last sought relief by an application to the city. To give this relief the city, in August, 1868, lent to Brown & Co. its bonds to the nominal amount of $99,000. The bonds were worth at the time not more than fifty cents on the dollar, and they were lent with the understanding that they might be sold for what they would bring, and that other bonds might be bought to replace them when they should mature. Early in November, 1868, another application of the same character was made for $175,000 of the

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city bonds; and a resolution was passed on the 18th, by the city councils, and an agreement signed on the 20th of November by the city of the first part and Brown & Co. of the second. The agreement recited:

'That, whereas the party of the first part, in session on the 18th day of November, 1868, did pass the following resolution, to wit:

"Resolved, &c., That the city will loan Messrs. Brown & Co., the contractors of the Nicholson pavement, one hundred and seventy-five thirty-year $1000 pavement bonds for eighteen months, upon condition that said contractors will place in the hands of the city attorney paving bills against the property holders to the amount of the face value of said bonds; and upon the further consideration that said contractors WILL release the city from all liabilities upon said paving contract, unless it should be decided by the courts of least resort that the property holders are not liable for said pavement. The interest upon said bonds shall be paid by the said Brown & Co., and at the end of said eighteen months said bonds shall be returned to the city, principal and interest, unless said interest has been previously paid:'

'Which said resolution embraces all the conditions of said loan, and is accepted by the parties of the second part.'

The instrument then proceeded:

'It is further agreed by said parties that the city will furnish said bonds as rapidly as they can be executed, and that as said bonds are delivered to the said Brown & Co., the said Brown & Co. will deliver to the city attorney the collaterals to secure the same. This agreement is in no wise to affect or modify the terms and obligations of the original contracts for paving the streets of Memphis with the Nicholson pavement, as now existing between the parties, or the owners of the lots abutting on the streets, except when said contracts are changed and modified by the above resolution of the board of mayor and aldermen and this agreement.'

The city did not comply with this contract. The master thus set forth the facts:

'Brown & Co. received, with much delay in their issue, $140,000 in city bonds. The remainder of the loan ($35,000) was wilfully withheld by the then acting representatives of the city, and applied to payment of interest on the general funded debt of the city, the city getting about fifty cents on the dollar for

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the bonds thus withheld. The mayor had given to Brown & Co. a letter (called by the city an acceptance, but which does not possess a single quality of a commercial acceptance), stating that Brown & Co. should be entitled to receive $35,000 of Memphis city bonds so soon as they could be signed and ready for delivery. But they were never signed, or if signed, never delivered, and in that particular the city did not comply with the stipulations whereby it received an agreement for release from its guaranty of the cash payments by property holders. The greatest and apparently most inexcusable neglect and...

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