City of Pinehurst v. Spooner Addition Water Co.

• Decision Date: 15 February 1968
• Docket Number: No. 6879,6879
• Citation: 424 S.W.2d 485
• Parties: CITY OF PINEHURST, Texas, Appellant, v. SPOONER ADDITION WATER COMPANY et al., Appellees. . Beaumont
• Court: Texas Court of Appeals

Page 485

424 S.W.2d 485

CITY OF PINEHURST, Texas, Appellant, v. SPOONER ADDITION WATER COMPANY et al., Appellees.

No. 6879.

Court of Civil Appeals of Texas Beaumont.

Feb. 15, 1968.

Rehearing Denied Feb. 28, 1968.

Keith, Mehaffy & Weber, Beaumont, for appellant.

Sexton & Owens, Orange, for appellees.

HIGHTOWER, Chief Justice.

On October 10, 1957, the City of Pinehurst adopted a franchise granting to Spooner Addition Water Company the right to distribute water in a portion of said City at a time when the City had no municipally owned facilities. On September 29, 1964, suit was instituted by the City to procure a declaratory judgment that the offer of the franchise to the water company had never been accepted by said company and that the City had no obligations to it under the provisions thereof. The water company filed a cross-action wherein it sought the recovery of the market value of its old water distribution system. Upon the basis of favorable jury findings for the water company, judgment was rendered against the City for $29,000.00 as the 'market value' for the old system. From said judgment, the City has duly perfected its appeal. The City of Pinehurst will be referred to as 'the City' hereinafter, and the Spooner Addition Water Company will be referred to as 'the water company' or other appropriate designation.

By its first point of error, the City contends that the offer of a franchise never ripened into a contract; hence, there was no obligation on the part of the City to purchase the old water distribution system. Under this point of error, the City correctly points out that the company failed to post bond as required under the contract; it did not give notice to the State Health Department of the water system and main, nor were said plans approved as required by Article 4477--1, Sec. 12(a) and Sec. 12(b), Vernon's Ann.Rev.Civ.St.; it engaged in the furnishing to the public of drinking water, for which a charge was made without having the same done under the supervision of a competent water works operator in violation of Article 4477--1, Sec. 11(a), R.C.S.T.; it knowingly furnished the public with drinking water which had been contaminated by rust and other foreign materials in the pipes; it failed to comply with the terms and provisions of said ordinance in that it did not maintain said water distribution system in accordance with the rule and regulations of the State Health Department and particularly Rule E 1.00, Sec. (c) and Sec. (i).

The City simply argues, that by reason of the established aforesaid acts and omissions by the water company, that said company never complied with the terms and provisions of the offer of the franchise and, therefore, a contract never came into existence. That it cannot be contended that there was any acceptance of the offer so as to ripen into a contract. It urges, that by reason of the aforesaid acts and omissions, there was no lawful performance by the water company, that the attempted performance by said company was in violation of State law enacted for the protection of the public health. Its purported performance was no performance at all. In substance, the City contends that because illegal actions were committed by the company in its performance of the contract, that there was no performance, and that no contract came into existence. We do not agree.

The contract itself was clearly a legal one. The fact that all elements of it were not legally performed by the company does not detract from its legality when first entered into by the parties. The law is well established, as stated by our Supreme Court in Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146:

'A contract that could have been performed in a legal manner will not be declared void because it may have been performed in an illegal manner. Labbe v. Corbett, 69 Tex. 503, 6 S.W. 808; 12 Am.Jur., p. 647, Sec. 153. According to the foregoing settled rules, the contract by which the parties associated themselves together, as alleged in the petition, must be held valid and not illegal.'

'A contract is not rendered illegal simply because in carrying it out illegal acts are committed. Erminger v. Daniel, Tex.Civ.App., 185 S.W.2d 148.'

By its second point of error, the City contends that the water company, having breached the terms of the franchise by its aforesaid illegal actions and omissions, the City was relieved of any obligation to purchase the old water distribution system.

We find no merit in such contention. In answer to Special Issue No. 2, the jury found that substantial compliance of the contract by the water company was waived by the City by acts or conduct evidencing an intent on the part of said City not to insist upon performance. This finding by the jury has not been attacked by the City in its brief, hence, we overrule such point of error.

Moreover, the record reflects that as a matter of law the City waived such contentions. There is no evidence of a single act on the part of the City from October 10, 1957 until September 26, 1964 that was in any way inconsistent with a belief that they considered the contract to be subsisting, nor did they, by any act or conduct, indicate any dissatisfaction with the performance of the company or any intention to...