Cobb v. City of Norman

• Decision Date: 02 February 1937
• Docket Number: Case Number: 26782
• Citation: 1937 OK 66,179 Okla. 126,64 P.2d 901
• Parties: COBB v. CITY OF NORMAN
• Court: Oklahoma Supreme Court

1937 OK 66

64 P.2d 901

179 Okla. 126

COBB v. CITY OF NORMAN

Case Number: 26782

Supreme Court of Oklahoma

Decided: February 2, 1937

Syllabus

¶0 1. MUNICIPAL CORPORATIONS - One Dealing With Municipality Charged With Notice of Limitations on Powers.

Whoever deals with a municipality does so with notice of the limitations on it or its agents' powers. All are presumed to know the law, and those who contract with it, or furnish it supplies, do so with reference to the law; and if they go beyond the limitations imposed, they do so at their peril.

2. SAME - Constitutional Limitation on Indebtedness.

The intention and plain purpose of Section 26, art. 10, of the Constitution, is to require municipalities to carry on their corporate operations upon the cash or pay as you go plan. The revenues of each year must take care of the expenditures of such year; and any liability sought to be incurred by contract, express or implied, executed or executory, in excess of such current revenue in hand, or legally levied is void, unless it be authorized by a vote of the people and within the limitations therein provided.

Appeal from District Court, Cleveland County; Tom P. Pace, Judge.

Action by Fred Cobb against the City of Norman. Judgment for defendant, and plaintiff appeals. Affirmed.

Sylvester Grim, for plaintiff in error.

T. Jack Foster, for defendant in error.

PER CURIAM.

¶1 This is an appeal by petition in error from a judgment of district court of Cleveland county in favor of defendant. The parties will be referred to as they appeared in the trial court.

¶2 On April 23, 1932, plaintiff, Fred Cobb, filed his petition in the district court of Cleveland county against the defendant, the city of Norman, a municipal corporation, charging that plaintiff was the city engineer of defendant; that the city commissioners ordered him to do certain engineering work preparatory to paving or special assessment projects during the fiscal years beginning July 1, 1929, and July 1, 1930; that at the time the commissioners employed him to do said work, there were sufficient funds on hand belonging to said city, properly appropriated, to pay for the same; that the work was performed and certain expenses incurred therein by him for which he asked judgment. The defendant answered with a general denial. Trial was had and judgment rendered for defendant May 6, 1935. Motion for new trial was overruled, and plaintiff appealed.

¶3 The evidence showed a contract of June 12, 1923, by which the defendant employed the plaintiff as its city engineer; that contract provided the plaintiff should be paid for his services a percentage of the costs of the work done, and in all cases where plaintiff performed services in pavement or special assessment projects, the completion of which was prevented by reason of protests, the defendant agreed to pay plaintiff for such services so performed, such payment to be equal to the actual expense incurred in performing such services; that plaintiff did certain work on order of defendant on paving or special assessment projects during fiscal years beginning July 1, 1929, and July 1, 1930, which projects were protested down and the defendant prevented from completing them; that plaintiff submitted his claim to defendant for payment for such services on said projects and items of expense incurred; and that defendant refused to pay the claim. The plaintiff offered in evidence exhibits 2 and 3, which were financial statements of defendant for said fiscal years 1929 and 1930, showing the amount of money which had been appropriated and set aside for various purposes. Exhibits 2 and 3 do not appear in the record, but defendant states in his brief these exhibits were omitted from the record by agreement of counsel. Defendant further sets out in its brief what it states to be a copy of the financial statements for the said two fiscal years when the work was done. The financial statements so set out show no money appropriated for engineer's fees, services and expenses.

¶4 1, 2. defendant contends plaintiff cannot recover for the reason the contract employing him of June 12, 1923, would not be a valid contract for work done during fiscal years beginning July 1, 1929, and July 1, 1930; and, further, the financial statements for said years did not provide any appropriation for the payment of said work.

¶5 The contract of June 12, 1923, was not binding on defendant after fiscal year in which it was made, and to be binding then there must have been funds available at the time, either voted or appropriated for the purpose of meeting the payments provided for in the contract. The rule is well established in Oklahoma that a contract of this nature creates a present Indebtedness against the municipality, and is in conflict with section 26, art. 10, of the Constitution of the state of Oklahoma and therefore void.

¶6 From the financial statements and the evidence it appears no specific appropriation was made or set up to pay for such engineering services and expenses for the years during which the work was done. Therefore, the defendant could not legally create or pay such indebtedness as plaintiff claimed. The plain purpose of section 26, article 10, of the Constitution, is to require municipalities to carry on their corporate business and operations upon a cash or pay as you go plan. The revenues of each year are used to pay claims of such year; and any liability sought to be incurred through contract, express or implied, executed or executory, in excess of such current revenue in hand, or legally levied, is void, unless it be...