El Dorado v. Citizens' Light & Power Co.

• Decision Date: 07 May 1923
• Docket Number: 353
• Citation: El Dorado v. Citizens' Light & Power Co., 158 Ark. 550, 250 S.W. 882 (Ark. 1923)
• Parties: EL DORADO v. CITIZENS' LIGHT & POWER COMPANY
• Court: Arkansas Supreme Court

250 S.W. 882

158 Ark. 550

EL DORADO v. CITIZENS' LIGHT & POWER COMPANY

No. 353

Supreme Court of Arkansas

May 7, 1923

Appeal from Union Chancery Court, J. Y. Stevens, Chancellor affirmed.

Affirmed.

U L. Meade and Mahoney, Yocum & Saye, for appellant.

No completed franchise was ever consummated.The ordinance was never legally passed.Not read on three different days.Sec 7502, Crawford & Moses' Digest;40 Ark. 107;100 Ark. 503;145 Ark. 547. 153 Ark. 1, not applicable;19 R. C. L. 888, § 188;Dillon's Municipal Corporations§§ 530-573;McQuillin's Municipal Corporations, § 607.Franchise was not accepted.12 R. C. L. 192, sec. 19;26 C. J. 1030, § 66;Pond on Public Utilities, § 375;70 Ark. 303;80 Ark. 108;114 Ark. 503;138 Ark. 390.Construction not begun within 3 months as required in sec. 5.Page on Contracts, sec. 51;15 N.E. 527(Ind.);94 Ind. 714; 92 N.E. 901(Ind.);Abbott, Municipal Corporations, § 901;26 S.Ct. 1439;5 Ark. 595;26 C. J."Franchises"§§ 58,66;178 Iowa 200;163 Cal. 668; 23 Wendell (N. Y.) 537;262 F. 291;271 F. 671;53 S. E.(N. C.) 292;64 S. E.(N. E.) 171;3 Am. & Eng. Ann. Cas. 89.Resolution not accepted was only a proposition without binding force.38 N.E. 534(Ill.);168 Ill. 286;42 Fla. 462;18 S.Ct. 875;30 P. 827;75 N.W. 130;101 N.Y.S. 61;94 N. E.(N. Y.) 1060;168 Pa. 182.Franchise when accepted and acted upon construed as other contracts.92 S.W. 948;64 S.E. 171;113 F. 256;86 Va. 608;84 S.W. 378;72 S.W. 55;75 N.W. 130;125 So. 366;153 U.S. 564;55 Pa. Sup. 564;55 Ark. 360, 105 Ark. 626;95 Ark. 532;134 U.S. 67;137 Ark. 195;5 Ark. 595.Franchise forfeited for failure to perform conditions subsequent.Such contracts construed most strictly against donee.96 U.S. 63;200 U.S. 22;111 U.S. 412;141 U.S. 67;166 U.S. 685;56 N. J. Equity 463;168 Pa. 181;35 Pa. S.Ct. 533;84 S.W. 378;209 Pa. 300;101 N.Y.S. 61.City council acts in legislative capacity in exercising the powers conferred upon it to grant franchises for the public benefit.101 Ark. 227;98 Ark. 543;64 Ark. 152.Franchises are lost by misuser or nonuser or failure to comply with conditions subsequent contained therein.235 U.S. 179;113 U.S. 574;185 U.S. 336;218 U.S. 645;30 P. 826.If franchise is valid, it only covers part of city east of Rock Island main line.26 S.Ct. 445;33 S.Ct. 697;26 S.Ct. 24; 97 U.S. 412;147 F. 1;56 N. E.(N. Y.) 528.Contract construed most strongly against party who prepared it.151 Ark. 81;112 Ark. 1;115 Ark. 166;90 Ark. 276;35 Ark. 156;113 Ark. 174;150 Ark. 492;26 C. J. 1031, sec. 70.Title or ordinance part thereof.Am. &Eng. Ann. Cas. 1917-E, 534.

Patterson & Rector, for appellee.

Amended and substituted complaint does not state a cause of action, and demurrer was properly sustained.In suits in chancery the exhibits to the pleadings constitute parts thereof, and such as constitute the foundation of the action will control the allegations of the pleadings.The two ordinances in question and the notice served by the city on appellee are made part of complaint.68 Ark. 263;104 Ark. 459;99 Ark. 218;135 Ark. 38.When a franchise is granted and accepted, it constitutes a binding contract.70 Ark. 300;80 Ark. 125;138 Ark. 393.Ordinance granting franchise not required read a sprovided in § 7502, C. & M. Digest.153 Ark. 1;100 Ark. 496.Ordinance granting franchise legislative act.101 Ark. 227.Not impeached by parol evidence.76 Ark. 205;66 Ark. 472;88 Ark. 265.The evidence accepted became a contract and cannot be varied or contradicted by parol testimony.113 Ark. 517.Demurrer admits no alleged fact not legally susceptible of proof.72 Ark. 119.Ordinance, with or without word "now" claimed to have been omitted in publication, has the same meaning.Allegations of the complaint show that the ordinance granting the franchise was accepted.153 Ark. 1.There is no ambiguity about the ordinance.Its meaning is clearly apparent from its terms.

U. L. Meade and Mahoney, Yocum & Saye, in reply.

When the facts stated, together with every reasonable inference therefrom, constitute a cause of action, the demurrer should be overruled.91 Ark. 404;70 Ark. 161;77 Ark. 351.The beginning of the doing of any one of the four things required by the ordinance was not a compliance with its terms. 55 Ark. 362.

OPINION

MCCULLOCH, C. J.

The council of the city of El Dorado passed an ordinance on August 17, 1922, granting a franchise to J. A. Rowland and eight other citizens of the municipality to construct and operate a system for furnishing light and water in the city, and the franchise was subsequently assigned by the original holders to the Citizens' Light & Power Company, a domestic corporation.Prior to that time a franchise, for similar purposes, not exclusive, had been granted to the Arkansas Light & Power Company, and that company is operating in the city.

On August 25, 1922, the city council passed another ordinance, revoking the ordinance of August 17, 1922, granting the franchise held by appellee, Citizens' Light & Power Company, and on December 2, 1922, the present action was instituted in the chancery court by the city against appellee to restrain appellee from asserting rights and proceeding to operate under the franchise which the council had undertaken to revoke.

The court sustained a demurrer to the original complaint, and appellant filed an amended complaint, to which the court also sustained a demurrer.Appellant stood upon its amended complaint, and declined to further amend, so the complaint was dismissed, and an appeal has been prosecuted to this court.

The validity of the franchise is attacked on three grounds: first, that the ordinance was not properly passed, in that it was read three times at the same meeting, and placed on its final passage without a suspension of the rules; second, that the passage of the ordinance was procured by false and fraudulent misrepresentations on the part of the promoters concerning its contents; and third, that there was a material change in the phraseology of the ordinance after its enactment and before publication.

Answering the first ground of attack on the validity of the ordinance, it is sufficient to call attention to the fact that this question has already been expressly decided by this court against the contention of appellant.We held in Barnett v. Mays,153 Ark. 1, 239 S.W. 379, that the statute(Crawford & Moses' Digest, § 7502) requiring that "all by-laws and ordinances of a general or permanent nature shall be fully and distinctly read on three different days unless two-thirds of the members composing the council shall dispense with the rule, does not apply to an ordinance or resolution entering into a special contract."In that casewe were dealing with an ordinance identical in character with the one now under consideration, and which granted a franchise authorizing the operation of an electric light plant.Counsel for appellant seek to make a distinction between the two cases because the court in the Barnett case used the words "special contract, " and that the contract under consideration in that case was more restricted than the one in the present case.The use of the word "special" may have been inapt, but the effect of the decision was that the statute quoted above has no application to an ordinance or resolution entering into a contract, and it is unimportant whether the contract is one more or less restricted in its character.The test as to the requirement of the statute is whether or not the ordinance is one of a "general or permanent nature," and unless it falls within that class the statute requiring a reading on different days or a suspension of the rule has no application.The fact that the franchise created by the ordinance runs for a long period of time does not make it general or permanent.Of course, all ordinances enacted by city councils are not permanent in the sense that they cannot be repealed, but those which endure until repealed are deemed to be permanent, and all others are not permanent.Ordinances of a general nature are those which are general and uniform in their application.It is clear, we think, that this point of attack on the validity of the ordinance is unfounded.

The other two grounds of attack on the validity of the ordinance may be discussed and disposed of together.

Section 1 of the ordinance in controversy reads as follows:

"There is hereby granted to J. A. Rowland, T. H. Norris, E. L. Pye, J. H. Alphin, George S. Miles, Hopkins Wade, H. M. Johnson, Neill C. Marsh and B. W. Griffin, their heirs and assigns, the right and authority to build, equip, maintain and operate a light and water plant in the city of El Dorado, Arkansas, and to furnish electric light, power and current, and water for domestic and other purposes, to the inhabitants of all that part of the city of El Dorado, Arkansas, lying east of the Chicago, Rock Island and Pacific Railway Company's main line tracks, as now located, with the right to erect poles, string electric lines and lay water mains in any of the streets, avenues and alleys thereof, and to furnish and supply the inhabitants of any other part of the city of El Dorado, Arkansas, with electric lights, power or current, and with water, who are not being supplied and furnished with such light and water by the Arkansas Light & Power Company; and the right to use the streets, avenues and alleys of said city for said purposes is hereby granted."

It is alleged in one of the paragraphs of the complaint that the passing of the ordinance was induced by false and fraudulent misrepresentations made by one of the promoters to the city council, to the effect that the "franchise was being sought for the sole purpose of...