Eddy Valve Company v. Town of Crown Point
| Decision Date | 12 January 1906 |
| Docket Number | 20,392 |
| Parties | Eddy Valve Company v. Town of Crown Point et al |
| Court | Indiana Supreme Court |
Rehearing Denied June 5, 1906.
From Porter Circuit Court; William B. Biddle, Special Judge.
Action by the Eddy Valve Company against the Town of Crown Point and others. From a judgment for defendants, plaintiff appeals.
Affirmed.
Grant Crumpacker and William A. Ketcham, for appellant.
Johannes Kopelke, Thad. S. Fancher and Frank B. Pattee, for appellees.
This action was commenced by appellant in the Lake Circuit Court against the town of Crown Point and its codefendants, the Crown Point Water-Works Company and the Seckner Contracting Company. On change of venue the cause was tried in the Porter Circuit Court.
The complaint is in three paragraphs, each of which declares upon and seeks to recover against said town on a warrant for $ 1,400 issued by the town of Crown Point on February 14, 1896 to the Crown Point Water-Works Company. Each of these warrants before maturity was, for value received, assigned by indorsement to the Seckner Contracting Company, which company assigned said warrants by indorsement to the plaintiff. Copies of the warrants, together with copies of the indorsements, were filed with the complaint and made a part thereof. A judgment is demanded against the town, on the complaint as an entirety, for the sum of $ 6,000.
The town of Crown Point appears to have been the only defendant that filed an answer to the complaint. It was in three paragraphs: First. General denial. The second paragraph averred as a defense facts disclosing that said town at the time it issued the warrants in suit was already indebted in excess of two per cent of the value of taxable property therein, etc., and that therefore the warrants were void, and unenforceable against said defendant. The third paragraph alleged that the consideration of the warrants sued upon was the purchase of a certain water-works plant for said town, which plant at the time it was purchased and conveyed to the town was encumbered by a mortgage lien thereon to the amount of $ 35,000; that by reason thereof the defendant town was not authorized to purchase said water-works so encumbered, and that the purchase was, therefore, ultra vires, etc.
The plaintiff replied to the second paragraph of answer in two paragraphs: First. General denial. The second paragraph alleged that the town of Crown Point was incorporated under the general laws of this State, and that in the year 1895 it had a population of 2,500, and the value of the taxable property therein was $ 832,185; that it was the county seat of Lake county, Indiana, and that its outstanding indebtedness, as then claimed to exist, was $ 10,800, which arose out of the issue of bonds for the benefit of the school town of Crown Point. The paragraph then proceeds to set up facts to show the necessity of the town's being supplied with water for domestic purposes and fire protection, and further facts to disclose that said town had neither money nor credit to enable it to construct water-works. In order to obtain water for the above uses the town on October 10, 1895, by an ordinance passed and adopted by it, granted the right and privilege to the Crown Point Water-Works Company to establish and construct within said town a system of water-works. Various provisions of this ordinance are set out in the pleading. It is further shown that the Crown Point Water-Works Company was incorporated on October 9, 1895, the day immediately preceding the passage of the aforesaid ordinance. The purpose, or object, of the incorporation of this company was to supply the town of Crown Point with water. The number of water hydrants to be used by the town, the measurement by meters of the water consumed, the amount of rentals to be paid for water hydrants, and the prices to be charged consumers for the use of water are all provided for in the ordinance. The latter further provided that the Crown Point Water-Works Company might mortgage its plant, or water system, to an amount not exceeding $ 35,000 to enable it to secure money with which to construct the water-works, and that in the event of the execution of this mortgage the town should pay the hydrant rentals direct to the mortgagee or his trustee.
By another provision of the ordinance in question the town reserved to itself, or was to have the right at its option, for a period of thirty days after the completion of the water plant, to purchase and take over said plant from said company on the following terms and conditions: The conveyance was to be for $ 1,000, payment to be made at such time and in such manner as might be agreed upon between said town and said water-works company, but to be made on or before said town should take possession of said water-works. The sale was to be made subject to any encumbrances to secure an indebtedness placed on the plant by the Crown Point Water-Works Company, together with accrued interest thereon, and the town was to agree to keep the plant in good repair and condition. The deed of conveyance of the plant to the town was to provide that the conveyance was to be made expressly subject to the encumbrance, but the town was not to assume the payment of such encumbrance. It is alleged that the water-works plant was constructed by said Crown Point Water-Works Company in compliance with the ordinance, and that while the plant was in course of construction the authorities of the town required said company to make additions thereto beyond the requirements of the ordinance, at an expense of $ 4,200. To secure money to pay for constructing the plant, said company borrowed $ 35,000, and executed bonds therefor and secured the payment thereof by a mortgage upon said plant and system of water-works. The reply discloses that, after said plant was encumbered, the town of Crown Point availed itself of the option provided for in the ordinance in question, and purchased the plant from the company for $ 1,000, subject to the mortgage thereon of $ 35,000; and and at the request of the town authorities the water plant was sold and conveyed by said company to the town, subject to said mortgage lien. The town, however, was not to assume or agree to pay said mortgage indebtedness, but only to purchase and to take said plant subject to said lien.
It further appears from the averments of this reply that the inhabitants of the town at all times after the introduction by the town board of the ordinance in question had knowledge of the construction of the water plant by said company, and that the town contemplated purchasing the same and taking a conveyance thereof, and that said purchase and conveyance would be made unless the town authorities were enjoined from so doing; but, notwithstanding these facts, said inhabitants acquiesced in and assented to said purchase. Other facts are alleged to show that from and after March 7, 1899, but prior to May 15, 1901, the town of Crown Point and its inhabitants, with full knowledge of the passage of an act by the legislature of this State, in force March 7, 1899 (Acts 1899, p. 568), under the provisions of which towns and cities were empowered to purchase water-works, accepted all of the benefits of the purchase and conveyance of said water-works by the town, and made use of the same as the property of the town for furnishing water for domestic purposes and fire protection, with the full knowledge that the warrants in suit which constituted the consideration for such purchase and conveyance remained outstanding and unpaid.
It is further averred that the indebtedness of the town on and after March 7, 1899, had so diminished as to fall below the constitutional limitation of two per cent of the assessed value of the taxable property within the town, and that its revenues at that time were more than sufficient to pay said warrants; that the town at that time had full authority to make said purchase and become indebted on account of the warrants in suit. It is alleged that under the facts set up the town and the inhabitants thereof ratified the issuing of the warrants in suit and should not be heard to set up as a defense to this action that at the time the town incurred the indebtedness by issuing these warrants it was indebted in excess of two per cent of the taxable property therein.
The plaintiff replied to the third paragraph of the answer in three paragraphs: First. General denial. In the second paragraph substantially the same facts are averred as are alleged and set out in the second paragraph of reply to the second paragraph of the answer. The second paragraph of reply to the third paragraph of the answer, under the facts, relied upon an estoppel. The same facts are set up in the third paragraph of the reply to show that there was a ratification on the part of the town and its inhabitants. A demurrer was sustained to the second paragraph of plaintiff's reply to the second paragraph of answer, but the demurrer to the reply was overruled as to the third paragraph of the answer. Upon the issues joined the cause was submitted to a jury for trial.
At the close of the evidence in the case, the court refused to give any of the instructions tendered by the plaintiff, and refused to permit the parties to argue the case before the jury; but, on the motion of the defendant Town of Crown Point, gave to the jury the following peremptory instruction: "The court instructs the jury that in its opinion the allegations of the second paragraph of answer of the town of Crown Point have been sustained by sufficient proof on the part of said defendant, and such proof has not been overcome by any proof offered in behalf of the plaintiff, and that, therefore, the jury is required to...
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