Femmer v. City of Juneau

• Decision Date: 16 June 1938
• Docket Number: No. 8639.,8639.
• Citation: 97 F.2d 649
• Parties: FEMMER v. CITY OF JUNEAU et al.
• Court: U.S. Court of Appeals — Ninth Circuit

97 F.2d 649 (1938)

FEMMER v. CITY OF JUNEAU et al.

No. 8639.

Circuit Court of Appeals, Ninth Circuit.

June 16, 1938.

James Wickersham and Henry Roden, both of Juneau, Alaska, for appellant.

Faulkner & Banfield and H. L. Faulkner, all of Juneau, Alaska, for appellee.

Before GARRECHT, HANEY, and STEPHENS, Circuit Judges.

STEPHENS, Circuit Judge.

This appeal is from a decree dismissing the amended bill of complaint in a suit brought by appellant against appellees to have a contract between appellees Northland Transportation Company and the City of Juneau declared invalid and to have the appellee officers of the City enjoined from doing anything under or in aid of the contract. The original bill was filed May 8, 1935. The amended bill was filed April 25, 1936, pursuant to leave of court granted on that date.

At the trial the following facts were brought out: The City of Juneau is a municipal corporation situate in and organized under the laws of the Territory of Alaska. It is located on the sea coast. Appellant was and now is a resident within the City of Juneau, an owner of both real and personal property therein, and was at all such times and now is a taxpayer in said City of Juneau. At all times the plaintiff, as such property owner, was duly assessed and paid taxes on his property in Juneau, for school, municipal and general taxation purposes.

When this action was begun the City owned and for more than twenty years had operated a public wharf or dock but it had been out of use for almost a year. It is undisputed that at the time the contract was executed the wharf had fallen into such a degree of disrepair that no ship could use it as a landing dock. The warehouse had commenced to rot away and could only be saved by covering it with corrugated iron. Piling had rotted away, and if replacement had not been promptly made the face of the wharf would have fallen into the bay.

The testimony was undisputed that at the time of making the contract the wharf, even in good repair, could not have been used or operated without loss unless one of the regular ship lines could be induced to adopt it for its regular landings.

Pursuant to resolution of its Council and by the signature of I. Goldstein, as Mayor, the City of Juneau and, by its proper officers, the Northland Transportation Company executed the contract in suit on April 24, 1935, effective two days thereafter.

The substance of the contract is as follows: Northland is granted for a period of five years the privilege of landing all its vessels, arriving at the port of Juneau, at the City wharf, and to there discharge and take on freight, baggage, mail and passengers. Northland is given a priority in the right to so land its vessels and thus use the dock, provided that a reasonable notice be given the City not less than six hours prior to the arrival of each of Northland's vessels. The City reserves the right to dock and serve other vessels than those of Northland subject only to the prior right just stated.

The City agrees to place the premises in a proper condition to be used by making certain described repairs, and to keep the premises in a reasonably safe and convenient condition, but Northland is to replace or repair broken parts of the wharf when damaged through its negligence.

The City is to furnish a wharfinger and is to handle the freight to and from the ships of the Northland vessels and provide warehousing therefor while in transit.

Northland agrees to pay the regular and current rates for such water as may be furnished it; to pay the outbound wharfage and advance charges, which are to be in accordance with the current tariff; and to pay a "call charge", fixed at Ten Dollars ($10.00) per voyage on each vessel calling at the wharf or a total of Fifteen Dollars ($15.00) where the vessel making a round trip voyage docks at Juneau upon both the going and returning trip.

Northland agrees that a minimum of 6000 tons of freight shall be moved across the wharf during each twelve month period of the life of the contract. In case the actual tonnage shall be less than 6000 tons, Northland will pay the current wharfage rate per ton on the difference between the actual tonnage so moved and the total of 6000 tons. The City may cancel the agreement after the expiration of eighteen months from its effective date if for any twelve month period the tonnage moved across the dock falls below 7000 tons.

The City may at any time sell the wharf property subject to the contract or may, on 90 days notice, cancel the agreement in case of a sale to a purchaser who desires to use the property for some other purpose than that of a public wharf.

The parties agree that in the case any dispute arises as to the terms of the contract or the fulfillment thereof it shall be settled by arbitration. The City agrees to defend, at its own cost, any suit or action brought by third parties attacking the validity of the contract. Northland is given an option to renew the contract, at its expiration, for a further period of five years. The City agrees, during the life of the contract, to ship by Northland's vessels, not less than ninety per cent of all freight consigned to the City, provided the charges for such service are not greater than those charged by competing lines.

There are various other provisions contained in the agreement, but the provisions mentioned suffice to illustrate the scope of the contract. Other clauses therein have no bearing on the questions presented to us.

In conditioning the wharf the City spent approximately $5000 from its general tax fund. The operation of the wharf under the contract up to Jan. 1, 1937, netted the City over and above all conditioning and operating expenditures, together with a proper allowance for depreciation, the sum of $869.84. Receipts from wharf operations were deposited in the general fund.

There was some speculative testimony that the use of the wharf by the Northland Company's boats might cause inconvenience to users of the separate City Float, but no actual interference was proved. The uncontradicted evidence is that no boat ever had to leave the wharf because of its use by the Northland vessels under the contract, and that there had never been any interference by the Northland's vessels with the use of the wharf by other parties. During the period that the agreement has been in effect many other vessels have docked at the wharf. The schedule of rates and charges for the use of the wharf were kept both in the wharfinger's office on the wharf and in the City Clerk's office at the City Hall, and were available to all users.

Appellant Femmer testified that his taxes had not been increased by the operation of the contract. He testified that he is the owner of a "public dock taking in various boats" and feared that he might be damaged in a roundabout way.

The trial court filed a written opinion and thereafter findings of fact and conclusions of law and decree were entered as of July 17, 1937.

The numerous arguments advanced by appellant in his attack upon the validity of the City of Juneau-Northland contract raise three fundamental questions. First, did the municipality have power to enter into the contract, or do the provisions of the contract transcend the scope of the City's powers? Second, if the contract is within the scope of the City's powers, was it entered into by the proper agency of the municipality? Third, if within the scope of the City's corporate powers and entered into by the proper agency, was the contract entered into by the method provided by statute?

We believe that the City of Juneau had power to enter into the contract. At the time of its execution the City had express legislative authority to "purchase, construct, or otherwise acquire, establish, and operate public wharves." Sec. 2383(4), Comp.Laws of Alaska, 1933, as amended by Chap. 48, Session Laws of Alaska, 1935.¹ Incident to a power thus expressly granted is the power to make such contracts as are necessary to its effective exercise. As said by a leading authority on municipal corporations:

"Ordinarily the local corporation is permitted to enter into all contracts which are proper and necessary to enable it to perform the functions expressly conferred and those which are necessarily implied from the powers conferred * * *. The power to make contracts may result (a) from the inherent power of a municipality to perform indispensable acts, (b) from express words in a statute or the charter, or (c) from what is implied as an incident to the powers expressly conferred on the municipality by a statute or the charter.

"* * * in order to exercise these express powers the municipality of course must make appropriate contracts; and it may be stated as a general rule that where there is no charter or statutory restriction a municipality may make any contract necessary to enable it to carry out the particular powers expressly conferred. `A corporation authorized to do an act has, in respect to it, the power to make all contracts that natural persons could make.' * * *"²

The wharf had been owned by the City for many years but for nearly a year prior to the execution of the challenged contract it was not used. The regular transportation lines offered the only source of income from operation of the wharf sufficient to meet operating expenses. It is well to here state that the City is prohibited from operating a public utility save from revenue collected from the users thereof. Sec. 2383(4) Comp.Laws of Alaska, 1933, as amended by Chap. 48, Session Laws of Alaska, 1935. The wharf "had commenced to rot away" and to place it "in a proper condition to be used" required extensive repairs whose cost amounted to more than $5000.

In such circumstances it cannot be said by this court that the contract, the substance of which is that the City, in return for a guarantee of a steady and substantial patronage, obligates itself to make certain repairs to the wharf...