Frasch v. City of Prichard

• Citation: 224 Ala. 410,140 So. 394
• Decision Date: 21 January 1932
• Docket Number: 1 Div. 688.
• Parties: FRASCH v. CITY OF PRICHARD ET AL.
• Court: Supreme Court of Alabama

140 So. 394

224 Ala. 410

FRASCH v. CITY OF PRICHARD ET AL.

1 Div. 688.

Supreme Court of Alabama

January 21, 1932

Rehearing Denied March 31, 1932.

Appeal from Circuit Court, Mobile County; J. Blocker Thornton Judge.

Taxpayer's bill by Edward B. Frasch against the City of Prichard, the individuals composing the City Council, and the J. B. McCrary Engineering Corporation, to enjoin performance of a contract for municipal improvements. From a decree sustaining a demurrer to the bill, complainant appeals.

Reversed and remanded.

Armbrecht Hand & Twitty, of Mobile, for appellant.

Joseph G. Bowen, of Mobile, and Leon G. Brooks, of Brewton, for appellees.

BROWN J.

This is a bill by a resident citizen and taxpayer seeking to enjoin the performance of a contract entered into by the respondents, the city of Prichard, a municipal corporation having less than 6,000 inhabitants, and the J. B. McCrary Engineering Corporation, for the construction of certain paving, storm and sanitary sewers, sidewalks, curbs, gutters etc., in pursuance of local improvement ordinances, adopted by the mayor and city council, providing for the improvement of certain streets.

Demurrers filed by the defendants to the bill were sustained, and from that decree the complainant prosecutes this appeal.

After the adoption of said ordinances, notice was given by publication as required by section 2182 of the Code as amended by the Municipal Public Improvement Act, approved September 10, 1927, Acts 1927, p. 760, § 11, inviting competitive bids for the work. The published notice, after stating that sealed bids would be received on a specified date, describing in a general way, the character and approximate quantity of such work, and, as to some of the work, the type of material to be used, further stated: "Plans and specifications are on file in the office of the City Clerk at Prichard, and in the office of the Consulting Engineers, Birmingham, Alabama. Specifications and proposal blanks can be secured, on deposit of $5.00, from the undersigned or from the Consulting Engineers. Copy of the plans will be mailed by the Consulting Engineers on receipt of payment (not deposit) of $5.00. The bidder shall agree to accept special assessment bonds at par and accrued interest in payment for said work. The right to reject any or all bids is reserved," etc.

The only bid submitted was the bid of the respondent McCrary Engineering Corporation, which was accompanied by the following proposal:

"Our bid of even date covering the construction or proposed Municipal Improvements under Ordinances Nos. 105, 106 and 107 is conditioned upon our being awarded all of the work for which bids were advertised.

"Further that bi-monthly estimates of materials furnished and work done be made and the City promptly to issue us notes authorized under section 2223 of the Code of Alabama to cover the full amount of said estimates. Said notes to bear 8% interest from date, to be payable on or before one year from date, for the payment of which the City will pledge the proceeds of assessments to be made against the property benefited by the improvements and also the full faith and credit of the City to the extent of its Constitutional debt limit at the time of issuing said notes. Such notes may be paid by the delivery to the holder thereof of special assessment bonds of the City issued under the Code of Alabama, the same to be a lien or charge against the property improved and against the funds collected from assessments levied against the property improved, in which bonds the City shall also pledge its full faith and credit in the sum of $10,000.00 to pay any deficiency, not exceeding that amount, that may result in the failure of the City to collect said assessments and/or pay said bonds at maturity. Said assessment bonds shall bear interest at 6% per annum, payable semi-annually, both principal and interest, payable at a New York Bank. The deferred installments of assessments against the property improved shall bear interest at 8% per annum.

"The notes and bonds to be issued and the proceedings relating thereto and to the improvements covered by said ordinances to be approved, as to legality by Leon G. Brooks, Attorney.

"We are bidding with the understanding that we be allowed a period, not exceeding sixty days from the date hereof, before beginning actual construction operations and that a formal contract embodying the foregoing is to be prepared and executed by the City and ourselves before the construction contract or this proposal shall be binding on either of us." (Italics supplied.)

The contract referred to in the proposal, the execution of which was made a prerequisite of the validity of the proposal and the contract for the work, stipulates, inter alia: "That in consideration of the premises the company agrees that it will, during the progress of the construction of said improvements, lend to the City such funds as may be required from time to time to pay the cost of construction, not to exceed the total cost thereof as shown by the estimates adopted by the council, said loans to be made on bi-monthly estimates by the City Engineer of materials furnished and work done. The City will execute and deliver to the company to evidence said loans its promissory notes as authorized by section 2223 of the Code of Alabama, said notes to bear interest at the rate of eight per cent (8%) per annum from date, to be payable on or before one year from date at the Citizens and Southern National Bank, Atlanta, Georgia, or at some other bank approved by the Company; and that for the payment of said notes the City will pledge the proceeds of assessments to be made against the property benefited by the improvements to be constructed under said contract, and shall also pledge the full faith and credit of the City to the extent of its constitutional debt limit at the time of issuing said notes. A discount of ten percent on said notes will be allowed as to all payments thereon received from the property owners who pay in full in cash within the period allowed by law the amount of assessments against their property for said improvements; which discount shall be allowed by the company or against which it will protect the City in the event the company shall not be the holder of said notes at the time of payment. Said notes may be paid at or before maturity by delivery to the holder thereof of special assessment bonds of the City issued under the Code of Alabama, the same to be a lien or charge against the property improved and against the funds collected from assessments levied against the property improved, in which bonds the City shall also pledge its full faith and credit in the sum of Ten Thousand Dollars ($10,000) to pay any deficiency, not exceeding that amount, that may result in the failure of the City to collect said assessments and/or pay said bonds at maturity. Said assessment bonds shall bear interest at the rate of six percent (6%) per annum, payable semi-annually, both principal and interest to be payable at a New York Bank. The deferred installments of assessments against the property improved shall bear interest at the rate of eight per cent (8%) per annum, which the City, through its council, does hereby agree to fix as the interest rate of said deferred installments by proper action at the time said assessments are made final." (Italics supplied.)

The stipulations in the contract for the work, material to the questions presented, are:

"1.-The Contractor promises and agrees to furnish and deliver all the material and to do and perform all the work and labor required to be furnished and delivered, done and performed in and about the

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