Frisbie Company v. East Cleveland
| Decision Date | 14 May 1918 |
| Docket Number | 15732 |
| Parties | The Frisbie Company v. The City Of East Cleveland |
| Court | Ohio Supreme Court |
Municipal corporations - Contracts - Validity - Statutory powers and procedure control - Failure to advertise for bids Section 2419, Revised Statutes - Waterworks - Agreement to reimburse private corporation - Installing system in its allotment - Action for cost of construction - Invalidity of contract as defense by city - Implied liability and damages for conversion - Public officers -Notice of powers and restrictions.
Where a statute prescribes the mode of exercise of the power therein conferred upon a municipal body, the mode specified is likewise the measure of the power granted, and a contract made in disregard of the express requirements of such statute is not binding or obligatory upon the municipality.
No valid obligation is imposed upon a municipality by a contract entered into by its waterworks trustees in 1902 for the construction of an addition to the waterworks system of the municipality at a cost in excess of $500 without advertising for bids as then required by Section 2419, Revised Statutes.
Where a company, owning an allotment within a municipality, pursuant to permission procured by it from the waterworks trustees thereof, laid water mains in the streets of such allotment the estimated and actual cost of which was in excess of $500, and connected same with said waterworks system under the control and management of said trustees who had agreed to repay the money so expended by said company when the rental of such lines should equal 10 per cent. of the cost of construction. if in funds applicable thereto, the municipality is not estopped to set up a violation of the statute requiring advertisement for bids, as a defense to an action to recover on such contract.
No implied liability arises against the municipality from the use of said water pipes in supplying water to residents in such allotment, nor can an action in damages for conversion be maintained against it.
It is incumbent upon persons dealing with public officers to ascertain whether their proposed action falls within the scope of their authority, and whether the requirements of law affecting a contract proposed to be entered into have been complied with.
The Frisbie Company seeks to recover from the city of East Cleveland the sum of $19,815.78, which it claims is due it by virtue of three several contracts entered into by said company with the board of waterworks trustees of the then village (now city) of East Cleveland, whereby it was agreed that the plaintiff should lay water mains in the streets of three allotments owned by it, and that when water rents received by the village of East Cleveland from the users of water on said streets should equal 10 per cent. of the cost of laying such mains the municipality should refund to the plaintiff the cost of the installation of said pipes.
It is averred that the first of said contracts, relating to one of the subdivisions owned by plaintiff, was entered into February 2, 1901, and that pursuant thereto plaintiff expended the sum of $2,953.70; that she second of said contracts, relating to another subdivision owned by plaintiff, was entered into November 2, 1901, and in pursuance thereof plaintiff expended the sum of $1,608.73; that the third of said contracts, relating to another subdivision owned by plaintiff, was entered into April 8, 1902, and in pursuance thereof plaintiff expended the sum of $15,253.35; and that the water rents received by the municipality for the fiscal year ending March 1, 1915, equaled 10 per cent. of the cost of installation of said pipes, but that the defendant on demand re- fused to refund to the plaintiff the cost of installation of said water mains.
As a fourth cause of action the plaintiff asserts that the city of East Cleveland is wrongfully applying the property rights of the plaintiff in said waterworks, water pipes, water rights and easements to its own use, benefit and profit without having compensated the plaintiff therefor, resulting in damage to plaintiff in the sum of $19,815.78.
Issues were made up and tried to the common pleas judge, a jury having been waived. Upon such hearing it was admitted that said water pipes were installed by the plaintiff to the satisfaction of the board of trustees, and that the cost thereof was as recited in the petition; that water rents received from the users of water from the pipes so laid have been equal to 10 per cent. of the cost of installation since March 1, 1915; and that subsequent to June 21, 1915, The Frisbie Company tendered to the council of East Cleveland a duly executed conveyance to the city of its right, title and interest to laid water pipes so laid and installed, on condition that the city pay the cost of installation, which deed and payment were refused.
The action of the board of waterworks trustees relative to such matter was by way of resolution, wherein it was provided:
In the court of common pleas judgment was rendered for the amount asked. Upon proceeding in error the judgment of the court of common pleas was reversed, whereupon a petition in error was filed in this court.
Messrs. Clum & Marty, for plaintiff in error. Mr. E. A. Binyon, for defendant in error. Mr. Francis R. Marvin, amicus curiae.
The primary question involved in this case is the validity of the contracts entered into by the board of waterworks trustees and the liability of the city of East Cleveland thereon.
The Frisbie Company at the time the agreement was made with such board was the owner of three tracts of land in the village, now city, of East Cleveland, which it had allotted in three subdivisions, plats of which had been approved by the council of the village, for record only; but the acceptance of streets dedicated to the public use was deferred until some time later. The company, presumably pursuant to its written obligation to the purchasers of lots in these subdivisions "to cause lake water to be supplied in,the street," sought and secured the permission of the board of waterworks trustees to lay water mains in and along certain designated streets in those allotments and connect the same with the waterworks system of the village, under the terms and conditions set forth in the foregoing statement of this case.
It is pleaded that these contracts are in full accord with the plan previously adopted and followed, whereby extensions of the waterworks lines of the village of East Cleveland had been made by these and other owners of land desiring to allot the same and lay out new streets therein; that pursuant to the terms of such contracts the municipality had refunded to said owners the cost of the laying of such extensions when the water rents along the lines so constructed equaled 10 per cent. of the cost of installation; and that such facts "were well known to the plaintiff herein and to the public generally, and had become the fixed and established custom and method of extending and operating the waterworks of the Village of East Cleveland."
As is stated by the court in Thomas v. The Guarantee Title & Trust Co., 81 Ohio St. 432: It would be quite contrary to the long-established and frequently-applied rule in this state to permit a public officer or agent, by the adoption of methods or a course of action forbidden by law, to validate the same by his unauthorized action, no matter how long continued.
The contention that the provisions of Section 2702, Revised Statutes, familiarly known as the Burns law, have application to the contract entered into by the trustees of waterworks is fully met by the decision of this court in the case of Kerr v. City of Bellefontaine, 59, Ohio St. 446. In that case the court had under consideration provisions relative to the powers and duties of trustees of gas works, quite similar to the statutes under consideration, here conferring powers upon and prescribing the duties of waterworks trustees. The condition in the contracts under consideration here, that "when the rentals along said line shall equal annually 10 per cent. of the cost of construction thereof, this board shall, if in funds applicable thereto, repay said The Frisbie Company," etc., makes the following language used by the court in the case of Kerr v. Bellefontaine quite pertinent here: "Not only was...
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