Grayson v. City of Marshall

• Decision Date: 13 March 1912
• Citation: 145 S.W. 1034
• Parties: GRAYSON et al. v. CITY OF MARSHALL.<SMALL><SUP>†</SUP></SMALL>
• Court: Texas Court of Appeals

145 S.W. 1034

GRAYSON et al. v. CITY OF MARSHALL.^†

Court of Civil Appeals of Texas. Texarkana.

March 13, 1912.

Rehearing Denied March 21, 1912.

Appeal from District Court, Harrison County; H. T. Lyttleton, Judge.

Action by the City of Marshall against H. S. Grayson and others. Judgment for plaintiff, and defendants appeal. Affirmed.

F. H. Prendergast, of Marshall, for appellants. Beard & Davidson, of Marshall, for appellee.

HODGES, J.

On the 10th day of November, 1908, the appellant Grayson obtained from the city of Marshall a franchise to use the streets and alleys of that city for the purpose of laying pipes and mains in supplying the inhabitants with natural and artificial gas. The material provisions of the ordinance by which this privilege was granted are as follows: By section 1 Grayson, his successors and assigns, were authorized and empowered for the period of 25 years after the passage of the ordinance to construct and maintain gas works in the city, and to manufacture, sell, and supply to its inhabitants natural gas and petroleum. By section 3 it was provided that as long as natural gas was furnished and sold to the city of Marshall and its inhabitants under this franchise the grantee should furnish free to the city natural gas for light and heat in the city hall and all offices and departments thereof, including the firehouse and jail. It was further provided that the grantee should, if so directed by said city, install and maintain gas street lamps at such points upon its mains as shall be selected by the duly authorized officials of the city. Other provisions fixed the compensation that was to be allowed. Section 7 required the grantee to be in a position to supply gas to the city of Marshall within 12 months from the acceptance of the ordinance, provided that any delay in laying pipe in or to or through the city caused by injunction, legal proceedings, or any other cause beyond the control of the grantee should not be counted as a part of the period specified. It was also provided that the grantee should begin work in the city within two months after the passage of the ordinance. By section 8 it was provided that within 30 days from and after the time this ordinance should take effect the grantee should file with the city secretary his written acceptance of the provisions; and, in case of failure to file such acceptance within that time, the ordinance should cease and become null and void. Section 10 provided that, when the grantee filed his acceptance of the ordinance, he should also file a bond in legal form in the sum of $5,000 with some bonding corporation authorized to do business in the state as security thereon, and payable to the city of Marshall, conditioned that the grantee should commence work in the city within two months after the passage of this ordinance, and should have a plant in complete operation under this franchise within one year after its passage, said bond to be approved by the city council of Marshall and to become null and void upon the compliance with its conditions; but upon failure to comply with these conditions the penalty of such bond should be considered liquidated damages.

In compliance with the conditions prescribed in the ordinance, Grayson filed his written acceptance of the grant, and on the 24th day of December, 1908, executed the following bond, with the American Surety Company of New York as his surety: "State of Texas, Harrison County. Know all men by these presents: That, whereas, on the tenth day of November, 1908, the city council of the city of Marshall, Texas, by an ordinance finally passed November 10th, 1908, granted to H. S. Grayson of Pittsburg, Penn., his successors and assigns, the right to construct, acquire, and maintain gas lines in the said city of Marshall and manufacture, sell, and supply to the said city and its inhabitants natural gas and petroleum, and the said ordinance required said H. S. Grayson to give bond for the sum of five thousand ($5,000.00) dollars: Now, therefore, we, H. S. Grayson, of the city of Pittsburg, state of Pennsylvania, as principal, and the American Surety Company of New York, as surety, are held and firmly bound unto the city of Marshall, Texas, in the sum of five thousand ($5,000.00) dollars upon this condition; that if said H. S. Grayson grantee, or his assigns, shall commence work in the city of Marshall within two months after the passage of said ordinance and shall have a plant in complete operation for furnishing gas to said inhabitants under said franchise within one year from its passage, then this obligation is to become null and void, and of no effect, otherwise to remain in full force. Witness our hands this 24th day of December, 1908." On January 6, 1910, the city of Marshall filed this suit, alleging a breach of the bond occasioned by the failure of Grayson to have in operation the gas plant contracted for within the time prescribed in the ordinance and bond, and seeking a judgment for the amount of the bond as liquidated damages. A trial resulted in a judgment in favor of the city for the full amount of the bond, with interest at the rate of 6 per cent. per annum from November 10, 1909.

The assignments of error presented in the record are merely separate and distinct reasons urged assailing the correctness of the judgment rendered, and embrace the substance of appellants' defense as contained in the special answer filed. These assignments may be summarized as follows: (1) That the sum expressed in the bond was named as a penalty, and not as liquidated damages; (2) that appellant had partially complied with his undertaking, and ceased only after the city had reinstated the franchise of Hunter & McCormick, a firm of competitors engaged in a similar undertaking; (3) That at the time appellant's franchise was granted by the city, and the bond executed, the franchise theretofore granted to Hunter & McCormick had lapsed, and, relying upon that fact, appellant obtained his franchise, executed the bond sued on, and spent the sum of $3,700 in complying with his undertaking; that thereafter the city reinstated the franchise of his competitors, Hunter & McCormick, and thereby enabled them to put gas into the city of Marshall before the expiration of the time allowed the appellant; (4) that the city granted a similar franchise to Hunter & McCormick, which included the right to supply gas free of charge to the city hall, jail, and firehouse, and to furnish street lamps at a stipulated price per annum; that, by reason of that fact, the city was not now in a position to comply with its obligations to both grantees; (5) that the city has sustained no damage by reason of the default of the appellant, because it has obtained from another source the gas which it contracted for from him; that it was not contemplated that two gas companies should engage in furnishing the city with gas; that the judgment is therefore inequitable and unjust under the circumstances; (6) that no interest should have been allowed on the bond prior to the rendition of the judgment.

The evidence shows...