Hendrix, Mohr & Yardley, Inc. v. City of Daphne

• Decision Date: 09 June 1978
• Citation: 359 So.2d 792
• Parties: HENDRIX, MOHR & YARDLEY, INC., a Corporation v. The CITY OF DAPHNE et al. and the First National Bank of Fairhope, a National Banking Association, et al. 77-5.
• Court: Alabama Supreme Court

Page 792

359 So.2d 792

HENDRIX, MOHR & YARDLEY, INC., a Corporation v. The CITY OF DAPHNE et al. and the First National Bank of Fairhope, a National Banking Association, et al.

77-5.

Supreme Court of Alabama.

June 9, 1978.

Champ Lyons, Jr. and Frederick G. Helmsing, Mobile, for appellant.

William H. Hardie, Jr., Mobile, for appellee, The First National Bank of Fairhope.

JONES, Justice.

This appeal concerns a contract action filed by Appellant, Hendrix, Mohr & Yardley, Inc., an investment banker, as fiscal agent for the Town of Daphne, seeking to recover for breach of contract and for services rendered under an implied contract. Alternatively, Hendrix-Mohr sought a declaratory judgment, declaring its right to a fee of 2% of the total bonds issued in the future for the financing of sewer construction in Daphne. We affirm in part, and reverse and remand in part.

This case was consolidated for trial with an action against the First National Bank of Fairhope for alleged violations of federal law and tortious interference with contractual relationships. No review is sought of the judgment in favor of the Bank.

On October 20, 1952, Hendrix-Mohr executed a contract with the Town of Daphne to perform certain duties as fiscal agent concerning a water works bond issue and to assist the Town in acquiring a gas distribution system. This contract contained a guaranteed bid clause and provided for compensation to Hendrix-Mohr equal to 3% of the bonds issued. The bonds were issued, pursuant to the contract, and it is undisputed that Hendrix-Mohr received its full payment. Thereafter, Hendrix-Mohr, without benefit of either a written or oral contract, performed services for the Town as its fiscal agent and aided in the formation of a water works board.

In 1961, a second written contract was entered into by these parties. This contract was for services related to the construction of sewers and the issuance of sewer bonds to finance such construction. No guaranteed bid clause was included and Hendrix-Mohr was to be paid 2% of the principal amount of the bonds issued. The contract further stated: "In the event no bonds or warrants are issued, the City owes the Agent nothing." The contract contained no termination date.

Pursuant to this second contract, and in order to enhance the Town's financial position and thus render the bonds salable, the fiscal agent worked toward acquisition of the Town's gas distribution system (at that time owned by the City of Fairhope). Hendrix-Mohr recommended that the Town exercise its previously acquired option to purchase the gas system from the City of Fairhope, which was accomplished after extensive and lengthy legal action. See Town of Daphne v. City of Fairhope, 284 Ala. 556, 226 So.2d 383 (1969); and City of Fairhope v. Town of Daphne, 282 Ala. 51, 208 So.2d 917 (1968). Due to "soft" bond markets and the continuing financial inabilities of the Town, however, the sewer bonds have never been issued.

While acting as fiscal agent, Hendrix-Mohr helped in seven other bond issues from 1952 through 1975. These were generally smaller issues and Appellant either was paid 2% of the principal amount or acted as underwriting agent and received its compensation from the subsequent resale of the bonds. Furthermore, Appellant served as financial advisor for the Town on an expansion of the water system to service the Montrose, Alabama, area. During this time, several grants were sought and obtained (though they subsequently lapsed) by the Town from State and Federal environmental and urban development agencies. For each, Hendrix-Mohr served the Town as fiscal agent. Appellant also helped and advised the Town in the formation of its Utilities Board.

Prior to 1975, the Town asked Hendrix-Mohr to evaluate the feasibility of issuing $600,000 worth of water bonds. The record is unclear as to exactly what services were performed in this regard. On July 2, 1975, the Town notified Appellant that the First National Bank of Fairhope was "handling" this bond issue. Believing correctly that this merely meant the Bank was purchasing the bonds, Hendrix-Mohr continued to act as fiscal agent. The Town on its own, however, contacted bond attorneys and performed many of these same duties. The bond issue was closed on September 25, 1975.

On October 20, Appellant was told that the Town would pass a resolution telling it to perform no more work for Daphne. This was confirmed by letter dated November 14, 1975.

Appellant, pursuant to the Town's request, sent a bill seeking $18,000 for services rendered $12,000 for work on the 1975 bond issue (based on 2% of the $600,000 principal amount), and $6,000 for other services performed as fiscal agent (including work on the 1961 contract, formation of both the Water Works Board and the Utilities Board, grant applications and the Montrose water system extension). Upon receipt of this bill, the Town tendered, but Hendrix-Mohr refused to accept, a $6,000 check which "would not prejudice plaintiff's right in any way to assert any claim." At trial, however, witnesses for the Town stated they did not believe Hendrix-Mohr was entitled to receive even this amount.

Trial began on June 21, 1977, and the Court, sitting without a jury, entered judgment for all Defendants on July 15. This appeal followed.

Hendrix-Mohr asserts that the 1961 contract was on-going and that the Town wrongfully repudiated the contract. The work and labor done was allegedly over and above that required by this and other written contracts. Thus, it contends, the reasonable value of the services is recoverable under either a theory of implied contract or in quantum meruit.

I.

It is well settled that, provided a contract is within the scope of its corporate powers, a municipal corporation may be held liable on an implied contract, either where the contract is implied in fact from corporate acts, or is implied in law, to prevent the municipality from enriching itself by accepting and retaining benefits without paying just compensation therefor. Bethune v. City of Mountain Brook, 293 Ala. 89, 300 So.2d 350 (1974); and Brush Electric Light & Power Co. v. City Council of Montgomery, 114 Ala. 433, 21 So. 960 (1896).

Daphne clearly was authorized to enter these contractual relations because it is the duty of the Town to provide utility services for its inhabitants. See Constitution of Alabama, § 225; § 11-48-61, Code 1975; and Hillard v. City of Mobile, 253 Ala. 676, 47 So.2d 162 (1950). Inherent in this duty is the power to issue public improvement bonds and the power to obtain financial advice in this regard. Thus, as a necessary incident to the expressed power, the Town was authorized to contract with a fiscal agent concerning its financial affairs. See Phenix City v. Putnam, 268 Ala. 661, 109 So.2d 836 (1959); and Fitts v. Commission of City of Birmingham, 224 Ala. 600, 141 So. 354 (1932). Therefore, if all other conditions exist, Daphne could be obligated to pay for services rendered to it under an implied contract.

II.

It is the settled law of this State that where one knowingly accepts services rendered by another, and the benefit and result thereof, the law implies a promise on the part of the one accepting with knowledge the services rendered by another to pay the reasonable value of such services rendered. Huffman-East Development Corp. v. Summers Electric Supply Co., 288 Ala. 579, 263 So.2d 677 (1972); and Shirley v. McNeal, 272 Ala. 696, 133 So.2d 873 (1961). Furthermore, we have stated that:

"An implied contract arises where there are circumstances which, according to the ordinary course of dealing and the common understanding of men, show a mutual intent to contract. Such a contract must contain all the elements of an express contract, which rests on consent, and it is to every intent and purpose an agreement between the parties, and it cannot be found to exist unless a contract status is shown." Water Works and Sanitary Sewer Board of City of Montgomery v. Norman, 282 Ala. 41, 45, 208 So.2d 788, 791 (1968).

To recover under an implied contract, however, where there is an express contract, it must be shown either that the express contract is performed as to all but payment for the services, or that the other party has breached the express contract and thus prevented its performance. Lovoy v. Ratliff, 276 Ala. 156, 159 So.2d 857 (1963); Braswell v. Malone, 262 Ala. 323, 78 So.2d 631 (1955); Foster & Creighton Co. v. Box, 259 Ala. 474, 66 So.2d 746 (1953); Ludden & Bates v. Watt, 18 Ala.App. 652, 94 So. 239 (1922); and Dunaway v. Roden, 14 Ala.App. 501, 71 So. 70 (1916). Furthermore, a party may recover for work and labor done in excess of the written requirements of the contract where that aspect is not of the type which must be in writing and where there is mutual assent. Bonie v. Griffin, 252 Ala. 299, 40 So.2d 870 (1949).

Under the facts before us, however, an implied contract for work and labor done is not proper. There has been no breach of the 1961 contract by the Town and Hendrix-Mohr has not fully performed its obligations under the contract. Mr. Hendrix admitted Hendrix-Mohr's work was only 90% complete and, thus, the contract is not "fully performed except for the payment." Furthermore, merely because the Town renounces the contract and treats it as expired does not mean they breached that contract.

As stated, no termination or expiration date was stated in the contract itself....