Howard v. Smith
| Decision Date | 30 November 1896 |
| Parties | HOWARD v. SMITH et al. |
| Court | Texas Supreme Court |
F. M. Etheridge, for appellant. Ballew, Clark & Ballew and McKie & Autry, for appellees.
On the 26th day of June, 1890, the city of Corsicana and J. T. Howard entered into a written contract whereby Howard agreed to furnish all labor and material and pave certain streets of said city, and the latter agreed to pay him therefor a portion in cash, and for the balance to execute its notes in five equal installments, payable yearly, interest at 8 per cent., reserving the right to pay all cash. No provision having been made for interest and sinking fund required by law, Howard, having concluded for that reason his contract with the city was void, repudiated the same, and so notified the city; there being nothing due him at that time. After some negotiations, the city and Howard entered into another contract on the 4th day of November, 1890, whereby Howard agreed to do the work under the original contract and the city agreed that it would carry out said original contract, and that "at the expiration of six months after said work is completed that the city shall issue five per cent. thirty-year bonds, and deliver to the said Howard, for the amount then due the said Howard by notes or in cash on said contract." At the foot of this agreement the defendant Allyn signed the following: "I obligate myself that the above agreement will be faithfully carried out." It appears that no provision was made for interest or sinking fund by the city at the date of this contract, and before its execution the city had already incurred debts to the full amount permitted by law, which fact was known to all the parties thereto. Howard paved the streets in accordance with the terms of this contract, the work being completed on the 28th day of March, 1891, and, being unable to collect the balance of about $30,000 due for said work from the city, brought this suit against Allyn upon said guaranty. We have stated only so much of the facts certified by the court of civil appeals as we deem important to a disposition of the case under our view of the law.
The question certified by said court is: "Did the guaranty of the contract in which the city agreed to issue its bonds in payment for street improvements, which all the parties then knew it had no legal power to do, bind the guarantor to pay the debt for such street improvements which was agreed to be paid in such bonds of the city?" The contract of November 4, 1890, if valid, imposed upon the city a pecuniary obligation, in that it thereby agreed to pay for the pavement, part in money and the balance by issuing and delivering its bonds within a given time, the failure to do which would, under settled rules of law, have entitled Howard to demand the entire sum in money; and, since the improvement was not a matter of current expense, and it does not appear that there was any fund, at the date of the contract, within the control of the city, out of which it was to be paid, such obligation was a debt within the meaning of the constitution; and, since no provision was made for interest and sinking fund at the date of such contract, it was void, and imposed no obligation upon the city to pay...
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