Indiana Serv. Corp. v. Town of Warren

• Decision Date: 28 March 1934
• Docket Number: No. 26437.,26437.
• Citation: 206 Ind. 384,189 N.E. 523
• Parties: INDIANA SERVICE CORPORATION v. TOWN OF WARREN et al.
• Court: Indiana Supreme Court

206 Ind. 384

189 N.E. 523

INDIANA SERVICE CORPORATION

v.TOWN OF WARREN et al.

No. 26437.

Supreme Court of Indiana.

March 28, 1934.

Appeal from Wabash Circuit Court; Frank O. Switzer, Judge.

Suit by the Indiana Service Corporation against the Town of Warren and others. Judgment for defendants, and plaintiff appeals. Transferred from the Appellate Court under Burns' Ann. St. 1933, § 4-215.

Affirmed.

Superseding opinion of the Appellate Court in 180 N. E. 14.

Barrett, Barrett & McNagny, of Ft. Wayne, Plummer & Plummer, of Wabash, and Leigh H. Hunt, of Chicago, Ill., for appellant.

Poppenhusen, Johnston, Thompson & Cole, of Chicago, Ill., Walter S. Bent, of Wabash, Ashcraft & Ashcraft and Carroll J. Lord, all of Chicago, Ill., and Gemmill, Browne & Campbell, of Marion, for appellees.

Matson, Ross, McCord & Clifford, of Indianapolis, amicus curiæ.

MYERS, Justice.

This was a suit by appellant against appellees to enjoin the latter from carrying out a contract entered into by the appellee town of Warren with appellee Fairbanks Morse & Co., and to compel the latter to refund to the town of Warren any sum of money paid to it on account of the contract. The 2-paragraph amended complaint covers 11 printed pages of appellant's brief. Each of these paragraphs was answered by a general denial. Trial, finding and judgment for appellees. Appellant's motion for a new trial was overruled, and this ruling is the only error assigned.

We will not take the space necessary for a substantial statement of the complaint or of the evidence introduced at the trial, other than to say, that for about 18 years prior to March, 1925, the town of Warren owned and operated its own waterworks and electric light plants and was engaged in furnishing water and electric energy by means of its distribution systems to the town for municipal purposes and to the inhabitants thereof for domestic, commercial, and industrial purposes. At that time its steam power plant had become inefficient and obsolete, and for that reason it entered into a five-year contract with appellant, beginning March 1, 1925, whereby it purchased from appellant electric energy which it resold and delivered to its customers through its distribution system. On March 5, 1929, appellee, having accumulated in its water and light fund about $29,000 in cash, decided to rehabilitate its power plant by installing Diesel oil engines. Thereupon the town board, in regular session, by unanimous vote, suspended the rules, passed and adopted Ordinance No. 36, which authorized the acceptance of the proposal of Fairbanks Morse & Co. to install certain engines and equipment in appellee's power house, appropriated the money to pay for the same, and authorized the execution of a contract with Fairbanks Morse & Co. for the purchase of the engines and equipment at a fixed price of $42,846, $4,000 of which to be paid on execution of the contract, $4,000 on arrival of the engines, and $2,000 upon completion of installation and acceptance of equipment, the remaining sum, $32,846, to be paid in equal monthly installments of $547.44, with interest, evidenced by 60 pledge orders, each of which contained the following provisions: “This is not a general obligation to the Town of Warren, Indiana, but a special obligation payable only from the net revenue of the Town's light and water plant.” “It is agreed that the obligation to pay the deferred installments of said purchase price and said pledge orders issued in evidence thereof is not a general obligation of the said Municipality payable from taxes or its general funds but only a special obligation payable from the net revenues of the light and water plant of the Municipality. ‘Net revenues' shall be deemed to represent the balance of the gross receipts of the Municipality's light and water plant after the payment solely of the legitimate and necessary expenses of the operation of the plant.” The contract purports to obligate the town of Warren to maintain rates for the service of the plant sufficient to provide revenue for the payments called for by the contract, so far as the law will permit; to operate the plant as a municipal plant until all obligations under this contract have been fully paid; not to dispose of the plant in any manner so as to deprive Fairbanks Morse & Co. of its title to or interest in the machinery or equipment without providing for the payment to the company of all amounts then unpaid under the contract. At the same session of the town board, Ordinance No. 37 was unanimously passed, providing for the payment of interest on pledge orders, and appropriating “a sufficient amount of said funds” for such purpose.

All of the questions relied on by appellant in the instant appeal presented by the record of which we have given a brief synopsis, were considered and decided against appellant's contentions in the case of Underwood v. Fairbanks Morse & Company (Ind. Sup.) 185 N. E. 118, and on the authority of that case those questions may be considered at rest.

The present appeal presents the additional question based on the alleged failure of the board of trustees of the town of Warren to comply with section 249 of the Cities and Towns Act (Acts 1905, c. 129, pp. 383, 392, as amended, Acts 1915, c. 191, pp. 689, 694, § 4; section 11129, Burns' 1926) by passing a resolution declaring a necessity for entering upon the policy of acquiring electric light works or waterworks, or both, and the submission of such declaratory resolution to the qualified voters of the town at a special or general election for approval or rejection. This statute provides that: “Any city or town may erect or construct waterworks, gas works, electric light works, heating, steam and power plants, or combination of such utilities, together with all buildings, lines and accessories necessary thereto, and may purchase or lease any such works and utilities already constructed, or in course of construction, and owned by any other persons: *** Provided, That before any city or town shall enter upon the policy of erecting and constructing any such new works and utilities, or the purchase of the same from other persons *** the board of trustees of such town *** shall adopt a resolution, designated by number, declaring the necessity for entering upon the policy of such erection and construction or purchase. In case of the proposed erection and construction of new works, said declaratory resolution shall fix the general character and the probable maximum cost thereof. *** Before such declaratory resolution is confirmed and the policy thereof entered upon, said common council or board of trustees shall submit the same to the qualified voters of such city or town, at a special or general election,” for approval or disapproval of such resolution.

In connection with the foregoing statute on the subject of municipal utilities, it may be well to notice the powers given to the board of town trustees. In that respect we are at present interested only in section 31, cls. 3 and 13, Acts 1905, c. 129, pp. 219, 229, 231; § 11277, Burns' 1926. Among other things it is provided (clause 3) that the board of town trustees shall have power “to construct, purchase and preserve *** reservoirs, wells, pumps, and other water-works for supplying such town with water for fire protection and other purposes and to regulate the use thereof and to levy taxes or issue bonds,” etc. Clause 13. “To contract for lighting the streets and other public grounds of the town with gas, electricity, or other suitable light: Provided, however, That the board of trustees, by a two-thirds vote of all their number, may, at a special...