Iowa Elec. Light & Power Co. v. Incorporated Town of Grand Junction

• Decision Date: 17 December 1935
• Docket Number: 42695.
• Citation: 264 N.W. 84,221 Iowa 441
• Parties: IOWA ELECTRIC LIGHT & POWER CO. v. INCORPORATED TOWN OF GRAND JUNCTION et al.
• Court: Iowa Supreme Court

264 N.W. 84

221 Iowa 441

IOWA ELECTRIC LIGHT & POWER CO. v. INCORPORATED TOWN OF GRAND JUNCTION et al.

No. 42695.

Supreme Court of Iowa.

December 17, 1935

Appeal from District Court, Greene County; George A. Heald, Judge.

Application to modify injunction restraining town of Grand Junction from performing contract with Fairbanks, Morse & Co. for construction of light and power plant, same having been held void; a legalizing act having been enacted validating same. From an order modifying injunction, plaintiff appeals.

See also, 217 Iowa, 291, 251 N.W. 609.

Affirmed.

ANDERSON, J., KINTZINGER, C. J., and MITCHELL, J dissenting.

Salinger, Reynolds & Myers, of Carroll, and Graham & Graham, of Jefferson, for appellant.

O. C. Metzger, of Grand Junction, George A. Rice, of Mapleton, and Clark, Byers, Hutchinson & Garber, of Des Moines, for appellees.

HAMILTON Justice.

In the year 1932, the town of Grand Junction, Iowa, entered into a contract with Fairbanks, Morse & Co. for the construction of an electric light and power plant for said town, to be paid for solely from the net earnings of said plant. Statutory authority therefor is provided by chapter 312 of the Code, section 6127 et seq. An action to restrain the town from carrying out said contract was instituted by the plaintiff, Iowa Electric Light & Power Company, which was at that time furnishing light and power to said town. From a decision in favor of the town, sustaining the contract, appeal was taken to this court, with the result that the judgment of the lower court was reversed, on the ground that the statutory provisions in reference to competitive bidding in the letting of said contract had not been complied with, and that the contract was therefore void. See the case of Iowa Electric Light & Power Co. v. Incorporated Town of Grand Junction, 216 Iowa, 1301, 250 N.W. 136.

Thereafter, to wit, on January 19, 1934, the state Legislature passed and adopted a legalizing act (Acts 45th Gen.Assem.Ex. Sess., c. 225), purporting to make legal and valid the contract and proceedings which had theretofore been declared void by this court. After reciting in the preamble the history of the proceedings, the act provides:

" Be it Enacted by the General Assembly of the State of Iowa: Section 1. That all proceedings relating to the election held May 12, 1932, in the town of Grand Junction, Greene county, Iowa, on the proposition of establishing and constructing a municipal electric light plant, and all proceedings taken by the council of the town of Grand Junction, subsequent to said election, in advertising for bids, filing plans and specifications, and the letting of a contract to Fairbanks, Morse & Company, under the provisions of sections 6134-d1 to 6134-d7, inclusive; and the contract entered into between the town of Grand Junction and Fairbanks, Morse & Company, on July 19, 1932, for the construction of said municipal electric light plant, and the pledge-orders issued in connection therewith, are hereby declared to be legal and valid notwithstanding any irregularity, omission or defect in connection therewith, and that said contract entered into between the town of Grand Junction, Iowa, and Fairbanks, Morse & Company, and the pledge-orders issued in connection therewith, shall be and are hereby declared to be valid, and the said town of Grand Junction is hereby authorized to accept said municipal electric light plant, and pay for the same as provided in said contract and pledge-orders.

Sec. 2. This act, being deemed of immediate importance, shall be in full force and effect from and after its publication in the Grand Junction Globe, a newspaper published in Grand Junction, Iowa, and in the Jefferson Bee, a newspaper published in Jefferson, Greene county, Iowa, without expense to the state."

The bill was duly signed, certified, published, and approved, as provided by law, and became operative January 25, 1934.

On January 30, 1934, the defendants and each of them filed their application for an order modifying and setting aside the original judgment and decree, in which application they set up the history of the events leading up to the curative act, or legalizing act of the Legislature, and prayed that that portion of the judgment restraining them and each of them from carrying into effect the contract with Fairbanks, Morse & Co., hereinbefore referred to, be modified and set aside, and that said contract be determined to be a valid, binding obligation of the respective parties thereto.

An order modifying the original decree was entered on the 14th day of March, 1934, as follows:

" Now therefore, it is hereby ordered, adjudged and decreed, that the contract made and entered into by and between the Incorporated Town of Grand Junction, Iowa, and Fairbanks, Morse & Company, on the 19th day of July, 1932, for the erection of an electric light and power plant and distributing system for the Town of Grand Junction, Iowa, be and the same is determined to be a valid, binding contract by and between the parties thereto.

It is further ordered, adjudged and decreed that the order permanently enjoining the defendants and each of them as provided for in said decree, entered on the 20th day of December, 1933, from carrying into effect the said contract, be and the same is hereby modified, set aside and determined to be of no further force and effect.

It is further ordered, adjudged and decreed, that nothing in this decree shall in any wise supersede any part of the final decree heretofore entered in this cause on the 20th day of December, 1933, until the 23rd day of March, 1934, and to all of which the plaintiff excepts."

From the granting of this order, plaintiff has again appealed to this court.

It is claimed by appellant that the modifying order of the lower court is erroneous for the reason that it is based upon the validity of the legalizing act, and that the legalizing act is void and of no effect. It will thus be seen that the decision of this case rests entirely with the construction to be placed by this court upon the so-called " curative act," or legalizing act.

The case has been ably presented, and the legal propositions involved quite exhaustively argued by eminent counsel, which, we gratefully acknowledge, has been of invaluable assistance to the court in attempting to arrive at a correct conclusion in the solution of the troublesome questions presented.

May the Legislature, under the limitations of the State and Federal Constitutions, pass a special act legalizing a contract made by a municipality and the proceedings thereunder, which have previously been declared by this court void as being in excess of and beyond statutory authority granted to the municipality, as in the instant case? And in attempting to so do by the act in question, has the Legislature trespassed upon established constitutional limitations?

The errors relied upon for reversal, Nos. 1 to 7, in appellant's brief, may be grouped as follows:

First. The legalizing act is unconstitutional and void, and therefore no law, because it is in violation of, and repugnant to, section 6 of article 1, and likewise of section 30 of article 3 of the Constitution of the state of Iowa, and of the Fourteenth Amendment to the Constitution of the United States.

Second. The contract of the town of Grand Junction with Fairbanks, Morse & Co., having been held invalid by this court, the legalizing act is an infringement of the Legislature upon the power vested exclusively in the judicial branch of the government, and hence is in contravention of section 1, article 3, of the State Constitution.

Third. The plaintiff is thus deprived of its vested rights under the prior judgment of this court, in violation of the Fourteenth Amendment to the Federal Constitution, whereby the state is forbidden to pass any law denying any person the equal protection of the law or depriving any person of property without due process of law.

I. What are the powers possessed by the Legislature over municipalities of the state?

In the case of City of Clinton v. Cedar Rapids & M. R. R. Co., 24 Iowa, 455, Judge Dillon, speaking for the court, said: " Municipal corporations owe their origin to, and derive their powers and rights wholly from, the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy. If it may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the legislature might, by a single act, if we can suppose it capable of so great a folly and so great a wrong, sweep from existence all of the municipal corporations in the State, and the corporation could not prevent it. We know of no limitation on this right so far as the corporations themselves are concerned. They are, so to phrase it, the mere tenants at will of the legislature. This plenary power on the part of the legislature over public corporations, saving vested rights of property and of creditors, is a doctrine so well settled that it is unnecessary to refer to more than a few cases asserting it."

We said in the case of McSurely v. McGrew, 140 Iowa, 163, at page 173, 118 N.W. 415, 416, 132 Am.St.Rep. 248:" Within its field, the Legislature is supreme, and it has plenary power, subject only to constitutional limitations or prohibitions. Its power is not a delegated one, but it may exercise all powers not forbidden by the state or federal Constitution or delegated by the people to the general government," or prohibited by the Constitution of the United States. (Italics are ours.)

It may therefore be stated that the Legislature has plenary power over all municipalities within the state, subject only to the above constitutional limitations and...