J. S. Love Co. v. Town of Carthage

• Decision Date: 08 June 1953
• Docket Number: No. 38774,38774
• Parties: J. S. LOVE CO. et al. v. TOWN OF CARTHAGE.
• Court: Mississippi Supreme Court

Page 568

65 So.2d 568

218 Miss. 11

J. S. LOVE CO. et al. v. TOWN OF CARTHAGE.

No. 38774.

Supreme Court of Mississippi.

June 8, 1953.

Creekmore & Beacham, Jackson, for appellants.

Barnett, Jones & Montgomery, Jackson, for appellee.

HOLMES, Justice.

The appellee, Town of Carthage, filed its original and amended bill of complaint in the Chancery Court of the First Judicial District of Hinds County, Mississippi, against J. S. Love Company, a partnership composed of J. S. Love, J. S. Love, Jr., and Howard Ivy, and against Southern Bond Company, a partnership composed of Cecil Inman and Cecil Inman, Jr. The bill sought the recovery of certain funds theretofore paid by the board of mayor and aldermen of the Town of Carthage to J. S. Love Company, and participated in by Southern Bond Company, it being alleged that the payment of said funds was by an ultra vires act of the mayor and board of aldermen and was an appropriation of funds which the board of mayor and aldermen were without authority to make, and was an appropriation of funds to an object not authorized by law. The funds were paid pursuant to a contract theretofore entered into between the appellee and J. S. Love Company, and the exact amount claimed was the sum of $13,170 less such an amount as an accounting might show to have been reasonably and necessarily expended by the defendants in the performance of said contract. It was alleged in the bill that the board of mayor and aldermen of said town determined to erect and install natural gas transmission pipe lines and facilities and a natural gas distribution system for supplying natural gas to the residents of the town under the provisions of Chap. 494 of the Laws of 1950, and that said project was approved by the qualified electors of the town. It was further alleged that in the construction and completion of said project, it became and was necessary (1) to secure the services of a competent and qualified engineer to make a preliminary survey and detailed plans and specifications for the installation of said natural gas system and to supervise the installation of said system; and (2) to secure the services of competent and qualified attorneys to prepare all necessary resolutions, ordinances, and contracts in connection with the planning, construction, and financing of said natural gas system, including the validation of the bonds to be issued and sold for the payment of the cost thereof; and (3) to secure the approval of a recognized bond attorney of the validity of the bonds to be issued by complainant for such purposes and to prepare a maturity and amortization table of the bond issue necessary to acquire said natural gas system; and (4) to negotiate with the Southern Natural Gas Company for a supply of natural gas to the said transmission and distribution system; and (5) to secure a certificate of public convenience and necessity from the Federal Power Commission authorizing the doing of said work and the construction of said project; and (6) to negotiate a contract with a private utility company for the lease of said natural gas system for a period of twenty-five years for sufficient rental to retire all bonds and interest as the same matured and to provide for the maintenance and upkeep of the system during the lease period, and to pay the Town of Carthage two percent annually of the gross receipts received from the domestic sales of gas by such company. It was further alleged that it was necessary for the Town of Carthage to issue negotiable bonds in the amount of $290,000 and that said bonds were issued by said municipality under the provisions of Chap. 494 of the Laws of Mississippi 1950, bearing interest at the rate of 3 1/2 percent per annum and maturing with interest added in an appropriate equal amount in from one to twenty-five years from their date. It was further alleged that in order to accomplish said project it was decided by the board of mayor and aldermen of the Town of Carthage to contract for the performance of required services, and that appellee thereafter received the following proposal submitted by J. S. Love Company:

'Jackson, Mississippi

'June 16th, 1950

'To the Mayor and Board of Aldermen Town of Carthage

'Carthage, Mississippi

'Gentlemen:

'We have this day made a careful study of the many problems present in connection with your acquisition of a natural gas transmission and distribution system for the use of the Town of Carthage and the inhabitants thereof, and we felt because of our many years experience in the securities business generally and in the field of revenue bonds especially that we can render you a very valuable service in connection with the problems incident to the acquisition of such a system.

'We respectfully submit for your consideration the following:

'(a) We will secure the services of a competent and qualified engineer skilled in the design of natural gas distribution systems to make a preliminary survey and detailed plans and specifications for the installation of your natural gas system, and to supervise the installation of such system.

'(b) We will secure the services of competent and qualified attorneys to prepare all necessary resolutions, ordinances, and contracts in connection with the planning, construction and financing of a natural gas system, including validation of the bonds.

'(c) We will secure the approval of your bond issue as to legality by Charles & Trauernicht, nationally known bond attorneys of St. Louis, Missouri.

'(d) We will prepare a maturity and amortization table of the bond issue necessary to acquire a natural gas system by the Town of Carthage.

'(e) We will conduct all necessary negotiations with the Southern Natural Gas Company for a supply of natural gas for your natural gas system.

'(f) We will negotiate a contract with a private utility company for the lease of your natural gas system for a period of twenty-five (25) years, the general terms of which will include the company paying sufficient rental to retire all bonds and interest as the same mature, and for the maintenance and upkeep of the system during the lease period, and in addition thereto the payment to the Town of Carthage of two percent (2%) annually of the gross receipts received from the domestic sales of gas by such company.

'(g) We will guarantee to purchase at par and accrued interest natural gas bonds in an amount not to exceed Two Hundred Ninety Thousand Dollars ($290,000) payable solely and only from the revenues of the system at an interest rate not to exceed 3 1/2%, maturing with interest added in an approximate equal amount from one (1) to twenty-five years (25) from their date.

'We sincerely believe our services will result in the Town of Carthage, and the inhabitants thereof, obtaining the benefit of natural gas much sooner than you could otherwise obtain these benefits.

'Our charge for all the above will be six percent (6%) for engineering services, which is the usual and customary fee for such services, and three percent (3%) for attorneys fees and incidental expenses which includes a fee of one percent (1%) for the attorney for the Town of Carthage, all based upon the amount of bonds actually delivered.

'The payment of the above fees are contingent upon the actual issuance and sale of bonds and the acquisition of a natural gas system by the Town of Carthage on or before July 1st, 1951.

'Yours very truly,

'J. S. Love Company

'By /s/ Howard Ivy

'Howard Ivy

'Southern Bond Company

'By /s/ Cecil E. Inman, Jr. 'Accepted by the Town of Carthage, Mississippi, this the 16th day of June, 1950, A.D.

'/s/ Fred L. McMillan

'Mayor

Fred L. McMillan.

Attest:

'/s/ B. M. Windham

'City Clerk'

It was further alleged that the aforesaid proposal of J. S. Love Company was accepted by the board of mayor and aldermen by an order duly entered on its minutes on June 16, 1950, and that thereafter on August 25, 1950, the said board of mayor and aldermen passed a resolution ratifying and confirming the aforesaid contract with the said J. S. Love Company. It was further alleged that pursuant to said contract the said J. S. Love Company selected, with the approval of the said board of mayor and aldermen, Baxter F. Wade as the engineer to prepare plans and specifications for said project and that bonds in the amount of $290,000 were issued, bearing date of September 1, 1950, and were advertised for sale on sealed bids to be filed with the said board of mayor and aldermen up to 7:30 P.M. on September 15, 1950, and that at said sale, the said bonds were purchased by the said J. S. Love Company, and thereafter delivered to the said J. S. Love Company and the purchase price therefor paid to appellee. It was further alleged that under the employment of said engineer, he was to prepare the bond amortization schedules, secure the natural gas supply, and secure the certificate of public convenience and necessity from the Federal Power Commission, but that these services were accomplished through other sources and that the said engineer therefore allowed a credit of one percent on the engineering cost, and that all other services required of the engineer having been performed by him, he was paid in full of his compensation the sum of $12,930. It was further alleged that there was paid to J. S. Love Company and participated in by Southern Bond Company the total sum of $13,170 in full of the contract therefore entered into between the appellee and the said J. S. Love Company. It was further alleged that the aforesaid payments were made after the completion of the said project and were made by the said board of mayor and aldermen in good faith and in the honest belief and upon the advise of counsel that it had legal authority to execute and perform the aforesaid contract entered into with the said J. S. Love Company. It was further alleged, however, that the appellee was without legal authority to make the said contract with the said J. S. Love Company and that said contract...