Miller v. Incorporated Town of Milford
| Decision Date | 14 December 1937 |
| Docket Number | 43962. |
| Citation | 276 N.W. 826,224 Iowa 753 |
| Parties | MILLER et al. v. INCORPORATED TOWN OF MILFORD et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Dickinson County; George A. Heald Judge.
Defendants appeal from a decree holding a contract for construction of a municipal light plant between the town of Milford and Monroe Electric Company void for lack of competitive bidding and that a contract for lighting the streets of Milford between the town and Northwestern Light & Power Company valid.
Reversed in part, affirmed in part, and remanded.
Geo A. Rice, of Mapleton, and W. L. Hassett, of Des Moines, for appellants.
C. J Lynch, of Cedar Rapids, and H. E. Narey, of Spirit Lake, for appellees.
Prior to 1930, the town of Milford and its inhabitants had been receiving electric service from the Iowa Public Service Company which held a general franchise expiring in October, 1933. On September 11, 1928, the town and company entered into a written contract for lighting the streets of Milford. The term of the agreement was for a period of five years, from July 1, 1928, and for five-year periods thereafter until canceled by a sixty-day written notice by either party to the other prior to the end of the term or any fifth anniversary of the effective date of the agreement. On February 21, 1930, the Iowa Public Service Company sold and transferred to the Northwestern Light & Power Company the general franchise, distribution, and street lighting system, and all equipment and property devoted to furnishing electric service in the town of Milford, and also transferred as a part of the sale the said street lighting contract.
Neither party to the contract gave notice of cancellation prior to July 1, 1933, so the contract remained in full force and effect until at least July 1, 1938.
One of the contentions of the defendants is, that as the franchise expired in October, 1933, the Northwestern Light & Power Company had no further right to use and occupy the streets and maintain its equipment and property thereon, and therefore the street lighting contract became void.
On February 1, 1934, the town voted to establish a municipal light and power plant to be paid for out of the future earnings of the plant as provided for by Code § 6134-d1. On February 28, 1934, the town of Milford entered into a written contract with the Monroe Electric Company, one of the defendants in this case, for the construction of the plant. The title to the plant remained in the Monroe Electric Company to secure the contract. In July, 1934, this suit was commenced. In June, 1934, the Northwestern Light & Power Company brought an action against the same persons who are defendants in this case in the federal court which sought substantially the same relief against the defendants as prayed for in the case at bar.
Another claim of the defendants here is that the decree in the federal case adjudicated all the issues in the case at bar adversely to the plaintiffs.
The plaintiffs, as citizens, property owners, taxpayers, and users of electric current, brought this suit in their own behalf and on the behalf of all other residents of Milford in said classes in which they sought a judgment and decree finding and adjudicating that: (a) A contract between the defendant town and Monroe Electric Company for the construction of a municipal electric lighting plant is void, and restraining the making of any payments thereunder and the doing of any further acts in performance thereof, including the restraining of the town from operating the plant and restraining Monroe Electric Company from transferring or collecting the revenue bonds; (b) that the street-lighting contract held by Northwestern Light & Power Company with the town is in full force and effect, and restraining the town from breaching said contract and from cutting off the service thereunder, and from removing the structures, equipment, and appliances on the streets and public places here maintained in the performance of said contract, and restraining the defendants from interfering with the system of the said company; (c) that the plaintiffs are entitled to receive the electric service they are now enjoying, and restraining the town and its officers from cutting the wires furnishing said service and from interfering with the distribution system of the said company.
The answer of defendants stated in substance: " Plaintiffs are not proper parties, have shown no damage, have no rights to protect, and are not entitled to an injunction; that the franchise of the Northwestern Light & Power Company in the Town of Milford having expired in October, 1933, and said Company having been notified to discontinue electric service in the Town of Milford and to remove its equipment from the streets and alleys, is maintaining a nuisance upon said streets and alleys; that the plaintiffs are not parties to the street lighting contract and have no rights thereunder; that the street lighting contract is void and not binding on the parties; that all of the issues raised by the plaintiffs, and especially all issues relative to the validity of the contract between the Town of Milford and the Monroe Electric Company for the construction of the municipal electric light plant being relative to a public question, have been adjudicated and determined in a prior and former action in the Federal Court, and that the findings and decree of the Federal Court on a public question is binding on all parties; that the contract for the construction of the municipal electric light plant is valid and that competitive bidding was had; that by reason of the fact that the contract for the construction of the plant having been completed, said plant accepted by the Town and the revenue bonds issued and delivered in payment thereof, the question of whether or not said construction contract is void was academic and moot."
Before the trial of the case commenced, the trial court sustained plaintiffs' motion to dismiss division two of the defendants' answer which pleaded that the judgment and decree in the federal case adjudicated all of the matters alleged in plaintiffs' petition adversely to the plaintiffs. At the conclusion of the trial, a decree was entered which found that the contract between the town and Monroe Electric Company for the construction of the plant was entered into without competitive bidding, and was not responsive to the invitation to bidders and extended to the company rights and privileges not within the purview of the call, and that the contract was illegal and void, and restrained the defendants from proceeding further in the performance of the contract, from operating the plant, and from making any payment upon the bonds issued for the purchase price, and from doing any acts pursuant to the contract; that the contract between the town and Northwestern Light & Power Company was valid and that the execution of the street lighting contract was not the granting of a franchise, and that the plaintiffs had a right to have street lighting service furnished under said contract, and restrained the defendants from interfering with or disturbing the property of the power company and from interfering with the furnishing of street lighting service under said contract.
In paragraph 9, division 2 of the answer, the defendants pleaded res adjudicata, alleging that all of the several causes of action contained in the pleadings of the plaintiffs have been fully adjudicated in the case of Northwestern Light & Power Co. v. Town of Milford, Iowa, 82 F.2d 45, 47, decided March 19, 1936, in the United States Court of Appeals, and that such adjudication resulted in a denial of the relief demanded by the plaintiffs which included the very matters involved in this action. The plaintiffs moved to strike said paragraph 9. (1) There is not an identity of parties; (2) the action in the federal court was not a class action but was brought and maintained by the Northwestern Light & Power Company in its individual capacity; (3) that the judgment and decree was not on the merits of the case. The trial court sustained the motion, and appellants maintain that this ruling constituted error.
On June 29, 1934, the Northwestern Light & Power Company brought a suit in equity as a taxpayer in the town of Milford in the federal court against the same persons who are defendants in the case at bar to enjoin them from carrying out the contract between the town of Milford and Monroe Electric Company for the erection of the municipal plant on the ground that the contract was illegal, and also alleged that the town proposes to breach plaintiffs' street lighting contract with the town, and that plaintiffs are entitled to the use of the streets in Milford in order to carry out its street lighting contract. The bill of complaint is substantially the same as in the instant case which was commenced about one month later. The court found generally for defendants and dismissed the case on its merits. An appeal was taken to the United States Circuit Court of Appeals. The appellate court affirmed the decision of the District Court and dismissed the petition for the following reasons:
(1) The Northwestern Light & Power Company, being without a franchise, was not in position to attack the contract.
(2) The Northwestern Light & Power Company, as a taxpayer, was not interested in the contract as it was not payable out of taxation.
(3) That in any event the contract had been fully performed and the question of the validity of the contract was moot.
The court further stated:
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