Nebraska City v. Nebraska City Hydraulic Gaslight & Coke Co.
| Decision Date | 16 October 1879 |
| Parties | NEBRASKA CITY, PLAINTIFF IN ERROR, v. THE NEBRASKA CITY HYDRAULIC GAS LIGHT AND COKE CO., DEFENDANT IN ERROR |
| Court | Nebraska Supreme Court |
ERROR to the Otoe county district court.
The action was brought by the gas company against Nebraska City to recover $ 291.66 for gas furnished under contract to the city during the month of June, 1877. To the fourth, fifth and seventh paragraphs of the answer (the substance of which is set forth in the opinion) a demurrer was filed, which was sustained and exceptions taken. Upon trial before POUND, J. judgment was rendered in favor of the gas company for the amount claimed, and the city brought the cause here for review upon a petition in error.
REVERSED AND REMANDED.
J. C Watson, for plaintiff in error, contended inter alia:
1. That the contract, exempting as it does the property of the gas company from taxation, providing for a miscellaneous appropriation of the sinking fund, and in exempting the company from payment of cash into the sinking fund, was in violation of law; violates also the city charter by increasing the general expenses of the city government to such an extent as to necessitate the levying of a tax for general purposes of more than five mills on the dollar, and that in making such contract the officers of the city exceeded their authority. Weeks v. City of Milwaukee, 10 Wis. 186. Gen. Stat., Chap. 66, Sec. 2. Id., Chap. 9, Sec. 31, subd. XLV. Halstead v. Mayor, 3 N.Y. 430. Brady v. The Mayor, 20 Id., 312. Thomas v. City of Richmond, 12 Wall., 356. Dillon Mun. Corp., secs. 372, 381.
2. That the court erred in not allowing the city to show that no estimate was made in regard to the contract, as required by Gen. Stat., p. 151, sec. 32, as the furnishing and erecting of lamps and lamp-posts are certainly improvements within the meaning of the statute.
3. That the contract being void in part, on account of being in violation of the statute, is void in toto. Austin v. Bell, 20 Johns., 442. Van Alstyn v. Wimple, 4 Cow., 547. Burt v. Place, 6 Cow., 431. Loomis v. Newhall, 15 Pick. 159. Baldwin v. Palmer, 10 N.Y. 232.
M. L. Hayward, for defendant in error.
1. No principle of law is better settled than that a party who would rescind a contract must place his adversary "in statu quo." Taft v. Wildman, 15 Ohio 128. Casswell v. Manufacturing Co., 14 Johns., 453. Wilt & Green v. Ogden, 13 Johns., 56. Ellis v. Hoskins, 14 Johns., 363.
2. Where one party breaks a contract, the amount which would have been received if the contract had been kept is the measure of damages. Doolittle v. McCullough, 12 Ohio State, 364. Marsh v. Blackman, 50 Barb., 329.
3. In no event should the Gas Company recover less than the full contract price for June, because the price is one entire sum for the month, and if the notice could have any effect at any time it could not for that month. Where contract is for time certain, if party is without cause discharged before the time, he is entitled to receive for full time. Parsons on Contracts, 4th ed., 518-528. Davis v. Maxwell, 12 Met., 286. Read v. Moor, 19 Johns., 337, and cases there cited.
4. The city, by accepting the gas, has ratified the contract, and can not deny its legality. 15 Cal. 591. 31 Cal. 26. 7 Cal. 463. 1 Dillon, 478. 9 Cal. 453. 20 N.Y. 319. It must pay the contract price. 9 Cal. 453. 18 B. Mon., 41. 7 Ohio State, 327. 12 Ohio State, 624.
5. If any tax was due the city from the Gas Company it could only be collected in the manner pointed out by statute. (Gen Stat., sec. 54, p. 917.) In no event could such tax be pleaded as a counter claim or set-off in this action. Statutes, 540, §§ 101 and 104. Cooley on Taxation, pp. 298 and 300.
We shall confine our examination to such of the alleged errors as were relied on by counsel for the plaintiff in error in argument as ground for a reversal of the judgment. And, first, did the court below err in sustaining the demurrer "to the fourth, fifth, and seventh defenses" of the answer?
It seems that at the time in question there existed a contract between the plaintiff in error and the defendant company, whereby the latter was to furnish to the city, at a stated price per month, gaslight for its streets, etc. That, while the company was engaged in the due performance of this contract on its part, the city authorities undertook to rescind it, and to that end passed the resolution, and gave the notice to the company, which form the basis of this fourth defense or answer, and which was in these words, viz.: "For a fourth, further, and separate defense to said alleged cause of action defendant alleges that, on or about the 11th day of June, 1877, defendant, by a resolution of its common council, approved by the mayor, declared said alleged contract at an end, and wholly rescinded; and on that day duly notified the plaintiff of such action; and that, from that time on, said contract was wholly rescinded; and directed plaintiff to furnish no more gas or light, and to light no more lamps, and to do nothing more whatever under said contract or modifications."
We do not think that what is thus set forth shows a rescission of the contract. It is only a declaration on behalf of the city to that effect, but to which it is not shown that the company had in any way assented. Generally a contract cannot be rescinded, unless by consent of all the parties to it, except in cases of fraud. Chitty on Contracts, 640. Therefore, there being neither assent nor fraud on the part of the gas company shown, it is clear that the contract remained in full force, notwithstanding this declaration of the city authorities to the contrary. But, although no rescission is shown, there is one material allegation which, admitted to be true, as by the demurrer it is, has an important bearing on the rights of the parties in this action. That allegation is, that on the 11th of June the gas company was duly notified and requested "to furnish no more gas or light, and to light no more lamps, and to do nothing more whatever under said contract."
As we understand the law applicable in such cases, it gave to the city, notwithstanding the contract, the absolute right as its own election to decline to receive any more gas under it, thereby refusing performance on its part. Clark v. Marsiglia, 1 Denio 317. The taking of this step, however, did not amount to a rescission of the contract, but simply a breach of it, for which the company, in a proper action, would be entitled to recover adequate damages. But in such action the contract price of the gas furnished, after the refusal to receive it, would not necessarily be the measure of damages recoverable.
And in this connection it is proper to refer to an item of evidence, the rejection of which is alleged for error. We allude to the notice given to the company, in pursuance of a resolution of the city council, to desist from further supplying gaslight to the city under said contract. As the pleadings stood at the time of the trial, by reason of the sustaining of the demurrer, to this fourth count of the answer, the rejection of this evidence on the ground of immateriality or incompetency was not error. The error lay back of this, and in holding, on the demurrer, that such notice was of no consequence.
By the fifth defense in the answer it was alleged in effect that, by the terms of the contract in question, the franchise and property of the company, employed in the manufacture of gas, were exempted from taxation for several years for municipal purposes, by reason of which there was lost to the city the sum of $ 4,200, which it should have received from said company as its proportionate contribution to the municipal revenues during that time.
As to the validity of this exemption, and whether it was a binding agreement, it is not necessary here to decide; but if it were, very respectable authority is cited by counsel for the defendant in error to sustain him in his claim that it was enforceable against the city on the theory that it was an indirect mode of making payment in part for gas supplied. Grant v. City of Davenport, 36 Iowa 396. Howsoever this may be, there is another very conclusive answer to this pretended set-off, which is, that for those years there was neither an assessment of said property, nor the levy of a tax upon it for city purposes, without which there could be no valid claim against the company for contribution to the public revenue. Mr. Cooley in his treatise on taxation says: Thurston v. Little, 3 Mass. 429. People v. Hastings, 29 Cal. 449. No tax is due unless it is assessed. Miller v. Hale, 26 Pa. 432.
The seventh defense of the answer alleges in substance that taxes for the year 1876 to the amount of $ 106.54 were levied and assessed on the capital stock of the gas company, which are delinquent and have never been paid, and that the same should be set off against claim of the plaintiff below.
By the demurrer to this defense of the answer, the question is raised whether, prior to the act of March 1st, 1879 providing "a system of revenue," and taking effect September 1st, 1879, delinquent taxes due from the plaintiff below to the city are a proper subject of set-off? Whether they would be under...
To continue reading
Request your trial