O'Neil Eng'g Co. v. Inc.
| Decision Date | 14 May 1912 |
| Docket Number | Case Number: 1638 |
| Citation | 124 P. 19,1912 OK 398,32 Okla. 738 |
| Parties | O'NEIL ENGINEERING CO. v. INCORPORATED TOWN OF RYAN et al. |
| Court | Oklahoma Supreme Court |
¶0 1. MUNICIPAL CORPORATIONS--Contracts-- Notice of Authority. Whoever deals with a municipality does so with notice of the limitations on its or its agents' powers. All are presumed to know the law, and those who contract with it, or furnish it supplies, do so with reference to the law; and if they go beyond the limitations imposed they do so at their peril.
2. SAME--Indebtedness--Limitations. The intention and plain purpose of section 26, art. 10, of the Constitution, is to require municipalities to carry on their corporate operations upon the cash or pay as you go plan. The revenues of each year must take care of the expenditures of such year; and any liability sought to be incurred by contract, express or implied, executed or executory, in excess of such current revenue in hand, or legally levied, is void, unless it be authorized by a vote of the people, and within the limitations therein provided.
3. SAME--Submission of Question to Popular Vote. Section 26, art. 10, of the Constitution, provides a complete referendum for submitting to the voters the question of incurring indebtedness in excess of the current revenue, within the limitations therein established.
4. SAME. To obtain the authority of the qualified voters to incur an indebtedness, or to enter into a contract otherwise prohibited, the proposition must be submitted to them in such specific language as to apprise the voters of the full purpose and the exact and particular thing upon which they are called upon to vote and decide.
Jones & Green and Lewis & Phillips, for plaintiff in error.
Chas. E. Davis, for defendants in error.
¶1 This is a suit for an injunction and a receiver. The suit was filed in the district court of Jefferson county by the O'Neil Engineering Company, as plaintiff, against the incorporated town of Ryan, and the officers thereof naming them, as defendants. It was brought for the purpose of restraining the paying out of certain funds, the same being a portion of the proceeds of a bond issue, and for the appointment of a receiver to take charge of such funds pending the litigation. A demurrer was interposed, challenging the sufficiency of the petition, in that its allegations were not sufficient to entitle plaintiff to the relief sought. Upon hearing at chambers, the judge refused to grant a temporary injunction and the appointment of a receiver. Because of such refusal, this appeal is prosecuted. The question before us is to determine whether, upon the showing made, plaintiff was entitled to equitable relief. The plaintiff predicates its action upon a certain written contract, attached to its petition, dated November 30, 1908, and which, it alleges, was entered into between the town of Ryan, acting through the chairman of its board of trustees, as party of the first part, and the plaintiff, O'Neil Engineering Company, as party of the second part. This contract appears to have been signed by the chairman of the board of trustees, and to have been attested by the town clerk with the town seal attached. Briefly summarized, it provided:
"That the plaintiff was to prepare and furnish plans and specifications for the construction of a proposed system of waterworks, sewers, and electric lights, with an estimate of cost of same; to assist defendant in awarding contracts for material and machinery; to employ all labor necessary in collecting material and in the construction of the plant; to furnish superintendence and all tools, such as picks, shovels, plows, scrapers, lanterns, hammers, etc., necessary to do the work."
¶2 Plaintiff was further to keep and render weekly pay rolls for work done and to inspect material; to furnish a steam trenching machine, paying freight thereon, with the fuel and labor to operate it, and was to excavate all the trenches for the waterworks system, according to certain dimensions, and for which defendant was to pay it a fixed sum per lineal foot. That wherever steam machinery would not work the excavations were to be made by hand, the pay rolls therefor to be paid by defendant. Under the contract, plaintiff was to receive the sum of ten per cent. upon the gross amount expended by the city, in addition to the full contract price for the excavation of the trenches in which the water pipes were to be laid. The contract further provided:
"That none of the payments as above recited, shall be due and payable until the bonds of the town of Ryan have been voted, sold, and paid for."
¶3 Plaintiff's petition discloses that there were no current funds of the town with which to meet any of the expenses called for in the contract. On this point the petition avers:
"That the current expenses of said town consume and exhaust its current revenues; * * * that taxes against the taxable property situated in said town have been and are now imposed to the full limit allowed by law; and that no other funds or property of said town are now or will be available and lawfully subject to the payment of any judgment that it may herein recover," etc.
¶4 Plaintiff further avers, in substance, that after the execution of said contract, November 30, 1908, it furnished defendant with plans and specifications for the proposed work, and that on May 26, 1909, an election was called by the board of trustees to be held on June 15, 1909, for the purpose of voting on the question of issuing the bonds of the town in the sum of $ 69,000, with which to construct the waterworks, light plant, and sewer system, and that at such election such bonds were authorized by the voters. Plaintiff then avers that, notwithstanding its readiness, willingness, and ability to carry out its contract, and its tender and offer so to do, after the bonds had been voted and the incurring of the indebtedness thereon authorized, in June, 1909, the defendant, acting through its then board of town trustees, repudiated the said contract altogether, and gave notice to plaintiff that it did not propose to be bound thereby, and that plaintiff would not be permitted to in any wise perform said contract in any particular. Plaintiff further avers that after such repudiation of its contract the defendant constructed the said works under contracts with other parties, ignoring plaintiff; and for such work, and for the construction of said plants, it had paid to other parties all but a small balance of the proceeds of the said bond issue, and that, unless restrained, defendant would pay out the balance of the same. Plaintiff avers that such balance of funds in the hands of defendant of such bond issue were sufficient to pay it the sums alleged to be due it by defendant under its contract, and that such funds were charged with a trust in the hands of the defendant for the payment thereof. Its prayer is to enjoin the defendant, its officers and agents, from paying out a certain specified balance of such funds, and for a receiver to take charge of and hold the same. It is contended by defendant that the contract relied on by plaintiff as a basis for this suit is invalid, because made without authority of law, and in contravention of the Constitution and laws of the state. The court, in sustaining the demurrer, took this view of the case. There being no current revenue on hand, or lawfully levied, out of which the contemplated expenses of this contract, and of the improvements to be made, could be paid, the funds therefor could only be provided in accordance with sections 26 and 27 of article 10 of the Constitution. Section 26, supra, relates to the incurring of indebtedness for any purpose in excess of the current revenues, and within certain limits. Section 27, supra, relates to incurring indebtedness in excess of the limitations imposed in section 26, for constructing or repairing public utilities, to be exclusively owned by the city. It is not shown that the indebtedness involved here was in excess of the limitations found in section 26, supra, and we may look to that section for a test of the contract involved. It follows:
¶5 That this section of the Constitution provides a complete referendum for submitting to the voters the question of incurring indebtedness in excess of the current revenues for the current year has been decided by this court, and is not disputed in this case. Board of Education of Sapulpa v. McMahan, 26 Okla. 588, 110 P. 907; Board of Education of Ardmore v. State ex rel., 26 Okla. 366, 109 P. 563; North v. McMahan, 26 Okla. 502, 110 P. 1115. This section of the Constitution has been under consideration a number of times by this court, and we collect here...
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