New Orleans Gas Light Co. v. The City of New Orleans

• Decision Date: 16 December 1889
• Docket Number: 10,280
• Citation: 7 So. 559,42 La.Ann. 188
• Court: Louisiana Supreme Court
• Parties: NEW ORLEANS GAS LIGHT COMPANY v. THE CITY OF NEW ORLEANS ET ALS

7 So. 559

42 La.Ann. 188

NEW ORLEANS GAS LIGHT COMPANY v. THE CITY OF NEW ORLEANS ET ALS

No. 10,280

Supreme Court of Louisiana

December 16, 1889

March 1890

APPEAL from the Civil District Court for the Parish of Orleans. Ellis, J.

Buck Dinkelspiel & Hart, for Plaintiff and Appellant.

Farrar Jonas & Kruttschnitt, for the Louisiana Electric Light and Power Company, Defendant and Appellee.

Carleton Hunt, City Attorney, for Defendant and Appellee.

OPINION

POCHE, J.

Plaintiff brings this suit in its capacity as a tax payer for the purpose of setting aside a contract made between the city and the Louisiana Electric Light and Power Company, in May, 1887, to light the city with electricity for four years, beginning on the 1st of January, 1888. The grounds of attack, to be considered on appeal, are the following:

1. That the contract is null and void, because it violates the prohibition contained in Sec. 2448 of the Revised Statutes, which provides that "the police juries of the several parishes, and the constituted authorities of incorporated towns and cities in this State, shall not hereafter have power to contract any debt or pecuniary liability without fully providing in the ordinance creating the debt the means of paying the principal and interest of the debt as contracted."

2. That the City of New Orleans had no power in law to enter into such a contract. The defence is practically a general denial, and the judgment on appeal rejected plaintiff's demand.

I.

A statement of the principal features of the contract is necessary to a proper understanding of the grounds of attack.

After the adoption of an ordinance on the subject and after public advertisement calling for sealed proposals to light certain portions of the city, therein designated, with electricity for a term of five years, and the lowest bid having been made by the Louisiana Electric Light and Power Company, the contract was executed between the city and that corporation, containing numerous stipulations not necessary to enumerate in this opinion. After fixing the rates to be paid for each light to be established and operated under the contract, the following stipulation was agreed upon:

"And the said City of New Orleans hereby binds and obligates itself to make and set apart in its budget of expenses for each and every year during the continuance of this contract, a special appropriation, sufficient in amount to cover the provisions of this contract, and to set the same aside and to dedicate the same to the purposes aforesaid."

It would seem to us that a mere comparison of the language just transcribed within the terms of the prohibition contained in Section 2448 of the Revised Statutes, is the best as well as the shortest argument to show that the contract under discussion does not fall within the scope of the prohibition contemplated by the statute.

There is no stipulation or expression either in the contract or in the ordinance on which to ground the contention that the city thereby intended to contract a debt.

The agreement imports no absolute and binding obligation on the part of the city to pay any sum of money for a consideration pre-existing or executed on the part of the obligee, which is of the essence of a debt. The obligation of the city for future disbursements in favor of the company is conditioned on the performance on the part of the latter of its part of the contract, a fact to be ascertained, under the terms of the contract itself, from month to month.

Although the eventual disbursements to be made by the city may amount to several hundred thousand dollars, it is certainly not correct to argue that the effect of the contract was to place it in debt to that amount.

If under the terms of the contract the company furnishes and operates in quality and quantity the lights contemplated and agreed upon, and if payments are made therefor by the city from month to month, as stipulated in the contract, the city would certainly never be in debt to the company. Hence we conclude that no indebtedness was contemplated to flow from or was created by the contract.

These considerations find their support not only on reason and logic, but also on authority derived from adjudications of courts of last resort. Weston vs. Syracuse, 17 New York Reports 110; Valparaiso vs. Gardiner, 7 An. and Eng. Corporation Cases 626.

Of course, in thus contracting the city incurred pecuniary liability, just as a natural person becomes liable in purchasing goods or commodities, or in securing the privilege by use or consumption of any needed object, thing or commodity. And the liability becomes exigible from month to month, as the lights contracted for are shown to have been furnished and operated by the company. But the very stipulation which creates the liability is in itself a provision of the means of paying the same.

As it appears from the stipulation hereinabove transcribed, the city obligates itself to annually provide in its budget the means of discharging its pecuniary liability under the contract for each ensuing year.

How else could the city have possibly provided for the means necessary to pay for its annual supply of gas or of any other needed and indispensable commodity but out of its annual revenues and by means of a budget framed in accordance with the positive mandate of the law?

We know of no other mode, and we have been referred to none. It is useless to refer to, or to analyze, for the purpose of distinguishing the difference existing in the decisions quoted by plaintiff's counsel on this point of the case. They refer to bonds, notes and other obligations, evidences of indebtedness, not part, but clearly outside, of annual expenditures of city revenues for necessary annual costs of municipal governments. They can have no possible application to a case...