Niles Waterworks v. City of Niles

• Decision Date: 27 January 1886
• Citation: 26 N.W. 525,59 Mich. 311
• Court: Michigan Supreme Court
• Parties: NILES WATER-WORKS v. CITY OF NILES.

26 N.W. 525

59 Mich. 311

NILES WATER-WORKS v. CITY OF NILES.

Supreme Court of Michigan

January 27, 1886

Error to Berrien.

Theo. G. Beaver and Edward Bacon, for plaintiff and appellant.

O.W. Coolidge, Spafford Tryon, and W.A. Underwood for defendant.

CAMPBELL, C.J.

This action was brought to recover for the price of furnishing hydrants and water to the city of Niles. All of the bills presented were under a written contract, and for the contract price. The defense alleged at the circuit was the illegality of the contract. This contract was one made in 1878 with Solan L. Wiley, plaintiff's assignor, whereby he was to have exclusive privileges of supplying water from Barron lake for 30 years, and by laying mains and pipes for that purpose. The city agreed to use at least 50 hydrants a year, at the price of $50 a year, making an annual expenditure of $2,500.

The charter of Niles contains a provision that the common council shall have no power to contract debts, incur liabilities, or make expenditures in any one year which shall exceed the revenue for the same year, unless first authorized to do so by a majority vote of the tax-payers of said city, at a public meeting thereof called and conducted as hereinafter provided. Local Acts 1877, p. 505. We have found nothing in any statute to vary this, and the amendment of 1877 is in some respects more explicit than the section as before existing.

It is not claimed that any authority was ever given to make this contract by vote of the tax-payers. The annual rental of $2,500 did not exceed, with other expenses, the authorized annual levy for past years. The aggregate sum of $75,000 would exceed any such percentage as is allowed in any one year. We have had occasion heretofore to consider the general policy of our city charters confining obligations to the annual appropriations, where not otherwise authorized. It is not necessary in the present case to determine whether, if the aggregate rental for 30 years should be brought within one year's revenue, it could be maintained as authorized. It has been held by several courts, whether correctly we shall not inquire, that nothing is an actual debt which depends on future accruing, and that under such a contract as this each year's rental did not become a debt until the year came round. However this may be, there can be no doubt in our opinion that this whole contract obligation is a "liability" to the full extent of the 30-years rental; and it is equally clear that all unpaid sums would be aggregated until paid. It seems to us to come within the language, as well as within the mischief, of the prohibition. The city council is only an agency to represent the people of the municipality, and the legislature have seen fit to give them what is deemed ample power to raise money year by year for the needs of each year, and no more. When they desire to make larger outlays, or to burden the future revenues of the city, it is left to the parties who are more directly interested to determine how far this shall be done. There is no occasion to construe terms beyond their natural meaning; and as this clause was intended for beneficial purposes, and to carry out the constitutional mandate to restrict the powers of cities and villages in taxation, borrowing money, and contracting debts, (Const art. 15, � 13,) it should be given its full effect.

If this contract is void, there can be no recovery for what has been furnished under it. There would be little safety in any such restriction, if it could be evaded by claims, year after year, of the very same thing which was prohibited to be contracted for. As this question has been settled by our own decisions, we need not inquire elsewhere. City of Detroit v. Michigan Paving Co., 36 Mich. 335; Detroit v Robinson, 38 Mich. 108.

The judgment below should be affirmed.

CHAMPLIN and MORSE, JJ., concurred.

SHERWOOD J., (dissenting.)

The defendants are a municipal corporation, organized under a special charter, and invested with the usual powers, and charged with the performance of such duties as generally pertain to the position of governing bodies in cities in this state. They constitute the common council of the city of Niles. By the charter of the city the common council are authorized to take such action as may "be necessary to secure said city, and the inhabitants thereof, against injuries by fire," and "to construct reservoirs;" also "to provide for supplying such reservoirs with water;" and "to adopt measures for the preservation of the public health;" and "to make by-laws and ordinances to improve the condition of the inhabitants of the city, *** not inconsistent with the laws and constitution of this state, and the constitution of the United States." Sess.Laws 1859, act No. 134, �� 13, 15, 16. The plaintiff is a corporation organized under "An act to authorize the formation of companies for the introduction of water into towns, cities, and villages, in the state of Michigan." How.St. � 782; Laws 1869, 188. The first section of this act will be found in the margin. ^[1]

On the twenty-eighth day of October, 1878, the common council of the city of Niles passed the following resolution: "Resolved, that it is deemed necessary and expedient that the city of Niles should be supplied and protected by a system of water-works, and that it is not deemed expedient that the city should build the same." Previous to the adoption of this resolution a system of water-works to supply the city with water from Barron lake, which lies about four miles from the corporation, had been commenced and partly completed, but the company engaged in the undertaking became unable to go on with the work for want of means, and the next day after the adoption of the foregoing resolution the common council of the city entered into a contract with Solon L. Wiley, of Boston, for the purpose of securing a supply of water for the city from said lake. A copy of this contract is given in the margin. ^[2]

Within the year, and on March 29, 1879, the contract was assigned by Mr. Wiley to the plaintiff corporation, which went into possession of the works then in progress, and completed the same; and on the twenty-second of September, 1879, gave written notice to the city that 44 of the 50 hydrants were set and ready for use, and that rent would be charged on the same from and after October first following, subject to the terms and conditions of the contract under which the work had been done. On the thirtieth of November, 1879, the council was further notified in writing by the plaintiff that the remaining six hydrants had been set, and were ready for use, and that rent would be charged on those from November 1, 1879, under the contract. At this time it was claimed by the plaintiff the works had been fully completed in accordance with the contract, and the city commenced using the water. After these notices, and up to the time of the commencement of this suit, the city used the waters and works in the extinguishment of fires, and to wash out the gutters. It also used the works to supply the engine-house, jail, and common council room, and the common council ordered these hydrants opened for drinking fountains, and raised the money by taxation to pay for the waters.

The plaintiff declared specially in five different counts upon the contract made with its assignor, Solon L. Wiley, by the defendant, to recover for the amount claimed to be due plaintiff for the rental value of the 50 hydrants mentioned in the contract, to the eighteenth day of April, 1883, amounting to the sum of $9,406.34. The declaration also contained the common counts in assumpsit. To this declaration the defendant pleaded the general issue, with notice that the defendant would show on the trial that the plaintiff was indebted to the defendant in divers amounts for the use and occupation, which it would claim by way of set-off to the demands of the plaintiff; and that plaintiff had failed to comply with the terms of the contract declared on, in consequence whereof it was not entitled to recover anything against the defendant. Several other matters were set up in the notice, which it is unnecessary to consider further here. A jury was impaneled, and the cause was tried in the Berrien circuit before Judge SMITH, who, after the testimony was all in, directed a verdict for the defendant on the ground that the city of Niles could not make the contract that it did for the rental of the hydrants; that it was a violation of the charter, which limits the amount of indebtedness to be raised in one year to 1 1/2 per cent. of the taxable property in the city, without a vote of the city; that the contract made with Wiley is void, and cannot be ratified by the city; that the declaration counts specifically upon this contract; and that no recovery can be had under the common counts. To these rulings counsel for the defendant excepted. Other rulings were made upon the trial, and exceptions taken; but those only relating to the rulings of the court in taking the case from the jury are under consideration upon this record.

The charter of the city of Niles was amended the twenty-third day of May, 1877, whereby the common council was limited in the amount of taxes they could levy and collect in any one year on real and personal property to 1 1/2 per cent. on the valuation thereof, exclusive of the costs of collection; and were prohibited from contracting debts, incurring liabilities, or making expenditures exceeding the revenues raised during the same period, unless first authorized so to do by a majority vote of the tax-payers of the city.

It is claimed on the part of the defendant that the agreement of the common council to pay the $2,500 annual rental for...