Powell v. City of Baird, 2032.

• Citation: 132 S.W.2d 464
• Decision Date: 06 October 1939
• Docket Number: No. 2032.,2032.
• Parties: POWELL et al. v. CITY OF BAIRD et al.
• Court: Texas Court of Appeals

132 S.W.2d 464

POWELL et al. v. CITY OF BAIRD et al.

No. 2032.

Court of Civil Appeals of Texas. Eastland.

October 6, 1939.

Rehearing Denied November 3, 1939.

Appeal from District Court, Callahan County; M. S. Long, Judge.

Suit by T. E. Powell, and others, against the City of Baird, Texas, and others, to cancel a certain contract and to require preparation of plans and specifications, wherein Colonel Dyer and others, alleging themselves to be resident citizens of Baird and taxpayers, were permitted to intervene. From an adverse judgment, the plaintiffs and interveners appeal.

Affirmed.

W. E. Martin and Ben L. Cox, both of Abilene, and Blanton & Blanton, of Albany, for appellants.

Felix Mitchell and L. L. Blackburn, both of Baird, and Scarborough & Ely, of Abilene, for appellees.

GRISSOM, Justice.

T. E. Powell et al., as plaintiffs, instituted this suit against the City of Baird, a municipal corporation, Albert C. Moore and Fairbanks-Morse & Company, a corporation, as defendants. The purpose of the suit was to cancel a contract between said city and said company, and a contract between the city and the Federal Emergency Administration, and to require the preparation of "plans and specifications that will enable other competitors to bid besides Fairbanks-Morse & Company" etc. Stated as briefly as possible, plaintiffs alleged that on September 30, 1938, a city election was held in Baird, at which there was submitted to the voters of the city the question as to whether or not said city would issue revenue bonds or warrants to be used for the purpose of constructing a municipal electric light plant. That at such election the proposition submitted to the voters was carried. That the only issue submitted to the voters was "whether or not the City of Baird should have authority to issue said revenue bonds or warrants and pledge the net revenues of the distribution plant for the purpose of paying interest, creating a sinking fund and retiring said bonds * *. The amount of such revenue bonds to be issued under said election was not to exceed $160,000." That thereafter the city applied to the United States Government for a "loan" and grant in financing the building of said municipal light plant. That the Federal Emergency Administration for Public Works of the United States Government agreed to make a grant of 45 per cent of the cost of the municipal light plant and to supply the remaining 55 per cent of the cost of said plant by purchase of bonds. Said Federal Emergency Administration agreed to purchase revenue warrants not exceeding the sum of $91,000, which said warrants were to be paid for solely out of revenues to be derived from the operation of said plant. It was alleged that said city in its application for "such loan and grant represented that the municipal plant in competition with West Texas Utilities Company which had such a plant in the city of Baird and was operating same at said time and is now operating same, would obtain 75 per cent of the total revenues obtained from the sale of electric current and the sale of the products and service to the public in competition with said local private plant; and that the total revenues for the city of Baird for such electric sales and current had been the sum of approximately $33,152 per annum; whereas, plaintiffs allege the facts to be on information and belief and verily believe the same to be true, that the total revenues derived from the sale of electric current in the city of Baird do not exceed, and had not exceeded $26,873.00 per annum; and your petitioners also allege upon information and belief that the municipal plant, if constructed, will not attain 75 per cent of the revenue from such sales, and in fact will not receive as much as 50 per cent of such sales and revenues, as shown by contracts between the citizens of Baird and the local private plant." It was alleged that in the contract between the city and the Federal Emergency Administration it was stipulated as follows: "It shall be provided in the bond ordinance or resolution, as a separate and independent remedial provision, that in the event of default of payment of either principal or interest of the bonds as the same shall become due, the holders of twenty-five percentum or more in principal amount of the bonds shall be entitled to the appointment of a trustee to operate the system until default shall have been cured and until the system shall be in all respects current with respect to principal and interest requirements of the bonds."

It was alleged on information and belief that the statements of the City to the Federal Emergency Administration to procure said money were fraudulent and false and known by the city to be false; that the clause just quoted from the contract between the city and the Federal Emergency Administration was "ultra vires and unlawful and it was beyond the power of the City Council or Commission to bind the city in any such contract." Plaintiffs alleged that after the city had entered into said contract with the Federal Emergency Administration that "it advertised it would let the contract of construction of such generating plant and distributing system and bids were invited by such advertisement from such persons and firms as might desire to bid on the contract and thereafter contract with the city for the construction of said plant and distributing system. And on the 17th day of December, 1938, the city awarded the contract for the construction of said plant and distributing system to the defendant, Fair-banks-Morse & Company, for the sum of $145,122. That prior to the advertisement for bids, the city of Baird employed and had the defendant Moore to prepare plans and specifications for the construction of said plant and distributing system; and on information and belief plaintiffs say that the plans and specifications call for a much larger plant and a much more costly plant than the needs of the city of Baird require, even if it should attain all the revenue produced from users of electric current in said city, and that specifications for the plant on which the contract was let were for too large a plant for said city; and that the price stipulated in said contract is excessive by at least $20,000."

Plaintiffs alleged on information and belief that the specifications for the plant were so drawn by the engineer Moore that no one could bid on same but Fairbanks-Morse & Company, and that these facts were known to the said Moore and to the Fairbanks-Morse & Company at the time said plans and specifications were drawn and advertisement for bids were had. "That the advertisements for bids for such plant by reason of the unlawful and fraudulent specifications was a mere subterfuge on the part of the defendants and was made in order to comply with the form of the law in such cases made and provided; and in fact no competitive bids were desired nor asked for nor received for such work, which rendered said contract void, both by virtue of the statutes of Texas requiring such competitive bids and by reason of the common law requiring that such bids should be bona fide and in good faith. On information and belief plaintiffs say that before such specifications were drawn and before bids were advertised for and long before the contract was awarded to defendant Fairbanks-Morse & Company the city of Baird and its officials and other defendants had entered into a conspiracy among themselves whereby it was agreed and understood that defendant Fairbanks-Morse & Company would be awarded the contract for building such plant and such distribution system; and said agreement and conspiracy was carried out by the defendants in the following manner * * *."

"A. The specifications require that no four cylinder, four cycle engines, nor engines with air injectors may be used. This specification tends to confine the bidding to Fairbanks-Morse & Company because, out of numerous makes of Diesel engines, almost all of them, in fact, all of them that would otherwise qualify under the other specifications, have air injectors, and air injectors are standard, efficient, and represent the best engineering practice of the country.

"B. Another of the specifications requires that the engines furnished be of a speed, or preferred, of not more than 300 revolutions per minute. Fairbanks-Morse & Company is the only manufacturer building engines otherwise qualified to meet such specifications with a speed of not more than 300 revolutions per minute.

"C. Another of the specifications that requires an engine built exclusively by Fairbanks-Morse and Company is one requiring that the engines for this proposed plant shall have a piston speed of not more than 1100 feet per second, and Fairbanks-Morse & Company is the only manufacturer building such engines, capable of meeting the other requirements of the specifications, with the price range of the Fairbanks-Morse & Company engines.

"D. Another of the specifications which could only be met by engines built by Fairbanks-Morse & Company is one reading as follows:

"`The brake mean effective pressure of the working cylinders of the 4-stroke cycle type Diesel engines to be furnished hereunder, shall not exceed 75 pounds per square inch.

"`For 2-stroke cycle type of Diesel engines to be furnished hereunder, the brake mean effective pressure shall not exceed 40 pounds per square inch.

"`For 2-stroke cycle type of Diesel engines furnished hereunder with oil cooled pistons, the brake mean effective pressure shall not exceed 60 pounds per square inch.'"

Plaintiffs then alleged that if the city of Baird did not conspire with Moore and Fairbanks-Morse Company to compile a set of specifications with which only said company could comply "that said specifications were, nevertheless so drawn, and that such was the effect thereof, and that if the city of Baird was overreached and deceived thereby, that its co-defendants Fairbanks-Morse & Company and Albert C. Moore...