Public Market Co. v. City of Portland

• Decision Date: 09 March 1943
• Citation: 138 P.2d 916,171 Or. 522,130 P.2d 624
• Parties: PUBLIC MARKET CO. OF PORTLAND v. CITY OF PORTLAND ET AL.
• Court: Oregon Supreme Court

171 Or. 522

130 P.2d 624

138 P.2d 916

PUBLIC MARKET CO. OF PORTLAND v. CITY OF PORTLAND ET AL.

Supreme Court of Oregon.

Argued January 17, 1942.

Argued on rehearing March 9, 1943.

Reversed November 2, 1942.

Original opinion amplified June 15, 1943.

Evidence

1. In suit by corporation against city for a decree specifically enforcing an ambiguous contract by which corporation was to construct a market building to be owned and operated by city as a public utility, oral evidence was admissible to determine the intention of the parties as shown by the negotiations leading up to and attendant on execution of the contract, but not undisclosed thoughts or opinions of the parties.

Evidence

2. The purpose of receiving evidence as to the intention of the parties to an ambiguous contract is to determine their intention and the meaning of the terms they use, and when those things are ascertained, they must prevail over the dry words of the agreement, such evidence being received not to change the writing, but to furnish light by which to ascertain agreement's actual significance.

Municipal corporations

3. In construing an ambiguous contract by which corporation was to construct a market building to be owned and operated by city as a public utility, it was required to be considered that at time contract was entered into city, along with the rest of the country, was in the throes of a great depression.

Specific performance

4. In suit by corporation against city for a decree specifically enforcing an ambiguous contract by which corporation was to construct a market building to be owned and operated by city as a public utility, evidence established that city's obligation was payable only out of a special fund to be created by sale of public utility market certificates, and was not a general obligation of city as contended by corporation.

Appeal and error

5. On appeal from a decree in an equity case, the Supreme Court defers to the finding of the trial judge on close questions of fact.

Municipal corporations

6. Where representatives of company which had entered into an ambiguous contract with city for construction of a market building to be owned and operated by city as a public utility,

whatever may have been their own understanding of the contract, knew that members of city council understood that contract was not intended to be an agreement imposing a general obligation on the city, it was court's duty under statute to construe the contract according to the understanding of the city council.

Contracts

7. A court has the duty to place such construction on a contract as will render it legal, rather than void.

Municipal corporations

8. Provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, requires city to adopt a pay as you go plan, and prevents the incurring of indebtedness or liability in any one year to be paid out of the income or revenue of any future year.

Municipal corporations

9. Provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, precludes a city from incurring valid obligations to pay any more than its revenue already provided will enable it to pay.

Municipal corporations

10. Provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, means that liabilities incurred in a particular year, which exceed revenues provided for the year in which they are to be paid, are void.

Municipal corporations

11. The word "liability" as used in provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, is a broader term than the word "debt", and includes any kind of debt or liability, either absolute or contingent, express or implied.

Municipal corporations

12. Where no revenues for payment of market building constructed by corporation for city to operate as a public utility were provided by city or were ever available, assumption by city in contract of liability, if it intended to be a general obligation of the city, was in violation of provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void.

Municipal corporations

13. The question of the validity vel non of contract between corporation and city for the construction by corporation of a market building to be owned and operated by city as a public utility was required to be determined as of the time when the indebtedness or liability was incurred by the city.

Municipal corporations

14. Provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, was intended to have some effect in limiting the powers of the city council in the incurring of indebtedness, and it is the court's duty to give it effect according to the meaning of the words used.

Municipal corporations

15. The word "revenue" as used in provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, does not mean the actual money which shall be received in the city treasury, but it is the estimated revenues which are contemplated, and the estimates must relate to sources of income which are certain and not contingent.

Municipal corporations

16. The clear purposes of the people in enacting provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, was to prevent council from incurring obligations payable in a future year, while leaving it to future councils to find the money to discharge them.

Municipal corporations

17. In determining what is a "liability" within meaning of provision of city charter that any liability incurred by city council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year, shall be void, a distinction is drawn between contracts involving extraordinary expenditures such as contracts for permanent improvements, and contracts for the ordinary running expenses of city.

Municipal corporations

18. The phrase "going public market utility" as used in contract between corporation and city providing for construction of a market building to be owned and operated by city as a public utility, and providing that before city acquired the building it

should be so occupied by tenants as to be a going public market utility, did not connote a business which was making net profits, but rather an established business with acquired customers, and hence corporation did not fail to perform the contract because the market was never operated at a profit.

Municipal corporations

19. Contract between corporation and city for construction by corporation of a market building to be owned and operated by city as a public utility, and providing that before city acquired the building it should be so occupied by tenants as to be a "going public market utility", did not require company to operate the market experimentally for a period of time to determine whether the venture would be a profitable one, but merely required that building should have a substantial number of tenants and be open for business and in operation as a market.

Specific performance

20. In suit in equity by corporation against city for an accounting and for a decree specifically enforcing a contract by which corporation was to construct a market building to be owned and operated by city as a public utility or for damages for breach of contract by city, evidence was insufficient to establish that city entered into the contract in reliance on representations of the company, with respect to the future success of the public market, but showed that city relied on its own investigation as to the prospects of the market.

Municipal corporations

21. Where delays by corporation in commencement of construction for city of a market building to be owned and operated by the city as a public utility, due to litigation and other causes, were waived by city, and building was occupied up to 90 per cent of its capacity by tenants secured by corporation in accordance with provision of contract that before city acquired building it should be so occupied by tenants as to be a going public market utility, and thereafter the building was fully completed, and tender of the premises was made on behalf of the corporation, corporation fully performed its undertaking, and city's repudiation of the contract was wrongful.

Specific performance

22. The remedy of specific performance, by ordering city to sell public utility certificates to pay for a market building constructed by corporation for city to operate as a public utility, was not available, where city's repudiation of the contract, protracted litigation, and other circumstances, made it highly improbable that buyers could be found for the certificates.

Contracts

23. Where a promise is to pay out of a fund to be realized in a certain way, there is an implied obligation that the promisor will use reasonable diligence in performing the act on which payment is contingent, and in default of such diligence, payment becomes due without performance of the condition.

Contracts

24. If a promisor is himself the cause of the failure of...