Rawls Springs Utility Dist. v. Novak

• Decision Date: 31 August 2000
• Docket Number: No. 1999-CA-00986-SCT.,1999-CA-00986-SCT.
• Citation: 765 So.2d 1288
• Parties: RAWLS SPRINGS UTILITY DISTRICT v. Paul S. NOVAK.
• Court: Mississippi Supreme Court

765 So.2d 1288

RAWLS SPRINGS UTILITY DISTRICT v. Paul S. NOVAK.

No. 1999-CA-00986-SCT.

Supreme Court of Mississippi.

August 31, 2000.

Larry O. Norris, Hattiesburg, Attorney for Appellant.

Kenneth Henry Meyer, Hattiesburg, Attorney for Appellee.

BEFORE BANKS, P.J., WALLER AND DIAZ, JJ.

WALLER, Justice, for the Court:

¶ 1. Rawls Springs Utility District brought suit against Paul S. Novak, demanding $8,000 in compensatory damages and requesting injunctive relief. Because we find that the Forrest County Chancery Court erred in refusing to hold the verbal agreement at issue void and in applying equitable estoppel, this case is reversed in part and remanded to the trial court.

FACTS AND PROCEDURAL HISTORY

¶ 2. Dealing with a sketchy record and avoiding prolixity, we note only the facts and procedural history which are essential to an understanding of our decision.

¶ 3. Rawls Springs Utility District, Inc., is a public corporation created by the Forrest County Board of Supervisors pursuant to §§ 19-5-151 through 19-5-207 of the Mississippi Code of 1972, as amended. The District was created on April 12, 1973, for the purpose of providing water and sewer service to area residents. It is "a body politic and corporate with power of perpetual succession." Miss.Code Ann. § 19-5-165 (1995). The members of the District Board of Directors are appointed by the County Board of Supervisors. The bylaws of the District Board were adopted on August 26, 1990.

¶ 4. Paul S. Novak, a developer of a trailer park in the Rawls Springs community, wanted to have 32 water meters installed at his trailer park. During 1991 and unbeknownst to the District Board, Novak and Harvey Bryant, president and chief executive officer of the District at that time, entered into an oral agreement for the District's maintenance personnel to install the meters for $50 per meter. This agreement was contrary to the District's regulations which provided for a charge of $300 per meter, as is evidenced by the minutes of a June 14, 1988, District Board meeting. Subsequent to the agreement, Jean Robbins, secretary and bookkeeper for the District, billed Novak on 32 occasions for the meter installments, from 1991 through early 1997. All payments were received by Robbins.

¶ 5. In further contradiction of the District's regulations, Bryant allowed Novak to tap into the District's water line without any governmental inspection and to have the water meters set up on Novak's private property, as opposed to having the meters set up on a public right-of-way.

¶ 6. After all 32 meters were installed, the District Board became aware of Bryant's agreement with Novak. On February 25, 1997, the Board sent a letter to Novak advising him that he would be charged $300 for his future water taps. On July 11, 1997, a letter from the District demanded payment from Novak in the amount of $8,000 for a $250 underpayment on each of the 32 meters.

¶ 7. After it did not receive the requested payment, on September 4, 1997, the District filed suit in the Chancery Court of Forrest County, Mississippi, seeking judgment for $8,000, and injunctive relief requiring Novak to move the meters from his private property to the public right-of-way at Novak's expense. Following a non-jury trial, the Chancellor rendered final judgment and concluded that: (1) the doctrine of equitable estoppel applied in favor of Novak, thus denying any monetary recovery by the District; (2) Novak was enjoined from any further action to install water meters without strict compliance with the applicable regulations, bylaws, and published charges of the District; and (3) Novak was required to participate in remedial action, at the District's election, to bring existing water and sewer connections into compliance with the District's regulations and bylaws, and was therefore enjoined to cooperate with the District in providing the necessary labor, either in person or by payment, to accomplish such remedial compliance action. A motion for new trial was summarily denied by the trial court. Feeling aggrieved, the District appeals to this Court, asserting five points of error:

I. THE DENIAL OF MONETARY DAMAGES WAS AGAINST THE WEIGHT OF THE EVIDENCE.

II. THE CHANCELLOR ERRED IN FINDING THAT THE DISTRICT WAS NOT A POLITICAL SUBDIVISION OF THE STATE, AND THUS NOT SUBJECT TO THE SAME GENERAL LAWS, RIGHTS, AND GUIDELINES.

III. THE CHANCELLOR ERRED IN FINDING THAT THE DISTRICT WAS EQUITABLY ESTOPPED BY THE ACTIONS OF ITS PRESIDENT.

IV. THE CHANCELLOR ERRED IN FINDING THAT THE DISTRICT'S PRESIDENT COULD CONTRACT WITH NOVAK.

V. THE CHANCELLOR ERRED IN THE SCOPE OF REMEDIAL ACTION WHICH NOVAK IS REQUIRED TO TAKE.

DISCUSSION

¶ 8. For the purposes of clarity and efficient discussion, the District's points of error are combined and rephrased.

I. WHETHER THE CHANCELLOR ERRED IN FINDING THAT THE DISTRICT WAS NOT A POLITICAL SUBDIVISION OF THE STATE, AND THUS NOT SUBJECT TO THE SAME GENERAL LAWS, RIGHTS, AND GUIDELINES.

II. WHETHER THE CHANCELLOR ERRED IN FINDING THAT THE DISTRICT'S PRESIDENT COULD CONTACT WITH NOVAK, WITHOUT APPROPRIATE ENTRY OF THE CONTRACT IN THE BOARD'S MINUTES.

¶ 9. The chancellor rejected the District's argument that it could not be bound by the unauthorized acts of its president in contracting with Novak to have the meters installed for $50. In so doing, the trial court stated that it "entertain[ed] serious doubts" that the District enjoyed "the same status and protection afforded municipalities, counties, and like subdivisions of the state" vis a vis the authority of such bodies to act through their minutes only. Thus, the issue is whether the District may have acted through its minutes only, so as to have rendered the agreement between Bryant and Novak void. As this is a question of law, this Court proceeds de novo. Cooper v. Crabb, 587 So.2d 236, 239 (Miss.1991).

¶ 10. The District is a public corporation created by the Forrest County Board of Supervisors pursuant to Miss.Code Ann. §§ 19-5-151 through 19-5-207 (Supp. 1999), as amended, and is "a body politic and corporate with power of perpetual succession." Miss.Code Ann. § 19-5-165 (1995). Although there are no cases which directly address the issue of whether the board of a utilities district duly created by a county board of supervisors may act only through its minutes, several of this Court's cases provide guidance on the point. As the District Board is a public corporation and body politic, we conclude that the District Board's action fall under those generally recognized holdings that limit such bodies to speak and act only through their minutes.

[A]lways it has been the positive rule in this state, both by statute and by a long line of judicial decisions strictly enforcing those statutes, that boards of supervisons [sic] can bind counties, or districts therein, only when acting within their authority and in the mode and manner by which this authority is to be exercised under the statutes, and that their contracts, and every other substantial action taken by them must be evidenced by entries on their minutes, and can be evidence in no other way.

Board of Supervisors v. Dawson, 208 Miss. 666, 672, 45 So.2d 253 (1950) (quoting Lee County v. James, 178 Miss. 554, 559, 174 So. 76, 77 (1937)); see also Thompson v. Jones County Community Hosp., 352 So.2d 795, 797 (Miss.1977)

("We therefore conclude that a contract with a public board may be enforced if enough of the terms and conditions of the contract are contained in the minutes ....") (emphasis added); Colle Towing Co. v. Harrison County, 213 Miss. 442, 448, 57 So.2d 171, 172 (1952) ("It has been repeatedly held in this State...