Town of Camden v. Fairbanks, Morse & Co.

• Decision Date: 22 January 1920
• Docket Number: 2 Div. 692
• Citation: 204 Ala. 112,86 So. 8
• Parties: TOWN OF CAMDEN v. FAIRBANKS, MORSE & CO.
• Court: Alabama Supreme Court

86 So. 8

204 Ala. 112

TOWN OF CAMDEN v. FAIRBANKS, MORSE & CO.

2 Div. 692

Supreme Court of Alabama

January 22, 1920

Rehearing Denied Feb. 14, 1920

Appeal from Circuit Court, Wilcox County; B.M. Miller, Judge.

Bill by Fairbanks, Morse & Co. against the Town of Camden for the sale of certain property, or for its restoration, and for general relief. From the decree rendered, the respondent appeals. Affirmed.

Anderson C.J., and McClellan and Brown, JJ., dissenting.

Bonner & Miller and S.C. Godbold, all of Camden, for appellant.

Pettus Fuller & Lapsley, of Selma, for appellee.

THOMAS J.

The complainant corporation filed its bill against the town of Camden to recover pumping machinery, which was purchased for that municipality and became a part of its waterworks. The machinery was sold to the municipality under a written contract of date February 10, 1916, for the purpose indicated--the vendor guaranteeing said machinery to be well made, of good material, and in a workmanlike manner; that, if any part should fail through defect in workmanship or material within a year from date of shipment, said company would replace the defective parts free of charge, etc. The terms of sale were as follows: $1,907.75, payable before the 10th of the month following delivery of the machinery at Camden; $200, payable before the 10th of the month following test; $1,000, payable 12 months after shipment--all deferred payments to be evidenced by negotiable notes, payable to the order of the company and bearing interest from date of shipment at the rate of 8 per cent. per annum, and payments represented by notes "to be secured by the machinery herein specified." The contract further stipulated that the proposal of purchase and sale by Fairbanks, Morse & Co. to "Town of Camden, Purchaser, Camden, Alabama," was made upon condition that the town make "the financial arrangements necessary to complete the waterworks system as contemplated," and upon the further fact "that the title and ownership of the property herein specified shall remain in this company until final payment thereof has been made in full," etc.; respondent to take all legal steps as might be required by the laws of the state of Alabama for preservation of complainant's title as provided in the contract, and in the event of default by respondent in making any of said payments when due, the full amount of the purchase price, at the election of the company to become immediately due and payable. The contract concludes with this stipulation and superscription:

"It is expressly understood this proposal made in duplicate contains all agreements pertaining to property herein specified, there being no verbal understanding whatsoever, and when signed by purchaser and approved by an executive officer or local manager of Fairbanks, Morse & Co. becomes a contract binding parties hereto. *** Respectfully submitted, Fairbanks, Morse & Co., by E.G. Bergh, Salesman.

"The above proposal is hereby accepted this 10th day of Feb., 1916.

"E.W. Berry, Mayor.

"B.H. Matthews, Town Clerk, "Camden, Alabama.

"Town seal lost at present. E.W. Berry, Mayor.

"Signed in presence of J.N. Stanford, Judge of Probate.

"Approved at New Orleans, La. Fairbanks, Morse & Co., by Jno. Jones, Manager. OK J. OK WH."

The bill avers that on April 26, 1916, complainant accepted the contract as binding and shipped to respondent a part of said machinery, the balance being shipped May 18th thereafter, which shipments were received by respondents and thereafter used in the construction of its waterworks; that the contract was approved by complainant's executive officer (between February 10 and July 24, 1916), and was ratified and became binding on complainant on April 29, 1916, by its shipment of a part of said machinery to respondent and by its receipt and use by respondent for the contract purpose. It is further averred that before the date of the contract the town of Camden had issued bonds to the extent of 8 per cent. of the assessed value of the taxable property therein for the purpose of constructing or buying a waterworks system and for the improvement of its streets, that when said contract was entered into said bonds had not been sold and delivered, and that between the time the contract was signed and the time it became binding said bonds were sold and delivered and the proceeds therefrom were in the treasury of that town. It is averred that at this juncture the mayor of Camden notified Fairbanks, Morse & Co. (complainant) that "financial arrangements" had been perfected to build and complete the waterworks system, and that the municipality was ready to proceed with the purchase of said machinery to be used as a part of said system. Under said written instrument complainant delivered and installed said machinery as an integral part of the waterworks at a cost of $3,107.75, and it is averred, as agreed therein, there was paid $1,500 of the purchase price on November 27, 1916, $194.20 credited to respondent on December 20, 1916, and that the balance due and unpaid was $1,413.55, and that since the installation of said machinery respondent has been in possession thereof, and has used it as a part of its waterworks system, and has made no claim of any defect therein, or of a breach of any of the contract provisions.

The prayer of the bill is for a sale of the machinery to pay the amounts due on the contract, or that the property be restored to complainant after ascertainment of the amounts due by the parties and payment of such just and legal demands so ascertained to be due by the respective parties, and concludes with the prayer for general relief.

The ground on which the town of Camden bases its right to withhold payment is that the issuance and sale of the bonds to the extent of 8 per cent. of the assessed value of the property therein was the full sum in which such municipality was permitted to become indebted under the Constitution (section 225), and for that reason its alleged contract of purchase of said machinery, after its bonds were issued and sold, was unauthorized by law; that no recovery may be had for any balance due for said machinery from the proceeds of the bond sale or otherwise of the municipality; and that any attempted reservation of title thereto was not enforceable.

The pertinent provision of the Constitution relating to the indebtedness of a municipality, of the class of Camden, is that--

"No city, town, or other municipal corporation having a population of less than six thousand, except as hereafter provided, shall become indebted in an amount including present indebtedness, exceeding five per centum of the assessed value of the property therein, except for the construction of or purchase of waterworks, gas, or electric lighting plants, or sewerage, or for the improvement of streets, for which purposes an additional indebtedness not exceeding three per centum may be created: Provided, this limitation shall not affect any debt now authorized by law to be created, nor any temporary loans to be paid within one year, made in anticipation of the collection of taxes, not exceeding one-fourth of the annual revenues of such city or town." Const. § 225; Stokes v. City of Montgomery, 82 So. 663.

The construction by our court of the several provisions of section 225 is not decisive of the question before us. Of these decisions it may be noted that the two classes of municipal corporations are dealt with and are created by having a population of more or less than 6,000, and that the expression "having a population" means the population at the time of the creation of the indebtedness, and not that shown by the preceding federal census (Ryan v. Mayor of Tuscaloosa, 155 Ala. 479, 488, 46 So. 638); that such municipal corporations are not affected by the limitations contained in their original charter, but by the Constitution fixing the limitation on said power (Howard v. Town of East Lake, 155 Ala. 525, 527, 46 So. 754); that a municipal corporation exceeding its debt limit was not liable in an action for damages for personal injury received in the operation of an electric lighting plant owned and operated by the municipality, and not having so exceeded its debt limit such municipality, while engaged in the business of furnishing lights to the public, is, quoad hoc, exercising proprietary or business powers, and is governed by the rules of law applicable to ordinary business corporations engaged in like businesses (Town of Athens v. Miller, 190 Ala. 82, 91, 66 So. 702; Darby v. City of Union Springs, 173 Ala. 709, 55 So. 889). The insufficiency of pleading to show that the obligation sued on was not executed to secure a temporary loan to be paid within a year, and made in anticipation of the collection of taxes, was discussed in McCrary Co. v. Town of Brantley, 202 Ala. 136, 79 So. 602. The foregoing are illustrative of the constructions given to several of the provisions of section 225 of the Constitution.

A reference to the debates of the constitutional convention will illustrate the extreme views given expression of freedom and of limitation of cities to contract debts for general and for specifically designated purposes, and that took shape in the constructive conservatism of section 225 of the Constitution. We may remark that Constitutions are interpreted by giving the words used their natural signification, and by regarding the order and grammatical arrangement in which they are placed; yet the interpretation is not alone abstractly considered by their words, "but by their words read in the light of the conditions and necessities in which the provisions originated, and in view of the purposes sought to be attained and secured." Dillon, Mun.Corp. vol. 1, § 4 (3a); Moody, Judge, et al v....