Town of Graham v. Karpark Corp.

• Decision Date: 25 February 1952
• Docket Number: No. 6363.,6363.
• Citation: 194 F.2d 616
• Parties: TOWN OF GRAHAM et al. v. KARPARK CORP.
• Court: U.S. Court of Appeals — Fourth Circuit

194 F.2d 616 (1952)

TOWN OF GRAHAM et al. v. KARPARK CORP.

No. 6363.

United States Court of Appeals Fourth Circuit.

Argued January 9, 1952.

Decided February 25, 1952.

William I. Ward, Jr., Statesville, N. C., and Forrest C. Hall, Graham, N. C. (Thomas C. Carter, Burlington, N. C., and Land, Sowers & Avery, Statesville, N. C., on brief), for appellants.

Thomas D. Cooper, Burlington, N. C. (Cooper, Sanders & Holt, Burlington, N. C., and Clark, Robinson & Hellebush, Cincinnati, Ohio, on brief), for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

PARKER, Chief Judge.

This is an appeal from a judgment upholding the validity of a contract relating to the installation and operation of parking meters and decreeing specific performance of the contract against the municipality which had entered into it. The plaintiff in the court below was the Karpack Corporation, which had furnished parking meters to the town of Graham, North Carolina, and had installed them upon the streets of that town in accordance with the terms of a contract which provided that they be paid for out of the funds collected from their operation. Defendants were the town and its mayor and commissioners, who after a change in administration had decided that they would not proceed further under the contract, contending that it was not binding upon them. The District Judge held the contract to be valid and binding and directed defendant to carry out its provisions as agreed upon.

Parking meters have come into use as a means of using the streets in the business sections of cities for the parking of automobiles, of preventing the abuse of the parking privilege and of relieving the congestion of traffic which would result from the abuse. The plan under which they are operated permits the use of the streets for parking purposes for a comparatively short period of time for a small charge which is paid by the deposit of a coin in a meter opposite the parking space. Parking for a longer period is forbidden unless an additional coin is deposited. The coin operated meters are used to measure the time of parking and the enforcement of municipal ordinances is relied upon to prevent parking beyond the time allowed. Although municipal ordinances directed to this use of parking meters were held invalid as not authorized by the law of North Carolina¹ in M. H. Rhodes, Inc., v. City of Raleigh, 217 N.C. 627, 9 S.E.2d 389, 130 A.L.R. 311, the law in that respect has now been changed and parking meters and ordinances for regulating traffic in connection therewith have been expressly authorized by legislative action. General Statutes of North Carolina, 160-200, subsection 31, being chapter 564 of the Public Laws of North Carolina 1945, as amended by chapter 7 of Public Laws of North Carolina of 1947, provides:

"31. To provide for the regulation, diversion, and limitation of pedestrians and vehicular traffic upon public streets, highways, and sidewalks of the city and to regulate and limit vehicular parking on streets and highways in congested areas.

"In the regulation and limitation of vehicular traffic and parking in cities and towns the governing bodies may, in their discretion, enact ordinances providing for a system of parking meters designed to promote traffic regulation and requiring a reasonable deposit (not in excess of five cents per hour) from those who park vehicles for stipulated periods of time in certain areas in which the congestion of vehicular traffic is such that public convenience and safety demand such regulation. The proceeds derived from the use of such parking meters shall be used exclusively for the purpose of making such regulation effective and for the expenses incurred by the city or town in the regulation and limitation of vehicular parking, and traffic relating to such parking, on the streets and highways of said cities and towns. Nothing contained in chapter two, section twenty-nine, of the Public Laws of one thousand nine hundred and twenty-one, or in section sixty-one of chapter four hundred and seven of the Public Laws of one thousand nine hundred and thirty-seven shall be construed as in any way affecting the validity of these parking meters or the fees required in the use thereof.

"The governing authorities of all cities and towns of North Carolina shall have the power to own, establish, regulate, operate and control municipal parking lots for parking of motor vehicles within the corporate limits of cities and towns. Cities and towns are likewise hereby authorized, in their discretion, to make a charge for the use of such parking lots."

Pursuant to this statute, the town of Graham entered into a contract with plaintiff in September 1947 to install 173 parking meters on certain portions of streets in that town. In March following, 43 additional meters were purchased under the contract. The total contract price was $15,444 to be paid from the coins deposited in the meters, the agreement being that the coins should constitute a special fund, one-half of which should be paid over from time to time to plaintiff until the total amount due on account of the purchase of the meters should be paid. There was no obligation to pay for the meters except from this special fund. The town obligated itself, however, to enact and enforce parking ordinances requiring the deposit of coins for parking opposite the meters until they were paid for. Upon failure on the part of the town to comply with the conditions of the contract, plaintiff was authorized to take possession of the meters and remove them, but this was "in addition to and not in substitution for" other rights for the enforcement of the contract.

Early in 1948 the meters were installed and an ordinance was passed regulating parking opposite them as provided in the contract.² Payments made to plaintiff from coins deposited in the meters prior to July 1, 1949 amounted to approximately $5,000, a like amount being retained by the town pursuant to the provisions of the contract. In May 1949 new town officers were elected, who were unwilling to perform the contract. They proceeded to repeal the parking meter ordinance and notified plaintiff it could remove the meters, although the town owed a balance of $10,279.21 on them and had collected around $5,000 as its part of the meter fees up to that time. This action was, thereupon, instituted by plaintiff for specific enforcement of the contract and decree was entered by the court below directing that defendants comply with its provisions, continue the collection of parking fees and enforce in good faith the parking ordinance until the meters should be paid for.

The principal contention of defendants is that the contract sued on is invalid, or at all events not binding upon the successors in office of those who made it, because it amounts to a bargaining away of governmental powers of the municipality. We think it clear, however, that in executing the contract the municipality was engaged in the exercise of powers incidental to its proprietary or private character, not those governmental or legislative powers which are vested in it as an agency of the state. Under the statute which we have quoted, municipalities in North Carolina are authorized to engage in the business of providing parking space for automobiles, a matter of great importance to their citizens, either by the operation of parking lots or the installation of parking meters in the streets, with a charge for the occupation of the space in the streets opposite the meters. A contract providing for the purchase of such parking meters and that they be paid for out of the coins which they collect is, manifestly, a reasonable exercise of the power thus conferred; and the enactment and enforcement of appropriate parking ordinances is a necessary incident of the operation of the meters. Such ordinances are properly viewed, therefore, not as the exercise of governmental powers by the municipality but as regulations in the exercise of the proprietary or business function in which it is authorized to engage in providing space for parking.

It is well settled that contracts relating to the exercise of the proprietary or business powers of a municipality such as contracts relating to water supply, street lighting, gas supply, flood prevention, sewerage and the like are valid and binding upon it and will be enforced, if reasonable, even though they extend beyond the term of office of those entering into them. See Plant Food Co. v. City of Charlotte, 214 N. C. 518, 199 S.E. 712, 713; Safety Insulated Wire & Cable Co. v. City of Baltimore, 4 Cir., 66 F. 140; Omaha Water Co. v. City of Omaha, 8 Cir., 147 F. 1, 12 L.R.A.,N.S., 736; 37 Am.Jur. 679; notes 70 A.L.R. 795 and 149 A.L.R. 339. The Supreme Court of North Carolina, whose decisions are binding upon us in this case, has laid down the applicable rule in Plant Food Co. v. City of Charlotte, supra, as follows:

"It is true as a rule that where governmental discretionary powers are involved a board can make no contract which would bind its successors in office with respect to the exercise of the discretion. * * * "Where governmental powers of this kind are not involved or disadvantageously affected, the right to make contracts, otherwise unobjectionable to the law, is one of the most important incidents of municipal government. Lambeth v. City of Thomasville, 179 N.C. 452, 102 S.E. 775. In the administration of its proprietary affairs the commissioners or councilmen of the town may make reasonable contracts binding upon their successors running through a term of years.

"The line between powers classified as governmental and those classified as proprietary is none too sharply drawn, and is subject to a change of front as society advances and conceptions of the functions of government are modified under its insistent demands. And it may be said that with respect to the making of contracts the inhibition does not...