American Nat. Ins. Co. v. Donald

77 S.W.2d 1080
CourtCourt of Appeals of Texas
DecidedOctober 26, 1934
DocketNos. 12979, 12993
StatusPublished
Cited by2 cases

This text of 77 S.W.2d 1080 (American Nat. Ins. Co. v. Donald) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Nat. Ins. Co. v. Donald, 77 S.W.2d 1080 (Tex. Ct. App. 1934).

Opinion

POWER; Justice.

On July 16, 1930, the city of Bowie entered into a contract with the Sanitary Appliance Company, Inc., by the terms of which the company agreed to furnish to the city of Bowie 400 units of a patented device manufactured under the trade-name of Saco Pit toilets, more fully described as follows: “Saco' Pit Toilet, consisting of Copper, Steel Slab, width four feet, length five feet, with three-inch sides (No. 12 U. S. Gauge), fitted with copper steel bowl, extra heavy protective coating Asphalt-Gilsonite Enamel, hardwood water closet seat, double reinforced non-split construction, with solid brass nickle-plated bar hinge and cover; ten feet three-inch galvanized vent pipe.”

It was agreed in the contract that the consideration for the delivery of the patented device was to be $11,600; and further agreed that, due to the fact that the city did not have on hand funds sufficient for the payment of this indebtedness, the city bound itself to issue to the company interest-bearing revenue bonds, to be dated July 16, 1930, and to secure the payment of these bonds it was agreed that' the company retain a lien on the appliances to be delivered to the city, and the city agreed to pledge the revenues therefrom, to[1081]*1081gether with a sufficient amount of the revenues of its water system to meet the interest and sinking fund requirements of said ’revenue bonds.

An ordinance of the city of Bowie was duly enacted ratifying the contract and directing the mayor to execute bonds numbered from 1 to 24, inclusive, of the denomination of $500 each, except one fox; $100, and authorizing the mayor to execute a mortgage or deed of trust making effective the liens on the property to be constructed for such sanitary appliance units and pledging the revenues to be derived from the rental of said units, and further pledging the revenues from its water system, all of which it was agreed would provide a fund to meet the interest and sinking fund requirements of the revenue bonds.

In compliance with this direction, the may- or did execute such bonds and such deed of trust. The deed of trust was, in part, as follows : “The principal and interest of this bond are payable out of a fund created from the revenues of the Water Works and Sanitary System of said city which has been pledged to that purpose, and to further secure 'the payment of this bond and the series of which it is one, the City of Bowie has executed a mortgage and deed of indenture on the said Water Works and Sanitary Systems and all appurtenances pertaining thereto, acquired or to be acquired, and has pledged and mortgaged the income thereof.”

The deed of trust specifically described the property encumbered as follows:

“(1) Four Hundred (400) units of the ‘Saco Pit Toilet.’
“(2) The City of Bowie, Texas Water Works system complete, consisting of approximately 4800 feet of eight inch main, approximately 1500 feet of six inch main, approximately 18000 4" feet of service line, together with all fire hydrants, tees, elbows, connections and appurtenances; elevated tanks, pumping plant is situated, together with all easements and other pi’operty and/or equipment belonging, incident or appertaining to the City of Bowie, Texas, Water Works System.
“10000 ft. service lines.”

Under the facts proven it is shown that the sanitary appliances sold to the city of Bowie were not connected or intended to be connected in any way with the sewer or waterworks system of the city, but that such of them as wei-e installed were used by citizens in connection with outhouses, disconnected with any water or sewer system of the city.

Plaintiff Paul Donald, a resident citizen of the city of Bowie, filed suit to enjoin the payment of the interest on these bonds. Later, the American National Insurance Company, who had become the owner of these bonds, sought to have issued a writ of mandamus directed to the city officials, requiring saiá officials to collect the rentals from each and every user of said sanitary appliance and deposit same with the city treasurer and to continue such collections each and every month until the termination of the issues involved in the case of Paul Donald vs. City of Bowie. By agreement the two cases have been consolidated and are so considered by this cqurt.

Judgment was entered by the trial epurt in behalf of Paul Donald, perpetually enjoining the city of Bowie, its mayor, aldermen, secretary, and treasurer from paying out any sums of money to the American National Insurance Company or the Sanitary Appliance Company, Inc., upon the bonds in question, or paying any interest on such bonds. The judgment further recites that while it appeared, to the court that the purchase by the city of Bowie of the 400 Saco Pit toilets from the Sanitary Appliance Company was unauthorized and invalid, yet it further appearing that the said Saco Pit toilets were owned by the said San-itáry Appliance Company, Inc., and after said purported sale 'to the city of Bowie, the said city of Bowie issued the bonds in favor of the said Sanitary Appliance Company, Inc., and that the Sanitary Appliance Company, Inc., negotiated the same to the American National Insurance Company, and that the-.said bonds provided for a lien against said 400 Saco Pit toilets, the court is of the opinion that defendant American National Insurance Company has a valid and enforceable lien against said 400 Saco Pit toilets, which lien amounts to $11,000, with 5 per cent, interest from June 16, 1930, and it is decreed that said lien on said Saco Pit toilets be foreclosed and that order of sale issue. The judgment further recites that all other relief as prayed for by the American National Insurance Company is denied, and all costs are taxed against the said American National Insurance Company.

The bonds involved in this case were issued in 1930. At that time article 1111, as amended by the 40th Legislature (chapter 194, § 1), read as follows: “All cities and towns operating under this title have power to mortgage and encumber their light systems, water systems, or sewer systems, either, both, or all, and the franchise and income thereof, and everything pertaining thereto, acquired or to be acquired, to secure the-payment of funds [1082]*1082to purchase same, or to purchase additional water powers, riparian rights, or to build, improve, enlarge, extend or repair such systems, or either, or all of them.”

And article 1112, as amended by Acts 1927, c. 194, § 2, was as follows: “No such light, water, or sewer system shall ever be sold until such sale is authorized by a majority vote of the qualified voters of such city or town; nor shall same be encumbered for more than five thousand dollars, except for purchase money, or for extensions, or to refund any existing indebtedness, until authorized in like manner. Such vote in either case shall be ascertained at an election, of which notice shall be given in like manner as in cases of the issuance of municipal bonds by such cities and towns.”

By Act of the 43d Legislature, c. 122, § 1, p. 320 (Vernon’s Ann. Civ. St. art.

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Related

Peoples Nat. Bank of Tyler v. City of Tyler
141 S.W.2d 1021 (Court of Appeals of Texas, 1940)
American National Insurance v. Donald
83 S.W.2d 947 (Texas Supreme Court, 1935)

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Bluebook (online)
77 S.W.2d 1080, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-nat-ins-co-v-donald-texapp-1934.