Lackey v. Fayetteville Water Co.

96 S.W. 622, 80 Ark. 108, 1906 Ark. LEXIS 85
CourtSupreme Court of Arkansas
DecidedJuly 23, 1906
StatusPublished
Cited by16 cases

This text of 96 S.W. 622 (Lackey v. Fayetteville Water Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lackey v. Fayetteville Water Co., 96 S.W. 622, 80 Ark. 108, 1906 Ark. LEXIS 85 (Ark. 1906).

Opinion

Wood, J.,

(after stating the facts.) First. The passage of the ordinances in question was within the -express powers of the. city council. Secs. 5442, 5448, Kirby’s Digest. The ordinances, when passed and accepted by the water company, became contracts, and binding on the parties thereto. Smith, Mun. Corp. § § 532> 1396. While the members of the council are trustees for the people of the municipality they represent, and as public agents are held to a stricter account than a mere private agent, yet when they act within the scope of their authority, and make contracts which they are expressly authorized to malee, these contracts must be governed by the same rules as other contracts. They can not be set aside upon other and different principles than those that control other contracts. Huidekoper's Lessee v. Douglass, 3 Cranch, 1-70; 1 Rose, notes and authorities cited; Illinois Trust & Savings Bank v. City of Arkansas City, 76 Fed. 271, 34 L. R. A. 518, and many authorities there cited; Little Falls Electric & Water Company v. City of Little Falls, 102 Fed. 663; Jewitt v. Town of Alton, 7 N. H. 257; Western Sav. Society v. Philadelphia, 31 Pa. St. 175; Prather v. New Orleans, 24 La. Ann. 41; Davenport Gas Co. v. Davenport, 13 Iowa, 233.

In the passing of an ordinance contracting for the supply of water to the city, the council must have in mind the interest of the public it-represents; and if the ordinance upon its face is so unreasonable and oppressive as to indicate that it was passed solely in the interest of the grantee of the franchise, it will be set aside. In fixing the terms of such an ordinance the council is acting in a proprietary and ministerial or business capacity, rather than legislative; and while the courts will not interfere to control its discretion to determine whether waterworks are necessary, and its discretion as to whether or not it will grant the franchise to private individuals to furnish same, which is a legislative discretion, they will interfere to inquire whether the contract by its terms is so unreasonable and oppressive'.as to indicate that the council has transcended its authority and abused its powers in ignoring the rights of the people of- the municipality affected by the contract. Valparaiso v. Gardner, 49 Am. Rep. 416. Such a contract would be a fraud upon the taxpayers affected thereby, whether the council were guilty of any intentional fraud or not.

The courts will also inquire as to whether there has been actual or intentional fraud in the making of such contracts. The proof does not show any actual or intentional fraud upon the part of the city council, or any member thereof, in making this contract with the appellee. Nor was there any fraud, or undue influence which would be equivalent to it, upon the part of Mcllroy in relation to the passage of the ordinances. The various things which appellant alleges that Mcllroy said and did, conceding that they are established by the proof, fall far short of constituting fraud or undue influence. Appellants make the mistake all the way in treating Mcllroy as if he occupied some superior and controlling position over the aldermen ofj the city that would enable him to impose upon them, or to exert some undue influence upon them. Nothing is brought forward to establish this, except frequent interviews “on the curb stone, in the streets, behind the corners of buildings and in stairways.” But these do not constitute that undue influence that will avoid a contract. Mcllroy was not the guardian of the aldermen. They were trusted public servants, and are presumed to be fitted, morally and intellectually, for their responsible duties. Surely they were not mere puppets to be moved bnly by the will of Mcllroy. They were dealing at arms’ length with him. Mcllroy had the right to talk with them as much as he pleased about the passage of the ordinances in which he was so vitally interested, and to make the best contract with them he could. They were supposed to be able to take care of the city’s side of the case. The law must so treat them. No charge of corruption on the part of the aldermen or Mcllroy is made, and none is shown. On the contrary, the testimony of the aldermen shows that Mcllroy did not attempt to improperly influence them to vote in favor of the ordinances. Mcllroy had the right to employ counsel for himself, and he had the right to say to the other side that he did not think it needed any counsel. He was not responsible for the failure of the city council to get all the help it could and all the information it wanted. Appellants can not say that Mcllroy made misrepresentations, and was guilty of concealments that induced them to pass the ordinances. Mcllroy is not to be censured, nor to lose any of his legal rights, because he had prepared a draft of the ordinances and submitted it to the council. It was for the council to adopt or reject them as they saw proper. When they passed them, they adopted them, and it was the work of their hands, not of Mcllroy’s. The burden of proof was upon the appellants to sustain the charge of fraud and undue influence, and this is not done by fragmentary acts and desultory conversations that might as well be attributed to innocent as evil motive. But to review in detail the evidence upon which appellants rely to show fraud and undue influence would unnecessarily lengthen this opinion. It is all of a kind. It shows acts upon the part of the council, its attorney, its members, committees or citizens, for which Mcllroy is in nowise responsible. And it shows acts upon the part of Mcllroy that- do not offend legitimate business methods. We are therefore of the opinion that the charge of fraud and undue influence is not sustained.

Second. Are the ordinances contrary to the Constitution,' the laws, and policy of the State? Section 12 of ordinance 135 provides that the city “shall have the right to purchase said water works at the expiration of ten, fourteen, and eighteen years at the fair and reasonable price thereof, subject to any bona ñde indebtedness that may exist thereon.” By section 13 authority is given the water company to incumber “the works by a mortgage or otherwise, and it is provided that the money due from the city to the water company for hydrant rental shall be retained by the city treasurer as net earnings of the water company, and shall be held by him in trust for the payment of the rental of the indebtedness of the water company.” It is also stipulated in this section that, should the city fail to pay its water rentals when due, the deferred payments shall bear eight per cent, annual interest. It is contended that these provisions are in violation of the Constitution prohibiting cities from issuing interest-bearing evidences of indebtedness, etc. Const., art. 16, § 1. But the provisions named are susceptible of no such construction. The city is not compelled to purchase the water plant. It may do so, if it desires. In case it should, inasmuch as its purchase would be subject to any bona ñde existing indebtedness to a limited amount, it has provided that such indebtedness should not be unnecessarily increased by accumulations of unpaid interest. In other words, it has provided a method of requiring the water company to pay its interest. The ordinances, as construed by the chancellor, limit the bona ñde indebtedness which the water company may incur at an amount not exceeding $1,250 for each hydrant erected and such additional ones as the city might order. Were the city compelled to purchase at an amount limited by the ordinance, but bearing interest, there would be more plausibility in appellant’s contention, but such is not the case.

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Bluebook (online)
96 S.W. 622, 80 Ark. 108, 1906 Ark. LEXIS 85, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lackey-v-fayetteville-water-co-ark-1906.