Texsan Service Co. v. City of Nixon

158 S.W.2d 88
CourtCourt of Appeals of Texas
DecidedNovember 26, 1941
DocketNo. 11049
StatusPublished
Cited by12 cases

This text of 158 S.W.2d 88 (Texsan Service Co. v. City of Nixon) 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
Texsan Service Co. v. City of Nixon, 158 S.W.2d 88 (Tex. Ct. App. 1941).

Opinions

NORVELL, Justice.

This is an appeal from an order of dismissal entered after the sustaining of a general demurrer to appellant’s second amended original petition. This suit was brought by appellant, Texsan Service Company, against the appellees, City of Nixon and C. W. Arlitt, seeking a perpetual injunction restraining the appellees from carrying out a certain contract with reference to the sale and delivery to Arlitt of certain bonds of the City of Nixon, purportedly issued in pursuance of an election held in the City of Nixon on the 14th day of September, A. D. 1940.

[90]*90Appellant’s second amended petition and exhibits thereto occupy fifty-four pages of the transcript. The material matters set forth in this lengthy pleading are summarized in appellant’s brief. It appears that the following allegations or matters as against the demurrer must be taken as true:

(1) That appellant for many years had owned and operated water and sewerage plants in the City of Nixon by virtue of its franchise duly granted by said city and owned by the appellant, and has rendered water and sewerage service to said city.
(2) That appellant is a taxpayer of said city, owning properties of a value substantially in excess of $5,000.
(3) That the number of water consumers and sewerage users in said city is wholly insufficient to support competing plants, and a competing plant would not be constructed by private capital, nor solely from revenue bonds.
(4) That prior to the election of September 14, 1940, the appellant proposed to sell its water and sewerage system to the city on an appraisal to be made by competent and disinterested engineers and to accept in payment thereof revenue bonds secured as provided by law, but said proposals were not accepted by the governing body of said city.
(5) That on the day the election was ordered, the governing body of the city entered into a contract with appellee Arlitt accepting his offer for the purchase of the entire bonds to be issued, both tax and revenue bonds, aggregating $105,000 on both systems.
(6) That there were six propositions submitted at the election held on September 14, 1940, as follows:
1. To issue $15,000 bonds to secure “funds to aid in the construction, purchase, extension and improvement of a waterworks system in and for the city and to levy a tax therefor.”
2. To issue $15,000 bonds to secure “funds to aid in the construction, purchase, extension and improvement of a sanitary sewer system and to levy a tax therefor.”
3. To issue $15,000 bonds to secure “funds to aid in the construction of a gas system in and for said city and to levy a tax therefor.”
4. To issue $40,000 bonds for the purpose of securing “funds to aid in the construction, purchase, extension and improvement of a waterworks system in and for said city, to be issued in accordance with and secured in the manner provided in Arts. 1111-1118, both inclusive, R. S.”
5. To issue $10,000 bonds “for the purpose of securing funds for the construction, purchase, extension and improvement of a sanitary sewer system in and for said city, to be issued in accordance with and secured in the manner provided in Arts. 1111-1118, R. S.”
6. To issue bonds in the sum of $10,000 to secure “funds to aid in the construction of a gas system in and for said city, to be issued in accordance with and secured in the manner provided in Articles 11 li-li 18, R. S.”
(7) That all six propositions were carried at the election, and thereafter the governing body of the city, purportedly acting under the authority granted by the election mentioned, by ordinance directed the issuance of $30,000 waterworks and sewer bonds to be paid off and retired by a tax levied for that purpose. The governing body of the city also authorized the issuance of $50,000 waterworks and sewer revenue bonds to be secured by and retired out of the revenues derived from the operation of a waterworks and sewer system.
(8) That the governing body of the city provided in the ordinance issuing the bonds that said water and sewer system should not be encumbered, sold or leased, and that no part of said system should be encumbered, sold or leased for a period of twenty-five years from the date of the bonds.

Throughout the stricken petition appear allegations relating to the hidden motives of members of the City Commission, which is the governing body of the City of Nixon, that is, it is directly alleged that some action was taken to accomplish a given purpose, without alleging the commission of overt acts by the commission from which it could be inferred that an improper purpose was contemplated and would be accomplished, unless an injunction issue. For instance, it is alleged that said City Commission at the time it submitted the various propositions above set out to a vote of the people, intended to merge or combine the various bond issues, if the propositions relating thereto carried at the election, into one or more issues and expend the monies realized through the sale of said bonds in any manner they [91]*91saw fit, rather than in accordance with the allocation made by the provisions of the propositions voted upon in the election. Further, it is alleged that although the propositions submitted called for constructing, purchasing, extending and improving waterworks and sewer plants, the City Commission had the undisclosed intention of not purchasing the existing water and sewer systems and to exercise no good faith discretion in an attempt to purchase same, and for that reason the propositions submitted were misleading, and in a sense resulted in a fraud being practiced upon the voters of the City of Nixon.

Allegations of this nature, relating to undisclosed or hidden motives of the members of the City Commission, do not aid the petition, and for that reason will not he further noticed by us. The case of Nalle v. City of Austin, 85 Tex. 520, 22 S.W. 668, 960, opinion by Judge Gaines, is in .point and controlling in this particular.

Appellant’s first and second points present the contention that injunction should issue because the governing body of the city combined the two tax bond issues of $15,000 each, authorized by the election, into one combined issue of $30,000 waterworks and sewer bonds. Likewise said body combined the authorized revenue bond issues of $40,000 and $10,000 into one issue of $50,000 waterworks and sewer system revenue bonds.

“It is elementary that the pror ceeds of bonds voted by the people must be expended for the purposes for which they were voted.” Lewis v. City of Fort Worth, 126 Tex. 458, 89 S.W.2d 975, 978. By virtue of the election above mentioned, the governing body of the City of Nixon would have the proceeds of $15,000 in tax bonds and $40,000 in revenue bonds available for the construction, purchase, extension and improvement of a waterworks system, and the proceeds of $15,000 in tax bonds and $10,000 in revenue bonds likewise available for sewer purposes.

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158 S.W.2d 88, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texsan-service-co-v-city-of-nixon-texapp-1941.