McKenzie Const. Co. v. City of San Antonio

POLK, Special Associate Judge. On October 22, 1923, the commissioners of- the city of San Antonio, by ordinance duly enacted, ordered an election to be held within said city for the purpose of submitting to its qualified taxpaying voters, among others, the proposition of borrowing money on the credit of the city and issuing bonds therefor in the total principal sum of $2,890,000, to be expended for the purpose “of improving the San Antonio River, San Pedro and Alazan Creeks, [350] by widening, deepening, altering, changing and damming the channels thereof and constructing levees and walls along and near the same, and building dams, dykes and reservoirs at and near the headwaters and the water sheds of said river and creeks and tributaries thereof, all in a permanent manner, so as to prevent or ameliorate flood conditions and protect the public health and safety, and to acquire any lands and other property necessary therefor; said improvements to be constructed being the widening, deepening, altering, changing and damming of the channels of the San Antonio River, San Pedro and Ala-zán Creeks, and constructing levees and walls along and near the same, and building dams, dykes and reservoirs at and near the headwaters and the water sheds of said river and creeks and tributaries thereof, all in a per-marient manner and acquiring any lands and other property necessary therefor.” This move was prompted by a then recent flood of the San Antonio river, still fresh in the memories of the citizens, that had wrought great disaster in the city. On December 4, 1923, the election was held pursuant to said order and the proposition carried, whereupon, on December 10, 1923, the edty commissioners duly enacted an ordinance carrying into effect the will of the voters; said ordinance providing for the borrowing of the money on the credit of the city, the issuance of the bonds for the purposes above set forth in quotations, to be denominated “Flood Prevention” bonds, the printing of the bonds, to mature serially within a period of forty years; further providing that “the proceeds on said bonds when sold shall be deposited with the Depository of the City and used under the direction of the City Commissioners to provide for the construction of the permanent public improvements and purposes as hereinabove set forth,” and further levying a tax for the year 1923 and succeeding years for the purpose of paying the interest on said bonds and to provide a sinking fund to pay the same when matured. The bonds were subsequently sold, the city receiving therefor in principal, premium, and- accrued interest the sum of $2,918,128.33. Thereafter the city caused to be prepared plans and specifications for the construction of a concret'e dam across Olmos creek, to he known as the “Olmos Creek Detention Dam,” and thereupon advertised for bids for the furnishing of estimated quantities of labor and material, and all machinery and equipment necessary to construct said dam. Bids were required to be submitted on a printed form of proposal which was bound up with and attached to a copy of the advertisement, instructions to bidders, form of bond and contract, conditions of the contract, specifications, and referring to and making the plans a part thereof, all of which were prepared and furnished by the city. It is proper to here note that Olmos creek is tributary to the San Antonio river, flowing into said river in the vicinity of Brackenridge Park, which park, is in the city. Appellant submitted a proposal in response to said advertisement, and on July 28, 1925, the city commissioners met with a committee of San Antonio citizens to consider the proposals submitted. Upon motion of Dr. Frederick Terrell, chairman of the Citizens’ Committee, the committee recommended that “the contract for constructing the dam be awarded to McKenzie Construction Company.” Whereupon the commissioners duly enacted an ordinance “that the attached proposition of the McKenzie Construction Company be and the same is hereby accepted, subject to proper and sufficient contract with adequate security in the judgment of the Commissioners be made.” Appellant, on August 7, 1925, entered into a contract with the city, the city executing same by its mayor, John W. Tobin, attested by its clerk, for the construction of the dam across Olmos creek, on the same date furnishing bond for the faithful performance of the contract with American Surety Company of New York, National Surety Company, United States Fidelity & Guaranty Company, and Fidelity & Deposit Company of Maryland, as sureties, and entered upon the construction of the dam. As the work progressed the city commissioners of San Antonio, upon estimates duly approved by Col. S. F. Crecelius, its flood prevention engineer, from time to time, paid unto appellant various amounts aggregating the sum of $352,541.68; each of such payments being authorized by ordinance duly enacted appropriating the money. The last of these payments was authorized by ordinance of February 14, 19-27, wherein it was provided that the sum of $32,288.39 be appropriated out of the flood prevention fund to pay appellant “said payment to be without prejudice to the right of said McKenzie Construction Company to assert or prosecute any claims that said company may have against the City, and without prejudice to the right of the City to assert or prosecute any claims that the City may have against said McKenzie Construction Company.” Previous to the enactment of this last ordinance the city commissioners also, on December 8, 1926, enacted an ordinance agreeing that “the turning over of the Roadway on the Olmos Dam to the City of San Antonio shall be without prejudice to the rights of either the contractor or of the City, under the contract between them for the construction of the Olmos Detention Dam.” Appellant instituted this suit on August 25, 1930, in Bexar county against the city of San Antonio and O. M. Chambers, its mayor, and Phil Wright, J. H. Rubiola, Paul M. Steffler, and Frank H. Bushick, its commissioners, as defendants, to recover the sum of $104,639.48, [351] alleged to be due it upon an express contract which it claims was entered into by virtue of the facts hereinabove set forth, for balance due under said contract, against which appellant alleged unauthorized charges were made by the city and .the engineer, said sum further including costs alleged to have been arbitrarily withheld from appellant and to have been imposed upon it as a result oí wrongful acts of the city and its engineer. By agreement of the parties the venue was changed to Nueces county, where trial was had, and, after nine weeks thereof, the court peremptorily instructed the jury to return a verdict for the defendants, which was done and judgment rendered thereon accordingly. Appellant duly excepted to the court’s action in granting appellees’ motion for peremptory instruction, and the bill of exceptions pertinent thereto discloses that the instruction was granted "because the Court was of the opinion that the contract sued upon by plaintiff was absolutely void and incapable of ratification, and that the doctrine of es-toppel plead and invoked by plaintiff was not applicable.” It is urged with much force and persuasion by appellees that the judgment of the trial court should remain undisturbed for the reasons that: (a) The contract that appellant claims to have been made with the city was void because not made or authorized by valid ordinance as required' by the city charter; (b) the contract was void because no provision was made, at or before the making thereof, for the payment of the debt attempted to be thereby created, as required by the constitution, the statute, and the city charter; and that (c) the contract being void, it could not be validated by showing ratification or estop-pel. We shall discuss these questions in the order presented. Section 20 of the Charter of the City of San Antonio provides that “no contract on the part of the City shall be made or authorized, nor any money appropriated from the funds of the City * * * otherwise than by ordinance.” Section 40 of the same instrument provides that “any debt hereafter contracted by any officer of the City, or by any person on account of the City, the payment of which has not been previously provided for by ordinance duly adopted by the City Council, shall be absolutely null and void and un-collectible at law or in equity, and it shall be the duty of the City Attorney to plead this statute to defeat the enforcement of any such claim or debt.” Section 53 of the same instrument, after providing for the borrowing of money on the city’s credit and the issuance of bonds therefor for permanent public improvements, further provides that “no debt shall be contracted for the payment whereof such bonds or lot thereof are issued until such bonds or lot thereof shall have been disposed of and the proceeds paid into the City Depository or the contractor undertaking such public improvements shall agree to take said bonds in payment for the work to be performed; and no debt shall ever be created by said City-unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent thereon.” This last provision is but a reiteration of an ancient rule of public policy laid down by section 5 of article 11 of our State Constitution. Appellees attack the validity of the ordinance hereinabove quoted accepting the proposal of appellant, on the grounds that the “proposition” therein mentioned was not in fact attached to the ordinance; that nothing was identified as being the proposition mentioned in the ordinance; and that the ordinance, being of itself incomplete, was insufficient and could not under any circumstances form the basis of a valid contract. Col. Crecelius, appellees” engineer, who supervised the dam construction and who recommended to the city commissioners that appellant’s proposal be accepted, testified at the trial that “after the proposal of McKenzie Construction Company was opened and the City Council took action with reference to-it I took charge of it, etc.” He further testified that the proposal was not attached to' the ordinance. The record of this case discloses that appellant made but one proposal and that both the parties acted thereunder. If the proposal was opened and the city council took action thereon, as testified to by Cre-celius, then the city council had full knowledge of its contents when it acted thereon. This court is cited no authority holding that,, under such circumstances, the lack of actual physical attachment renders the ordinance-void or invalid, and will not so hold. Moreover, should such be the law, then the testimony of Col. Crecelius, contradictory as it was, raised an issue which was within the province of the jury to determine. Appellees further attack the ordinance accepting appellant’s proposal on the ground that the city commissioners did not formally approve the bond executed and delivered by appellant. The record discloses that each of the four surety companies on appellant’s-bond were authorized to act as such sureties at the time the bond was executed. Under the provisions of our Revised Statutes, article 4970, we hold that no such formal approval was necessary. The United States Supreme Court has likewise so held in a similar case involving a similar statute. See United States v. Purcell Envelope Co., 249 U. S. 319, 39 S. Ct. 300, 63 L. Ed. 620. Before the contract was awarded to-appellant, as hereinbefore stated, the qualified voters of the city of'San Antonio had authorized the city to borrow ?2,800,000 on its [352] ■credit and issue bonds tberefor, and to expend the money on a general flood prevention program including the building of dams at and near the headwaters of the San Antonio river and creeks and tributaries thereof. At that time, according to one of the witnesses, “there was a great demand from the business interests to protect the downtown section from the floods on the Olmos which run into the river up around Brackenridge Park and there was a bond issue voted for that purpose.” The Olmos creek was tributary to the San Antonio river, and the damming thereof was clearly and plainly contemplated when the bond issue was proposed, submitted, and carried; no other reasonable inference can be drawn and it was not necessary to specifically name the Olmos creek, it having been included as a tributary to the San Antonio river. The issuance and sale of the bonds were duly authorized by ordinance, due provision being made in the ordinance for the levying of taxes to discharge the same. Upon the sale of the bonds the proceeds thereof were deposited by the city in its “Flood Prevention Fund,” remained under the control of the city, and thereupon became lawfully applicable to the building of the Olmos Dam, contract for which was subsequently let to appellant. Appellees’ objection that no provision for interest and sinking fund was made at the time the contract was made cannot be entertained. Neither the provisions of the city charter nor of the State Constitution or statute were violated. McNeal v. City of Waco, 89 Tex. 88, 83 S. W. 322, 323 ; Berlin Iron-Bridge Co. v. City of San Antonio (Tex. Civ. App.) 50 S. W. 408. The contract involved in this case was within the corporate power of the city to make; it was not prohibited by law nor was it ultra vires or against public policy; it was entered into by ordinance as prescribed by the city charter; the most serious objection that could be lodged to it, if at all,, is that there’ was a mere irregularity in the making of it. The city accepted the benefits of the contract. It repeatedly recognized the contract by ordinances appropriating specific sums of money to pay appellant as construction progressed;’ it specifically recognized it in its ordinance of December 8, 1926, accepting the roadway on the dam. Such acts bind the city to performance of its obligations under the contract by ratification. Gallup v. Liberty County, 57 Tex. Civ. App. 175, 122 S. W. 291; City of Dallas v. Martyn, 29 Tex. Civ. App. 201, 68 S. W. 710. Appellant’s pleadings and the proof introduced thereunder in the court below were sufficient to entitle it to a determination of the issues involved by a jury, and we so hold. Numerous assignments are presented to this court in this appeal; but, inasmuch as it becomes necessary to reverse the judgment of the court below on those discussed, no opinion is expressed thereon. ■ The judgment of the court below is accordingly reversed, and the cause remanded.