Morgan Engineering Co. v. Cache River Drainage District

Hart, J. Both the Morgan Engineering Company, hereinafter called the engineering company, and the Cache River Drainage District, hereinafter called the drainage district, have appealed from a judgment of the circuit court allowing a claim of the engineering company against the drainage district. The facts are as follows: The Cache River Drainage District was created by a special act of the Legislature, approved June 2, 1911. It included within its boundaries parts of Craighead, Jackson and Lawrence counties. . See Special Acts, 1911, page 1245. The first section of the act specifically and definitely described the boundaries of the drainage district; section 2 provided for a board of directors for the drainage district, whose duty it was to carry into effect the provisions of the act; section 5 provided for the appointment of a chief engineer by the board of directors, and stated the duties.that were to be performed by him; other sections of the act provided that, in order to obtain a proper outlet for the drainage system, the directors might construct ditches or do ether work beyond the boundaries of the district, so as to carry the water to some running stream or proper outlet. The board of directors made a contract with the engineering company to furnish all engineering services required in making the surveys and constructing the ditches provided for under the act. It agreed to pay them therefor five and one-half per cent cf the estimated cost of the construction. The contract provided that when the full work on which the plans were based was completed, and the plans and specifications completed and filed with the district, the district should pay to the engineering company 2 per cent of the estimated cost of the work. The remaining 3% per cent was to be paid at a later time, designated by the contract. The engineering company, with the consent of the board of directors of the drainage district, surveyed cer■tain lands which lie outside of the boundaries of the district as set forth in the act creating it. This extra territory was included in order to give drainage to that territory, and also to foretell how the water from that territory would reach the district. The survey was made in order to give relief to the territory surveyed outside of the district,’it being the intention of the board to embrace that territory in the district by proper orders to be made by the court, under the terms of the act, at a later date. An estimate was made of the cost of the construction of the whole system, including that part to be added, and it is claimed by the engineering company that it is entitled under its contract to 2 per cent of that amount. In 1913 the G-eneral Assembly of the State of Arkansas repealed the act creating the drainage district above referred to. See Act 119, Acts of 1913, p. 512. The repealing act reads as follows: “Section 1. That the act to create the Cache River Drainage District, approved June 2, 1911, is hereby repealed. “Section 2. All persons having claims against the Cache River Drainage District shall file the same with the county court of Craighead County within one year from the passage of this act, and upon filing such claim twenty days before the commencement of any term of court within one year, it shall be the duty of the county court to ascertain the extent and value of the services which were rendered the Cache River Drainage District, and to allow such claimant or his assignee reasonable compensation for such services rendered, and shall transmit to the respective county courts of Lawrence and Jackson counties certified copies of its proceedings, and it shall then be the duty of the respective county courts to extend said amounts pro rata according to acreage against the lands, found to be benefited by the proposed improvements as .shown ¡by the .survey .and assessment lists now on file in the office of the circuit clerk of Craighead County, in the respective counties, which sums shall be extended and placed upon the tax books of the respective counties and collected by the collector thereof as other taxes are collected, and paid over to the treasurer of Craighead County, and by Mm paid to the respective claimants or their assignees in the order in wMch the judgments .are rendered; provided, that as to certificates of indebtedness, or warrants, heretofore cashed.by the treasurer, they shall be payable, principal and interest, as stated on their face. Provided, that any land holder within said district may appear at any time before the allowance of any claim and make himself a party to said proceedings and contest the same both as to the amount and the liability of the drainage district for such services, and when such intervention is filed it shall be the duty of the county court to hear and determine the amount due and render a judgment therefor, from which either party may appeal at 'any time within six months as is now provided by law for appealing from judgments and orders of the county court. Upon appeal, the ease shall be tried and disposed of as common law cases are usually disposed of. Provided, further, that if any persons shall intervene and contest the allowance of any claim, they shall be liable for cost- — if the claim is allowed — for the amount demanded, and if the claim is not allowed for the amount demanded, the cost shall be borne by the persons presenting such claims. “Section 3. This act shall take effect and be enforced Mnety days after its passage.” The claim of the engineering company was presented to the county court in compliance with the terms of the repealing act just quoted and from the judgment rendered iby the county court the engineering company duly prosecuted an appeal to the circuit court, and in the circuit court the cause was tried before a jury. At the conclusion of the evidence the court gave to the jury the following instruction: “You are instructed that the plaintiff is entitled to recover for services rendered under said contract at the rate of 2 per cent of the estimated cost of the construction of all of the drainage work provided for in said district, and that the undisputed evidence shows that the estimated «cost of construction is $1,224,000. From this sum you will deduct the estimated cost of the construction of the drainage work on the north of said district for lands not included within the original district as formed by the act of the Legislature, and also the estimated cost of construction of drainage work on the southeast of lands not included within the original drainage district as provided by the acts of the Legislature, and from this amount as finally .ascertained, deduct the amount which the drainage district has paid to the plaintiff company in cash, and render your verdict accordingly. You will, therefore, return a verdict in favor of plaintiff for $13,-455.40, with interest thereon at the rate of 6 per cent per annum from October 10, 1912, to date. ’ ’ The jury returned a verdict in -conformity with the direction of the court and judgment entered upon the verdict. As we have already stated, both parties have appealed from the judgment. It is the contention of the drainage district that under the terms of the repealing act, the engineering company could recover only such compensation .as the jury might find reasonable; on the other hand, the engineering company contends that its compensation should be measured by the terms of the contract, and that having done all of the preliminary work required under the act, it was entitled to recover from the drainage district 2 per -cent of the estimated cost of construction of the whole work. We do not agree with the contention of either party. (1) It is well settled under our Constitution that the Legislature may not pass an act impairing the obligation-of a contract. The board of directors of the drainage district made a valid and binding contract with the engineering company to furnish all the engineering services that would be required in the preliminary surveys and also for the construction of the ditches required under the terms of the act. Any law passed by the Legislature, the effect of which would be to impair the binding force of this contract, would be contrary to the Constitution, and void. We have copied the act repealing the drainage district so that its terms appear in full, and are of the opinion that when the act is construed it does not mean to impair the obligation of any valid contract which had already been entered into by the board, and which had been in whole or in part performed. (2) The act provided that it shall be the duty of the county court to ascertain the extent or value of the'services which were rendered the drainage district and to allow such claimant, or his assignee, reasonable compensation for such services. The Legislature, in passing the act, no doubt, had in mind that the board had made the contract in question as well as other contracts under the terms of the original act, and that services had been performed under these, contracts. It must have intended, then, by the term “reasonable compensation for such services rendered,” to mean such compensation as was provided in valid contracts which had been made by the board of directors of the drainage district. Under the act, “reasonable compensation for services rendered,” did not mean that proof was to be taken of the amount and value of the services rendered, and that judgment be rendered against the drainage district'on that basis, but we think the repealing act meant that the compensation of the claimant was to be measured by the terms of his contract with the drainage district, if he had any valid contract with it. (3) On the other hand, we do not think that the provision of the act that the engineering company should be paid 2 per cent of the estimated cost of the work when the full work on which the plans were based was completed, and the plans and specifications were completed and filed with the district, meant that they were entitled to that amount absolutely on the performance of that work, but we think it only provided a time or mode of payment for services rendered by the engineering company. The contract made by the drainage district with the engineering company contemplated that the engineering company should furnish all the engineering services necessary for the preliminary surveys, and also for the construction of the whole work, and we are of the opinion that the payment of 2 per cent only provided a method of payment, and did not mean that 2 per cent was the measure of the value of the services which had been performed at the time the payment was to be made. The contract provided for a gross sum of 5% per cent to be paid the engineering company for the whole service to be performed by it, including the construction of the improvement. (4-5) The Legislature had a right to repeal the act creating the drainage district, and, as we have already seen, it provided a tribunal for parties who had claims against the district in which to present their claims, and have them adjudged according to the terms of their contract with the drainage district. Therefore the court should have taken proof of the value of the services under the contract which had been performed by the engineering company at the time the repealing act was passed, and should have found for the engineering company for that amount. That is to say, by the terms of the contract, the engineering company was to receive 5% per cent of the estimated cost of the construction of the work as its compensation. And for the work already done, it was entitled to recover as compensation its proportionate value to the whole engineering service to be furnished. For example, if the evidence should show that the work done by the engineering company at the.time the repealing act was passed amounted to one-fourth of all the service it would have been required to perform had the improvement been constructed, then it would be entitled to recover one-fourth of 5y2 per cent of the estimated cost of construction of the work as provided for in the original act. (6) It will be noted that the court held that the land which was not embraced in the boundaries of the district as prescribed by the original act could not be taken into consideration in fixing the compensation due the engineering company. In this the court was correct. Neither the board nor the engineering company had a right to go out and make surveys of land which had not been properly included within the drainage district and charge the drainage district for engineering services in doing something which, under the terms of the act, it had no legal authority tq do'. (7) Under the terms of the act, however, an outlet to some running stream was contemplated, and for services in surveying and providing for that outlet, the engineering company did have a right to receive compensation. It follows from the views we have expressed that the court erred in its instruction to the jury, and for that error the judgment will be reversed and the cause remanded for further proceedings in accordance with this opinion.