Case Name: R. W. LUCAS and H. R. BUTT v. TOWN OF BELHAVEN
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1918-02-20
Citations: 175 N.C. 124
Docket Number: 
Parties: R. W. LUCAS and H. R. BUTT v. TOWN OF BELHAVEN.
Judges: 
Reporter: North Carolina Reports
Volume: 175
Pages: 124–128

Head Matter:
R. W. LUCAS and H. R. BUTT v. TOWN OF BELHAVEN.
(Filed 20 February, 1918.)
1. Municipal Corporations — Cities and Towns — Bond Issues — Electric Lights —Water Works — Sewerage—Discretionary Powers — Repeal.
Where the rights of third parties have not supervened, a present board of aldermen of an incorporated town, within their discretion, may revoke the action of a preceding board thereof, differently constituted calling for a valid issuance of bonds for an electric light, water works, and sewerage system, which discretion the courts may not supervise.
2. Municipal Corporations — Cities and Towns — Public Improvements — Bonds Contracts — Condition Precedent — Injunction.
Where a former board of aldermen of an incorporated town have passed resolutions for a bond issue for electric light, water works, etc., systems, and have entered into a contract for their erection upon conditions that the bonds bring par, and pending an injunction against the action of the board, its attorney delivers the bonds to purchasers thereof and allows, under his instructions, damages to the purchasers of $2,775, and expenses, etc.; Reid, the contract for the erection of the various systems is unen-forcible for failure of the condition under which it was entered into, and the pendency of the restraining order.
Appeal by Lucas and town of Belhaven from Kerr, J., at December Term, 1917, of Beaueoet.
Prior to May, 1917, W. B. Tooly was mayor and 0. T. Windley, W. D. Morrison, A. Miller, F. M. Bisbop, and J. W. Smith were aldermen of tbe town of Belhaven. On 20 September, 1916, these aldermen duly passed certain ordinances declaring that systems of electric lights, waterworks, and sewerage were necessary to the town and provided for an issue of $60,000 in bonds to install these utilities. At the same time a proposition was made by J. B. McCrary Company, contractors, to do the work, which proposition was made and accepted to become effective “when funds are provided”j that is, contingent upon receiving funds from a sale of the bonds.
On 22 February, 1917, the aldermen passed a resolution that the bonds be readvertised for sale on 28 March, 1917, in accordance with the resolution of 20 September, 1916, which resolution provided that the bonds should “be sold when issued for not less than par at public sale, after advertisement and competitive bids.” On 28 March, 1917, W. L. Slay-ton & Go., of Toledo, Ohio, having bid par and more, and being the highest bidder, a resolution was adopted reciting said facts and directing the acceptance of their bid and execution and delivery of the bonds. During April, 1917, and before final acceptance of the bonds by Slayton & Co., the regular municipal election for mayor and aldermen was held in the town of Belhaven and the question of issuing these $60,000 of bonds and installing 'these public improvements was an issue. The two members of the old board and mayor, who were candidates for reelection, were defeated and a new board and mayor elected.
On 20 April, 1917, after the defeat of the old board, in the election, and before the final acceptance of the bonds by Slayton & Co., tho old board made award on certain bids for materials, on condition, however, in the language of the resolution adopted at that time, that “all bids accepted for light, water, and sewer'age material shall be accepted conditionally upon the sale of lights, water, and sewerage bonds.”
On 25 April, 1917, E. W. Lucas, a citizen and taxpayer, instituted an action against the old board, the members of which had not been reelected in the recent election, and whose terms of office would expire Monday, 7 May, 1917, and filed his complaint on 27 April, asking an order to restrain the old board from proceeding further in making and completing contracts for these public improvements, alleging bad faith and that they were seeking on the eve of their retirement from office to fasten obligations on the town to carry out their personal will and to deprive their successors in office of any discretion in the premises. Upon this complaint, used as an affidavit, a restraining order was issued by Daniels, J., which on 27 April was served upon said mayor and aider-men, prohibiting their proceeding further in making or completing contracts with respect to electric lights, waterworks, and sewerage for the town of Belhaven. They were ordered to show cause on Monday, 7 May, 1917, why the order should not be continued to the hearing, but did not do so. Immediately on the service of said restraining order, an attorney for said board, by its authority, had a conference with the McCrary Company in Atlanta, G-a., in consequence of which the aider-men, on 30 April, 1917, sent an attorney to make a delivery of said $60,000 to Slayton & Co., who had not till then accepted the said bonds. Said attorney proceeded to Toledo, Ohio, and on 3 or 4 May, 1917, pending said injunction, delivered said bonds to Slayton & Co., accepting in payment therefor $3,000 less than par and interest, and on 5 May said board made contracts with McCrary & Co. for sundry materials. The expenses of counsel to Atlanta and to Toledo, Ohio, were ordered paid by the old board before going out of office.
On Saturday, 5 May, 1917, just before retiring from office, the old board adopted certain resolutions in which is the following language: “The said W. L. Slayton & Co. declined compliance with its offer of purchase of said bonds, unless allowed by the board the sum of $2,775 for damages, attorney’s fees for approval of the bonds, expense of printing bonds and other expenses, and the said bonds were sold to W. L. Slayton & Co. for par and interest from date thereof, allowing deduction aforesaid. The town treasurer is hereby authorized to allow the said W. L. Slayton & Co., in settlement for said bonds, the sum of $2,775, for the reason and for the purpose aforesaid.” It was in evidence that the bonds could have been printed for $25 or lithographed for $100.
Upon retirement from office of the old board and mayor (who are the defendants in suit by R. W. Lucas), the new board of aldermen, composed of George L. Swindell, J. W. Bell, W. S. Riddick, J. B. Cuthrell, and W. E. Stubbs (who are the defendants in the suit by H. R. Butt), duly qualified on 7 May, and on 22 May they unanimously adopted a resolution rescinding the resolution of the former board to instal said plants and in regard to any contract with J. B. McCrary Company, and due notice to said company was promptly given. On 30 May, 1917, H. R. Butt brought suit against the new board of aldermen asking a mandamus to compel them “to proceed with the fulfillment of the contracts for the installation of the said system of electric lights, waterworks, and sewerage,” and for the appointment of a receiver for the town of Belhaven to take over the corporate property, and to require the town “in all manner to carry on and complete the contracts for the installation of the said system.” By consent, the two actions were consolidated and tried together.
The court submitted no issues to the jury in the Lucas case, but dismissed the action, from which order' Lucas appealed. The defendants in that case did not show cause on 7 May as ordered, and since the action of the new board the injunction should have been granted.
Tbe only issues submitted to tbe jury in tbe Butt case were in substance: 1. Did tbe former board in good faitb and in tbe exercise of its discretion, pass resolutions calling for tbe installation of a system of water, sewerage, and lights of said town, and authorize tbe issuance of .$60,000 of bonds and to sell tbe bonds pursuant to said resolutions? 2. Has tbe new board of Aldermen failed and refused to provide these systems authorized by tbe former board?
Tbe court charged tbe jury peremptorily to answer both issues in tbe affirmative, and tbe jury having obeyed, tbe court gave judgment in tbe nature of a peremptory mandamus commanding tbe new board forthwith to install all three systems of public utilities in tbe town of Bel-haven. From this judgment tbe town of Belhaven appealed.
Announcement was made in open court, both by attorneys for Butt and for tbe old board in tbe Lucas case, that tbe court was not asked to compel tbe present board of aldermen to perform any contracts made for tbe installation of water, lights, and sewerage prior to tbe induction of tbe present board into office. Though tbe J. B. McCrary Company was made a party to tbe suit by order of tbe court, that company did not allege or ask tbe court to enforce any contract between it and tbe town of Belhaven. No material men were parties to tbe action or have .sued on any contracts.
Tooly & McMullan for plaintiffs.
Small, MacLean, Bragcm & Rodman for defendants.

Opinion:
ClabK, C. J.
Tbe validity of tbe $60,000 of bonds in question was upheld in tbe appeal of Swindell v. Belhaven, 173 N. C., 1. So there is no controversy on that point. Neither is there any exception by J. B. McCrary Company, who are parties to this action. It appeared in an answer filed by Slayton & Co., and was not denied here, that Slayton •& Co. bad offered to return tbe $60,000 bonds upon tbe surrender to them of tbe $57,225 in cash which they bad deposited to tbe credit of tbe town in a bank in Washington, N. C.
Tbe only question presented, therefore, is whether tbe court could by mandamus direct tbe present board of aldermen of Belhaven to proceed with tbe installation of lights, water, and sewerage in tbe town of Bel-haven.
There being no question of tbe enforcement of any contracts with outside parties, it would seem very clear that tbe right of tbe present board to rescind a resolution passed by tbe former board for tbe installation of these public improvements cannot be gainsaid. It was a matter which rested in tbe discretion of tbe former board to pass such resolution, Brodnax v. Groom, 64 N. C., 244, which tbe courts cannot supervise, and tbe same power resided in tbe present board to rescind such order, Ward v. Comrs., 146 N. C., 534; Glenn v. Comrs., 139 N. C., 412.
It would seem, however, tbat as tbe contract witb tbe J. B. IfcOrary Company was conditioned upon funds being provided by tbe sale of tbe bonds, tbat tbat condition bad not been met, and tbat sucb contract can bave no validity, for tbe attempted sale to Slayton & Co. was invalid because tbe bonds were not sold at par and interest, wbicb was in violation of the resolution of tbe aldermen of 20 September, 1916 (under wbicb tbe bonds were directed to be issued), wbicb required a sale at par and interest. Also, for tbe further reason tbat tbe bonds were delivered to Slayton & Co. in violation of tbe injunction then in force wbicb directed tbat no further steps should be taken to effectuate any contract for tbe execution of tbe work.
It was also stated in! tbe argument here by counsel for tbe new board tbat there would be no opposition to tbe installation of a plant to furnish electric lights, but tbat tbe people of tbe town bad elected them to stay tbe installation of water and sewerage at this time owing to tbe increased expense attending it at tbe present juncture, and tbat tbe board proposed to submit tbe issuance of bonds for sucb purpose to a vote of tbe people.
Tbe action of tbe court in both appeals is
Beversed.