Court Opinion

ID: 8741319
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:49:33.146963+00
Date Added: 2024-06-11T17:00:25.093000
License: Public Domain

SEAMAN, District Judge,
after making the foregoing statement, delivered the opinion of the court.
The appellant, who was the complainant below, contracted to furnish a fire-alarm system or plant, to be owned and operated by the city of Laporte, at a purchase price to be paid by the city in the following year after completion and acceptance; and this in the face of the fact, then known to all parties, that the existing indebtedness of the municipality was beyond the amount limited by the constitution of ihe slate, and that it was thereby prohibited from incurring further indebtedness. The plant, having been installed in conformity with the contract, was accepted, and went into the possession and use of the city, hut payment was refused; and thereupon the appellant sued in a state court to recover the purchase price, resulting in a final adjudication dismissing the action on the ground that the contract violated the constitutional provision referred to, and was invalid. City of Laporte v. Gamewell Fire-Alarm Tel. Co., 146 Ind. 466, 15 N. E. 588, 35 L. R. A. 686. On such state of facts, equitable relief is sought through the present bill, which is predicated on the conclusiveness of that adjudication to bar recovery upon the contract; and it is conceded in the argument for support of the bill, as clearly held in the kindled case of Litchfield v. Ballou, 134 U. S. 190, 193, 5 Sup. Ct. 820, 29 L. Ed. 132, that the invalidity is equally effectual against any implied promise to pay for the reasonable value of the property so furnished. The question is not presented of right on the part of the appellant to recover and remove any severable material or appliances furnished by it under the contract, and so appropriated by the city, for the reason that relief of that character is inadmissible, if not impossible, under the allegations of the bill, even if otherwise the subject of equitable remedy. It is expressly alleged that the plant, which includes portions contributed by the city, constitutes an entirety, and is “incapable of dismemberment or disintegration without destroying the use thereof, and without irreparable injury to the several parts composing the same,” and, in effect, that the only available ^remedies in favor of the appellant are (1) an accounting in reference to the past use, to ascertain just compensation therefor; (2) an arrangement between the parties for future compensation in an annual rental for the use; or, in default of such arrangement, (3) the plant to he turned over as an entirety, “complete and ready for operation,”, to the appellant, as owner, for management and use, together with a perpetual franchise for that purpose, to be implied from the contract.
The hill rests on the theory that the contract is so far severable that laying aside the void promise of the city to pay for the plant, as purchaser, there remains the permission which was granted by the city for its construction, together with the fact of the actual operation of the plant by the contractor for a brief period before it was delivered over, and that out of these circumstances equity may imply a grant *420by the city of a franchise to the contractor to operate and manage the system as the beneficial owner, and will enforce both ownership and franchise.in his favor whenever the contract of purchase becomes inoperative. How the intended public nature of the system, described as one “of great utility and even of prime necessity to the city,” can thus be preserved, is neither disclosed nor intimated. In other words, the appellant invokes equitable relief, not only to set aside the contract, which was deliberately made between the parties, but to substitute a new contract, and establish relations with the municipality not contemplated in the original transaction. The contract provided for a plant to be owned and operated by the city, for municipal purposes, clearly within its power; and the invalidity arose out of the creation of a debt to accomplish the purpose, and not in the purpose for which it was made. To save the contractor who furnished work and materials under this contract from sacrifice of his contribution in whole or in part, a decree is demanded to create and enforce a contract between the parties departing radically from that which was intended and entered into; placing the plant and its control in private hands, together with a perpetual franchise to so maintain and operate the system. The terms of the contract as made afford no semblance of support for the contention that the grant of a franchise to that end may be inferred, and, aside from the consideration of the inviolable nature of municipal powers in that regard, the doctrine is well est'ab- . lished that no measure of relief which would so change the contract purposes and relations can be granted by a court of equity, even in the , absence of all remedy at law. Magniac v. Thomson, 15 How 281, 299, 14 L. Ed. 696; Hedges v. Dixon Co., 150 U. S. 182, 192, 14 Sup. Ct. 71, 37 L. Ed. 1044. As stated in Magniac v. Thomson:
“Whenever the rights or the situation of the parties are clearly defined and established by law, equity has no power to change or unsettle those rights or that situation, but in all such instances the maxim, tSEquitas sequitur legem,’ is strictly applicable.”
The case presented by the bill is within the rule held in Litchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. 820, 29 L. Ed. 132, where the conditions were analogous in many respects. Bonds were there issued by the municipality, beyond the constitutional limit, for the construction of waterworks, and were finally held invalid for that reason. The bondholders then proceeded in equity to obtain satisfaction of the bonds through a sale of the waterworks plant, but their claim of an equitable lien for that purpose was declared untenable, and the bill was dismissed. So in the case at bar the decree properly dismisses the bill for want of equity, without prejudice to proceedings at law, and it is accordingly affirmed.