Court Opinion

ID: 9625089
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:27:32.774422+00
Date Added: 2024-06-11T18:06:00.694563
License: Public Domain

HALLEY, Justice
(dissenting).
I cannot concur in the majority opinion for several reasons. I think it is based upon an erroneous assumption that in a replevin action where plaintiff proves that it owns the property sought to be replevied. *977and that it is entitled to possession, it is entitled to judgment without regard to any other question.
The opinion almost entirely overlooks and ignores what appears to me to be the most important question involved, which is: did-the written lease or conditional sales contract as to the water lines in Lees Addition create an indebtedness of the City of Law-ton which is prohibited by Sections 26 and 27, art. X of our State Constitution, thereby rendering the agreement void and unen-forcible by replevin or any other action ?
It is also held that the “Lease Agreement,” executed in 1947, is not a conditional sales contract. Considerable stress is laid upon the fact that the written agreement is headed or labeled a “Lease Agreement.” It is fundamental that the character of a written agreement is determined by its terms, .and not by what.it is designated by the parties executing it.
To me, the agreement is more of a conditional sales contract than a lease. It contains elements of a lease that are very clear, and it also contains with equal clearness the basic essentials of a conditional sales contract. It is without doubt the intention of the parties, as expressed by its terms, that upon the payment by the City of Law-ton to the plaintiff of a definitely named amount the water lines in Lee Addition would become the property of the City of Lawton. The source of that definite sum is wholly immaterial.
That part of the agreement clearly shows the intention of the plaintiff to lease the water lines to the City until the rentals provided for reached the agreed price to be paid for the lines, or until the agreed price to be paid was paid by the City in any other manner or from any other source, leaves no doubt but that the City of Lawton had the right to pay the balance due upon the agreed price at any time it chose to pay, regardless of the source from which such payment was made, and in the event of full payment, the water lines would become the property of the City. It was definitely agreed that when the rentals agreed to be paid by the City reached' the agreed purchase price, then the water lines would automatically become the property of the City of Lawton. To me the written agreement is as certainly a conditional sales contract as it is a lease agreement.
In any event the agreement fixed a definite price which would be paid at any time in cash, or it could be paid over a term of years from the agreed rental of $1 per month for each residence taking water from the City, at the option of the City of Law-ton! When this action was filed in 1952, it was admitted that $2,143 had been paid upon the agreed purchase price, leaving a balance on the water lines in Lee Addition of $13,476.31. The purported lease agreement gave the City until July 1, 1960, to pay “unless the full amount has been paid prior to that date.”
The refusal of the City to continue payments appears to have arisen because a Federal Agency refused to approve loans upon the City residences unless the City refused to make further payments upon the cost of the water lines. When this action was filed it occurred that the agreement mentioned was a violation of the constitutional provisions above mentioned to the effect that the City had become indebted in an amount exceeding the income and revenue provided for. such year without the consent of the voters of the .City of Lawton.
Did the purported lease agreement create such indebtedness? It cannot be disputed that the indebtedness created was not provided for or to be paid out of the revenue available from the current year, but was to be paid out of revenue accruing from the sale of water, by the City through the water lines involved.
This Court in News Dispatch Printing & Audit Co. v. Board of Com’rs of Adair County, 177 Okl. 162, 57 P.2d 1156, 1157, announced in the first and second paragraphs of the syllabus as follows:
“The intention and plain purpose of section 26, art. 10, of the State Constitution is to require municipalities to carry on their corporate operations up*978on the cash plan. The revenues of each year must take care of the expenditures of such year; and any liability sought to be incurred by contract, express or implied, executed or executory, in excess of such current revenue in hand, or legally levied, is void, unless it be authorized by a vote of the people, and within the limitations therein provided.”
“Whoever deals with a municipality does so with notice of the limitations on it or its agents’ powers. All are presumed to know the law, and those who contract with it, or furnish it supplies, do so with reference to the law; and if they go beyond the limitations imposed, they do so at their peril.”
In the early case of Fairbanks-Morse Co. v. City of Geary, 59 Old. 22, 157 P. 720, the City of Geary had purchased certain machinery at a definite price, paid partly at delivery and the balance in monthly installments over a period of years. When the City failed to make installment payments, the seller filed a replevin action. The contract was held to be void and the Court announced in the fourth paragraph of the syllabus as follows:
“A debt which is in excess of the constitutional or statutory limit is void; and in no form can such debt be held valid upon 'any theory- of' quantum meruit, or equitable obligation. The absolute lack of power to contract such indebtedness bars every form of action and every legal devise by which recovery is sought;, nor will the courts aid the vendor to recover the property sold and delivered under such illegal contract.”
In Zachary v. City of Wagoner, 146 Okl. 268, 292 P. 345, 346, the City had purchased electric machinery and agreed to pay therefor from the income from the plant. This Court held this agreement void as violative of our Constitution, and said in part:
“The provisions of sections 26 and 27, article 10, of the Constitution apply without regard to the source from which the funds pledged to the payment of the indebtedness incurred are to be obtained.
“The fact that an indebtedness incurred by a municipality is to be paid only from some source other than ad valorem taxation does not render inoperative the limitation contained in section 26, article 10, of the Constitution, or extend the grant of authority contained in section 27, article 10, of the Constitution. * * *
“Section 27, article 10, of the Constitution, prescribes the manner and means municipalities must follow and comply with to exercise the power granted them by section 6, article 18, of the Constitution, and such manner and means is exclusive.”
This Court held to the same effect in City of McAlester v. State ex rel. Board of Public Affairs, 195 Okl. 1, 154 P.2d 579.
Much is said about the fact that the City of Lawton operates its water system in a proprietary capacity and at all times had sufficient cash in that fund to pay for the water lines of the plaintiff. In Layne-Western Co. v. City of Depew, 177 Okl. 338, 59 P.2d 269, the City purchased a water pump and agreed to pay therefor. It failed to pay and the seller sued for the purchase price. It was held that the fact that the City of Depew operated its water system in a proprietary capacity did not relieve it of the constitutional inhibitions in regard to creating an indebtedness beyond the revenues available for the current year without first obtaining the consent of the voters of the city.
The majority opinion appears to accept the assertion of the plaintiff that not one cent was charged for the water lines in the sale of any lot in Lee Addition. This is contrary to the finding of the trial judge who heard this case. This assertion is too unreasonable to justify argument. What was meant, I think, was that in the sale of ■residence -lots no specific mention was made that the water lines were available for .each lot. It is a matter of common knowledge *979that residence lots in a modem city cannot be sold without water connections already installed, as here, or an agreement that they will be installed. -■
I find it unnecessary to discuss the above questions as 'applicable to the Selected Investments Corp. Addition which was not covered by the written agreement covering Lee Addition. The agreement relative to payment for the water lines appears to have been similar to that applicable to Lee Addition. It follows that I believe that agreement is also void for the same reasons that the agreement as to Lee Addition is void.
I note that while the plaintiff insists that it has at all times owned these water lines and that they are personal property, yet it appears that they have never rendered them for taxation. This is but another circumstance indicating that after the additions were annexed at their own request they considered that they had made a conditional sales contract with the City of Lawton.
When plaintiff filed this action it is bound to have known that the water lines were under the ground and could not be returned to it, as the return of the sheriff showed on the Writ of Replevin.
My attention has been called to the decision of the Federal Court of the Tenth Circuit, where a case similar to the one here involved was decided by that court adverse to the view held by me. This Court is not bound by that decision construing the laws of this State, and with due respect for that court, I cannot concur in that decision.
In my opinion the ruling of the majority. opinion will have the effect of permitting cities to virtually nullify the constitutional inhibitions mentioned. They can operate their public utilities in a proprietary capacity and contract any amount of indebtedness they desire without the vote of the taxpayers by entering into a lease agreement for the City to pay a definite amount for the equipment from funds collected by the City from those buying the services furnished by such equipment. Such payments may be made over a term of years until a definite total is reached, being the selling price fixed by the seller. If the City fails to pay, the seller can recover for the balance due in an action similar to the one here.
For the foregoing reasons I dissent.