Christensen v. Town of Kimballton , 212 Iowa 384 ( 1931 )

By acceptance dated February 15, 1928, of the proposition of Fairbanks, Morse Company, a contract was made whereby Fairbanks, Morse Company agreed to sell and deliver F.O.B. Factories a designated type and style of "Special Electric Diesel Oil Engine with standard equipment for running water cooling and direct connection to Alternator in accordance with specifications attached" for the price of $18,394, including $6,345.35 cancelled balance of a former contract. The town agreed to erect the proper foundations and buildings and furnish common labor, cartage and materials for erection and operation which was to be done under the superintendence of the seller's engineer. The purchase price was to be paid in forty-eight equal pledge orders beginning 60 days from date, payable in consecutive monthly payments "said orders not to be general obligations of said town but a special obligation payable only from the revenues of the Light Power Plant as provided in appropriation ordinance of said Town of Kimballton," title to remain in company until final payment. The company in case of default was entitled to take possession of the machinery and make sale according to the statutes of the state. It was provided that the machinery should remain personal property. By ordinance reciting the contract there were appropriated monthly from all moneys received from the operation of the electric light plant of the town, over and above operating expenses, such sums as would create a fund sufficient to pay the principal and interest of the orders which were declared by the ordinance to be payable only out of such fund. The ordinance provided that the earnings of the plant were pledged as security for payment of the obligations and would be maintained sufficient for that purpose. Plaintiff alleges, among other matters not necessary to relate, that the contract and pledge orders are void because they were ultra vires and contrary to public policy forbidding municipal corporations to mortgage or create liens upon public property. Defendant took issue upon these allegations.

It was stipulated that the town owns a water works for which there is outstanding bonded indebtedness of $4500; that the electric light and power plant was acquired by popular vote. It is stipulated that the building and improvements for the housing of the engine under the contract involved were "all in place and had been erected for more than five years past." The foregoing for present purposes sufficiently sets out the case.

Owing to misapprehension of the rules the appellant did not set out a stipulation made in the lower court that he was a resident and taxpayer of the town of Kimballton. Defendants have not sought to take advantage of this omission. Hence the former opinion, 231 Northwestern 502, has been withdrawn.

The case is ruled by Van Eaton v. Town of Sidney, 211 Iowa 986, and pursuant to that decision the judgment is — Reversed.

All Justices concur except MORLING and STEVENS, who dissent.