
    The City of Cleburne v. M. T. Brown et al.
    No. 2637.
    Municipal Corporation.—A municipal corporation incorporated under general laws can not by contract loan its credit to a private corporation. A contract between such city and individuals who bind themselves to be afterwards incorporated, and which provides in effect for an extension of such credit to the proposed corporation, is within, the prohibition of article 11, section 3, of the State Constitution, and void.
    Appeal from Johnson. Tried below before Hon. J. M. Hall.
    The opinion states the case.
    Ho briefs on file by counsel for either party.
   Acker, Presiding Judge.—

On April 26, 1886, appellant filed an amended petition substantially as follows:

“Complaining of M. T. Brown, S. B. Allen, and B. L. Durham, represents that plaintiff, the city of Cleburne, is a municipal corporation in Johnson County, Texas, legally incorporated under the laws of the State-of Texas providing for the incorporation of cities and towns; that prior to July 3, 1884, and ever since, it has been and is a legally existing municipal corporation, and as such was on that date the legal and equitable-owner and was then in the possession of the system of water works in said city together with the machinery, fixtures, and appurtenances thereto-belonging.

“ That on said 3d day of July, 1884, said M. T. Brown as principal, and said S. B. Allen and B. L. Durham as sureties, in consideration .among other things of the agreement hy plaintiff through its qualified officers and agents to transfer to the Cleburne Water and Ice Company, a corporation to be thereafter organized and duly incorporated under the ■laws of Texas by said M. T.-Brown within thirty-five days from said date, said■ system of water works and all property and appurtenances thereto belonging for a term of fifty years from said date, upon certain terms and ■conditions then and there stipulated and agreed upon by and between plaintiff and said M. T. Brown, and fully set forth in the draft of a contract and agreement then and there made and reduced to writing by plaintiff and said Brown and referred to in the bond hereinafter mentioned, made, executed and delivered to plaintiff their bond and writing obligatory, bearing date on the third day of July, 1884, whereby M. T. Brown .as principal, and S. B. Allen and B. L. Durham as sureties, acknowledged themselves jointly and severally to be indebted to and bound to pay to plaintiff the sum of six thousand five hundred dollars, in the city of Cleburne, absolutely and as fixed and liquidated damages, upon the condition that the said M. T. Rrown should, within thirty-five days from the date of said bond, cause to be incorporated under and in accordance with the laws of the State of Texas a corporation to be named and known as The Cleburne Water and Ice Company, and to procure and cause the ¡said corporation to legally execute and carry out and perform the above mentioned contract and agreement with the city of Cleburne for the transfer of said system of water works aforesaid, a draft of which contract was then and there agreed upon between said Brown and said city of Cleburne; and that said Cleburne Water and Ice Company, as soon as formed and incorporated, should issue and deliver to the city of Cleburne fifty-one bonds of one thousand dollars each, described in said draft of said contract, and should also, for the better securing the city of Cleburne in the faithful performance of said contract at and upon the legal execution thereof, and thereafter on the first day of July of each year during the term thereof, make, execute, and deliver to plaintiff a good and sufficient bond with approved security, each in the sum of $6500, as fixed damages for the breach of said contract; the said corporation to be legally incorporated, said contract to be legally executed by said corporation, and all of said bonds to be legally issued and executed within thirty-five days from the date of said obligation and bond; in which "bond it is provided that the same shall become null and void upon compliance and performance by said M. T. Brown with each and all of the .stipulations and conditions therein specified, and to secure the performance of which said obligation was made. But should the said M. T, Brown fail or refuse to perform any or all of the stipulations and agreements contained in the said bond on his part to be performed, then said ibond and obligation to become absolutely due and payable, and said obligors, and each of them, in said event promised to pay to plaintiff in the city of Cleburne the fixed sum of $6500 as liquidated damages for the breach of said bond, a copy of which bond is hereto attached, marked exhibit CA,’ and made a part of this petition.

“ Plaintiff alleges that upon delivery to it of said bond on July 3,1884,.-it, acting in good faith and at the special instance and request of M. T. Brown, delivered to him the system of water works and all property and appurtenances thereto belonging, and at and upon the expiration of said thirty-five days was and has been ready, and willing to transfer said system of water works, etc., as aforesaid, to said Cleburne Water and Ice Company, upon compliance by the said Brown with the stipulations and agreements mentioned in said bond, and then and thereafter offered so-to do. That said thirty-five days has long since elapsed, yet the said Brown has neglected and refused and wholly failed and still fails and refuses to comply with and perform the stipulations and agreements or. any or either of them set out in said bond to be performed by him within said thirty-five days, or to cause or to procure the same to be done, and. by reason of all of which the said M. T. Brown as principal and S. B. Allen and B. L. Durham as sureties became liable to pay to plaintiff as stipulated, fixed, and liquidated damages said sum of six thousand five hundred dollars, with interest thereon at the rate of eight per cent per annum from and after the expiration of said thirty-five days, which sum of money and interest said defendants, although often requested, have wholly failed and refused to pay to plaintiff, to plaintiff’s damage eight thousand dollars.”

To this petition appellees, defendants below, filed a general demurrer and the following special exception:

Because said petition does not set forth sufficiently the terms of the-contract charged to have been agreed upon between plaintiff and M. T. Brown as a contract to be executed by and between plaintiff and the Cleburne Water and Ice Company.”

The court overruled the general and sustained the special exception. Thereupon appellant, by leave of court, filed its trial amendment setting out in full the contract agreed upon between plaintiff and M. T. Brown.

Appellees then filed a general demurrer to plaintiff’s cause of action as stated in first amended petition, filed April 26, 1886, and in the trial amendment filed April 27, 1886, which was sustained, and judgment éntered dismissing the suit.

Under proper assignments of error it is urged that the court erred in sustaining the exceptions and in rendering judgment dismissing the suit.

As the defect pointed out by the special exception, which was sustained, was cured by the trial amendment, the only question necessary for us to determine is whether the petition as amended was good on general demurrer.

It is contended upon the part of appellees that the contract which the .agreement provided for to be entered into between the city of Cleburne and the proposed corporation—the Cleburne Water and Ice Company— was ultra vires as to both the plaintiff and the proposed corporation, and that therefore the bond sued on was without consideration.

Appellant was a municipal corporation incorporated under the general laws providing for the incorporation of cities and towns, and the court will take judicial cognizance of the provisions of these laws in determining the powers of such corporations.

The agreement entered into does not define the powers nor state the .amount of capital of the proposed corporation.

The agreement if carried out would have amounted to nothing more than a loan by the city of Cleburne of its credit to the proposed corporation. This the city had not the power to do. State Const., art. 11, •sec. 3.

We think the judgment of the court below is correct and should be affirmed.

Affirmed.

Adopted March 26, 1889.

Motion for rehearing transferred to Austin and there overruled. This suit was brought in the court be-  