LOUISIANA, A. & M. R. CO. v. BOARD OF LEVEE COM'RS OF TENSAS BASIN LEVEE DIST, 87 F. 594

PARDEE, Circuit Judge. The statement of this case is a somewhat lengthy matter, and, as we find in the first 27 pages of the brief submitted by Messrs. Boatner & Hudson, of counsel for the appellee, a full and fair statement, we adopt the same without reproducing it iu this opinion. It is conceded that as all the contracts involved in this suit were entered into in the state of Louisiana, and, as the lands involved are wholly situated in the same state, the law of Louisiana governs in the de termina Lion of the nature and validity of the contracts, and as to the relief which can be given by the courts.

The trial judge gave no reasons for his conclusions, and his decree is limited to rescinding the contracts between the parties, rescinding and declaring void the deeds of conveyance of the lands in question, and to enjoining the Louisiana, Arkansas & Missouri Railroad Company from claiming or setting up any rights under the said contracts or deeds of conveyance.

The claims of the appellee (complainant below) are (1) that the contracts are executory only; (2) that on the part of the Board of Levee Commissioners they were ultra vires and void ab initio; (3) that the engagements of each of the parties were prohibited by law at the date of each of the contracts; (á) if the contracts were not ultra vires and void, they had become forfeited by the failure of the grantee to perform the conditions subsequent annexed to the grant. The contention of the appellant is, of course, the contrary of the foregoing propositions.

In the assignments of error the appellant contends that the trial court erred as follows: “First, in decreeing that the contract made on the 3d day of May, 1889, between the Board of Levee Commissioners of the Tensas Basin Levee District and the Louisiana, Arkansas and Missouri Kailroad Company, and all subsequent renewals, modifications, and amendments thereof, and especially the contract between the same parties sof date July 25, 1890, and that dated October 12, 1891, be, and the same are, resolved and rescinded and declared null and void; second, in not finding and decreeing for the defendant as prayed in its answer and amended answer; third, in decreeing that the defendant be enjoined from setting up or claiming any rights, privileges, benefits, or advantages arising under the contracts between the plaintiff and defendant, and the deeds of conveyance executed by the plaintiff; fourth, that the court erred in decreeing a reconveyance of said lands without stipulating that the defendant be reimbursed in the amount of such expenditures as it may have' made in the performance of such contracts; fifth, that the court erred in decreeing that the contracts between the plaintiff and the defendant were ultra vires; sixth, that the court erred in not dismissing the plaintiff’s bill as prayed in defendant’s answer; seventh, that the court erred in not decreeing that the plaintiff had full povfer and authority to make the contracts which were made between the plaintiff and the defendant, set forth in the answer of defendant; eighth, the court erred in not decreeing that the lands ‘mentioned in the conveyances were conveyed to the defendant voluntarily, as a part payment, and that, having been so conveyed, no reconveyance could be decreed; ninth, the court erred in not decreeing that the contracts between the plaintiff and the defendant were valid, binding, and subsisting contracts.” The first, second, third, sixth, and ninth of these assignments are not as specific as are required by our rules, and, in substance, amount to no more nor less than that the circuit court erred in deciding the case for the complainant, instead of for the defendant.

The fifth, seventh, and eighth raise the same questions as are embraced in the appellee’s contention. The fourth assignment of error presents the question whether the Eailroad Company is entitled to a reimbursement of expenditures in case the reconveyance of the lands is decreed. The counsel for appellant argues that the Tensas Basin Levee Board is one of the public functionaries of the state of Louisiana upon which only ministerial and executive duties devolve, and that, as such creature of the law, it has no standing to question the constitutionality of any law of the state conferring powers and duties upon it.

So far as this contention affects the issues in this case and the right of the said board to bring this suit, and therein set up the unconstitutionality of so much of the act of July -3, 1886 (Sess.

Acts, p. 96), as authorizes the Levee Board tó use the donated lands for the purpose of assisting in building or completing a system of levees and other works of public improvement without the state of Louisiana, it may be noticed that, by the terms of the act of 1886, the Tensas Basin Levee Board was created a full-fledged corporation, authorized to assess taxes, collect and receive funds, and hold and administer the same; and that, by the same act, a large grant of public lands was made to the said hoard to he expended discreetly in carrying oat the general purposes of the act; and that, so far from being a purely ministerial and executive functionary, it was vested with large discretion, and was made and constituted a fiduciary agent.

As a fiduciary, it would seem unquestionable that, if the property belonging to the trust should be appropriated and disposed of iu an unlawful manner, It would be not only within its rigid and power, but its duty, to sue for and recover the same. The question, however, is not very material iu this case, because it is not so much the constitutionality of the acts of 1886 and 1888 that is attacked by the complainant as it is the proper construction of the said acts. It may be noticed, further, that, by

article 21á of the constitution of the state of Louisiana, the general assembly is authorized to create levee districts within the state, who shall have supervision of the erection, repairs, and maintenance of tlie levees in said districts, and of course within the state, and that by

article 216 the general assembly is given the power, with the concurrence of the adjacent state or states, to create levee districts composed of territory partly in the state, and partly in adjacent states. It is conceded that the two articles cited are limitations on the power of the legislature; and thus the grave question is presented whether the general assembly has the power to create a levee district wholly within the state, but authorized to build and construct levees outside of the state. The supreme court of the state of Louisiana, in Fisher v. Steele, 89 La.

Ann. 448, 1 South. 882, have held that this identical act is constitutional; but tlie report does not show that this precise question was considered, and it will be observed in regard to this decision that it appears to be based upon the fact that the laws in force at the time negatively prohibited the Tensas Basin Levee Board from undertaking any works in the state of Arkansas except by the consent of and in conjunction and co-operation with the authorities of that state.

The learned counsel for the appellee says: ‘•The state has the power to execute through any agencies which it chooses to select any power which it possesses itself.

Therefore tlie power of the legislature to grant to the Tensas Basin Devee District all of the public lands lying within the state for the purpose of aiding in the construction, within or without tlie state, of levees or other works of public improvements for the protection of the alluvial lands of the district from overiiow, was strictly within the constitutional powers of that body, because, among other reasons, the bulk of the land granted by the state to the Levee Board was granted to the state by the United States government for tills very purpose.” As this is the standpoint of the counsel for the appellee, we art' inclined to agree with them that they are not attacking the constitutionality of any of the acts of the legislature of Louisiana.

It is contended by the appellee that the contracts iu question and tin* grants of lauds thereunder were ultra vires and void, because they contemplated levees and other works wholly without tlie levee district, and within the state of Arkansas, without the consent of the authorities of said state, and because (he railway embankment contracted for was not, and could not be, a system of levees or other work of public improvement, within the meaning of

section 9 of the act of 1886, as amended by the second

section of the act of 1888. The act of 1886 (section 17) provides that the Board of Levee 'Commissioners of the Tensas Basin Levee District shall have the right to join in with any levee district embracing the counties of Chicot and Desha, in the state of Arkansas, for mutual protection in compliance with

article 216 of the constitution. This provision was left in force by the amendatory act of 1888, and it therefore, considered in-connection with

article 216 of the constitution to which it refers, is to be treated as a limitation upon the power of the Board of Levee Commissioners in regard to constructing levees or works of public improvement in the state of Arkansas.

It is not disputed that the statutes of the state of Arkansas provide for the construction of public levees in Chicot and Desha counties, by and under the authority of the levee boards of said counties; and the case shows — in fact, it is conceded — that the levee boards of those two counties have not joined with the Tensas Basin Levee Board in the building of the embankment or levee contracted to be built by the Railroad Company, nor have the same boards given permission, even to build the said embankment, but, on the contrary, have refused such permission, and, as appears by the averments in the defendant’s answer, have gone so far in opposition as to contribute to the expense of litigation to prevent the construction by the Railroad Company of such embankment.

The statutes of the state of Arkansas providing for the organization of railroad corporations, and regulating the construction of railroads by such corporations, prohibit the building of railroads across streams or water courses in such a manner as to permanently obstruct the stream or water course or impair .its usefulness (Mansf.

Dig. § 5447, par. 5), from which it follows that, although the Railroad Company may have the right to construct its roadbed in the state of Arkansas, it can neither build a roadbed under its railway charter, nor, without the consent of the authorities of Chicot and Desha counties, build an embankment, either of which will permanently .interrupt the free,flow of the water through all natural channels.

Prom these conclusions it would seem that the contract between the Tensas Basin Levee Board and the Railroad Company is not only ultra vires the power of the Levee Board, but otherwise, in its objects and purposes, is a contract impossible to perform.

Section 2 of Act No. 77 of 1888, which amends

section 9 of Act No. 59 of 1886, provides as follows: “That in order to provide additional means to carry out the purposes of this act, and to furnish resources to enable said board to assist in developing, establishing and completing, either within or without the slate, a system of levees and other works of public improvement, designed to aid in protecting property in the Tensas Basin Levee District from disastrous floods, all lands now belonging, or that may hereafter belong to the state of Louisiana, and embraced within the limits of the Tensas Basin Levee District as herein constituted, shall be, and the same hereby are given, granted, bargained, donated, conveyed and delivered unto said Board of Levee Commissioners of the Tensas Basin Levee District. * * * Said Board of Levee Commissioners shall have the power and authority to sell, mortgage, pledge or otherwise dispose of said lands in such manner and at such times and for such prices as to said board shall seem proper, but all proceeds .derived therefrom shall be deposited in the state treasury to the credit of the Tensas Basin Levee District, and shall be drawn out only upon the warrants of the president of said board, properly attested as provided in this act.” The above is the legislative authority for the Board of Levee Commissioners to make the conveyance of the lands in question to the Bailroad Company.

By the first contract entered into between the parties, the Bailroad Company, for the consideration named, —"Agrees and binds itself to construct and complete above overflow, in a 1 borough and workmanlike maimer, under the supervision and direction of the Board of State Engineers of the State of Louisiana, and thereafter to maintain, all that certain embankment or portion of its roadbed proposed by said Railroad Company to be located in the state of Arkansas, between a point where the line of railroad projected by said company sha.ll cross Crooked Bayou, in section-, township-south, range--west, and a point on "l he northern terminus of what is known as the ‘Bayou Macon Ridge,’ in section-, township- south,-, range —-west.

Said embankment or roadbed, when constructed, may be forever afterwards used as its roadbed by the said Louisiana, Arkansas and Missouri Railroad Company, its successors, and assigns. The course of said embankment is to be a general northerly and southerly direction on the west of Bayou Macon.” The second contract further described the railroad and embankment to be constructed as follows: “And to continue actively and earnestly at work until a railroad is completed and In operation, northward from Delhi, to and as far as the northern terminus of the Bayou Macon Hills, at the Boeuff Cut-Off, in Chicot county.

Arkansas. And said Railroad Company further covenants, promises, and agrees so [to] complete said embankment In said contract agreed to be constructed, and entire line of railroad from Helleys, Arkansas, to Delhi, Louisiana. * * « Fourth.

The Louisiana, Arkansas and Missouri Railroad Oom-Xiany further covenants, promises, and agrees, not only to keep said embankment across said Boeuff Cut-Off, in Chicot county, Arkansas, in repair, but also to place thereon a standard-gauge railroad, and to maintain and operate the said railroad after it is completed.” The consideration for the conveyance of the land as stated in the contract is “the completion on the part of said Bailroad Company of the embankment in the state of Arkansas, agreed to be constructed by said Bailroad Company in and by a certain contract dated May 3rd, 1889.” Prom what we have quoted, it will be seen that the object of the contracts betweeu the parties was the construction of an embankment across Boeuff Cut-Off, lowlands in the state of Arkansas, and the; building and operation of a railroad from Helleys, Ark., to Delhi, La.

The authority given to the Levee Board was to assist in developing, establishing, and completing, either within or without the stale, a system of levees and other works of public improvement designed to aid in protecting the property in the Tensas Basin Levee District, etc.; and this naturally brings us to the question whether the railroad and embankment, the object of the contract between the parties, were public improvements, within the terms and meaning of the law in question. Counsel for appellee, relying upon

article 06 of the constitution of Louisiana of 1879, as follows: “The funds, credit, property or tilings of value of the state, or of any political corporation thereof, shall not be loaned, pledged or granted to or for any person or persons, association, or corporation, public or private; nor shall the state, or any political corporation, purchase or subscribe to the capital stock of any corporation or association whatever, or for any private enterprise.

Nor shall the state, nor any political corporation thereof, assume the liabilities of any political, municipal, parochial, private, or other corporation or association whatsoever: nor shall the state undertake to carry on the business of any such corporation or association, or become a part owner therein: provided, the state, through the general assembly, shall have power to grant the right of way through its public lands to any railroad or canal.” —contends: First, that it was beyond the power of the legislature to confer upon the Tensas Levee Board authority to contract for any work or any levees or public improvements designed to prevent the overflow of the Tensas Basin, unless the work, when completed, should be owned and controlled by the public, and not by any private party; second, that a railroad, although upon a solid embankment, is not a work of public improvement; and, third, that such railroad, although it may be in some sense a work of public improvement, is not a work of public improvement designed in fact to aid in protecting property in the Tensas Basin Levee District from overflow.

In McKenzie v. Wooley, 39 La. Ann. 944. 3 South. 128, a case much relied upon by the counsel for appellant, it was declared incidentally that a railway is a public improvement; and in many aspects this is, no doubt, true. It can hardly be denied that an embankment or levee designed to prevent the overflow of the surplus waters of the Mississippi river is a work of public improvement.

The record shows with regard to the railway embankment in question that the Louisiana State Board of Engineers reported to the governor of the state as follows: “The Tensas Basin Levee District has recently entered into an agreement with the Louisiana, Arkansas and Missouri R. R.

Company to construct an embankment on the west side of Bayou Macon, and across the stream and lowlands known as ‘Boeuff Cut-Off.’ Such an embankment, of sufficient length and strength to confine the flood waters of its eastern side in case of breaks in the front levee along the Mississippi river, will give additional security against overflow, and protect the major part of the district, independently of the levee system along the front.” The contention that the public improvements, assisted by the Tensas Basin Levee Board, and designed to aid in protecting property in the Tensas Basin Levee District from overflow, should be owned and controlled entirely by the public as public property, is not well founded.

The language of the statute forbids such a narrow construction.

There has been much argument with regard to the effect to be given to the provision of the third contract, which stipulates that: “The Railroad Company, agrees to complete the work in question on or before December 31st, 1893, unless it, its successors or assigns are, by reason of the elements, litigations, strikes, financial panics, epidemics, or any other cause unforeseen or beyond the control of said Railroad Company, hindered or delayed or otherwise prevented from properly prosecuting said work, in which case, time not being of the essence of this contract, it is understood and agreed that the dates mentioned shall be extended, and the time lost shall not be counted.” , The appellant contends that, under this provision, the Railroad Company could not be put in default at the commencement of this suit, nor since, because the case shows that there have been financial panics and litigations which have hindered and delayed the Railroad Company in prosecuting the work, for which reasons, aud because it is expressly stipulated that, time was not of the essence of the contract, the .Railroad Company is entitled to farther delay and opportunity to prosecute aud complete the work before the contracts providing for the same can be avoided and the reconveyance of the lands can be demanded.

The extraordinary unilateral contract made between the Levee Board and the Railroad Company furnishes strong support to the appellant’s contention; and, if the contracts can only be declared at an end because of the default of the Railroad Company, we are inclined to think that the appellee can never pm the Railroad Company in default, no mailer what may be the delay resulting. The laws controlling the whole matter, however, are the Louisiana laws; and under well-recognized Louisiana law, the principles of which are declared in

article 2765, Rev. Civ. Code La., to wit, “The proprietor has a light to cancel at: pleasure the bargain he has made, even in case the work has already been commenced, by paying the undertaker for the expense and labor already incurred, and such damages as the nature of the case may require,” the Tensas Basin Levee Board had the right to cancel the contract and demand the re-conveyance of the lands in question at any time oil paying the Railroad Company for the expense and labor already incurred in executing the contract, and such damages as the nature of the case required.

The institution of the present suit mav be taken as a cancellation of the contract on the part of the Tensas Basin Levee Board. If the contracts are held void because ultra vires, equity makes it the duty of the Tensas Basin Levee Board to restore all {he consideration received from the Railroad Company before it can demand the reconveyance of the lands.

The Railroad Company, in its answer, avers that it has expended in good faith, in procuring the right of way on which to build said embankment, in the building of the same, in the prosecution and defense of litigation, in making surveys, and in other necessary expenses in and about the performance of said contract, a sum in excess of §100,000; but we do not find that this averment is established by the evidence, nor do we find that any specific sum, nor any sum worthy of consideration, has been expended by the Railroad Company otherwise than for and on account óf and for the actual benefit of the Railroad Company itself in the preservation of its charter and franchises, and in the construction of its own roadbed in the main distinct and apart from the embankment which was to aid in preventing overflow.

Certain it is chat the case does not show that the Railroad Company has done anything from (lie date of the first contract to the commencement of this suit which was beneficial to, or in any wise to the advantage of, the Tensas Basin Levee District, nor that the Levee Board has in possession anv consideration received from the Railroad Company which equity requires to be restored.

On the whole case, we are of opinion that the contracts between the Railroad Company and Hie Tensas Basin Levee Board for the construction of the specific railway and embankment in the state of Arkansas, without the consent and co-operation of the Arkansas authorities, was ultra vires of the Tensas Basin Levee Board; that, because of the existing provisions in the laws of the state of Arkansas and the opposition of the levee boards of Desha and Chicot counties of the state of Arkansas, the contracts in question, in their objects and purposes, were impossible of performance; that the Tensas Basin Levee Board had a right to, and did, cancel the said contracts; that in no aspect of the case is the Kailroad Company entitled to compensation for work done and expenses incurred in carrying out the said contracts, nor for advantages which might have resulted from the performance of the same as a prerequisite to the conveyance of the lands in question; and that in all respects the decree of the circuit court appealed from should be affirmed; and it is so ordered.