Visalia Gas & Electric Light Co. v. Sims

Temple, C. The complaint charges that plaintiff leased to one Lynch, June 24, 1887, certain premises, including the plant of the electric light and gas company, for the term of two years from June 1, 1887. That Lynch agreed to take possession, manage, control, and operate the same, and to pay said company every three months during the term all the receipts of said gas and electric light business, after paying all necessary charges and expenses incurred in carrying on said business; and further agreed that the amount so paid should be sufficient to enable it to pay an annual dividend to its stockholders of five per cent upon its capital stock of twenty-eight thousand dollars, and, in case of deficiency, he would pay to such company every three months such further sums as would enable it to pay such dividend.

That defendants became sureties by signing an agreement indorsed on said agreement, of lease, whereby they agreed if said Lynch failed to pay plaintiff such sums, or any sums which might be due, they would pay the same.

That Lynch took possession of the demised property and retained it until June 1,1889, without paying plaintiff any sums of money as rents or receipts from said business.

That on the 1st of June, 1888, there became due plaintiff on said agreement fourteen hundred dollars, and on the 1st of June, 1889, the sum of fourteen hundred dollars; that no part of said sum has been paid.

The answer contains several defenses: 1. It denies that Lynch held possession for two years, and avers that plaintiff ejected him August 1, 1888; 2. There was no consideration for Lynch’s agreement; 3. No consideration for the agreement to pay sums additional to the receipts from the business; 4. Receipts did not exceed the expenses; there was, therefore, a failure of [329]consideration; 5. The contract of defendants was without consideration; 6. Failure of consideration for sureties’ agreement; 7. Want of consideration again pleaded; 8. Plaintiff was incorporated to furnish gas and electricity to the inhabitants of Visalia for illuminating purposes; the alleged lease was therefore ultra vires; 9. The contract is ultra vires and against public policy.

A defense by amendment sets up the incorporation of plaintiff for specific purposes of furnishing light to the inhabitants, an ordinance procured by it from the city authorizing it to lay pipes in the streets and to erect masts for electric lights, the acceptance of the franchise, the construction of the works, the duty of the corporation to furnish gas and electric lights, in consideration of the privileges, and its undertaking that the works shall not constitute a nuisance, and again charges that the lease to Lynch was against public policy and void.