46 S.E. 28 | N.C. | 1903
This action is prosecuted by the plaintiffs, citizens and taxpayers of the city of Charlotte and members of the board of aldermen of said city, against the defendants, board of water commissioners of said city, for the purpose of restraining and perpetually enjoining a proposed issue of bonds and the execution of a mortgage on the property held and owned by said board, and pledging the rents and tolls derived from (3) the operation thereof to secure the payment of the said bonds and the interest thereon.
The facts material to the decision of this appeal, as set forth in the complaint and admitted by the demurrer, are: On 13 March, 1897, in pursuance of authority vested in it by chapter 40, Private Laws 1881, and by chapter 68, Public Laws 1897, the board of aldermen purchased the plant, property, franchises, easements, privileges and appurtenances of the Charlotte City Waterworks. Pursuant to authority vested in it by said acts of the General Assembly and by virtue of the approval of a majority of the qualified voters of said city, ascertained at an election duly held for that purpose, it issued and sold two hundred and fifty thousand dollars of the bonds of the city, and applied the funds received therefrom to the payment of the purchase money of said property and in making extensions and improvements thereto.
At the session of 1899, chapter 271, Private Laws, the General Assembly duly passed an act whereby E. T. Cansler, R. J. *3 Brevard, W. C. Dowd and R. R. Jordan were constituted a board of water commissioners for the city of Charlotte, of which the mayor of said city was made ex officio chairman. Provision was made for filling vacancies in said board. Said board was declared to be a corporation under the corporate name of the Board of Water Commissioners of the city of Charlotte, with power to sue and be sued, to hold real estate, and to enjoy the usual privileges of a corporation. That all acts and doings of said board within the scope of their duty or authority are declared to be obligatory upon and be in law considered as if done by the board of aldermen of the city of Charlotte; the said board was empowered for and in the name of the board of aldermen of the city of Charlotte to take and hold the land, real estate, rights, franchises and property of every kind now owned by said board of aldermen, or that may hereafter be purchased for the purpose of operating and maintaining a (4) system of waterworks for the said city, and have power to acquire such additional property and make such additional improvements thereto as should be necessary to supply the city of Charlotte with a sufficient supply of good and wholesome water. Power was given to condemn land and water rights if necessary to extend said system of waterworks. The board was given power to regulate the distribution and use of water and to fix a price for the use thereof, the time of payment, etc. The property held by said board was exempt from taxation. The board was given power to collect all rents, water rates, etc., and required to keep an account thereof, and after paying the expense of operating the plant or system of waterworks under their control, including cost of such improvements as was deemed necessary, the net balance they were required to pay over to the treasurer of said city. It was provided that said board of aldermen out of such net balance should first pay the interest upon such of the bonds of the city of Charlotte as were sold for the purpose of raising money to purchase said system of waterworks, and the balance remaining to constitute a sinking fund to meet the payments of said bonds at maturity.
The members of said board organized under and pursuant to the provisions of said act of 1899, and the board of aldermen, pursuant thereto, turned over to the said board of water commissioners the said waterworks system and plant, improvements and extensions for the purpose and in accordance with the terms and provisions of said act, and in accordance therewith the said board holds the real estate, rights, franchises and property so turned over to them. Said board has since acquired additional property and made additional improvements and are endeavoring *4 to acquire still more property and make further improvements, all of which are necessary to furnish said city (5) and its inhabitants with a sufficient supply of good, wholesome water. The population of said city was, at the last census, 19,000, and now exceeds 25,000 people. Said city has expended large sums in establishing and maintaining, and now maintains, a paid fire department for the protection of the property of the citizens of said city. It also maintains a system of sewerage made necessary for the proper drainage of its streets and for the preservation of the public health. Said system of fire protection and sewerage require large quantities of water from said waterworks system for their use, operation and efficient maintenance. The city has found it necessary to and has laid many miles of sewer and water pipes, and purchased the necessary implements, tools, etc., for the operation thereof, all of which are necessary for the protection of the property and health of said city and its inhabitants; that the present water supply is inadequate to meet the demands of public and private consumers and an efficient operation of said plans; that one of the watersheds of said city from which it derived a considerable portion of its water supply has become thickly populated and occupied by manufacturing plants, making it advisable to discontinue the use of water from that source for public or domestic purposes; that neither the said city nor the board of water commissioners have any funds on hand which can be used to purchase necessary real estate, machinery and other property to adequately equip its system of waterworks to supply the wants and needs of the city or its inhabitants; that it will require the expenditure of at least one hundred and fifty thousand dollars for said purpose; that to enable the said board of water commissioners to properly equip and maintain said waterworks system, sufficient to supply the city with water necessary for municipal purposes at a moderate cost to said city, it is necessary that the board of water commissioners shall equip and maintain a water system of sufficient capacity (6) to furnish all the inhabitants of said city desiring to use the same a sufficient quantity of pure, wholesome water for domestic purposes, and to charge therefor certain toll or rental, without which the said commissioners would be unable to maintain said water system for municipal purposes, except at an enormous and unreasonable expense to said city.
The General Assembly at its session of 1903, chapter 196, Private Laws, at the instance and with the approval and pursuant to a resolution of the board of aldermen of said city, duly passed, in accordance with the provisions and requirements of *5 Article II, section 14, of the Constitution, an act repealing sections 6, 17 and 18, chapter 271, Private Laws 1899, and conferring upon the board of water commissioners power to acquire such additional property and make such additional improvements thereto as may be necessary to at all times furnish the city of Charlotte with a sufficient supply of good, wholesome water. And in order to procure necessary funds for that purpose said board was given full power and authority to issue bonds not to exceed in amount the sum of two hundred thousand dollars, in such form and of such denominations and payable at such time or times and places, and to bear such rate of interest, payable semi-annually, as said board shall determine; said bonds to be signed by the mayor of the city as ex officio chairman of said board, sealed with the corporate seal of said city, attested by the ex officio clerk of said board, and coupons on said bonds to bear the engraved or lithographed signature of said clerk. "All bonds so issued shall be equally and ratably secured by first mortgage or deed of trust upon all the real estate, rights, franchises and other property of every description owned and held by said board, and which was purchased by the city of Charlotte from the Charlotte City Waterworks Company, as well as all other property, rights and franchises which may hereafter be purchased or acquired by said board (7) for the purpose of extending, maintaining and operating said system of waterworks for said city." Provision is made for the execution of a mortgage or deed of trust on said property for the purpose of securing the payment of said bonds.
It was provided that the said board of water commissioners, out of the moneys derived from the collection of tolls or rents for water, shall pay (1) the cost and expenses of operating said plant or system of waterworks under its control, including the cost of such incidental improvements as the board may deem necessary for that purpose; (2) the semi-annual interest upon the bonds issued by virtue of section six (6) hereof as the same shall become due; (3) the cost and expense of such extensions and additions to the plant of said system as the board may, from time to time, deem advisable; (4) the semi-annual interest upon the bonds heretofore issued by the city of Charlotte for the purchase of said waterworks, as the same shall become due, for a period of fifteen years from the date thereof; (5) after the expiration of which period all moneys so derived (less the cost and expenses of operating said plant, the interest on the bonds authorized to be issued hereunder, and the cost and expenses of additions to the plant as aforesaid) shall be turned over to the treasurer of the city of Charlotte, to be held by him *6 and invested under the direction of the board of water commissioners for a sinking fund with which to pay off, as they may mature, first, the bonds issued by virtue of section six hereof in full; second, the bonds heretofore issued by the city of Charlotte for the purpose of purchasing said waterworks system: Provided, that none of the funds of the city of Charlotte raised by taxation shall ever be applied to the payment of either principal or interest of the bonds issued by virtue of section six (6) hereof."
Prior to the commencement of this action the board of (8) water commissioners, 8 October, 1903, at a regular meeting, unanimously adopted a resolution reciting the several matters and things herein set forth, and further reciting that "Whereas, it has become necessary to relocate and establish new reservoirs, pumping stations, pipe lines, etc., upon and connected with streams drawing their supply from watersheds not so liable to contamination, and sufficient to furnish the necessary water supply for said city for both present and future compensation:
"First, That the board, pursuant to the provisions of chapter 196, Private Laws, ratified 2 March, 1903, hereby authorizes and directs the issuance of one hundred and fifty thousand dollars of its bonds or obligations, payable to bearer thirty years after date of said bonds, and bearing interest at the rate of five per cent per annum, payable semi-annually, etc. The said bonds to be of the denomination of one thousand dollars each, and payable only out of the moneys to be derived by the board from the collection of tolls or rents for water, as provided in the second subsection (17) of section 1 of the act hereinbefore referred to, the terms and provisions of which act are to be considered as if incorporated herein: Provided, that neither the bonds authorized to be issued hereunder, the coupons attached thereto nor the deed of trust securing the same, shall be deemed or held as creating any debt of the city of Charlotte, or as pledging the faith or lending the credit of said city for the payment of the indebtedness hereby authorized, and no action shall be maintained in any court against said city or any of its officers to enforce the payment of said indebtedness evidenced by said bonds, coupons or deed of trust except as to the funds and property herein expressly charged with the payment thereof."
The form of the proposed bond is incorporated in said resolution, conforming to the provisions of said act of 1903 (9) and said resolution.
The second of said resolutions provides for the execution of a mortgage or deed of trust for securing the payment of *7 said bonds, conveying said plant, and all additions made thereto, with all franchises, etc., appurtenant thereto. The said resolutions in all respects conform to the provisions and requirements of the several acts herein referred to. The complaint alleges that the proposition to issue said bonds and mortgage has not been submitted to or approved by a vote of a majority of the qualified voters of said city, nor has said board any other authority therefor than is conferred by said act of 1903. The board of water commissioners threaten to, and unless enjoined will, issue and sell said bonds and execute said mortgage or deed of trust.
The plaintiffs aver that they are advised:
1. That the title to said waterworks and appurtenances is held by said board in trust for said city of Charlotte upon the terms set forth in said acts, and that said board is bound in law to hold and operate the same upon the trusts aforesaid as such acts provide.
2. That the threatened bond issue and mortgage of said property and pledge of said rents and tolls is violation of the rights of the city of Charlotte and its citizens as secured to them by the law of the land and the several acts referred to, other than chapter 196, Private Laws 1903, and particularly violation of Article VII, section 7, of the Constitution of the State.
3. That chapter 196, Private Laws 1903, in so far as it attempts to authorize said board of water commissioners to issue said bonds and to pledge the water rents, tolls and emoluments of said waterworks plant and system, and to mortgage the said property and franchises, is violation of section 7 of Article VII of the Constitution, and that, therefore, (10) chapter 271, Private Laws 1899, directing the manner in which the rents, etc., arising from said system of waterworks and the operation thereof shall be applied is still if force and effect.
4. That said board has no power to mortgage said property or pledge the rents and tolls derived from the operation thereof, but that it is the duty of said board to hold the same upon the trusts attaching thereto.
5. That the issuance of said bonds and the execution of said mortgage will cast a cloud upon the title to said property.
The defendants demur to the complaint, for that it does not allege facts sufficient to constitute a cause of action, because it appears therefrom:
That the act of 1903 expressly confers upon the said board the several threatened acts sought to be enjoined. *8
That said acts of the General Assembly were passed at the instance and with the approval of the board of aldermen.
That it is necessary to issue bonds for the purpose of securing funds sufficient to make the extension and improvements referred to and to enable said board to perform the duties and functions imposed upon it by said legislation.
That said proposed bond issue is a necessary expense to be incurred in preserving and maintaining in a state of efficiency municipal property already acquired by the city and held by said board in trust for necessary municipal purposes, and that therefore it is not necessary to be first authorized by a majority of the qualified voters of said city.
That the act and the resolution of the board expressly provides for the payment of the principal and interest of said bonds from and out of the tolls and rents received from the operation of said waterworks; and further provides that neither said bonds nor the coupons attached thereto, nor the deed of trust (11) securing the payment thereof, shall be deemed or held as creating any debt of the city of Charlotte, or as pledging the faith or lending the credit of said city for the payment of the indebtedness thereby authorized.
That the issuing of said bonds and the pledge of said water rents, etc., will not be contracting any debt or pledging the faith or lending the credit of said city in the sense inhibited by section 7 of Article VII of the Constitution.
His Honor sustained the demurrer, and the plaintiff appealed.
We have been very much aided in our investigation and disposition of this appeal by full and excellent briefs and oral arguments of the learned counsel for the parties to the record.
It will be convenient to dispose of the questions raised by the pleadings in an order somewhat different from that in which they are presented. If, as contended by the defendants, the bonds proposed to be issued are not debts or liabilities of the city, or if the making and issuance of them be not pledging the faith or lending the credit of the city within the meaning of section 7, Article VII, of the Constitution, several important and interesting questions discussed in the briefs will be eliminated. This question has not before been presented to or decided by this Court. The language of the Constitution declares that no county, city, town or other municipal corporation "shall contract any debt, pledge its faith or loan its credit," etc. The plaintiffs insist that the issuing of the bonds in controversy comes within this inhibition. "Debt" is defined to be "that which is due from one person to another; that which one person is bound to pay or perform to another." Black's Law Dict., *9
337. Perrigo v. Milwaukee,
The Supreme Court of Iowa, in Swanson v. Ottumwa, 59 L.R.A., 620 (Iowa), thus states the view held in that State, which we think is correct: "The tax required to be levied is clearly authorized by the statute, and such tax, together with (14) the income of the company derived from other sources, the ordinance expressly provides shall pay all obligations assumed by the city. If it does not, neither the bond-holders nor company have any claim on the city for the deficiency. The obligation of the city is to levy the tax and see that the amount collected is applied to the specific purposes. If the special fund legally provided is not sufficient, then it may be well said the deficiency is not payable by the city; and it is difficult to conceive how there can be such a thing as a debt which is never to be paid. No burden is created thereby, and there cannot be such an indebtedness. In a constitutional sense the prohibited indebtedness must be a burden and payable from funds which could not be constitutionally appropriated for that purpose." Waterworks Co. v. Creston,
The Supreme Court of Illinois, in Springfield v. Edwards,
The case of U.S. v. Fort Scott,
As we have pointed out, the city of Charlotte makes no such promise. Any inference or suggestion to that effect is expressly negatived by the act, the resolution and the terms of the bonds.
It is said, however, if the rents and tolls accruing from the operation of the waterworks, as provided by the act of 1899, are diverted to the purposes of the act of 1903, the burden on the ordinary revenues will be increased and thereby its debt indefinitely increased. We cannot see how this result can justly be called contracting a debt. The question raised by this suggestion will be discussed in another phase of the controversy. We conclude that the proposed bond issue will not constitute a debt against the city of Charlotte in any legal or constitutional sense. It is immaterial, in this phase of the question, whether we regard the bonds as issued by the board of aldermen or the board of water commissioners. We deem it proper to say this, that it may be seen that we have not overlooked the language of section 6 of the act of 1903: "And the contracts and engagements, acts and doings of said board within the scope of its duty and authority shall be obligatory upon and be in law considered as if done by the board of aldermen of the city of Charlotte." The conclusion which we have reached is not affected by the fact that the bonds are issued by the board of water commissioners, but is based upon the provision for raising the fund out of which they are to be paid, to the express exclusion of anyother fund or revenue of the city.
Holding, as we do, that the proposed bond issue is not creating a debt against the city, or lending its credit, or pledging its faith, we do not deem it necessary to pass upon the question raised by the demurrer, that the purpose for which (16) *12 the fund is to be raised is a "necessary expense," within the meaning of Article VII, section 7, of the Constitution. There is much force in the position that upon the admitted facts in the case the bond issue could be sustained as a necessary expense. It is evident that the value and efficiency, if not the preservation, of the present system of waterworks as an essential agency in protecting the property and health of the city and its inhabitants is involved in the proposed action by the board. While the policy indicated by the restrictive constitutional provision upon municipal indebtedness must be kept in view and upheld, we may not disregard the ordinary meaning of words or give to them a strained and unusual construction. Surely no one could well contend that these words, if used in a power of attorney respecting the private business of the citizen, would be construed to prevent the agent from assuming for his principal such obligations as were necessary for the protection of his property and the performance of the duties imposed upon him. The people of Charlotte have by their votes declared that a system of waterworks is essential to their corporate welfare and safety. They have empowered their municipal servants and agents to expend a large sum for securing such a system. Is it not clear that this involves the duty of protecting this property and making it efficient for the very important, may we not say necessary, purpose for which it was originally acquired? If so, the power to contract such obligations as are necessary to discharge the duty must be found. "Narrow and technical reasoning is misplaced when it is brought to bear upon an instrument framed by the people themselves, and designated as a chart upon which every man, learned or unlearned, may be able to trace the leading principles of government." Cooley Const. Lim., 59.
That waterworks are held by the city or such quasi municipal corporations as may be established by the Legislature for (17) such purpose for public use and for public purposes is clearly shown by the Supreme Court of the United States in New Orleans v. Morris,
The plaintiffs suggest that the property purchased by the city by the board of aldermen, and by the act of 1899 transferred to the board of water commissioners, is impressed with a trust for the city and for the purposes set out in this act, "and that said board is bound in law to hold and operate the same upon the trusts aforesaid." It is clear that the Legislature may, in aid of municipal government or for the purpose of discharging any municipal functions, or for any proper purpose, create municipal boards and confer upon them such powers and duties *13
as in its judgment may seem best. Section 4, Article VIII, of the Constitution, ordains that "It shall be the duty of the Legislature to provide for the organization of cities, towns and incorporated villages," etc. It is uniformly held that "municipal corporations are mere instrumentalities of the State for the more convenient administration of local government. Their powers are such as the Legislature may confer, and these may be enlarged, abridged or entirely withdrawn at its pleasure," etc. Lilly v. Taylor,
In Water District v. Waterville,
"There is no prohibition which we have been able to discover, and we have been pointed to none, against the creation by the Legislature of every conceivable description of corporate authority and to endow them with all the faculties and attributes of other pre-existing corporate authority. Thus, for example, there is nothing in the Constitution of this State to prevent the Legislature from placing the police department of Chicago or its fire department or its waterworks under the control of an authority which may be constituted for such purpose."
"The Constitution nowhere commits corporate objects or purposes irrevocably to authorities now existing, nor does it prohibit the committal of them to such corporate authority whose appointment may be called into life by the same law which creates the subject and commits it to their jurisdiction." People v. Solomon,
Referring to the liability of waterworks to be sold for debts of the city Judge Miller says: "The learned counsel, in the oral argument and in the brief, substantially concede that the waterworks themselves, in the hands of the city, were not liable to be sold for the debts of the city. And if no such concession were made, we think it quite clear that these works were of a character which, like the wharves owned by the city, were of such public utility and necessity that they were held in trust for the use of the citizens."
"The property owned by the city corporation is held by it as a public corporation and is subject to the law-making power of the State vested in the Legislature." Darlington v. The Mayor, etc.,
The Supreme Court of Connecticut, in West Hartford v.Water Commissioners,
In Adams v. Rome,
The Supreme Court of the United States, speaking of the cases which hold that corporate property pledged to the payment of bonds may not be diverted from that purpose, says: "They simply hold that an act of the Legislature, passed after a contract is made, which withdraws property, then liable to be seized and sold in enforcement of that contract, from the power of the courts to seize and sell it, impairs the obligation of the contract. But it has never been held, so far as we are advised, that a statute dealing with property not subject to sale for the enforcement of the contract cannot, in providing for a change in the mode of the title by which the debtor holds it, continue the exemption from forced sale of that which it represents in the hands of the (22) same owner the property so exempt."
We have not overlooked Vaughn v. Commissioners,
The only case to which our attention has been called which militates against the view which we have taken is Joliet v. Alexander (Ill.),
In Southport v. Stanly,
It is stated that to enable the commissioners to furnish water for municipal purposes at a reasonable expense, it (23) is necessary that it be furnished to citizens at a fair and reasonable rental. The power of the city to do this was brought into question in Slocumb v. Fayetteville,
The judgment of the court below is
Affirmed. *18