On Aрril 1, 1957, the City Council of Elizabethtown, Kentucky, enacted ordinances authorizing the issuance of $1,300,-000 Natural Gas System Revenue Bonds, and establishing rates and charges for the use of and services rendered by the natural gas distribution system.
Pursuant to recommendations made by the consulting engineer, employеd by the city, and J. J. B. Hilliard and Son, fiscal *186 agent for the City in the sale of the bonds, the City Council, on May 13, 1957, duly enacted an ordinance providing for the management, control, and operation of the existing waterworks and sewer system and the proposed natural gas system by a Municipal Utilities Commission. At this same meeting the Council adopted a resolution authorizing the sale of $1,150,000 of the natural gas bonds on June 3, 1957.
Before the sale of the bonds, J. J. B. Hilliard and Son issued a descriptive circular with reference to this bond issue in which it was stated that “Prior to the sale of these bonds, the City expects to adopt an ordinance creating a Municipal Utilities Commission (Board) which will operate and manage the Water and Sewer System ’and the Nаtural Gas System * * * on a non-partisan and non-political basis.” The City published and distributed, in mimeograph form, a booklet entitled “Official Statement — Information for Prospective Bidders Relating to the Sale of” the natural gas bonds. This booklet contained copies of the bond ordinances, thе rate ordinance, and the ordinance (and the preamble) creating the Municipal Utilities Commission.
In accordance with the provisiоns of the Municipal Utilities Commission ordinance, M. L. Underwood, Will Allen Brown, and W. H. Taylor, all of Elizabethtown, Kentucky, were appointed members of the Commission. J. J. B. Hilliard and Son and associates were the successful bidders on the bonds, and in turn sold them to various purchasers.
At the election held in November, 1957, Jess W. Murray, Scott 'Carroll, denial Tharp, Robert C. Duggins, Jr., Oliver H. Walker, and H. B. Goodman were elected to the City Council of Elizabethtown, and Leonard T. Bean was elected Mayor. On January 6, 1958, the new City Council enacted an ordinance abolishing the Municipal Utilities Commission and providing for the opеration of the water and sewer system and the natural gas system by the City Council.
Lee E. Cralle and J. J. B. Hilliard and Son, a partnership, filed this suit on behalf of themselves, as holders of natural gas bonds and as class representatives of all other holders of natural gas bonds, to enjoin the City of Elizabethtown, the members of the City Council, and the Mayor from enforcing the ordinance abolishing the Municipal Utilities Commission. The defendants below filed an answer and cross complaint. The lower court enjoined the defendants below from interfering in any way with the operation of the Utilities Commission during the life of the gas bonds, and this appeal is from that decision. The matters presented by the cross complaint are not involved here.
While an office created by a city ordinance may be abolished by a subsequent ordinance,. an exception has been recognized in those cases in which the creating ordinance is a contract that is protected against impairment. Keathley v. Town of Martin, Ky.,
It is not contended that there was an express agreement by the City of Elizabeth-town that the gas system should be under thе control and operation of the Utilities Commission so long as any of the gas bonds should be outstanding. Rather, the position of the bondholders is, that in сreating the Utilities Commission before the sale of the bonds, and publishing the Utilities Commission ordinance in the information booklet for prospectivе bidders, the City intended for the bondbidders to believe that the management of the utility was vested in a permanent commission free of political оr partisan favoritism, and that the bondbid-ders reasonably relied upon this assurance
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■and, as a consequence, submitted a bid more favorable to the City. As thus phrased, •the claim of the bondholders appears to be based more upon estoppel than contract, although this may be a point at which es-toppel and contract overlap. See
The statements upon which the bondholders assert that they relied are in the third paragraph of the preamble to the "Utilities Commission ordinance, which ¡reads as follows:
“Whereas, it is deemed advisable by the Council that a permanent plan, of municipal management, control and •operation of said combined and con•solidated muniсipal waterworks and ■sewer system and said proposed natural :gas distribution system be now made of record for the assurance of efficient management, control and operation of said systems, free of political or partisan favoritism.”
Even if it be assumed that this is a representation that would be binding upon the City, were it in the body of a contract or an ordinance, the fact that it appears in the preamble tо the ordinance is fatal to the contention of the bondholders. A preamble to a statute or ordinance, the same as a preamble to a contract, is merely an introductory clause, expressing the reasons for and objects sought to be accomplished by the body of the enactment or agreement, and is not an essential part thereof. Jones v. City of Paducah,
The lower court was guided by the Keathley case, supra. While that opinion contains language which suрports the claim of these bondholders, in that case there was an express contract between the municipality and the bondbidders providing for a utility commission during the life of the bonds. It was properly determined that the ordinance creating the Board of Water Commissioners' could not be repealed so long as a bond of that issue of bonds was outstanding. What was said beyond that was obiter dictum.
The judgment is reversed and the case is remanded for proceedings in conformity with this opinion.