City of Providence v. Providence Electric Light Co.

| Ky. Ct. App. | Jan 15, 1906

OPINION by

John D. Carroll, Commissioner.

Affirming.

On February 3, 1903, tlie appellee entered into a contract with, the appellant to furnish it 50 or more lights at an annual rental of $18 per annum per light, the lights to he placed in operative condition within 90 days thereafter, and payments to he made monthly, beginning with the acceptance of the lights. The contract further provided that “the period of this contract shall be from date of acceptance of said lights until January 1, 1904, and if the party of the second part fails to contract with the party of the first part for the use of said lights for another year from the expiration of this contract the party of the first part shall have the right or privilege to allow their poles, wire© and transformers to remain upon the streets and alleys of the city of Providence for five years after the termination of this contract. ’ ’ Under this contract the light company furnished to the city of Providence for the year 1903 lights amounting to $925.35. The city paid $396 of this amount, leaving a balance due of $529.35. For this amount the city issued to the light company four warrants, thereby recognizing the justness of the claim. The city failed to pay the balance, and this action was instituted by the light company to secure from it the amount due, with interest from January 1, 1904. The action was founded on the contract, and not on the warrants issued.

The city resisted the payment of the claim upon several grounds, among them, contending that the amount sued for was more than the light company was actually entitled to recover; that the warrants issued by the city were invalid, because- allowed at other than regular meetings of the council; that they failed to specify the fund out of which the money was to be paid.; that all, except one, were signed by a person who was not clerk of the council; that the contract was void, being in violation of section 164 of the Constitution, and upon the further ground that there was at no time funds in the treasury out of which the debt could be lawfully paid, and it created a liability in excess of the revenue for the year. On a trial of the case judgment was rendered for the amount claimed. It does not seem to be necessary to consider the question of the correctness of the amount sued for, as' it is admitted by the defendant in the record that the sum claimed is the correct amount due. Nor is it necessary to determine whether or not in issuing the warrants the provisions of the statute were complied with, because the action is not based on the warrants, but upon the contract, and the warrants are merely filed as evidence of the indebtedness.

This leaves but two questions open for consideration. The first one is, was the contract void because made in violation of section 164 of the Constitution? This section provides that “no county, city, town, taxing district or other municipality shall be authorizd or permitted to grant a franchise or privilege or make any contract in reference thereto for a term exceeding twenty years. Before granting such franchise, or privilege, for a term of years, such municipality shall first after due advertisement receive bids therefor publicly and award the same to the highest and best bidder.” This section is mandatory, and no contract made in violation of its provisions can be enforced, nor can any franchise or privilege be granted without a compliance with its requirements. The contract made by the city with the light company is in violation of the provisions of this section, and therefore the contract is void. But this court, in the case of Nicholasville Water Company v. Board of Councilmen of the Town of Nicholasville, 36 S. W., 549; 38 S. W., 430; 18 Ky. Law Rep., 592, in all respects like the one at bar, held that although the franchise to and contract with the water company might be treated as void, because not granted in the manner provided by this section, that, as it appeared the city had received and used the water it was liable for the value of the water so received. In this case it is not disputed that the city received the benefits of the lights furnished- by the appellee; and, it being admitted that the amount claimed is just and correct, the city cannot escape liability, and must pay for the lights it received their reasonable value, which has been ascertained to be the amount for which judgment was rendered.

The other question to be disposed of arises under section 3641 of the Kentucky Statutes of 1903, and section 157 of the Constitution. Section 3641 of the Kentucky Statutes of 1903, or so- much thereof as is pertinent, reads as follows: “The city council shall not create, audit, allow or permit to accrue any debt or liability in excess of the available money in the treasury that may be legally apportioned and appropriated for such purposes.” Section 157 of the Constitution declares that “no city, town, taxing-district or other municipality shall be authorized or permitted to become indebted in any manner or for any purpiose to an- amount exceeding in any year the income and revenue provided for such year without the assent of two-thirds of the voters thereof voting at an election to be held for that purpose. And any indebtedness created in violation of this section shall be void. Nor shall any such contract be enforcible by the person with whom made, nor shall such municipality ever be authorized to assume the same.”

Under the Constitution and the charter of fifth class cities, the appellant is authorized to impose a tax of 75 cents on the $100 and a poll tax of $1.50. When the contract with appellee was made, the assessed value of the property of the city was approximately $260,000, -and there were 400 polls. If a tax of 75 cents on the $100 had been levied, in connection with- the poll tax authorized1, the revenue of the city from these sources in 1903 would have been $2,550, independent of the sum raised from license taxes and fin.es -which amounted in- 1903 to several hundred dollars. The debt to the light company was created when the. contract was entered into, and it appears that on that date there was in the city treasury something over $1,400. It is in evidence that the current running expenses of the city in 1903 were about $1,400, and that, aside from these fixed charges, the city only owed a debt of some $400. It will thus be seen that, if the city had imposed the tax that it was authorized to levy, ample revenue to pay the debt contracted with the light company could be raised, and there would have been money in the treasury that might be legally appropriated to pay this claim. Therefore the contention of counsel for the appellant is not well taken.

It is true that the city in 1903 only levied an ad valorem tax of 35 cents, but it is the amount of tax that may be levied and raised under the Constitution that must be looked to in determining whether or not the indebtedness “exceeds in any year the income and revenue provided for such year.” It will not do to say that a city that is authorized to levy an ad volorem tax of 75 cents may contract an indebtedness that can be assumed and paid within the constitutional limit, and then by refusing to levy the full amount of tax authorized, or by le,vying only a small tax, defeat the collection of the debt upon the ground that the revenue for the year is less than the amount of indebtedness created.

It is therefor ordered that the judgment of the lower court be affirmed.-