Edwards v. City of Helena

191 P. 387 | Mont. | 1920

MR. JUSTICE HOLLOWAY

delivered tbe opinion of tbe court.

On February 16 of this year an ordinance was passed by the city council of Helena, and approved by tbe mayor, directing that a special election be held on April 5 for tbe purpose of submitting to the qualified electors the proposition to issue the bonds of the city in the sum of $200,000, the money to be used to install a pipe-line to convey a portion of the city’s water supply from the source near Rimini to the reservoir near Helena. The preamble to the ordinance recites that the city owns its water supply and distributing system; that the portion of the supply in question has been conveyed through an open ditch; the necessity for the proposed improvement, and the probable cost of the same; that the city has almost reached the ordinary constitutional limit (three per cent) of indebtedness; and that to procure the funds to install the pipe-line it is necessary to increase the city’s indebtedness beyond the three per cent limit. In the body of the ordinance is this provision: “The revenues of said city, derived from its said water system, shall be devoted to the payment of the principal and interest on said bonds, and the city council shall hereafter provide therefor. A tax to be fixed by ordinance must be levied each year, for the purpose of paying the interest on the bonds and to create a sinking fund for their redemption.” The like provision is contained in the notice of election, which was duly given, and in the ballot provided, is this recitation: “Which said bonds and the interest thereon shall be paid from the revenues derived by the city from its said water system.” The election was held and the bonds authorized, but before they were issued this taxpayer’s suit was instituted to’ restrain further proceedings.

The complaint recites the history somewhat more in detail, and alleges that, notwithstanding the recital in the preamble, the city had not almost reached the three per cent limit of indebtedness, but, on the contrary, there was still a margin within that limit of more than $300,000, an amount ample to secure the funds desired. To this complaint a general demurrer was interposed, and afterward sustained. From a judgment dismissing the complaint, this appeal is prosecuted.

It is the contention of appellant that the city could not law [1] fully authorize a bond issue beyond the three per cent limit so long as there was a sufficient margin within that limit to secure the funds desired, and this will be conceded at once; but it does not follow that because the city council, either purposely or through inadvertence, declared that it was necessary to increase the indebtedness beyond the three per cent limit, the bonds authorized by the favorable vote of the qualified electors are void. They are nevertheless the valid obligations of the city, unless the favorable vote was procured or influenced by the deception of the voters to their prejudice. Assuming the allegation of the complaint to be true, and the demurrer admits it to be true for the purpose of this case, the bonds, if valid, are the obligations of the city incurred within the ordinary limit (three per cent) of its indebtedness. It is a matter of vital consequence to the taxpayer whether the bonds are within or beyond the three per cent limit. If they [2, 3] are beyond that limit, and authorized by section 6, Article XIII, of the Constitution, the revenues from the city owned water plant are irrevocably set aside and dedicated to the discharge of the interest and principal, and a taxpayer who is not a water user may not be called upon to contribute anything, unless the water plant revenues are insufficient, and then only may a property tax be levied to supply the deficiency. On the other hand, if the margin within the three per cent limit is sufficient to admit of a bond issue in the amount necessary, such bonds become the ordinary obligations of the city, to be redeemed by funds derived from direct taxes upon property within the city, unless other provisions are made for their payment and the payment of the interest as it becomes due. It is upon the theory that the property of this plaintiff and of others similarly situated will be charged with the payment of these bonds that this action is prosecuted; but, in this instance, the premise for the theory is erroneous, and the theory itself fails.

It does not appear from this record whether the city’s water system was purchased by funds derived from the sale of [4, 5] bonds issued in excess of the three per cent limit, but it is not material here. If the three per cent limit was exceeded, the revenues from the water system are set apart to the discharge of that original indebtedness only to the extent that such revenues are necessary, and any excess is subject to disposition by the city council as other public revenues of the city. (McClintock v. City of Great Falls, 53 Mont. 221, 163 Pac. 99.) It is not claimed in this complaint that such revenues are not sufficient to meet the original indebtedness and this new bond issue; and it follows that the excess may be employed to discharge this new indebtedness, and that, if any tax levy is ever required, it will be only such as is rendered necessary to meet a deficit. In other words, plaintiff’s situation is not different from what it would have been if the declaration by the city council had been correct.

But it is insisted by counsel for plaintiff that, even though [6] the revenues from the water system are available to discharge these bonds and pay the interest as it accrues, the city council cannot be compelled to make such application, even though it has declared in the ordinance that it will do so. Speaking in general terms, that contention would be available upon the theory that the same legislative body which passed this ordinance could hereafter repeal it; but to that general rule there is this exception, which is as well settled as the rule itself, vis.: An ordinance contractual in nature cannot be repealed without the consent of the other party, unless the right of repeal is reserved in the original ordinance itself, for such repeal would impair the obligation of the contract. (28 Cyc. 383.) Clearly, the ordinance of February 16 is contractual in its nature and effect. By its express terms the city agreed that, if these bonds were authorized, it would devote the revenues from the water system to their discharge and resort to direct taxation only in the event such revenues were insufficient, and then only to meet the deficit. It would violate every principle of justice and fair dealing to permit the city thus to influence a favorable vote and then refuse to carry out its promise. Since the ordinance of February 16 does not reserve tbe right of appeal, onr conclusion is that it is irrepealable until these bonds and interest thereon are fully discharged., and that plaintiff fails to disclose wherein he is, or can be, injured.

The judgment is affirmed.

Affirmed.

Mr. Chief Justice Brantly and Associate Justices Hurly, Matthews and Cooper concur.