196 N.Y. 178 | NY | 1909
Lead Opinion
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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *186 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *189 The above three actions are brought by taxpayers and, in each, the plaintiffs demand that the municipal authorities of the city of New York be restrained from committing the city to certain proposed contracts for the construction of a subway in Brooklyn and for various other public improvements, and from issuing corporate stock therefor; upon the ground that thereby, the provisions of the Constitution of the state, with respect to the limitation of the city indebtedness, will be violated. Upon an application for a preliminary injunction, an order of reference was made, which was extended to each action, whereby the referee was required to take proof of, and to report with his opinion, the amount in which the city was indebted for any purpose, or in any manner, on June 30th, 1908; to take proof as to its obligations *192 and to classify such indebtedness, to the end that the court may be "enabled to determine thereupon the amount of existing indebtedness coming under constitutional limitations". The learned referee, with great care and elaborateness, complied with the order and, in his report, he has discussed, with marked ability, the important questions presented. Upon the coming in of his report, the applications for an injunction were denied and, on appeal to the Appellate Division, in the first department, the orders of the Special Term were affirmed. Leave was given to the plaintiff to appeal to this court and a great number of questions have been certified for our review.
The constitutional provisions, which are brought into question, are contained in section 10 of article VIII of the State Constitution, and they read as follows: "No county or city shall be allowed to become indebted for any purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city subject to taxation, as it appeared by the assessment rolls of said county or city on the last assessment for state or county taxes prior to the incurring of such indebtedness; and all indebtedness in excess of such limitation, except such as now may exist, shall be absolutely void, except as herein otherwise provided. No county or city, whose present indebtedness exceeds ten per centum of the assessed valuation of its real estate subject to taxation, shall be allowed to become indebted in any further amount until such indebtedness shall be reduced within such limit. This section shall not be construed to prevent the issuing of certificates of indebtedness or revenue bonds issued in anticipation of the collection of taxes for amounts actually contained, or to be contained in the taxes for the year when such certificates or revenue bonds are issued and payable out of such taxes. Nor shall this section be construed to prevent the issue of bonds to provide for the supply of water * * *.
"All certificates of indebtedness or revenue bonds issued in anticipation of the collection of taxes, which are not retired *193 within five years after their date of issue, and bonds issued to provide for the supply of water * * * shall be included in ascertaining the power of the city to become otherwise indebted; except that debts incurred by the city of New York after the first day of January, 1904, * * * to provide for the supply of water, shall not be so included."
The assessment roll of the year 1907 was taken as the basis for a statement of the assessed valuation of the real estate subject to taxation; necessarily, forasmuch as that for 1908 did not go into effect until July 6th. From such assessment roll that assessed valuation appears to have been $6,240,500,602. The constitutional limit for the incurring of municipal indebtedness would be ten per centum of that amount, or $624,050,060.20.
It is strenuously objected that, in computing the indebtedness of the city, within the purview of this provision of the Constitution, it was incorrect to include special franchises as a part of the real estate, which is valued for assessment purposes. It was shown that they entered into the valuation of the real estate, appearing by the tax assessment rolls, to the amount of $466,855,000, and the referee held that they were properly so assessed. The language of the constitutional article is explicit that "the assessed valuation of the real estate" must be taken "as it appeared by the assessment rolls", and I think the rolls are made conclusive upon the subject. In these complaints, they are not attacked and are assumed to be correct. But, if we should assume that the items in the real estate column of the assessment rolls are open to legal objections, with respect to their classification as real estate for purposes of taxation, the referee's conclusion was absolutely correct. These special franchises are rights, or privileges, of a public nature, the exercise of which is permitted under grants from the state to corporations, and the legislature, in the General Tax Law, has classified them as real estate. (See Laws of 1896, chap. 908, sec. 1, sub. 3, as amended by Laws of 1899, chap. 712.) In the nature of incorporeal hereditaments, at common law, franchises partook *194 of the nature of realty and these special franchises are inseparable from real property in their enjoyment. They fall, necessarily, into that one of the two general divisions of property made by the statute, which is described as real estate. (Washburn on Real Property [6th ed.], sec. 1185; 1 R.S. 750, sec. 10; Real Property Law, Laws of 1896, sec. 1, chap. 547.)
There was nothing decided in People ex rel. MetropolitanStreet Ry. Co. v. State Board of Tax Commissioners, (
In ascertaining the limit of the city's capacity to become further indebted, the referee, very properly, has read the constitutional provision as contemplating what may be termed a permanent, or funded, debt, for permanent improvements, to be paid by future taxation, and a temporary indebtedness, created to pay the current expenses of administration and to be liquidated from the taxes levied for the year. The total of the debt represented by bonds outstanding of the several cities, towns, villages and counties, which, in 1898, were consolidated into the present city; by corporate stocks, issued by the present city for various purposes, and by its general fund, assessment and certain of its revenue bonds, aggregated $779,543,128.85. To this amount the referee added certain of the city's obligations, or liabilities, other than bonded indebtedness, which aggregate $26,529,785.71. In estimating the permanent debt, represented by corporate stocks, or bonds, there were only included of the revenue bonds, issued in anticipation of the collection of taxes, such as had not been retired within five years of their issue. Under section 187 of the city's charter, the comptroller is authorized to borrow, in anticipation of its revenues, not to exceed in amount the *195 amount of such revenues, such sums as may be necessary to meet expenditures under the appropriations for each current year. For this purpose, revenue bonds might be issued, to be redeemed out of the proceeds of the tax levy. Within the constitutional provision, such of these bonds, only, are to be included, in ascertaining the indebtedness, as have been outstanding for more than five years since their issue. I agree with the referee that it is not essential to their exception, under the constitutional provision, that these revenue bonds should have been issued during the year, when the taxes became payable against which they are issued; provided that, when issued, they represented those taxes, within the amount unpaid of the levy, and were payable from the proceeds of their collection. Neither constitution, nor charter, fixed the times for issuing them. That was a matter left to the discretion of the comptroller, to be governed in its exercise by the city's needs and the amount of the particular year's uncollected taxes. Another class of revenue bonds, not included as part of this permanent debt, consists of such as have been issued under the authority of section 187 of the charter, "for purposes other than to meet expenditures under the appropriations for each current year", and which were made redeemable "out of the tax levy for the year next succeeding the year of their issue", under an appropriation therefor "by the Board of Aldermen and the Board of Estimate and Apportionment in the budget for such year". Bonds of this class were issued in 1908 to be redeemed in 1909. They do not differ, in their temporary character, from other revenue bonds. They are issued in emergencies and provisionally. Instead of being in anticipation of the revenue for the year, in which issued, they are redeemable in the ensuing year under a special appropriation to be made. They should not be included in the computation. There were assessment bonds, aggregating $28,370,632,65, which were issued to pay the cost of local improvements. Though the cost is assessed back, more or less, upon the property benefited, the bonds are the absolute and unqualified obligations of the city; are issued upon its faith and *196 credit, alone, and, when due, are payable directly. As the referee says, the lien of the city upon the property "can be regarded only as a general asset." The general fund bonds are issued under section 222 of the charter and it is plain therefrom that they are to be classified with the city's corporate stock; as the faith and credit of the city are pledged for the fulfillment of their obligation. As held by the sinking funds, they are the subject of deduction, in the computation of the permanent debt, with other sinking fund holdings. Among the other obligations of the city, which were included in the estimate of the general permanent debt, are "Contract" and "Land" liabilities. The former comprehend such amounts as had been actually earned upon contracts outstanding, on June 30th, 1908, for public improvements. As to the correctness of this item, I shall have considerable to say presently. In "Land Liability" the referee has included the amount owing by the city to the owners of private property taken for public use. The amount, with interest, is approximated by taking the assessed value of the property; which appears from the evidence to be conceded to represent, at least, the measure of the awards. The appraisal may exceed; but it has not been known to be less. By law, the owners are entitled to recover the value of the land, with interest, from the city; in which had become vested the title and possession, upon formal proceedings taken by the municipal authorities looking to the acquisition of the land. The aggregate of the indebtedness, as thus ascertained, is $806,072,914.56.
From this indebtedness deductions were made of the following items. Bonds issued by the counties, prior to the consolidation, amounting to $21,808,279.64, were, properly, deducted. They are not to be included in the computation of the city's indebtedness. (Adams v. East River Savings Institution,
I find myself in accord with the referee's reasoning and conclusions; except upon one question, which is of great importance. I refer to the question of whether certain outstanding contracts, validly entered into by the city for public improvements, should be regarded as an existing indebtedness within the purview of the Constitution. There were, on June 30th, 1908, such contracts, which obligated the city to an amount estimated to be in excess of $54,000,000, and, except as to the amount which had been earned upon them, which is stated to have been, on that day, $2,553,933.92, the referee has refused to include that sum as an indebtedness. I think the referee was in error. The distinction made by him is that such debts do not create a debt, but are agreements for future indebtedness to be incurred upon performance by the party contracted with. In that view, he says that these contracts by the city represent, not a present debt for the $54,000,000, but contract obligations out of which a future debt may arise. He holds that the indebtedness to be taken into account, in determining whether the constitutional debt margin has been exceeded, "is the indebtedness, or the amount due and payable under such contract, at the time the testis made". In my opinion, this is taking a view of the constitutional provision, which is too technical and which tends to *199 narrow too much a provision intended to safeguard the municipalities of the state against coming under an excessive indebtedness. It was held in Bank for Savings, etc., v.Grace, (supra), that the "indebtedness referred to is an indebtedness to be met in the future by taxation" and "the mischief to be prevented was the creation of an excessive debt for local improvements, or public works, or the loaning of municipal credit, so payable that the burden should not fall upon those who contracted the obligations, or on their revenues, but on posterity". (p. 318.) Undoubtedly, as it was held in that case, the constitutional prohibition was aimed at "an actual and not a theoretical indebtedness"; but it would be quite incorrect, in my opinion, to regard the obligations of the contracts in question as a theoretical indebtedness. In that case, the question was whether bonds of the city of New York, held by the commissioners of the sinking fund, constituted an indebtedness of the city within the purview of the Constitution, and they were held not to be such. Theoretically, they were, until actually canceled by the commissioners. The discussion, there, was in view of the discretionary power of the commissioners to sell the city stock, or bonds, at any time held by them, for the sole purpose of buying, with the proceeds of the sale, other city stock redeemable at an earlier day; the result being an exchange of stocks and not an enlargement of the body of indebtedness. The term "theoretical", as applied to an indebtedness, was used in reference to bonds so held and not canceled. If we are to fix the margin of the constitutional limit for indebtedness with reference to what are the fixed obligations of the city, as are its stocks, or its bonds, then these contract obligations must be excluded; but I am strongly of the opinion that to do so will result in the failure of the purpose, which led to the constitutional provision. That purpose is obvious. It was to prevent the municipalities from improvidently contracting debts for other than ordinary current expenses of administration. It was to restrict their borrowing capacity and, thus, to minimize the mischievous consequences to the taxpayers of extravagance in city expenditures. The language is significant: "no county, *200 or city, shall be allowed to become indebted for any purpose, orin any manner", etc. That is a mandate directed to all municipal officers, which, in effect, forbids them to obligate the municipality in any manner, which may result in an indebtedness in excess of ten per cent of the assessed valuation of the city's real estate. The words, in which the People have expressed their will in the fundamental law of the state, should be read in the broadest sense, which will give effect to it. Indebtedness is a state of being in debt and a debt is defined to be "that which one person is bound to pay to another"; or an "obligation". It is that which is due by express agreement and its definition is not affected by the manner, or condition, upon which it is to be paid. The constitutional provision is a limitation upon the power of the city to become indebted; that is to say, to contract any indebtedness, which shall exceed an amount fixed with reference to its taxable real estate, and if the question, whether liabilities upon contract obligations are to be included in ascertaining the present indebtedness, is a debatable one, then it should be resolved in favor of the view which effectuates the purpose of the provision in all its integrity. It is conceded that none of these contracts, involving expenditures for upwards of $54,000,000, was payable from current revenues, or annual tax collections. They were made for permanent public improvements, pursuant to section 149 of the charter, under certification by the comptroller as to the fund applicable thereto. They are chargeable to, and are payable from, bonds issued for a term of years. Such bonds are to be paid from future taxation and their issue had been authorized by the municipal authorities, prior to the execution of the contracts. Why should these contracts not be regarded as constituting an indebtedness of the city? The law presumes that the parties to a contract will perform their agreements. If the incurring of contractual obligations to pay for public improvements does not represent an indebtedness, which is to be taken into account in ascertaining the margin of the debt limit, the force of the constitutional prohibition becomes *201 doubtful. If the provision applies, not to the time of the execution of the contract, but, only, to the time when payments become due, very remarkable results may follow. To illustrate: if, prior to the time of the completion of a contract for an extensive public improvement, made when the margin of the city's debt limit, as measured by an indebtedness consisting in direct, or absolute obligations, seemed to warrant it, the debt limit is reached, through the issuance of bonds to meet payments upon other contracts subsequently made, but completed at an earlier date, is the obligation of payment upon the first contract avoided? The constitutional provision is that "all indebtedness in excess of such limitation, * * * shall be absolutely void"; with an exception which does not apply to the case supposed. Can that provision be invoked by a taxpayer to defeat an obligation of the city, valid and binding when incurred? I do not think we should agree to that. Then, may the validity of a contract obligation depend upon conditions, as determined by subsequent facts? If contracts are binding when made, are they to be invalidated by after-occurring events in the city's financial career? If the answer is obvious, it is, at once, suggested to the mind that the constitutional debt limitation does include within its provision the actual, or estimated, indebtedness upon such contracts. Again, to illustrate what I conceive to be the fallacy of the argument in favor of the exclusion of such contract obligations from the computation of indebtedness, if the assessed valuation of taxable real estate should be less in a subsequent year and the margin of the debt limit is, in consequence, reached, or narrowed, is the indebtedness to be met upon a contract, made upon the basis of the assessment rolls in a prior year, showing an ample debt margin, avoided, because the payment will put the city in debt beyond the constitutional limit? I recognize that, as a rule, the figures of assessed valuations of real estate increase each year; but it does not impair the usefulness of the illustration. If the provision as to the debt limit is not applicable to binding contract obligations, when incurred, then how is it safely *202 applicable when the obligations mature? If it is not heeded, when obligations exist upon contracts for public improvements, of what avail will it be, if the obligation to meet payments maturing in subsequent years shall result in a burdensome taxation?
It seems to me that the better conclusion to be reached upon this question, and the one in better accord with the policy of the constitutional provision, is that, in ascertaining the margin of the city's constitutional debt limit, "existing indebtedness" must be regarded as including the city's liability upon contracts for public improvements, which is intended to be met from an issue of bonds.
Decisions by the courts of other states are cited by counsel on either side of the question. Many are inapplicable, by reason of the differing provisions of the state constitutions. In Illinois, the decisions of the Supreme Court support the views which I have expressed upon the subject of what constitutes an indebtedness. The Constitution of that state prohibits allowing a city "to become indebted * * * to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of taxable property therein, to be ascertained by the last assessment for state or county taxes" etc. In Culbertson v.City of Fulton, (
Without an ampler discussion, I am of the opinion that the amounts, which, on June 30th, 1908, were involved in the contracts of the city for public improvements, and which the referee states as being upwards of $54,000,000, should have been included in ascertaining the city's "existing indebtedness". That would result in a reduction, pro tanto, of the "margin of constitutional limit of indebtedness", as stated by the referee; less, of course, by the amount already charged against the city, as earned upon the contracts, viz.: $2,553,933.92. On the referee's figures, the debt limit should have been stated as $54,759,646.74.
I agree with the referee that all unliquidated and disputed claims, pending against the city on June 30th, 1908, which he computes as upwards of $62,000,000, should not be included as a part of the city's existing indebtedness. Liability upon them is denied; they have not been adjudicated and, so far as they may be ultimately reduced to judgment, they will be payable from the proceeds of special revenue bonds; which, as it has previously been shown, do not enter into the constitutional purview of an existing indebtedness.
The views expressed, notwithstanding the difference with *204 respect to the item of "contract liability", require the affirmance of the orders, which denied the applications for injunctions, restraining the defendants. The difference in view, merely, affects the margin of debt limit on June 30th, 1908. Reference to the report of the learned referee will be profitable, if a fuller understanding of the questions is desired. I advise that the questions certified be answered as follows: Questions 1 to 11, inclusive, 17 to 23, inclusive, 27, 31 to 41, inclusive and 43 should be answered in the affirmative. Questions 12 to 16, inclusive, 24 to 26 inclusive, 29 and 42 should be answered in the negative. Question 28 should be answered as follows: The real estate, which furnishes the basis for valuation, is what appears assessed as such in the assessment rolls. Question 30 should be answered as follows: The amount payable on a contract liability becomes an indebtedness, when the contract has been certified by the comptroller, under section 149 of the charter
Concurrence Opinion
I concur in the opinion of Judge GRAY with one exception hereafter noted. The most important question before us is whether in the case of contracts for public improvements, the cost of which is to be defrayed by the issue of city bonds, the whole estimated sum to be paid under the contracts is to be considered a city indebtedness upon the execution of the contract, or only from time to time the amounts which then may be actually due thereon for work already performed. As regards this question I agree not only in the opinion of Judge GRAY, but in that of Judge HAIGHT, for, as I read the opinions, both of my brethren are in accord as to the principle of law which should determine the question. Judge HAIGHT thinks that the record does not show that the contracts which are the subject of this difference are to be paid by the issue of bonds, and, therefore, that the certified questions should not be answered. I think that the record does show this fact. On the argument of the case all parties conceded the fact to be as assumed by Judge GRAY, and common knowledge would almost seem to justify *205 us in taking notice that the large sums covered by these contracts could not be raised by taxation of a single year.
The availability as an offset to the general indebtedness of the city of water bonds issued by the city since the new Constitution and held in the sinking funds, I think depends entirely upon the particular sinking funds in which such bonds are held and not on the character of the bond. If they or other bonds are held in the special sinking fund created by section 208 of the charter, or in any sinking fund which is by law especially created to discharge indebtedness which, under the Constitution, is not to be reckoned in ascertaining the city's debt, then they cannot be treated as an offset against the general city debt; otherwise, they should be so considered. The questions certified to us do not seem to present any distinction between the several sinking funds, and any answer we make to those questions should be considered as subject to the qualification here expressed.
Dissenting Opinion
I differ to some extent from the conclusions reached by Judge GRAY with reference to the answer to the 19th, 23d and 27th questions certified for our determination. The 27th question is as follows: "Does the amount payable upon contract liability for work and labor to be performed or materials to be furnished under contracts for public improvements by said city of New York, to be paid for as such work is performed or the materials furnished from time to time from the proceeds of bonds, become an indebtedness of said city within the provisions of article 8, section 10, of the Constitution of the state at the time when the comptroller of said city indorses thereon his certificate as required by section 149 of the Greater New York charter, that there remains a balance of the appropriation or fund applicable thereto sufficient to pay the estimated expense of executing such contract as certified by the officer making the same?"
It appears from the finding of the referee that on the 30th day of June, 1908, the outstanding contracts, upon which money would become due in the future for labor performed *206 and material furnished, amounted to the sum of $54,000,000. and the question arises as to whether this amount should be deducted from the $106,000,000 which the referee found was the borrowing margin of the city. These contracts were entered into pursuant to the provisions of section 149 of the Greater New York charter, which, so far as material, are as follows: "No contract hereafter made, the expense of the execution of which is not by law or ordinance, in whole or in part, to be paid by assessments upon the property benefited, shall be binding or of any force, unless the comptroller shall indorse thereon his certificate that there remains unexpended and unapplied, as herein provided, a balance of the appropriation or fund applicable thereto, sufficient to pay the estimated expense of executing such contract, as certified by the officer making the same." The manner in which these contracts were executed is provided for by section 419 of the charter, and is disclosed by the testimony of the witnesses Andrews and Smith. It is substantially as follows: When an improvement has been authorized the borough president publishes a notice for ten days asking for bids. When the bids are received and opened and the lowest bidder is ascertained, the bid is transmitted to the comptroller for his approval of the sureties. His approval, if made, is transmitted to the head of the department to execute the contract. The contract when drawn and signed is transmitted to the comptroller, and if satisfactory, he indorses thereon his certificate that there is a fund applicable sufficient to pay the estimated expense of executing the contract. This, upon delivery, completes the contract and it then becomes a binding instrument between the city and the contractor. It will be observed that the certificate of the comptroller, as required by section 149, is silent with reference to the source or character of the fund which is applicable to the payment of the contract. The witness Andrews further states that "sufficient funds available," as appearing in the comptroller's certificate, does not mean cash on hand, but that it means sufficient funds have been legally authorized. It would, therefore, seem that in the absence of *207 any provision of the contract or of the statute requiring or directing the payments to be made by the issuing of bonds, that the installments, as they matured upon the contract and became due, would be payable in cash, like other obligations of the city. If all of the contracts of the city for public improvements must be paid in the issuing of long-time bonds, it would follow that the city as a corporation could not long exist without exceeding the constitutional limitation. Instead of paying for the improvements in cash as the money became due and payable thereon, the city would be compelled to issue long-time bonds therefor, thus placing the burden upon future generations which should be borne by the present generation. Many of the improvements are of a temporary character, subject to wear and decay and soon have to be replaced. If all of such contracts must be paid by the issuing of bonds, the constitutional limitation would soon be reached and thereafter the city could not enter into any contract of this character, even for the building of a schoolhouse, for if it must be paid for by the issuing of bonds, they, under the provisions of the Constitution, would be void and illegal. These contracts, as I understand, are the ordinary contracts for the construction of public buildings, wharves, bridges and streets. The contracts do not provide that the payments maturing thereon from time to time shall be made by the issuing of bonds, nor do any of the provisions of the charter require these payments to be so made. It is true that under section 222 of the charter the city may authorize the issuing of bonds to be called general fund bonds, and these bonds may be used for the payment of the obligations of the city. The witness Smith tells us that the general fund bonds, issued pursuant to section 222, are usually sold en bloc, many millions at a time, and the amounts received from such sale are passed to the credit of a fund called the proceeds of the sale of such bonds, and then, when funds are needed in the various accounts of the city, the money is transferred from this fund to the particular account to which it is required. It is, therefore, apparent that the installments, as *208 they become due and payable upon these contracts, are payable in cash, if any remains to the credit of that particular department of the city. If not, they may be paid by the issuing of revenue bonds, payable out of the taxes to be assessed and collected upon the next tax roll. Or, if the authorities of the city so determine, they may be paid by moneys transferred from the account of the proceeds of the sale of general fund bonds. It thus follows that the payment out of the proceeds of the general fund bonds is permissive and not compulsory. And any time when the constitutional limitation is reached which would prohibit the issuing of such bonds, then the city must pay its contract liabilities as they mature and become due and payable in cash or out of the revenue bonds.
There may be improvements which the statute requires to be paid for in bonds, such as the building of subways and reservoirs. There may be other contracts which the proper board may determine should be paid for in bonds. But it is not found as a fact by the referee, nor do I understand it to be established by the evidence, that these contracts are of that character. If the contracts were to the effect that the payments falling due thereon must be paid by the issuing of long-time bonds, or that the payments were required to be so made by the charter or the board of estimate and apportionment, then I think Judge GRAY would be correct in his conclusions; for then the obligations would become complete to pay in bonds by force of the contract or the statute as the payments become due. To hold otherwise might produce absurd results. Should the constitutional limitation be reached by the city before the contracts were performed in full, it would follow that the contracts theretofore completed would be valid, and those thereafter performed would be invalid, for the reason that the bonds to be issued in payment thereof would exceed the constitutional limitation. It thus might follow that the contracts made for the construction of a great public improvement, which would necessarily consume a number of years in its construction, would become void under the Constitution, while many subsequent contracts requiring less time to *209 execute would be fully completed before the limitation was reached.
The rule which should control the determination of such questions is to the effect that when a contract is made for a public improvement, which by its terms or by the provisions of the charter is required or directed to be paid with long-time bonds presently issuable, it becomes a debt within the meaning of the Constitution, even though such debts are payable in the future by installments. But in contracts for such improvements which are not required to be paid by the issuing of such bonds, but are payable in cash when the future installments become due, they are not debts within the meaning of the Constitution until the maturity of the installments, even though the municipality in its discretion may issue bonds to pay such installments. In the former case the debt is deemed to be created at once, the time of payment only being postponed. In the latter case, the indebtedness is not considered created until the consideration has been furnished. This, as I understand, is in accordance with the views of Judge Dillon as expressed in his new work on Municipal Corporations.
Inasmuch as the referee has not found facts upon which we can determine the precise character of these contracts I am inclined to the view that questions 19th, 23d and 27th, certified, should not be answered either in the affirmative or negative, but should be answered in accordance with the requirements of the rule to which I have called attention.
Orders affirmed, with one bill of costs in all cases.
Opinions by CULLEN, Ch. J., and GRAY and HAIGHT, JJ.; CULLEN, Ch. J., WERNER and HISCOCK, JJ., concur with GRAY, J., except as to the allowance of the securities in the sinking funds to meet the water debt created since the Constitution of 1894 as a deduction from the general indebtedness of the city; EDWARD T. BARTLETT and VANN, JJ., concur with HAIGHT, J.; EDWARD T. BARTLETT, HAIGHT, VANN, WERNER and HISCOCK, JJ., concur with CULLEN, Ch. J., as to the effect of the sinking funds; GRAY, J., dissents from CULLEN, Ch. J., on this point. *210
The questions certified are answered as follows:
No. 1. Question certified answered in the affirmative. All concur.
Nos. 2, 3 and 4. Questions certified answered in the affirmative. All concur.
No. 5. Question certified answered in the affirmative. All concur.
No. 6. Question certified answered in the affirmative. All concur.
No. 7. Question certified answered in the affirmative. All concur.
No. 8. Question certified answered in the affirmative. All concur.
No. 9. Question certified answered in the affirmative. All concur.
No. 10. Question certified answered in the affirmative. All concur.
No. 11. Question certified answered in the affirmative. All concur.
Nos. 12, 13 and 14. Questions certified answered in the negative. All concur.
No. 15. Question certified answered in the negative. All concur.
No. 16. Question certified answered in the negative. All concur.
No. 17. Question certified answered in the affirmative. All concur.
No. 18. Question certified answered in the affirmative. All concur.
No. 19. Question certified answered in the affirmative. Concur: CULLEN, Ch. J., GRAY, WERNER and HISCOCK, JJ. Not voting: EDWARD T. BARTLETT, HAIGHT and VANN, JJ.
Nos. 20, 21 and 22. Questions certified answered in the affirmative. All concur.
No. 23. Question certified answered in the affirmative. Concur: CULLEN, Ch. J., GRAY, WERNER and HISCOCK, JJ. Not voting: EDWARD T. BARTLETT, HAIGHT and VANN, JJ. *211
Nos. 24 and 25. Questions certified answered in the negative. All concur.
No. 26. Question certified answered in the negative. All concur.
No. 27. Question certified answered in the affirmative. Concur: CULLEN, Ch. J., GRAY, WERNER and HISCOCK, JJ. Not voting: EDWARD T. BARTLETT, HAIGHT and VANN, JJ.
No. 28. Question certified answered as follows: The real estate that furnishes the basis for valuation is what appears assessed as such in the assessment roll. All concur.
No. 29. Question certified answered in the negative. All concur.
No. 30. Question certified answered as follows: The amount becomes an indebtedness when the contract has been certified by the comptroller under section 149 of the charter. See answer to question No. 27. Concur: CULLEN, Ch. J., GRAY, WERNER and HISCOCK, JJ. Not voting: EDWARD T. BARTLETT, HAIGHT and VANN, JJ.
No. 31. Question certified answered in the affirmative. All concur.
No. 32. Question certified answered in the affirmative. All concur.
No. 33. Question certified answered in the affirmative. All concur.
No. 34. Question certified answered in the affirmative. All concur.
No. 35. Question certified answered in the affirmative. All concur.
No. 36. Question certified answered in the affirmative. All concur.
No. 37. Question certified answered in the affirmative. All concur.
No. 38. Question certified answered in the affirmative. All concur.
No. 39. Question certified answered in the affirmative. All concur. *212
No. 40. Question certified answered in the affirmative. All concur.
No. 41. Question certified answered in the affirmative. All concur.
No. 42. Question certified answered in the negative. All concur.
No. 43. Question certified answered in the affirmative. All concur.
The answers to questions 31 to 41, both inclusive, relative to the sinking funds, must be qualified by the statement that none of the securities in the sinking funds especially pledged under the Constitution for the retirement of obligations not counted against the city in ascertaining its indebtedness, can be allowed as a deduction or offset against the general debt, which under the Constitution is the subject of computation.
Ordered accordingly.