245 Pa. 287 | Pa. | 1914
Lead Opinion
Opinion by
By an ordinance of the select and common councils of the City of Philadelphia, approved October 3,' 1913, the corporate authorities of the said city signified their desire to increase its indebtedness in the sum of $8,600,000, and at an election held on the fourth of the following
The last assessed valuation of taxable property in the city preceding the election of November 4, 1913, was $1,556,323,614, seven per centum of which is the sum of $108,942,652.98. This was the limit of the borrowing capacity of the city when the ordinance of October 3, 1913, was approved and the election on November 4 was held. From the gross indebtedness of the city existing at those dates the defendants insist there ought to have been two deductions — one for $6,524,216.57, the amount
The constitutional provision which concisely, clearly and definitely fixes the borrowing capacity of a city is that its indebtedness “shall never exceed seven per centum upon the assessed value of the taxable property therein.” The indebtedness of a municipality, like that of an individual, is what it owes and can be called upon to pay, and the constitutional limitation upon its power to contract indebtedness is fixed without regard to what assets, real or personal, it may own. It may own absolutely real estate worth seven per cent, of all the taxable property within its limits, but property which it may so own is not to be weighed in the balance in determining how much it may borrow. Under the plain words of the Constitution it is never a question of how much a municipality owns in determining how much it may borrow. County, city, borough, township and school district, corporately rich or poor, all have the same basis for their borrowing capacity. It is the assessed value of the taxable property within their confines, seven per centum of which is the limit to which any of them may borrow. The Constitution says nothing about their assets. If the same were permitted to be taken into account in ascertaining the borrowing capacity of the subdivisions of the State, it would not only not be uniform, but there would be endless controversies and litigation in determining the value of county, city, borough, township and school district assets. The constitutional provision in this respect is alike for rich and poor. In the same year that
If the question of the constitutionality of the Act of April 20,1874, P. L. 65, had been raised promptly after its passage, we have no doubt that it would have been held to be legislation forbidden by the Constitution by clearest implication. But for more than a score of years it remained unchallenged, and, in the interval, municipalities acted upon its authority, and millions of dollars have been borrowed and disbursed in reliance upon it. It is for this reason that we do not now feel any imperative necessity which would justify us in striking it down: Commonwealth v. Gilligan, 195 Pa. 504; Elliot v. Philadelphia, 229 Pa. 215. In the latter case the solvent debts which the city claimed to deduct from its gross indebtedness were, as appears from the paper books now before the writer, for delinquent taxes and other items which were absolutely due and payable to the city, the proceeds of which it could use to discharge any outstanding obligations. Outstanding solvent debts, within the meaning of the Act of 1874, which a municipality may deduct from its gross indebtedness in ascertaining its borrowing capacity, are debts due to it directly, payment of which it can enforce as one of its quick assets for the liquidation of any of its obligations. Elliot v. City of Philadelphia is authority for this, and nothing more, in construing the meaning of the words “solvent debts” as used in the Act of 1874, and neither now nor at any time in the future will they be given any other than their strict, literal meaning.
The indebtedness of the city to the amount of $6,524,-216.57, incurred by it for school purposes, is still outstanding in the shape of its valid obligations to pay, and the holder of each of these obligations can look to it for payment. The Act of 1911, imposing upon the school district the obligation to pay this indebtedness, in no manner affects the absolute liability of the city to pay it. The legislature could not have impaired in the least degree these obligations of the city, for both Federal and State Constitutions forbid the passage of any statute impairing the obligation of contracts. The liability of the city to pay remains, in respect to this indebtedness, just the same as if the Act of 1911 had not been passed. What its general indebtedness was before the passage of that act still exists, except so far as it had been paid or reduced.
But it is earnestly contended that, under the Act of April 20, 1874, the amount of the city’s indebtedness assumed by and imposed upon the school district ought
The city does not even hold a debt against the school district, due and payable to it, the proceeds of which it may use for the payment of any of its outstanding obligations. There is a mere promise or obligation by the school district, admittedly solvent, to pay a part of the city’s indebtedness. There is, however, no promise to pay. anything to the city, and no obligation is imposed upon the school district to do so. To contend that a mere promise, or even an obligation, to pay a debt which the city itself owes, is a solvent debt due to it, is to assume that the legislature did not know the difference between a debt due from one person to another and a promise by a third party to pay the same. Solvent debts which the legislature had in mind are debts absolutely due and payable directly to the municipality, without regard to what it may do with the money when received. The indebtedness of the city, incurred by it for school purposes, is still its debt, to be included in determining the amount of its liabilities.
The second question for our consideration is the right of the city to deduct from its gross indebtedness authorized but unissued loans amounting to $6,750,000. If the city’s contention as to this should, prevail, it would mean that a municipality’s indebtedness may be authorized by the corporate authorities and electors to an unlimited amount and that the Constitution permits the authoriza
Counsel for defendants seek to justify their contention as to authorized but unissued loans by what was said by the lower court in Redding v. Esplen Borough, 207 Pa. 248. The bill in that case was to enjoin payment by the borough authorities of moneys claimed on a contract for the construction of a sewer alleged to have been illegally entered into by the borough authorities, in view of its indebtedness existing at the time, including au
Nothing more need be said in support of our decree of March 30,1914.
Dissenting Opinion
Dissenting Opinion by
I must be in error, as the court has so decided, but not being convinced of the error, and since the debt creating
It is too late to even question the validity of the Act of 1874 on constitutional grounds. For forty years the profession throughout the State have accepted it as a valid binding act and municipal indebtedness to the extent of millions of dollars has been created upon the strength of its provisions. This court has also settled the question beyond the peradventure of doubt: Bruce v. Pittsburgh, 166 Pa. 152; Elliot v. Philadelphia, 229 Pa. 215. Nothing can be gained now by attempting to disturb what must be considered a settled question of law. It is true that the courts have not been called upon to precisely define what is meant by the words “solvent debts” within the meaning of the Act of 1874. To my mind a debt is an obligation to pay, and if the debtor is solvent and able to pay his obligation, he is a solvent debtor, and his obligation to pay is a solvent debt, within any reasonable meaning of the term. The school dis
It is suggested that the legislature might repeal the school code without making any provision for the payment of indebtedness created or assumed by the school district, and in such event, the City of Philadelphia would have no recourse against the school district. It could just as well be said that the legislature might repeal what is known as the Bullitt Act, and all other acts relating to the city, and by so doing, strike down the entire municipal government and take away from it its power to levy and collect taxes and to incur and pay municipal indebtedness. But such suggestions are not in keeping with the spirit of our people and such a method of repudiating indebtedness and destroying public credit is foreign to Pennsylvania. Of course the legislature would do no such thing without making ample provision for the payment of all honorable obligations. I would sustain the position taken by the learned city solicitor and allow a deduction of the amount assumed by the school district from the gross indebtedness of the city.
With the greatest respect for the views of my asso