251 Pa. 28 | Pa. | 1915
Opinion by
This was a bill in equity filed by plaintiff, as a taxpayer and resident of Pittsburgh, against the City of Pittsburgh, Joseph G. Armstrong, its mayor, and E. S. Morrow, city controller, to restrain the issue of four series of bonds, which were authorized without submitting the matter to a vote of the people. The ordinances, in question, provided for the issue of bonds, as follows:
1. Bonds to the amount of $2,760,000, designated “Funding Bonds 1911,” authorized' by Ordinance No. 389, approved November 11, 1911, which bonds were to be issued to fund a then existing floating indebtedness of the city, due and unpaid.
2. Bonds to the amount of $1,068,000, designated “Street Improvement Bonds, Series A, 1911,” authorized by Ordinance No. 388, approved November 13, 1911.
3. Bonds to the amount of $867,000, designated “Improvement Bonds, Series B, 1911,” authorized by Ordinance No. 105, approved November 17,1911.
1. Bonds to the amount of $735,000 designated “Improvement Bonds, Series C. 1911,” authorized by Ordinance No. 106, approved November 18, 1911.
The creation of new indebtedness for municipal purposes was authorized by the last three series of bonds. It is only the limit of councilmanic power to create indebtedness which is here in question. The plaintiff alleged that all of the proposed issues are invalid for the
In the appeal of the city, the first question raised, as stated by counsel, is as follows: whether certain funding bonds consisting of two issues, one of $700,000 and one of $400,000 respectively, issued with the assent of the electors, but which were issued and the proceeds used for the payment of a floating indebtedness incurred prior to such assent, is an indebtedness incurred with or without the assent of the electors within the meaning of the Constitution. It is clear that the obligations which these bonds were intended to replace, were created without the vote of the people, and the authority after-wards granted by the people to fund this existing indebtedness, which had been incurred without their consent, cannot be held to operate to transfer such indebtedness from the councilmanic class to the electoral class. The funding or refunding of a debt previously created and existing, is not an increase of that indebtedness, but is merely a continuation thereof. The referee and the court below were right in the conclusion which they reached, that these bonds represented indebtedness incurred without the vote of the people.
The third question raised in the city’s appeal, is with respect to the estimated damages caused by the change of a street grade, and the estimated cost of doing the work, which the referee included in computing the indebtedness of the city. An estimate of the amount of
It is also contended that certain judgments, which had been obtained against the city, for damages for personal injuries, which by the referee were included in computing the debt of the city, should not have been so included, because it is suggested, such obligations are usually paid out of current revenue. We think it is a sufficient answer to this, to say that such judgments can hardly be fairly regarded as being within the class of ordinary expenses. And in addition to that it may be said that it was not shown that a sufficient appropriation had been made from the current revenue to cover such liabilities during the fiscal year.
The assignments of error in the appeal upon the part of the city at No. 133, October Term, 1915, are overruled, with the exception of the twelfth, which is to the final decree. As to that, the questions raised will be considered in connection with the appeal of the plaintiff.
In his fourth finding of fact, the referee found that by Ordinance No. 389, the City of Pittsburgh authorized and directed the issuance and sale of bonds of said city in the aggregate principal amount of $2,760,000 for the purpose of “funding the existing unfunded indebtedness of the city, consisting of contractors’ claims, judgments and assessments, arising from the opening, widening and improving of streets and the construction of sewers, and the acquirement of property for public use, and other floating indebtedness,” said bonds being designated “Funding Bonds, 1914.” Counsel for plaintiff points out that in the ordinance authorizing the issue of these bonds, no provision is made for the cancellation of the items of floating indebtedness simultaneously with the
The second point raised in the argument of counsel for plaintiff is, that a claim made by the Pittsburgh Board of Education against the city, should have been recognized and regarded as a debt. It appears, however, from the record that the claim of the board of education is disputed, and that all liability on that account is denied by the city. We can see no good reason for regarding unliquidated and disputed claims pending against a municipality, as part of its indebtedness, where all liability upon such claims is denied.
The next particular in which plaintiff questions the action of the court below, and of the referee, is as to their allowance of a deduction in computing indebtedness of the city, of the amount of certain assessments, secured by undisputed liens against properties specially benefited by the improvement of streets and the construction of sewers. We think these liens may fairly be regarded as solvent debts due and owing to the city, and
The next and perhaps the most important question raised by the appeal of plaintiff, is as to the method of ascertaining the net amount of councilmanic debt outstanding, or that which has been created without the consent of the electors. It appears from the record that in the sinking funds now maintained for the retirement of councilmanic bonds, there are held, as investments, both councilmanic and electoral bonds; and in the sinking funds for the retirement of electoral bonds, there are held, as investments, both electoral and councilmanic bonds. It is argued on behalf of plaintiff that only such councilmanic bonds as are held in the councilmanic sinking funds, are properly to be regarded as an offset against the gross amount of councilmanic indebtedness, and that neither bonds authorized by the electors, which are held in councilmanic sinking funds, nor cash held therein, should be deducted from such indebtedness. On the other hand, counsel for the city maintain that all the reserves in the councilmanic sinking funds, consisting of cash and the bonds of the city of whatever kind held therein, should be counted as offsets to the councilmanic indebtedness, without regard to whether those bonds be councilmanic or electoral in their origin. The referee
By agreement of counsel this case Avas considered and decided Avith respect to the financial stituation of the city as it stood on September 30, 1914. It Avould not, therefore, be affected by the Acts of Assembly of May 6,1915, Avhich have been brought to our attention. The effect of these acts Avould seem to be to make a city to Avhich contiguous municipalities have been annexed, liable for the payment of not only its OAvn debt but also of the debt of
In plaintiff’s appeal, at No. 134, October Term, 1915, the first, second, third, fourth, eighth and ninth assignments of error are dismissed. The fifth assignment is sustained. The questions raised by the other assignments will depend for answer upon the result of the calculation to be made in accordance with the method of ascertaining the net councilmanic debt, which we have indicated. It is, therefore, ordered that the record be returned to the court below for further proceedings in accordance with this opinion. The costs of this appeal, and in the court below, to be paid by the City of Pittsburgh.