174 Wis. 588 | Wis. | 1921
Lead Opinion
It is undisputed that if the mortgage certificate the railroad commission authorized the city of Portage to issue for the purpose of securing funds for the improvement of its waterworks as directed by the commission is added to the city’s existing indebtedness, then the city’s indebtedness will exceed the five per cent, limitation prescribed by sec. 3, art. XI, of the constitution.
It is the conterition of the state that the city can comply with the order of the railroad commission in making the directed improvement of its waterworks by availing itself of the provisions of sec. 927 — 16 or 927 — 19b, Stats., as a means of raising the necessary funds. This claim of the
Sub. 1 declares that whenever the voters have determined by vote to purchase, acquire, or construct a public utility the governing authority “shall.have power ... to provide for the payment thereof, and to provide for any extensions, additions and improvements that are necessary,” in the manner provided; namely, by setting aside the- income and revenue of such utility as a separate and special fund, which is to be applied to pay the. expense of its maintenance and operation and the payment of the purchase or construction price. This revenue is divided into fixed proportions for (a) maintenance and operation, (b) an adequate depreciation account, and (c) the payment of the principal and interest of the bonds authorized by this statute. Sub. 3, 4, 5, 6, and 7 specify in detail how these three proportions of the revenue shall be made up and expended. Sub. 8 provides for the issuance of bonds to secure means for the payment of the utility and “for any extensions, additions and improvements thereof, . . . which bonds shall be payable only out of the said special redemption fund.” The obligations of such
“It means 'something owed;’ ‘money due or to become due upon express or implied agreement.’ ... It denotes not only an obligation of the debtor to pay, but the right of the creditor to receive and enforce payment. (Citing.) Under the constitution as well as under, the law of taxation the question is: Is the city indebted ?”
The court held in that case that contracts for the purchase of park land under statutes authorizing such purchases, upon terms “creating a lien thereon for such purchase money, without creating any corporate liability therefor, do not constitute a city indebtedness within the constitutional limitation restricting city indebtedness.” In Connor v. Marshfield, 128 Wis. 280, 107 N. W. 639, the court reexamined the holdings in Perrigo v. Milwaukee, 92 Wis. 236, 65 N. W. 1025; Milwaukee v. Milwaukee Co. 95 Wis. 424, 69 N. W. 819, and the Burnham Case, and reconsidered the question “whether, when a city purchased property or acquired the right to purchase it, from the fact that rights in or burdens upon that property were held by others, so that the city, to hold it and protect the interest acquired in it, must pay large sums of money, the city thereby became indebted for such sums in the constitutional sense,” and there stated that this court in the Burnham Case . . reviewed the conflicting array of decisions, and, rejecting the reasoning of those the respondents now cite, we decided the question in the negative. The distinguishing element, as then defined, consisted in the fact that the city could not be coerced by the creditor of its grantor into applying to his claim either its general revenue or property owned by it at
The point is urged that this scheme and plan of paying the cost of purchase or. construction of any such utility in the manner prescribed out of the income and revenues cannot be legally applied to the cost incurred for improvements, extensions, or additions to a utility after the utility has been purchased or constructed, for the reason that the provision made for the issuance of bonds to cover the cost of such improvements, additions, and extensions necessarily pledges the property of the utility after it has been paid for in the manner prescribed and has become the property of the city under the provisions of this statute. We think there is merit in this claim. It is manifest that after the utility property has been mortgaged to secure the purchase-money lien created in the manner provided by this statute, it cannot
Upon these considerations it follows that the city of Portage cannot be coerced into complying with the order of the railroad commission under the provisions of sec. 927—
It is urged by the state that if the city cannot proceed to make the improvement of its waterworks as ordered by the railroad commission, then the provisions of sec. 927 — 19& furnish an exact means to enable the city to raise the money to pay the costs of the improvements without incurring a debt within the meaning of the constitutional provision limiting municipal indebtedness. The statute need not be repeated here. It suffices to call attention to its provisions and to say that if the method prescribed by the legislature authorizing the city to execute a mortgage or trust deed upon the entire plant or a part thereof; that such “mortgage certificates” shall be secured by such mortgage or trust deed; and that “no municipal liability shall be created thereby,” it constitutes a scheme which is subject to the same infirmity as the one providing, under sec. 927 — 16, for additions and extensions to existing utilities. To carry out this scheme results in mortgaging the city’s property to secure the payment of a liability which was not a lien on the city’s property in the nature of a purchase-money mortgage, and constitutes in fact an application of the property to the payment of a corporate debt. It must therefore be held that the city of Portage cannot make the improvements ordered by the railroad commission under the provisions of secs.
But it is urged that the city of Portage can be coerced to comply with the commission’s order under the scheme of sec. 927 — 19& upon the ground that the constitutional limitation of municipal indebtedness has no application to an indebtedness of a municipality in cases where the expenditure is incurred to perform a municipal function due to an overwhelming public necessity. It must be borne in mind that the expenditure ordered and here in question does not pertain to a governmental function, but to a business the city is conducting in its proprietary capacity in which the city engages voluntarily. True, in the conduct of such business it can do nothing to the detriment of the public health, good order, and the general welfare. If it transgresses its legal duties in these respects it can be coerced to obey the law. It does not follow, however, that a city, in order to remedy an evil like the one the commission found exists in the city of Portage, can create an indebtedness in excess of the constitutional limitation. If a city can do this it would afford an easy way to create large corporate indebtedness in cases like the instant one through extensions and enlargements of a public utility of a city. We think that the municipal debt created by assuming to pay the expense of improving a city’s water plant in order to furnish its inhabitants with a reasonably adequate supply of wholesome water, as the city of Portage was directed to do by the railroad commission by the issuance of mortgage certificates as prescribed by sec. 927 — 19&, would create a debt within the constitutional provisions and cannot lawfully be incurred if it exceeds thfe prescribed five per cent, limit.
Upon the foregoing considerations it follows that the city of Portage cannot be coerced by mandamus to carry out the order of the railroad commission.
The following opinion was filed October 3, 1921:
Dissenting Opinion
(dissenting in part). With so much of the decision as dismisses the relator’s petition and quashes the alternative writ of mandamus I concur. That portion of the decision disposes of all that is squarely presented in this case. So much of the decision as suggests methods that may be pursued under either of the statutory proceedings discussed in the decision is upon questions not before us and is not necessary for the determination of this case. For that reason I shall content myself with saying that in my judgment such suggestions are an advance judicial approval of methods of avoiding the clear intent and express language of a constitutional provision, the recent amendment to which indicates the disapproval of the people of this state to there being piled up, either directly or indirectly, additional mu-, nicipal burdens or obligations when the established limitation has been reached.