Asia v. City of Seattle

• Decision Date: 29 April 1922
• Docket Number: 17132.
• Citation: 206 P. 366,119 Wash. 674
• Parties: ASIA et al. v. CITY OF SEATTLE et al.
• Court: Washington Supreme Court

206 P. 366

119 Wash. 674

ASIA et al. v. CITY OF SEATTLE et al.

No. 17132.

Supreme Court of Washington, En Banc.

April 29, 1922

Appeal from Superior Court, King County; J. T. Ronald, Judge.

Action by S. B. Asia and others against the City of Seattle, a municipal corporation, and others. From an adverse judgment the plaintiffs appeal. Reversed, and remanded.

Fullerton J., dissenting.

Tucker & Hyland, Preston, Thorgrimson & Turner, Chadwick, McMicken Ramsey & Rupp, all of Seattle, for appellants.

James B. Howe, Hugh A. Tait, John H. Powell, all of Seattle, amici curiae.

Walter F. Meier, Corp. Counsel, Thomas J. L. Kennedy and Charles T Donworth, Assts. Corp. Counsel, and Robert H. Evans, Sp. Asst. Corp. Counsel, all of Seattle, for respondents.

TOLMAN, J.

Appellants being residents and taxpayers of the city of Seattle, seek by this action to enjoin the city and its officers from the use of any of its general funds in the operation and maintenance of the street railway system which it acquired by purchase from the Puget Sound Light & Power Company, and from levying any tax for the purpose indicated. From a judgment denying the relief sought, after a trial on the merits, the case is brought here for review on appeal.

The matters involved all grow out of, and are the direct aftermath of, the conditions set forth and discussed in Twichell v. Seattle, 106 Wash. 32, 179 P. 127, and reference should be had to that case for an understanding of this, and the opinion there should be read in connection with the opinion here.

This case was advanced here because of its importance to the city and its taxpayers. The record is voluminous; we have been favored with no abstract thereof, and withal, are expected to give an early decision. Under these conditions, we find it too burdensome to attempt to give an orderly and detailed statement of all the facts involved, but desire it to be understood that we have carefully considered, and given due weight to such facts, disputed and undisputed, as materially affect the issues.

Following the decision in the Twichell Case, the city completed the purchase of the street railway system under the terms therein indicated, went into possession, and proceeded to operate it. There has developed from the operation a condition which establishes beyond cavil that the city council was in error when by ordinance No. 39025, considered in the Twichell Case, it declared that in its judgment and in the judgment of the corporate authorities the gross revenues from such operation would be sufficient to meet all expenses of operation and maintenance, provide for revenues previously pledged, and permit the setting aside in a special fund of amounts sufficient to meet the interest and principal of the bonds given in payment, according to the terms agreed upon; a declaration which we were then compelled to accept at its face value, and upon which the result in the Twichell Case is based. It now appears that, aside from other deficits more or less disputed, the city, in September, 1920, in order to meet the interest upon the bonds then due, overdrew the street railway fund, which overdraft continued into November, 1920, when it exceeded $500,000, and in December, 1920, to help meet this overdraft, the city definitely and specifically borrowed $83,000 from its general fund, which was not repaid until nearly a year later, and then without interest. Such was the condition at the time this action was commenced, and that condition, if the use of the general fund for such a purpose be illegal, warranted the intervention of a court of equity. Subsequent repayment will not stay the hand of the court, especially where, as here, the city asserts the right to repeat the operation whenever it may see fit, and to pay operating and maintenance charges out of its general fund, or out of funds raised by general taxation, if it elects so to do.

The question then is, May the city voluntarily or involuntarily encroach upon its general fund, or otherwise place upon the taxpayers the burden of meeting deficits of any kind incurred by reason of the carrying out of the plan of purchase or the operation and maintenance of the system thereunder?

As recited in the Twichell Case, Rem. Code, § 8005, gives to the city the right to acquire, maintain, and operate street railways. Section 8006 requires the submission of any such proposition to the voters, except in certain cases where no general indebtedness is to be incurred. Section 8008 reads as follows:

'Whenever the qualified voters of any such city or town shall have heretofore adopted or shall hereafter adopt a proposition for any public utility as heretofore provided and either no general indebtedness shall have been authorized or the common council or other corporate authorities shall not desire to incur a general indebtedness, and whenever the common council or other corporate authorities of any such city or town shall be authorized to exercise any of the powers conferred by section 8005 hereof without submitting any proposition as provided in subdivision first and second of section 8006 hereof, the common council or other corporate authorities shall have power to create a special fund or funds for the sole purpose of defraying the cost of such public utility or addition, betterment or extension thereto into which special fund or funds the common council or other corporate authorities of such city or town may obligate and bind the city or town to set aside and pay a fixed proportion of the gross revenues of such public utility, or any fixed amount out of and not exceeding a fixed proportion of such revenues, or a fixed amount without regard to any fixed proportion, and to issue and sell bonds or warrants bearing interest not exceeding six per centum per annum, payable semiannually, executed in such manner and payable at such times and places as the common council or other corporate authorities of such city or town shall determine, but such bonds or warrants and the interest thereon shall be payable only out of such special fund or funds. In creating any such special fund or funds the common council or other corporate authorities of such city or town shall have due regard to the cost of operation and maintenance of the plant or system as constructed or added to, and to any proportion or part of the revenue previously pledged as a fund for the payment of bonds, warrants, or other indebtedness, and shall not set aside into such special fund a greater amount or proportion of the revenue and proceeds than in their judgment will be available over and above such cost of maintenance and operation and the amount or proportion, if any, of the revenue so previously pledged. Any such bonds or warrants and interest thereon issued against any such fund as herein provided shall be a valid claim of the holder thereof only as against the said special fund and its fixed proportion or amount of the revenue pledged to such fund, and shall not constitute an indebtedness of such city or town within the meaning of the constitutional provisions and limitations. Each such bond or warrant shall state upon its face that it is payable from a special fund, naming the said fund and the ordinance creating it. Said bonds and warrants shall be sold in such manner as the corporate authorities shall deem for the best interests of the city or town, and the corporate authorities may provide in any contract for the construction

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