Bell v. Waynesboro Borough
| Decision Date | 26 March 1900 |
| Docket Number | 77 |
| Citation | 45 A. 930,195 Pa. 299 |
| Parties | Bell v. Waynesboro Borough |
| Court | Pennsylvania Supreme Court |
Argued March 6, 1900
Appeal, No. 77, Jan. T., 1900, by plaintiff, from decree of C.P. Franklin Co., on bill in equity, in case of Bell v Waynesboro Borough. Affirmed.
Bill in equity for an injunction to restrain the issue of borough bonds.
The facts appear by the opinion of JOHN STEWART, P.J., which was as follows:
This case was heard on bill and answer. The material facts are as follows:
On November 7, 1899, the qualified electors of the borough of Waynesboro, at an election duly called and regularly held gave their assent to a proposed increase of the borough indebtedness in the sum of $21,000, to be expended as follows:
Five thousand eight hundred dollars to be used in refunding a like amount of outstanding bonds of an earlier issue, and the balance in funding a floating indebtedness of the borough.
The following exhibit, published in advance of said election shows the financial condition of the borough at the time:
Amount of present bonded debt
$40,000
Amount authorized but not yet issued
6,000
Amount of present floating debt
15,200
Total
$61,200
Less amount in treasury
$150 00
Less uncollected taxes
2,137 00
Less taxes applicable within one year
4,971 00
7,258
$53,942
Amount of last assessed valuation
$1,104,594
Amount of proposed increase of debt
21,000
Percentage of increase of debt
.019
The indebtedness of $15,000, indicated under the item "present floating debt," was incurred when the assessed valuation next preceding was $791,404. It made the aggregate debt of the borough exceed, at that time, two per cent of the assessed valuation. Being unauthorized by the vote of the electors, it was without validity, at least to the extent of the excess.
As to the other item to which the money voted was to be applied, the $5,800 of outstanding bonds, these were some unpaid bonds that had been issued in 1889 by the authorities. No vote upon this issue was required, for the limit was not then reached; but the validity of these bonds is now challenged, on the ground that, when said bonds were originally issued or authorized, no tax had been actually levied or assessed for their payment, as required by article 9, section 10 of the constitution. It is admitted, however, that the statement filed by the borough authorities in the office of the clerk of the quarter sessions court, as required by law, in advance of the issue, declares unqualifiedly that "the amount of tax levied for the payment of said indebtedness is $1,200," and we have the further fact that, beginning with the spring of 1890, a tax each year equal to eight per cent of the principal on entire issue of said bonds, has been assessed and levied for the purpose of liquidating the principal and interest thereof, as required by the constitution.
Because of the unauthorized increase of the floating debt of $15,000, and the admitted failure of the authorities before issuing the bonds, of which $5,800 is unpaid remainder, to assess and levy a tax for their redemption, the bill asks that the burgess and town council be enjoined from issuing bonds of the borough in the sum of $21,000, or in any sum whatever, pursuant to the supposed authority granted by the vote of the electors on November 7, 1899. The position taken by the complainant is, that both the floating debt, which it is proposed to fund, and the bonds, which it is proposed to refund, are invalid and not enforceable against the borough, for the reasons above stated.
First, with respect to the floating debt. We entertain no doubt whatever that the power of council to create debt, without a vote of the electors authorizing it, was exhausted when the aggregate indebtedness reached the two per cent limit. So long as the appeal of the City of Wilkes-Barre, 109 Pa. 559, remains as an authority, this construction of the constitutional provision must prevail. That case is followed by the recent one of Pepper v. City of Philadelphia, 181 Pa. 566, to the same effect.
It follows that this floating debt, which then existed, being in excess of the two per cent limit, was illegally created and therefore, invalid. But it was not irremediably so. It was invalid only because it lacked the assent of the electors of the borough. It is not a case of total want of power. To the borough authorities is committed both the right and power to contract indebtedness in amount not exceeding seven per cent of the total assessed valuation of the taxable property therein, the power, however, to be exercised with respect to any excess over the two per cent limit only with the express consent of the electors. This latter provision is intended to regulate the exercise of the power. It is not the consent of the electors that creates the debt. It is the act of the borough authorities, and after consent given, it still rests with them to say whether it shall be contracted. And it is not a regulation that calls for any compliance on the part of the electors. It is not imposed on them, but for their protection it is imposed on their agents. The invalidity of any action taken in disregard of such regulation, is full protection to the electors; but it is a protection that they need not avail themselves of unless they are so minded. As they could have authorized the debt in the first instance by giving their agents power to contract it, they unquestionably have the right to affirm and ratify it when contracted without their previous assent, by like action on their part as was required to give the power originally. This doctrine is fully recognized by Dillon in his work on Municipal Corporations, vol. 1, page 640, and that too in connection with this very matter of municipal indebtedness. It results from the elementary rule that, a ratification of a prior act or contract, may be made by any one in whose behalf the act or...
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