Buntman v. City of Phoenix

• Decision Date: 18 April 1927
• Docket Number: Civil. 2620
• Citation: Buntman v. City of Phoenix, 32 Ariz. 18, 255 P. 490 (Ariz. 1927)
• Parties: PHILIP BUNTMAN and GEORGE O. FORD, Appellants, v. THE CITY OF PHOENIX, a Municipal Corporation, and FRANK A. JEFFERSON, LUKE W. HENDERSON, J. A. R. IRVINE, CHARLES E. MORTON, and A. L. BOEHMER, as Members of the City Commission of the City of Phoenix, Appellees
• Court: Arizona Supreme Court

255 P. 490

32 Ariz. 18

PHILIP BUNTMAN and GEORGE O. FORD, Appellants, v. THE CITY OF PHOENIX, a Municipal Corporation, and FRANK A. JEFFERSON, LUKE W. HENDERSON, J. A. R. IRVINE, CHARLES E. MORTON, and A. L. BOEHMER, as Members of the City Commission of the City of Phoenix, Appellees

Civil. No. 2620

Supreme Court of Arizona

April 18, 1927

APPEAL from a judgment of the Superior Court of the County of Maricopa.Dudley W. Windes, Judge.Affirmed.

Mr Will E. Ryan, Mr. Robert McMurchie and Messrs. Stockton &amp Perry, for Appellants.

Mr. W L. Barnum and Mr. James E. Nelson, for Appellees.

OPINION

LOCKWOOD, J.

Philip Buntman and George O. Ford, hereinafter called plaintiffs applied to the superior court of Maricopa county for an injunction forbidding the city of Phoenix, a municipal corporation, hereinafter called the city, and its commissioners, from holding an election for the purpose of submitting to the taxpaying qualified electors of said city the question of whether or not it should issue $750,000 of its serial bonds for the purpose of the reconstruction and rehabilitation of the street railway system, which was then and is now owned and operated by the city.Plaintiffs, after the formal necessary allegations of such an action, set up as the vital point of their complaint that the city was without power or authority to issue such bonds, for the reason --

"that the amount of the taxable property in said city of Phoenix, as ascertained by the last assessment for city purposes, is the sum of $49,870,521; that the present outstanding indebtedness of said city of Phoenix is $3,742,500; that said indebtedness is in excess of four per centum of said taxable property; and that said city of Phoenix is without power or authority and is forbidden by section 8, article 9, of the Constitution of Arizona, to become indebted to an amount in excess of four per centum of such taxable property for the purpose set out in this question so by said defendants proposed to be voted on at said special election for the purpose in said question stated. . . ."

Defendants filed a general demurrer to the complaint, which the court, after considering the matter, sustained, and plaintiffs having elected to stand upon their complaint, judgment was rendered that the action be dismissed, and the matter is now before us for review on plaintiffs' appeal.

There are two questions of law involved: First, whether or not the city of Phoenix is forbidden by the Constitution of the state of Arizona from incurring an indebtedness of the character and amount which it is proposed to authorize as aforesaid; and, second, even if it is not expressly so forbidden, has it affirmative authority granted whereby it may proceed to issue bonds for such purpose?We will consider these questions in their order.

Section 8, article 9, of the Constitution of Arizona, as originally adopted read as follows:

"Sec. 8.No county, city, town, school district, or other municipal corporation shall for any purpose become indebted in any manner to an amount exceeding four per centum of the taxable property in such county, city, town, school district, or other municipal corporation, without the assent of a majority of the property taxpayers, who must also in all respects be qualified electors, therein voting at an election provided by law to be held for that purpose, the value of the taxable property therein to be ascertained by the last assessment for state and county purposes, previous to incurring such indebtedness; except, that in incorporated cities and towns assessments shall be taken from the last assessment for city or town purposes; provided, further, 'that any incorporated city or town, with such assent, may be allowed to become indebted to a larger amount, but not exceeding five per centum additional, for supplying such city or town with water, artificial light, or sewers, when the works for supplying such waster, light or sewers are or shall be owned and controlled by the municipality.'"

In 1912 this was amended by adding after the second semicolon the following words:

"Provided, that under no circumstances shall any county or school district become indebted to an amount exceeding ten per centum of such taxable property, as shown by the last assessment roll thereof," -- and changing the words "five per centrum" in the last proviso of the original section to the words "fifteen per centum," and, as so amended, the section is at present a part of the Constitution.

Provisions similar in character, though differing in language, are found in almost all state Constitutions, and their purpose is always the same, to limit the amount of indebtedness which a municipality might otherwise incur through the acts of a corrupt or ignorant governing body, or the negligence and lack of farsightedness of the taxpayers themselves.But, as no two Constitutions have exactly the same language, the specific interpretation will depend upon the general principles of reason applied to the particular proviso.

Our constitutional provision above quoted is reasonably susceptible of two constructions.The first is that the municipality may incur an indebtedness up to four per cent of its assessed valuation for any legitimate city purpose; that all indebtedness of every nature, however incurred, must be charged against the four per cent until that limit is reached; and that so long as the total indebtedness of all classes amounts to four per cent, no increase can be had for any purpose whatever, except for water, artificial light and sewers, and for them only of an additional fifteen per cent and by the assent of the taxpaying electors, thus making the maximum indebtedness for all purposes nineteen per cent of the assessed valuation.A somewhat similar constitutional provision was before the Supreme Court of Montana in the case of Butler v. Andrus,35 Mont. 575, 90 P. 785, and the construction above set forth followed.

The second is that, while the indebtedness of the city can in no case exceed a total of nineteen per cent it is divided into two separate classes, and the class into which any particular indebtedness must fall is determined by two things -- the manner in which it is incurred, and the purpose thereof; that all expenditures for water, light and sewers, authorized by a vote of the taxpaying electors, fall into the fifteen per cent class under all circumstances; that only expenditures which do not possess these two characteristics are charged to the four per cent class; and that these two separate classes may fluctuate up and down, the one independent of the other, with the sole limitation that the one must not at any one time exceed four per cent while the maximum of the other is fifteen.The Supreme Court of the state of Washington has taken this view of a constitutional limitation of this class in the case of Austin v. City of Seattle,2 Wash. 667, 27 P. 557.

We are of the opinion that the latter construction is more consonant with reason and the presumable spirit and purpose of our Constitution.The construction first set forth would mean that, should a city incur an indebtedness of four per cent for the special enterprises set forth in the second proviso it could never become indebted for any other legitimate municipal purpose unless and until the total indebtedness, including that for water, light, and sewer, was reduced below the four per cent.Such a construction would greatly limit and hamper our municipalities in the performance of their legitimate duties.A municipal water plant alone will generally cost more than four per cent of the assessed valuation of a city.That this was realized by the people is shown by the fact that the five per cent additional allowed by the original Constitution was promptly raised to fifteen per cent.If we are to construe section 8, supra, in accordance with the first theory, it would mean, in effect, that a city which put in a municipal water plant by that act surrendered the privilege of becoming indebted for any other purpose except lights and sewers; that parks, libraries, sanitary and police protection, and matters of similar nature could only be taken care of out of the current revenue.A city might have incurred an indebtedness up to the four per cent limit for general purposes, and thereafter have voted bonds for a water plant for fifteen per cent additional.By careful economy it might have used its current revenues to pay off the original bond...