Butler v. City of Ashland

• Decision Date: 13 January 1925
• Citation: 113 Or. 174,232 P. 655
• Parties: BUTLER v. CITY OF ASHLAND ET AL.
• Court: Oregon Supreme Court

232 P. 655

113 Or. 174

BUTLER v. CITY OF ASHLAND ET AL.

Supreme Court of Oregon

January 13, 1925

In Bank.

Appeal from Circuit Court, Jackson County; C. M. Thomas, Judge.

Suit by G. S. Butler against the City of Ashland, a municipal corporation, and others. Judgment for defendants, and plaintiff appeals. Affirmed.

See also, 231 P. 155.

This suit was instituted for the purpose of enjoining the defendant, city of Ashland, from issuing its certificates of indebtedness in the sum of $36,000 in payment of 600 acre-feet of water agreed to be purchased by the defendant city from the defendant Talent irrigation district. The purchase was authorized by a contract theretofore entered into between the defendant city and the defendant irrigation district. This contract was construed and held valid by this court in an opinion in Butler & Thompson v. Ashland, 109 Or. 683, 222 P. 346. Under the terms of that contract however, it is provided, among other things, that the mayor and common council--

"should not enter into or carry out the provisions of said contract without first having an election, giving the electors of the city a right to vote for an amendment to the city charter authorizing the incurring of said debt and the issuing of said notes."

Subsequent to executing that contract the city had in its treasury $20,000 belonging to the water fund, and what its council believed to be sufficient income to meet the indebtedness to be incurred by the purchase of the 600 acre-feet of water without the necessity of issuing long time notes, bonds, or other evidence of indebtedness against the city. The parties to the contract therefore agreed that the city of Ashland should issue its certificates of indebtedness, limiting the liability of the city of Ashland to the revenues received by it from the sale of water, and the irrigation district agreed to accept such certificates of indebtedness, and to look exclusively and solely to the revenues to be received by the city from the sale of water. In accordance with this agreement, a contract was entered into between the city of Ashland and the irrigation district, substantially in accordance with the terms of the contract construed and determined to be valid in Butler & Thompson v. City of Ashland, above, the only difference being that, instead of issuing notes or other evidence of indebtedness against the city, the certificates against the revenues from the sale of water were agreed upon. No election, authorizing a contract as provided in the original contract referred to, was authorized or held. The contention of the plaintiff in this appeal is that the council had not the power to authorize the issuance of the certificates of indebtedness without direct authority from the people of the municipality, that the certificates of indebtedness, authorized by the ordinance and contract assailed in this appeal, will exceed the limitation of authorized indebtedness prescribed in the charter pursuant to article 11, § 5, of the state Constitution.

The charter of the city of Ashland, as amended by the act of the Legislature, January 31, 1903 (Sp. Laws 1903, p. 185), after defining the boundaries of the city of Ashland, prescribes among other things, the following:

"And the present and future residents of said district shall be and are hereby constituted a municipal corporation, by the name of 'the city of Ashland,' and by that name may sue, and be sued, plead and be impleaded, prosecute and defend in all courts of justice, and in all actions, suits or proceedings whatsoever; * * * may purchase, or acquire by the exercise of eminent domain, lease, hold, or receive property, real and personal, within and beyond the limits of the city, for the construction and maintenance of water works to supply the city with water; * * * and for such purpose or purposes may take private property within the limits of the said city for public use, and within and beyond the limits of the said city for the purpose of supplying it with water; * * * provided, that any and all waterworks and water rights now owned, or which may hereafter be acquired by the said city, or any property now owned, or which may hereafter be acquired by said city for the purpose of supplying the inhabitants thereof with water, shall never be rented, leased, sold, or otherwise disposed of; nor shall said city ever grant any franchise to any person or corporation for the purpose of supplying the inhabitants of said city with water, but the right to furnish the inhabitants thereof with water shall forever be vested in the city of Ashland, with the full power and authority to condemn, purchase, appropriate, and own the water of any stream, or spring, for the purpose of supplying the water system, and to do any and all things necessary, proper, or convenient in the premises to give the most efficient and effectual water service to the said city without in any way impairing its right to any existing water, water power, or water right now owned by it, or which may hereafter be owned by the said city; and may make any and all arrangements and ordinances deemed by the city council of the said city of Ashland pertinent and proper for the preservation and security of such water, and the effectiveness of such water system: Provided, the uses and appropriations heretofore made to and by said city, and the water rights heretofore purchased by said city shall be and the same are hereby vested in said municipality, with the right to exact and collect compensation of the users of water from such water system: Provided further, that all revenues arising from the sale of water, water power, or the collection of water rents shall be set apart as a fund from which to pay--first, all needful expenses in repairing, renewing, and extending said water system as necessity therefor shall arise, and for the payment of the interest on the water bonds of the city of Ashland as the same shall accrue; and, second, of the residue of such water rents and revenues a sinking fund shall be created, to be kept inviolate, and to be applied in the discharge of the water bonds of said city when the same shall become due, and said funds shall be used for no other purpose. The city council shall, at its first regular meeting after the adoption of this provision, enact suitable ordinances for the purpose of carrying the same into effect."

This charter was amended at a special election held in the city of Ashland for that purpose on the 12th of February, 1915. No material change was made in the language above quoted. The city charter further limits the amount of indebtedness to be contracted by the council to the sum of $5,000, and further provides that...