City of Denver v. Hubbard

• Decision Date: 14 April 1902
• Citation: 17 Colo.App. 346,68 P. 993
• Parties: CITY OF DENVER et al. v. HUBBARD.
• Court: Colorado Court of Appeals

68 P. 993

17 Colo.App. 346

CITY OF DENVER et al. v. HUBBARD.

Court of Appeals of Colorado

April 14, 1902

Appeal from district court, Arapahoe county.

Bill by Perry L. Hubbard against the city of Denver and others to restrain the carrying into effect of a certain ordinance and contract. There was a decree in favor of the complainant, and defendants appeal. Reversed.

H.M. Orahood and H.L. Ritter, for appellant City of Denver.

Henry J. O'Bryan and H. Riddell, for appellant Lacombe.

Yeaman & Gove, for appellee.

WILSON P.J.

On and prior to February 14, 1901, there was in the city of Denver only one electric light and power plant capable of supplying an electric current for the lighting of the streets of the city, the homes of its inhabitants, and for commercial purposes generally. Up to January, 1900, this company, under contract with the city, had lighted the streets, receiving therefor the sum of $100 per annum for each are light. Subsequent to this time, and up to the completion of the new plant hereinafter mentioned, the company had furnished such street lighting, but not under contract with the city, and had been receiving therefor the sum of $90 per annum for each arc light. On February 14th, before mentioned, the council of the defendant city passed an ordinance whereby Charles F Lacombe, one of appellants, and his assigns, were granted the right and privilege to construct, maintain, and operate in the city a street arc electric light and power plant, and also a commercial electric light and power plant, for the purpose of producing and transmitting an electric current for lighting, heating, and power purposes, for use of the said city of Denver, and residents and citizens thereof, and to erect poles, string wires, etc., along the streets and alleys of the said city for this purpose. Specifications and conditions were inserted as to where and how the plant should be constructed, its kind, capacity, etc. The ordinance further provided for, and upon its acceptance by Lacombe and his assigns was, a contract between the city and Lacombe for lighting the streets, and a similar contract other than the one arising from the acceptance of the ordinance, was executed between the city and Lacombe. The construction of the arc lighting plant was to be completed within 90 days and of the commercial plant within 4 months, from the passage of the ordinance. The contract was for the lighting of the streets of the city for a period of 10 years, at the price of $7.50 per month, or $90 per annum, for each arc light, and for such additional arc lights in excess of 1,000 as might be required by the city during the continuance of the contract the sum of $70 per year per arc light. The city covenanted that it would use not less than 1,000 arc lights. The ordinance and contract reserved the right to the city to purchase the arc lighting plant at the end of any year at a constantly reducing price, which was fixed for each year in the contract, and it was also provided that the plant should not be sold to or combine with any other electric lighting plant in the city. With reference to the commercial plant, a maximum rate to be charged private consumers, residences, business houses, etc., was fixed, and it was provided that the city might purchase this plant at the end of five-year periods. at a price to be fixed in a manner provided in the ordinance. It was further agreed that Lacombe and his assigns should pay into the city treasury 3 per cent. per annum of the gross revenues that might be received from the commercial plant. In an agreed statement of facts, it was stipulated that the city had not at any time appropriated a definite sum of money, or any amount of money whatever, for the liquidation of any liability which it might incur by reason of such ordinance or contract, unless the ordinance itself operated as an appropriation, except by the passage of the annual appropriation ordinance of the city on January 17, 1901, which contained the following provision: "Electric Light and Gas. There is hereby appropriated to the electric light and gas department, the sum of ninety thousand dollars ($90,000) for the public lighting of the streets of the city of Denver by arc electric lights of two thousand standard candle power, running all night, every night in the year, and also for the payment of gas and electric light bills in the different city buildings, outside of the fire and police departments: provided, that not more than one-quarter of said amount shall be expended in any one quarter of the year, unless authorized expressly by the city council: provided, further, that not more than ninety dollars each per annum shall be paid for arc electric lights of two thousand standard candle power each. And the city council hereby reserves the right to direct the expenditure of the amount hereby appropriated as said council from time to time determine." It was further stipulated that neither the contract with Lacombe and his assigns, nor the expense to the city resulting therefrom, was rendered necessary by any casualty, accident, or unforeseen contingency happening after the passage of the last annual appropriation ordinance by the city council of the city of Denver, and that neither the ordinance nor the contract had ever been recommended or approved by the board of public works, nor had the said board of public works, nor the city, nor any officer nor department thereof, in any manner advertised for bids for lighting the streets and public grounds of the city. It was further stipulated that the ordinance was passed and the contract entered into by the city in order to afford the city and its inhabitants the benefit of competition in the price of electric light and power between the old company and the proposed new company, and that it was impossible to secure the benefits of such competition and the erection of a competing plant without entering into the contract set forth in the ordinance with Lacombe and his assigns, or some other company, corporation, or person. Also that since the commencement of this action the old company had, for the purpose of meeting the competition afforded by defendant Lacombe and his assigns, materially reduced the rates charged by it for commercial lighting. It was also agreed that at the time of the commencement of this action the amount of the appropriation for the lighting of the streets and buildings of the city in the annual appropriation ordinance of January 17, 1901, remained unexpended, with the exception of about $11,000 paid out for lighting subsequent to January 1, 1901. The plaintiff, a taxpayer of the city, commenced this suit February 16, 1901, assailing the validity of the ordinance and contract, and praying an injunction restraining the defendants from carrying it into effect. The decree of the court granted the relief substantially as prayed for, the contract being held null and void, and from this defendants appeal.

To establish the invalidity of this ordinance and contract, the grounds chiefly relied upon are: (1) That it was in violation of and prohibited by the constitution of the state; (2) that it was and is prohibited by the charter of the city of Denver. There are some other objections which possibly may not in terms come strictly within these two grounds, but they will be adverted to and considered during the course of this opinion.

1. The constitutional objection is based upon the provision of the state constitution limiting the extent and amount of municipal indebtedness, it being claimed that this contract would operate to create a municipal indebtedness in excess of the constitutional limit. Const. art. 11, § 8. It was stipulated that at the time when the contract was entered into the indebtedness of the city had not reached the constitutional limit by the sum of $225,000. If, therefore the contract created an indebtedness such as was embraced within the constitutional inhibition, and such indebtedness was for the aggregate amount of the total minimum payments to be made during the 10-year life of the contract, to wit, the sum of $900,000, it is apparent that the constitutional limitation would, of course, be exceeded. If, however, even though it be conceded that the contract did create a debt within the meaning of the constitution, but the debt was only in the amount to be paid in any one year, to wit, $90,000, then the indebtedness so created would not exceed the constitutional limitation. There is much force in the contention that a contract like this does not create a debt within the meaning of the constitution, and that no debt exists or comes into being until after the expiration of a period fixed in the contract for payment, and this is the view taken by many highly respectable authorities. It is not necessary, however, for the determination of this appeal, that this question should be considered and definitely passed upon. It is immaterial, for the purposes of this case, how that question may be settled, because, if the mere execution of the contract created a debt at all within the purview of this constitutional provision, the extent of the debt was only the amount of the annual payment provided for, which is $90,000, and hence it was clearly and safely within the prescribed constitutional limitation. This doctrine, which has been much discussed and frequently passed upon, is, as applied to this class of cases, founded upon sound reason and principle, and is supported by an overwhelming weight of authority. We cite in support of it a number of the leading and best-considered authorities, but by no means all. City of Walla Walla v. Walla Walla Water Co., 172 U.S. 19, 19 S.Ct. 77, 43 L.Ed. 341; Saleno v. City of Neosho, 127 Mo. 639, 30 S.W. 190, 27 L.R.A. 769, 48...