City of Middletown v. City Commission of Middletown

• Decision Date: 12 November 1941
• Docket Number: 28200.,28199
• Parties: CITY OF MIDDLETOWN et al. v. CITY COMMISSION OF MIDDLETOWN et al. (two cases).
• Court: Ohio Supreme Court

37 N.E.2d 609

138 Ohio St. 596

CITY OF MIDDLETOWN et al. v. CITY COMMISSION OF MIDDLETOWN et al. (two cases).

Nos. 28199, 28200.

Supreme Court of Ohio

November 12, 1941

Syllabus by the Court.

1. Where the solicitor of a municipal corporation has instituted a suit for injunction under Section 4311, General Code, at the request of a taxpayer, and the court finds that such solicitor is not proceeding in good faith or with due diligence, the court has the inherent power to allow interested taxpayers to become intervening parties to the action, who thereupon have the same rights to plead participate in the proceedings and appeal as if they had been original parties.

2. The municipal ordinance subject to referendum within the contemplation of Section 5, Article XVIII of the Constitution of Ohio, is one which not only declares the necessity for the acquisition or construction of a public utility, but includes or is accompanied by some comprehensible statement of the general plan for financing the project.

3. A municipality issuing utility mortgage bonds within the provisions of Section 12, Article XVIII of the Constitution, may secure such bonds not only by the property acquired or constructed with the proceeds from the sale of the bonds, but also by such other municipally owned property which is a necessary part of such utility and directly connected with its operation.

4. Section 12, Article XVIII of the Constitution, is self-executing and self-sufficient, and utility mortgage bonds created and issued strictly within its terms are not affected by other parts of the Constitution or by the Uniform Bond Act (Section 2293-1 et seq., General Code).

Appeals from the Court of Appeals, Butler County.

On August 18, 1938, the city commission of the charter city of Muddletown, Ohio, passed Ordinance No. 2226, bearing the title: 'An Ordinance Declaring It Necessary for the City of Middletown, Butler County, Ohio, to Construct or Purchase a Municipal Electric Light and Power Plant Together With All the Necessary Equipment Therefor, Including [Transmission and Distribution Lines and] the Acquisition of the Necessary Land.'

So far as the record discloses, no referendum petition was filed to this ordinance.

On November 18, 1938, the Middletown city commission enacted Ordinance No. 2237, as an emergency measure, bearing the title: 'An Ordinance to Authorize the Issuance of $1,800,000 Mortgage Revenue Bonds of the City of Middletown Ohio, Under Section 12 of Article 18 of the Constitution of the State of Ohio, for the Purpose of Constructing or Purchasing a Municipal Electric Light Plant Together With All the Necessary Equipment Therefor, Including the Acquisition of the Necessary Land: To Provide a Franchise to Take Effect in the Event of Foreclosure of Said Mortgage, and to Declare an Emergency.'

Such ordinance was published the next day, November 19, 1938, and purported to become effective on that date.

Soon after the passage and publication of Ordinance No. 2237, the Cincinnati Gas & Electric Company, as a taxpayer of the city of Middletown, and Horace O. Miller, also claiming to be a taxpayer, requested the city solicitor of that municipality to bring an action to enjoin the execution of such ordinance because of alleged invalidity.

Acceding to such requests and acting under Section 4311, General Code, the city solicitor on December 2, 1938, filed a petition in the name of the municipal corporation in the Court of Common Pleas of Butler county against the city commissioners and others, praying that such commissioners be permanently enjoined from executing such ordinance, from proceeding under a written contract involving the sale of the bonds authorized by the ordinance to Van Lahr, Doll & Isphording, Inc. (at five points under par with interest at three and one-half per cent), and from issuing such bonds; and that Earl E. Grant, chairman of the city commission, and C. H. Campbell, auditor and fiscal officer of the city of Middletown, be enjoined from executing and delivering such bonds. The petition alleged that Ordinance No. 2237 was invalid because it violated the Constitution of Ohio and failed to comply with the Uniform Bond Act (Section 2293-1 et seq., General Code).

An amendment to the petition was filed on December 15, 1938, adding allegations which drew into the controversy Ordinance No. 2226, and attacked Ordinance No. 2237 in greater detail.

Both Horace O. Miller and The Cincinnati Gas & Electric Company made application to intervene as parties to the action, and, later, at the conclusion of the hearing on the application, the trial court allowed such intervention.

Horace O. Miller then filed an intervening petition, charging in effect fraud and collusion in connection with the contract for the sale of the bonds authorized by Ordinance No. 2237; that the date fixed for the maturity of the bonds violated the charter of the city of Middletown; and challenging the right of the city commissioners to attach an emergency clause to such ordinance. The Court of Common Pleas correctly found as set out in its opinion, that there was no evidence sustaining the charge of fraud and collusion.

An intervening petition was likewise filed by the Cincinnati Gas & Electric Company, attacking the validity of Ordinance No. 2237 and containing a prayer similar to the one made in the original petition.

Finally the cause came on for hearing on the petitions, the amendments thereto, answers and the evidence, including some sixty-six exhibits. The trial court entered a decree perpetually enjoining the defendants from carrying out the provisions of Ordinance No. 2237, and subsequently overruled the motion for a new trial.

In its opinion the court indicated that Ordinance No. 2237 was subject to referendum, and that the issuance of bonds thereunder in the manner provided would constitute a violation of Section 13, Article XVIII, of the Constitution, and of the Uniform Bond Act.

An appeal was taken to the Court of Appeals, where the judgment below was modified and affirmed.

By its judgment entry the Court of Appeals found that the lower court erred in allowing Horace O. Miller and the Cincinnati Gas & Electric Company to become parties to the action, and dismissed them. However, they were permitted to appear as amici curiae.

The Court of Appeals further found that Bond Ordinance No. 2237 was a valid ordinance properly passed in conformity with the Constitution (Sections 4 and 12, Article XVIII), was not affected by the Uniform Bond Act but was subject to referendum (Section 5, Article XVIII of the Constitution).

Whereupon, it was considered and adjudged 'that said ordinance being subject to referendum, any procedure under such ordinance is enjoined until such time as it is determined that any referendum if filed thereto was filed in compliance with the provisions of the Constitution and that if such referendum has been duly and legally instituted, any procedure under such ordinance should be enjoined until such time as a favorable vote has been had thereon * * *.'

Two separate appeals were filed from the judgment of the appellate court, one by the Cincinnati Gas & Electric Company 'in its own right as an intervening appellee and as a taxpayer on behalf of the city of Middletown, after demand upon and refusal by the city attorney of the city of Middletown to institute' an appeal, and the other by H. O. Miller and Elliott D. Levey 'on behalf of said city and of themselves and on behalf of all citizens, taxpayers, and electric current consumers and rate payers similarly situated.' This latter appeal was also taken after a demand had been made on the city attorney to institute an appeal and he had refused to do so. The cause was admitted to this court as of right, and motions to require the Court of Appeals to certify its record were also allowed.

Elliott D. Levey and C. W. Elliott, both of Middletown, for appellant H. O. Miller.

Peck, Shaffer, Williams & Gorman, Ernst, Cassatt & Cottle, and Calvin S. Weakley, all of Cincinnati, for appellant Cincinnati Gas & Electric Co.

Thomas M. Miller and Paul R. Gingher, both of Columbus, for appellee city commission of Middletown.

ZIMMERMAN Judge.

A majority of the court entertains the view that where the solicitor of a municipality has instituted a suit for injunction under Section 4311, General Code, at the request of a taxpayer, and the court becomes satisfied that such solicitor is not proceeding in good faith or with due diligence, the court has the inherent power to allow interested taxpayers to become intervening parties to the action, who thereupon have the same rights to plead, participate in the proceedings and appeal as if they had been original parties.

A majority of the court is also of the opinion that the trial court in the present cause rightly permitted Horace O. Miller and the Cincinnati Gas & Electric Company to become parties to the action.

The writer and Chief Justice WEYGANDT find themselves in disagreement with the majority of their associates on the above procedural question. It is their conviction that where, at the request of a taxpayer, the solicitor of a municipal corporation makes application to the proper court for an order of injunction under Section 4311, General Code, such taxpayer may not thereafter become an intervening party to the litigation with the right to shape the proceedings according to his own notions. Neither has such taxpayer, not a party, the right to appeal from an adverse judgment in the cause.

Sections 4311 and 4314, General Code are controlling. The former reads: 'The solicitor shall apply in the name of the corporation, to a court of competent jurisdiction for an order of injunction to restrain the misapplication...