City of Spartanburg v. Blalock, 16730

• Decision Date: 01 April 1953
• Docket Number: No. 16730,16730
• Citation: 75 S.E.2d 361,223 S.C. 252
• Court: South Carolina Supreme Court
• Parties: CITY OF SPARTANBURG v. BLALOCK et al.

Page 361

75 S.E.2d 361

223 S.C. 252

CITY OF SPARTANBURG v. BLALOCK et al.

No. 16730.

Supreme Court of South Carolina.

April 1, 1953.

Holcombe & Bomar and Sam R. Watt, Spartanburg, Huger Sinkler, Charleston, for appellant.

E. W. Johnson, Spartanburg, for respondent.

OXNER, Justice.

This action was brought by the City of Spartanburg for a declaratory judgment with respect to the power of City Council to fix water rates, dispose of any unpledged revenue, and otherwise manage and control the fiscal affairs of the waterworks system of the City of Spartanburg. In another cause of action, the Court is asked to determine the validity of certain policies and practices followed by the Commissioners of Public Works. Named as defendants were the Commissioners, te Secretary and Treasurer of the Spartanburg Waterworks and its Superintendent, and also the Citizens and Southern National Bank. The last named defendant is the custodian of certain waterworks funds, but is not interested in the controversy and was joined as a party solely in order that it might be bound and protected by any judgment rendered. The contest is in reality between the City Council of Spartanburg and the Commissioners of Public Works.

The case was heard by the Court below on the facts stated in the pleadings. It appears that in 1907, pursuant to the authority contained in Article 8, Section 5 of the Constitution, as implemented by Act No. 39 of the Acts of 1896, 22 St. at L. 83, the City of Spartanburg, after a favorable election, acquired its water system and thereafter issued bonds to pay for it. In 1908, as provided by the Statute of 1896, a Board of Commissioners of Public Works was elected. Since that time the waterworks system of Spartanburg has been continuously operated, managed and controlled by the Commissioners of Public Works, who have disbursed the proceeds of all bonds issued for water purposes, fixed the water rates, and otherwise directed the fiscal affairs.

In 1938, it was decided to make improvements and additions to the water system at an estimated cost of $625,000. The Federal Government was then following a policy of making outright grants to defray a portion of the cost of such a project. A grant of 45% was obtained for this undertaking. After making allowance for same and the use of certain surplus funds, it became necessary to borrow the sum of $300,000, which was done under the terms of Act No. 299 of the Acts of 1933, 38 St. at L. 411.

The City Council contends that as long as any revenue bonds issued in 1938 remain outstanding, it has the sole power and authority, under the terms of the Act of 1933, to prescribe the water rates, to determine the respective amounts that should be paid into the various funds required to be set aside by the 1933 Act, to dispose of any revenue remaining, and to otherwise manage and control the financial affairs of the waterworks system.

The Commissioners assert that the 1933 Act constitutes merely a vehicle by which a municipality or other political subdivision might issue and sell revenue bonds, and that this act can, and should be, harmonized with the Act of 1896, under which the Commissioners have heretofore controlled and managed the waterworks system, by leaving the powers previously vested in the Commissioners unimpaired so long as the covenants and contractual obligations made on behalf of the municipality with the bondholders, as required by the 1933 act, were fulfilled.

The Court below, after stating that many of the provisions in the Act of 1896 were in conflict and could not be reconciled with certain provisions in the Act of 1933, sustained the foregoing contentions made by the City Council, and further held that some of the challenged practices and expenditures made by the Commissioners were ultra vires. From this order, the Commissioners of Public Works have appealed.

It is apparent from the foregoing statement that the answer to the principal question presented on this appeal depends upon the construction which should be given to (1) Act No. 39 of the Acts of 1896, 22 St. at L. 83, which, with amendments, is now embodied in Sections 7280, 7281, 7283, 7284 and 7293 of the 1942 Code; and (2) Act No. 299 of the 1933 Acts of the General Assembly, 38 St. at L. 411, which, with amendments, now constitutes Chapter 187, Volume 4 of the Code of 1942. These two acts, including the amendments, will hereinafter for convenience be referred to as the Act of 1896 and the Act of 1933. A detailed review of these statutes would unduly lengthen this opinion. We shall only briefly summarize the portions pertinent to this controversy.

The Act of 1896 authorizes cities and towns to issue bonds for the construction and operation of waterworks, if approved at an election held for that purpose. The bonds so issued are to be paid by an ad valorem tax. It further provides that at the election on the question of the issuance of bonds, there shall also be elected three commissioners of public works, who shall be vested with the power to construct and operate such waterworks and 'shall have full control and management of same.' The commissioners are further empowered to prescribe the rates and charges to be made for the use of water. The proceeds of any bonds issued are required to be turned over to the commissioners to be disbursed by them for the purposes above mentioned.

The foregoing act has been amended in a number of particulars. Among these amendments is a requirement that the board of commissioners shall each month make a full statement to the city council of their receipts and disbursements during the preceding month, and shall incur no indebtedness without the concurrence of that body.

In City of Union v. Sartor, 91 S.C. 248, 74 S.E. 496, the Court was called upon to determine the legal status and powers of commissioners of public works and their relation to the municipality and to the city council. There were several views expressed in the opinions, but that of Mr. Justice Woods, concurred in by Mr. Justice Hydrick, appears to be the one followed by this Court in subsequent decisions, including the recent case of Welling v. Clinton Newberry natural gas authority, 221 S.C. 417, 71 S.E.2d 7. That distinguished Jurist concluded (1) that the city council is not the municipality, but merely an agency of the municipality, having no authority except that conferred by the statute, either expressly or by necessary implication; (2) that the city council is not expressly given any authority or power in the management of municipal waterworks, and no such authority can be implied because the General Assembly denied the city council such power by conferring it on the board of commissioners of public works; (3) that the board of commissioners is not in any sense a separate corporation but a mere municipal agency, through whose management and control the General Assembly has required that the municipality shall operate and manage its waterworks; (4) that the power conferred by the statute on the board of commissioners includes all powers necessarily incident to the operation and management of the waterworks, including the power to fix rates for the use of water, which must be reasonable and free from unfair discrimination; and (5) that the manifest purpose of the statutory requirement that the board of commissioners shall make a full statement monthly to the city council of receipts and disbursements was not only to provide a safeguard against official misconduct, but to enable the city council to scrutinize the account and object to excessive charges.

Under the construction given the 1896 statute in the Sartor case, it would seem clear that the full control and management of the waterworks system of Spartanburg, including the power to fix rates and to generally determine the fiscal policies to be followed, was vested in the Board of Commissioners. Was this power divested by the Act of 1933, and, if not, to what extent, if any, was it restricted or impaired?

In construing the 1933 Act, it is proper to consider the history of the period in which it was passed. Greenville Baseball, Inc., v. Bearden, Sheriff, 200 S.C. 363, 20 S.E.2d 813. We were then in the midst of a severe depression. Unemployment was widespread. There was a crisis in our economy. The Federal Government sought to alleviate this condition by encouraging public works, and made liberal grants for this purpose. The reluctance of the taxpayers to further burden themselves by the issuance of general obligation bonds was realized. Then, too, this method of financing in many instances was cumbersome and time consuming. Many municipalities and counties had incurred bonded indebtedness up to the maximum permitted by the Constitution. To enable the states, counties, cities and other units of government to raise money for the purpose of supplementing Federal grants, a comparatively new method of financing was adopted whereby bonds issued for public projects would be secured solely by the revenue to be derived from the project undertaken. It is well known that proposed bills for this purpose were frequently prepared in Washington and enacted hurriedly by the states with little or no effort made toward harmonizing or integrating the proposed legislation with existing statutes. In this connection, it may be of interest to note that during the 1933 session, three other acts similar to Act No. 299 were passed by the General Assembly. See Acts Nos. 106, 119, and 236 of the Acts of 1933. It clearly appears that the act now under consideration was passed in furtherance of the foregoing purpose, but any doubt thereabout was completely removed by an amendment made in 1934, 38 St. at L. 1543, wherein it was stated that the intention of the act was to enable the borrower 'to qualify for the securing of the loan available from the Public Works Administration of the Federal Government and any other right, privilege or immunity granted by any Act...