City of Stamford v. Town of Stamford

• Decision Date: 04 May 1928
• Citation: 107 Conn. 596,141 A. 891
• Court: Connecticut Supreme Court
• Parties: CITY OF STAMFORD v. TOWN OF STAMFORD.

141 A. 891

107 Conn. 596

CITY OF STAMFORD v. TOWN OF STAMFORD.

Supreme Court of Errors of Connecticut.

May 4, 1928

Case Reserved from Superior Court, Fairfield County; John Richards Booth, Judge.

Action by the City of Stamford against the Town of Stamford for a declaratory judgment, settling and determining questions relating to the powers and limitations of the parties respectively, pertaining to the issuance of bonds. Reserved by the court on an agreed statement of facts for advice. Interrogatories answered.

Action for a declaratory judgment settling and determining questions relating to the powers and limitations of the parties respectively, pertaining to the issuance of bonds, brought to the superior court in Fairfield county and reserved by the court, upon an agreed statement of facts, for the advice of this court.

J Walter Madigan, of Stamford, for plaintiff.

Thomas J. Ryle, of Stamford, for defendant.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS, JJ.

HINMAN, J.

The determinative facts upon which the questions submitted arise are as follows: The town of Stamford and the city of Stamford are municipal corporations. The city of Stamford is located within the town, but the territorial limits of the town and the city are not coterminous, the area of the city being approximately 24 per cent. of the area of the town, and the population of the city is about 80 per cent. of the combined population of the town and city. The town and the city are separate and independent political entities, and, as such, have separate and distinct forms of government, offices, and officials, the town being vested with the powers, duties, and functions of constructing, equipping, and maintaining the schools, charities, and bridges in the town, both inside and outside the city limits, in addition to its general functions of government outside the city limits, and the city being vested with the powers, duties, and functions of constructing, equipping, and maintaining the highways, sewers, drains, police and fire departments, sanitation and health functions of government within the city limits.

The grand list of the town as of October 1, 1926 (exclusive of tax exempt property), was $106,047,624. The total taxable property or grand list of the city (exclusive of tax exempt property) was $86,704,168. Tax exempt property located within the town, not including real estate owned by the United States and the state of Connecticut, was of the value of $8,991,820, and such tax exempt property to the amount of $8,497,488, was located within the city.

The town of Stamford has issued bonds in the amount of $3,608,000, of which bonds approximately 80 per cent. pertain to its exercise of its functions of government exclusively within the confines of the city. The city has issued bonds in the amount of $1,999,000, representing about 02.305 per centum of the grand list of the city, excluding the amount of tax exempt property located therein.

Sinking funds of the town, set aside for the redemption of outstanding bond obligations, amount to $309,954.56, and sinking funds of the city, set aside for the redemption of bond obligations of the city, amount to $329,381.60.

The town, by vote, has duly authorized the issue of " serial notes" to the amount of $345,000, such notes to be of approximately $50,000 each, as the circumstances may require, each of which shall bear a rate of interest not to exceed 5 per cent. per annum, and shall be severally payable one, two, three, four, five, six, and seven years after the respective date or dates.

The town is now engaged in the construction of a high school, and it is necessary to issue the serial notes described above in order to finance and pay for such construction, and, in addition thereto, it will be necessary for the town to issue bonds for an additional sum of at least $250,000 for the purpose of finishing the construction and equipping of the high school and grading. The city desires to immediately prosecute certain public improvements, and to properly finance such improvements it is necessary to issue bonds.

The questions upon which advice is desired are, briefly stated, as follows:

(1) Is the city of Stamford a town or consolidated town and city, or a political or territorial division thereof, within the meaning of chapter 162 of the Public Acts of 1925?

(2) May the town of Stamford, by virtue of chapter 162 of the Public Acts of 1925, issue bonds to the extent of 5 per centum of the grand list of the town, including tax exempt property located therein? and (3) may the city of Stamford, by virtue of section 271 of its charter, issue bonds to the extent of 3 1/2 per centum of the total taxable property or grand list of the city? or (4) are the town and city limited, in the issuance of bonds, to 5 per centum of the aggregate grand lists of the town and city?

(5) If the town may and does issue bonds to the extent of 5 per centum of its grand list, to what limit may the city issue bonds?

(6) If the city is limited in bonded indebtedness to 3 1/2 per centum of its total taxable property or grand list, may it add thereto tax exempt property for the purpose of determining its limit of bonded indebtedness?

(7) Does section 271 of the charter of the city constitute a " special act" within the meaning of chapter 162 of the Public Acts of 1925?

(8, 9) May sinking funds of the town and city, respectively, reserved for payment of outstanding bond obligations, be used as a credit and deduction in computing its outstanding bonded indebtedness?

(10) Will the " serial notes" contemplated by the town constitute, when issued, an indebtedness through the issuance of bonds within the meaning of chapter 162 of the Public Acts of 1925?

The provisions of chapter 162 of the Public Acts of 1925, which are important to the present inquiry are as follows:

" No town or consolidated town and city, either by itself or by any political or territorial division or divisions thereof, shall incur any indebtedness through the issuance of bonds which shall cause the aggregate net indebtedness of such town or city to exceed five per centum of its grand list, unless otherwise provided by special act. For the purposes of this act the grand list of every town or city shall be construed to include, in addition to the taxable real estate and tangible personal property, the fair market value of the tax exempt real estate therein, except such tax exempt real estate as may be owned by the United States, the state of Connecticut or the county in which such town is situated. * * * In computing the net indebtedness subject to the limit prescribed by this act, bonds issued for the supply of water, gas or electricity or for the construction of subways or underground conduits for cables, wires or pipes, shall not be included."

The first question is whether, in the situation as to territorial limits, governmental characteristics, and other relevant circumstances, the town of Stamford and the city of Stamford together constitute a " consolidated town and city," or the city " a political or territorial division" of the town of Stamford, in the sense in which those designations are employed in this act. In a general sense, to consolidate means to unite into one mass or body; to combine. Webster's International Dictionary. It signifies something more than to rearrange or redivide. Fairview v. Durland, 45 Iowa, 53, 56. As applied to business corporations, " a consolidation takes place when two or more companies are extinguished and a new one is created, taking over the holdings of those companies passing out of existence." The effect is to work a dissolution of the companies consolidating, and to create a new corporation out of the old ones. 1 Words & Phrases, Second Series, 908, and cases cited. It contemplates the creation of a new corporate body which displaces and destroys an individual existence of its predecessors. Buford v. Keokuk Northern Line Packet Co., 3 Mo. App. 159, 171; 12 C.J. 530. Likewise, where existing municipal corporations are consolidated, almost invariably a new corporation is created and takes the place of the old, and the latter cease to exist and can no longer exercise any corporate powers, unless their existence is expressly continued for some specific purpose. True v. Davis, 133 Ill. 522, 22 N.E. 410, 6 L.R.A. 266; Adams v. Minneapolis, 20 Minn. 484 (Gil. 438); Smith v. Saginaw, 81 Mich. 123, 45 N.W. 964; Warren v. Mayor et al. of Charlestown, 2 Gray (68 Mass.) 84; Stone v. Charlestown, 114 Mass. 214; Little Rock v. North Little Rock, 72 Ark. 195, 79 S.W. 785; 28 Cyc. 217.

The natural meaning and inherent force of the term " consolidated town and city," as employed in this and other statutes, indicate that it comprehends only those instances, of which this state affords several, in which the original town organization and government and that of a city territorially conterminous with or contained within it have been combined by charter in, and superseded by, a single municipal government exercising the administrative and other powers, and assuming the duties formerly vested in and imposed upon both; e. g., Bridgeport, 10 Special Laws, 854; Hartford, 12 Special Laws, 624; New Haven, 12 Special Laws, 589-1108. Here, however, we have two separate political entities, each possessing individual, although somewhat interrelated, attributes, and lacking the primary and distinctive characteristics of consolidation, unification into one municipal corporation succeeding to all the functions of both. " The town * * * and the city * * * within the territorial limits of the town, are each municipalities, independent of each other, and each performing different functions, discharging...