Cleveland Elec. Illuminating Co. v. City of Cleveland, 87-852
| Decision Date | 25 May 1988 |
| Docket Number | No. 87-852,87-852 |
| Citation | 524 N.E.2d 441,37 Ohio St.3d 50 |
| Parties | CLEVELAND ELECTRIC ILLUMINATING COMPANY, Appellant, v. CITY OF CLEVELAND, et al., Appellees. |
| Court | Ohio Supreme Court |
Syllabus by the Court
1. A municipality may not support a municipally owned public utility with monies derived from tax-generated revenue where the city charter provides that such utilities are to be "non-tax supported."
2. Where a city charter declares that municipally owned public utilities are to be "non-tax supported," that prohibition extends to advancements from a tax-generated fund to such public utilities where there is no expectation of prompt and complete repayment.
3. In matters of construction, it is the duty of this court to give effect to the words used, not to delete words used or to insert words not used. (Columbus-Suburban Coach Lines v. Pub. Util. Comm. [1969], 20 Ohio St.2d 125, 127, 49 O.O.2d 445, 446, 254 N.E.2d 8, 9, followed.)
On April 6, 1984, the Cleveland City Council enacted Ordinance No. 578-84 as an emergency measure. The ordinance, 1 inter alia, relieved the city's Division of Light & Power ("Muni Light") of any obligation to reimburse certain amounts expended by the city for the benefit of Muni Light. According to a recitation in the ordinance, the city had advanced a total of $36,256,000 to Muni Light, of which $6,805,727 was expended for legal fees and other services in connection with litigation unrelated to the matter herein. Section 1 of Ordinance No. 578-84 recites that "[w]ith the exception of the portion of the Expended Amounts representing the Advanced Legal Fees to be reimbursed to the General Fund pursuant to Section 2 hereof, the entire amount of Expended Amounts is hereby acknowledged, determined and agreed not to be subject to any legal, contractual or other requirement or obligation that such funds be reimbursed or otherwise restored to the General Fund or any other City fund from which such funds were appropriated or expended. * * *" Thus, the obligation of Muni Light to repay $29,450,273 to the city was excused.
Appellant, Cleveland Electric Illuminating Company, filed this taxpayer's suit seeking an injunction to prevent the utilization of tax-generated funds to subsidize Muni Light. Appellant contended that the ordinance authorized an application of city funds which is inconsistent with the Cleveland City Charter.
The trial court granted summary judgment in favor of appellees, the city of Cleveland and its director of public utilities. The court of appeals affirmed.
The cause is now before this court upon the allowance of a motion to certify the record.
Squire, Sanders & Dempsey, Daniel J. O'Loughlin, Frank J. Pokorny, Alan D. Wright and Carl E. Chancellor, Cleveland, for appellant.
Calfee, Halter & Griswold, John E. Gotherman, Mark I. Wallach, Marilyn G. Zack, Director of Law, and June M. Wiener, Cleveland, for appellees.
Kelley, McCann & Livingstone, Stephen M. O'Brien and Daniel S. Strouse, Cleveland, urging affirmance for amicus curiae, Ohio Mun. Attorneys Ass'n.
Patrick A. D'Angelo, Cleveland, urging reversal for amicus curiae, Cleveland Police Patrolmen's Ass'n.
The question we must decide today is whether the Charter of the city of Cleveland forbids the release of Muni Light from any obligation to repay the sum of $29,450,273 previously expended by the city for the benefit of Muni Light. We hold that the city charter prohibits the use of tax-generated funds to subsidize municipally owned public utilities such as Muni Light.
The Charter of the city of Cleveland contains the following pertinent provisions:
The meaning of the words "non-tax supported" in the above charter provisions is the determinative issue in this case. Appellees contend that these words do not constitute a prohibition on the use of tax revenues to support the city's ownership and operation of its public utilities. We do not agree. Our review of the relevant charter provisions compels us to conclude that the words "non-tax supported" were intended to establish that municipally owned and operated utilities shall be self-supporting enterprises independent of public subsidies.
Section 111 of the charter, quoted above, provides that the director of public utilities "shall manage and supervise all non-tax supported public utility undertakings of the City, including all Municipal water, lighting, heating, power and transmission enterprises * * *." (Emphasis added.) Obviously, all municipally owned and operated public utilities, with certain stated exceptions, are intended to be non-tax supported. Such public utilities are specifically defined as including municipal lighting and power enterprises, of which Muni Light is clearly an example.
Appellees place much emphasis on the absence from the charter of a specific provision prohibiting municipally owned public utilities from receiving support from tax monies. In our view, however, this prohibition is proclaimed by the very use of the words "non-tax supported public utility." Appellees' proposed conclusion can only be sustained by a disregard for that phrase as it is used throughout the Cleveland Charter. A court construing a provision in a city charter, statute, contract or other writing may not ignore the existence of any word or phrase. The inadvisability of such an approach is particularly apparent in the case before us, where the consequences of ignoring the phrase in question could be extreme.
It cannot be disputed that once the debt is excused, Muni Light becomes a tax supported utility, since the money advanced was taken from tax-generated city funds. If this change in status from a non-tax supported to a tax supported utility is permitted to occur, then all the provisions in the Cleveland City Charter relating to non-tax supported public utilities will no longer apply to Muni Light. For example, the authority given by Section 111 to the city's director of public utilities to "manage and supervise all non-tax supported public utility undertakings of the City * * *" will no longer include any authority over the (now tax supported) Muni Light. Section 112, governing the fixing of rates charged by non-tax supported public utilities, will likewise have no application to Muni Light. Section 41 would no longer prohibit the transfer of Muni Light revenues or earnings to any other purpose.
The practical effects of appellees' proposed approach could be far-reaching. Consider a fact pattern wherein a city (here Cleveland) decides to provide support to its municipally owned water public utility from the city's tax-generated general fund. It would seem that the water utility would no longer be "non-tax supported." It would follow then, as noted above, that the section of a charter (herein Section 41) that prohibits transfer of revenues or earnings from the utility to any other purpose would be inoperative--because the utility is no longer non-tax supported and thus not governed by the restriction. Thus, a water rate, exceeding that which was necessary to operate the water utility, could be charged and the excess revenues transferred to pay for other activities not in any way connected with the production and sale of water. 2 In our judgment, appellees' approach would provide a way for city councils and administrations to raise general operational money through rates instead of requiring that such money be raised through traditional tax measures. The excessive rate becomes, in effect, a hidden tax.
This result is clearly untenable. When the larger picture is considered, the importance of the phrase "non-tax supported" becomes plain. Contrary to the view advanced by appellees, this phrase does have meaning--a crucial meaning. Tax-generated funds may not be used to support Muni Light.
In matters of construction, " * * * it is the duty of this court to give effect to the words used, not to delete words used or to insert words not used." (Emphasis added.) Columbus-Suburban Coach Lines v. Pub. Util. Comm. (1969), 20 Ohio St.2d 125, 127, 49 O.O.2d 445, 446, 254 N.E.2d 8, 9. It is argued that by interpreting the charter as prohibiting tax support of municipally owned public utilities, this court is inserting words into the charter, since that document contains no provision specifically declaring that such support is forbidden. However, this approach overlooks the fact that the rule of construction cited above consists of several imperatives. Courts are commanded to refrain from inserting or deleting words. However, we are also directed to "give effect to the words used * * *." Id. The Cleveland City Charter uses the words "non-tax supported" in connection with municipally owned public utilities, not just once but several times. We cannot pretend that these words do not exist or that they have no meaning.
Nor are the words "non-tax supported" limited in their prohibitive effect to outright transfers of tax-generated funds to utilities such as Muni...
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