Dickinson v. Salt Lake City

• Decision Date: 11 February 1921
• Docket Number: 3624
• Citation: 195 P. 1110,57 Utah 530
• Court: Utah Supreme Court
• Parties: DICKINSON v. SALT LAKE CITY et al

195 P. 1110

57 Utah 530

DICKINSON v. SALT LAKE CITY et al

No. 3624

Supreme Court of Utah

February 11, 1921

Original proceedings by S. S. Dickinson against Salt Lake City and others for a writ prohibiting the City from issuing certain bonds.

DEMURRER TO COMPLAINT SUSTAINED, and COMPLAINT DISMISSED.

C. W Boyd, of Salt Lake City, for petitioner.

W. H Folland, City Atty., of Salt Lake City (C. C. Dey, of Salt Lake City, of counsel), for defendant.

GIDEON, J. CORFMAN, C. J., and WEBER, THURMAN, and FRICK, JJ., concur.

OPINION

GIDEON, J.

Plaintiff, a resident and taxpayer of defendant city, seeks a writ prohibiting said city and the other defendants, commissioners of Salt Lake City, from issuing and offering for sale, or selling, certain negotiable bonds authorized by a resolution of the commissioners of said city. From the affidavit for the writ, together with the exhibits made a part thereof, the following facts appear. The defendant Salt Lake City is a city of the first class. The other defendants are the duly elected, qualified, and acting commissioners of said city, and were such during the month of January, 1921. In January, 1921, at a regular meeting of said commissioners, a resolution was unanimously adopted authorizing the city to borrow the sum of $ 1,500,000, and pledge the credit of the city for the payment of the same and to issue negotiable bonds for said amount in denominations of $ 5,000 each. The said bonds are to bear interest at the rate of 6 per cent. per annum and are to become due and payable December 31, 1921. The resolution recites:

"That whereas, there is an immediate and pressing need of raising funds to defray contingent expenses, to purchase water sources, streams, and the land upon which streams are appropriated, and canals, to construct waterworks and supply water for irrigation and other purposes, to open, improve, and repair streets and sidewalks, to construct and repair sewers and drains, to construct and maintain bathhouses, to maintain the public library and reading room, to pay interest on bonds heretofore issued, and constitute a sinking fund for the payment of the principal on bonds heretofore issued, to defray current expenses, and for general corporate purposes."

The form of bonds proposed to be issued is made a part of the petition, and in said bonds it is provided:

"The board of commissioners shall levy in the year 1921 a sufficient tax to pay the principal and interest on this bond as the same shall fall due, and this bond is issued in anticipation of the payment of such taxes for the year 1921."

"It is hereby certified, recited, and declared that the entire indebtedness of said city hereby incurred is not in excess of the taxes of said city to be levied for the current year, 1921, and that said indebtedness was and is contracted for the purposes for which said taxes are to be levied."

It also appears from an exhibit attached to said petition that the taxable property within the said defendant city, according to the assessment for the year 1920, is $ 205,939,286; also that the tax levy in said year 1920 was $ 2,252,975.79, and the total revenue from all sources for said year was $ 2,901,808.16; that the estimated expenses for the current year 1921 will be $ 2,879,494.24. It further appears that the estimated revenue from the general taxes for the year 1921, and from other sources for said year, will be $ 2,900,475.79; that the total bonded indebtedness of the city, exclusive of the $ 1,500,000 bonds proposed to be issued, is $ 6,000,000. All of the $ 6,000,000 bonds were authorized by vote of the qualified electors of said city.

To the petition or affidavit the defendants have filed a general demurrer, and the matter, on that state of the record, is submitted to this court for determination.

There are three general questions raised by the demurrer which may be stated in the language of the brief of defendants as follows:

"(1) Has the board of commissioners the power to borrow money and to issue, negotiate, sell, dispose of, and deliver negotiable bonds for the payment of which, principal and interest, the full faith and credit and taxing power of the city is pledged in anticipation of taxes for the current year and without authorization by vote of the qualified voters? (2) If such authority is vested in the city, acting through its board of commissioners, can it be exercised at this time, or must it be deferred until after the tax levy has been made? (3) Whether the city has power to borrow money and issue such bonds without there being a separate borrowing for each particular purpose, together with an itemized and separate account."

Article 14, § 4, of the state Constitution provides that no city shall become indebted in an amount, including existing indebtedness, exceeding 4 per cent. of the value of the taxable property therein, provided that cities of the first and second class, when authorized as provided by section 3 of that article, may be allowed to incur a larger indebtedness not to exceed 4 per cent. for supplying such city with water, artificial light, or sewers.

It is contended, and it so appears, that the proposed issue of bonds by the defendant city is not in excess, including prior existing debts, of the debt limit fixed by the Constitution. We are therefore not called upon to consider or determine whether the indebtedness proposed is a debt within the meaning of the foregoing constitutional provision.

Article 14, § 3, of the Constitution provides:

"No debt in excess of the taxes for the current year shall be created by any * * * city * * * unless the proposition to create such debt shall have been submitted to a vote" of the qualified electors, etc.

The authority to incur the proposed indebtedness is claimed on the part of the defendants by the provisions of Comp. Laws Utah 1917, §§ 570 and 570x6, which read as follows:

"570. The boards of commissioners and city councils of cities shall have the powers in the following sections enumerated: * * *

"570x6. To borrow money on the credit of the corporation for corporate purposes in the manner and to the extent allowed by the Constitution and the laws, and to issue warrants and bonds therefor, in such amounts and forms and on such conditions as the council shall determine. The council shall provide for the payment of interest on such bonds as the same shall become due and for a sinking fund for the payment of the principal thereof, within twenty years after issuing the same."

Section 570x2 reads:

"To...