Feil v. City of Coeur D'Alene

• Decision Date: 21 September 1912
• Citation: 23 Idaho 32,129 P. 643
• Parties: CHARLES FEIL, Appellant, v. CITY OF COEUR D'ALENE et al., Respondents
• Court: Idaho Supreme Court

129 P. 643

23 Idaho 32

CHARLES FEIL, Appellant, v. CITY OF COEUR D'ALENE et al., Respondents

Supreme Court of Idaho

September 21, 1912

PURCHASE OF WATERWORKS-DEBT LIMITATION-WHAT CONSTITUTES DEBT OR LIABILITY-CONSTITUTIONAL CONSTRUCTION.

(Syllabus by the court.)

1. Sec 3, art. 8, of the state constitution, provides that "No.... city.... shall incur any indebtedness, or liability in any manner, or for any purpose, exceeding in that year, the income and revenue provided for it for such year, without the assent of two-thirds of the qualified electors thereof, voting at an election to be held for that purpose," etc.

2. Where the city of Coeur d'Alene was indebted up to the maximum debt limitation, and while so indebted the council passed and the mayor approved an ordinance authorizing and directing the proper officers to purchase a water system, and pay therefor the sum of $180,000 and issue the bonds of the city for the same, payable in twenty years, with interest thereon at six per cent, and provided in such ordinance that the city should not be liable in any manner or form for the payment of such bonds, except that it bound and obligated itself to maintain water rates high enough to collect an annual income from the water consumers to pay all the running expenses of the waterworks system, and to raise a sufficient fund thereby to pay interest at six per cent and the entire principal within the period of twenty years, and at the same time covenanted and agreed not to sell or encumber any of the property purchased until full payment should be made therefor; held, that such ordinance and contract, if carried out, would create a liability in violation of the provisions of sec. 3, art. 8, of the state constitution.

3. The word "liability" as used in sec. 3, art. 8, of the constitution is to be read, construed and accepted in the usual and ordinary sense in which that term is commonly employed, and when so used means and signifies the state of being bound or obligated in law or justice to do pay, or make good something.

4. Under the provisions of sec. 3, art. 8, of the state constitution, a city may anticipate both the income and revenue provided for it for such year, and incur debts or liabilities against the city which can be met and discharged out of the aggregate income and revenue for that year, but the city has no right to anticipate, set aside and hypothecate either the income or revenue of the city, or any part thereof, for a special purpose, for a period of twenty years in advance.

5. When a city acquires its own water system and engages in selling and distributing water to its inhabitants and charging rates therefor, it becomes subject to the same duties and obligations and responsibilities of an individual or private corporation running and operating a like business, and is subject to have the rates charged, regulated and fixed in the same manner prescribed by law for the fixing of water rates generally.

6. A water rate sufficiently high to pay all running expenses and improvements and repairs of the system and six per cent on the entire value of the plant and the purchase price therefor, in the period of twenty years, would be unreasonable, and it would be beyond the power and authority of the city to contract in advance to maintain water rentals at such a rate.

APPEAL from the District Court of the Eighth Judicial District for the County of Kootenai. Hon. Robert N. Dunn, Judge.

Action to enjoin the issuance and sale of certain municipal coupon bonds and declare ordinance No. 380 of the city of Coeur d'Alene void. Judgment for defendant and the plaintiff appealed. Reversed.

Reversed and remanded, with direction. Cost awarded in favor of appellant.

Whitla & Nelson, for Appellant.

Under the ordinance in question, the city is to issue its promise to pay. It necessarily follows that the city becomes indebted. The legislature of this state and the people when they adopted the constitution had in mind only the one kind of a debt to be incurred by the city. They intended to restrict the power of the city to become indebted, and the indebtedness which they attempted to restrict covers all kinds of encumbrances whatsoever. (Par. 130, Dillon, Mun Corp., 4th ed., and cases cited; Voss v. Waterloo Water Co., 163 Ind. 69, 21 N.E. 208, 106 Am. St. 201, 2 Ann. Cas. 978, 66 L. R. A. 95; Browne v. City of Boston, 179 Mass. 321, 60 N.E. 934; Ironwood Water Works Co. v. Trebilcock, 99 Mich. 454, 58 N.W. 371; Hall v. Cedar Rapids, 115 Iowa 199, 88 N.W. 448.)

The city in operating the water plant operates the same as any other private corporation, and can only charge reasonable rates for the water used by its patrons. (Twitchell v. City of Spokane, 55 Wash. 86, 104 P. 150, 133 Am. St. 1021, 24 L. R. A., N. S., 290; Cent. Digest, "Water and Waterworks," 290, 299; Dec. Digest, "Water and Watercourses," par. 203.)

A municipal body or county must follow the spirit of the law and of the provisions of the constitution, and would not be permitted by subterfuge to do indirectly what the statute prohibits them from doing. (People ex rel. Lincoln County v. George, 3 Idaho 72, 26 P. 983; McDonald v. Doust, 11 Idaho 14, 81 P. 60, 69 L. R. A. 220.)

From the allegations of the complaint, which must be taken as true, the price is greatly excessive, and the courts will always lean toward the protection of the people, and will enjoin a city from entering into an unreasonable and unconscionable contract. (Avery v. Job, 25 Ore. 512, 36 P. 293; Winkler v. Summers, 51 Hun, 636; 5 N.Y.S. 723.)

McFarland & McFarland, for Appellant Robinson.

Sec. 2315, Rev. Codes, as amended by the Laws of 1911, p. 66, and sec. 2238, subd. 36, do not provide for the issuance of municipal bonds without the submission of the question to the qualified electors of such city. (Woodward v. City of Grangeville, 13 Idaho 652, 92 P. 840; Ostrander v. City of Salmon, 20 Idaho 153, 117 P. 692.)

"When the question arises as to the reasonableness of rates, stockholders of the company are not the only persons whose rights are to be considered. The rights of the people are not to be ignored." (Covington etc. Road Co. v. Sanford, 164 U.S. 578, 596, 17 S.Ct. 198, 41 L.Ed. 560.)

Constitutions and statutes authorizing cities to acquire water systems and to issue bonds for that purpose should be strictly pursued in every particular. (1 McQuillin, Mun. Corp., p. 819, sec. 371.)

John P. Gray, for Respondents.

The indebtedness provided for by the ordinance in question is not a general indebtedness. (Ostrander v. City of Salmon, 20 Idaho 153, 117 P. 692.)

The identical question was before the supreme court of the state of Washington in Winston v. City of Spokane, 12 Wash. 524, 41 P. 888.

The constitution of Washington is slightly different from our constitution, but the principle is the same as that involved in the construction of the Idaho constitution. (See, also, Kenyon v. Spokane, 17 Wash. 57, 48 P. 783; McEwan v. Spokane, 16 Wash. 212, 47 P. 433; Faulkner v. City of Seattle, 19 Wash. 320, 53 P. 365; Dean v. City of Walla Walla, 48 Wash. 75, 92 P. 895; Griffin v. City of Tacoma, 49 Wash. 524, 95 P. 1107; Brockenbrough v. Board of Water Commrs., 134 N.C. 1, 46 S.E. 28; Swanson v. City of Ottumwa, 118 Iowa 161, 91 N.W. 1048, 59 L. R. A. 620; State v. City of Neosho, 203 Mo. 40, 101 S.W. 99; Connor v. City of Marshfield, 128 Wis. 280, 107 N.W. 639; Board of Commrs. of Monroe County v. Harrell, 147 Ind. 500, 46 N.E. 124; Gray, Limitations of Taxing Power and Public Indebtedness, sec. 2111.)

This court has adopted the principle of constitutional and statutory construction which is controlling in the determination of this question. (McGilvery v. City of Lewiston, 13 Idaho 338, 90 P. 348; Blackwell v. City of Coeur d'Alene, 13 Idaho 357, 90 P. 353.)

If a municipality owns or operates a public enterprise in the nature of a water system or lighting plant, the rates and service are the subject of regulation in the same manner and to the same extent as though the service were furnished by a private corporation. (Wyman, Public Service Corp., sec. 218.)

No facts are stated in the pleadings showing any fraudulent intent on the part of the council or any member, and no facts are alleged showing or tending to show that there is any abuse of discretion on the part of the municipal authorities. (Oakley v. Atlantic City, 53 N.J.L. 127, 44 A. 651; Ryan v. City of Paterson, 66 N.J.L. 533, 49 A. 587.)

Where there are facts which show their action to be consistent with an honest judgment, the court should not interfere. (Van Reipen v. Jersey City, 58 N.J.L. 262, 33 A. 740; Findley v. City of Pittsburgh, 82 Pa. 351; Ferguson v. Board, 60 N.J.L. 404, 38 A. 676.)

Courts have uniformly refused to interfere or judicially review the proceedings leading up to the making of the contract or adoption of the ordinance. (O'Brien v. Drinkenberg, 41 Mont. 538, 111 P. 137; Collins v. City of Keokuk, 147 Iowa 233, 124 N.W. 601.)

If there is room for a reasonable difference of opinion, the action of the council is final. (City of Marengo v. Eichler, 245 Ill. 47, 91 N.E. 758; Northwestern University v. Willamette, 230 Ill. 80, 82 N.E. 615; Reed v. City of Anoka, 85 Minn. 294, 88 N.W. 981; Georgia R. & Banking Co. v. Jordon, 122 Ga. 422, 50 S.E. 123; Seward v. Town of Liberty, 142 Ind. 551, 42 N.E. 39.)

AILSHIE, C. J. Sullivan, J., concurs. STEWART, C. J., Dissenting.

OPINION

AILSHIE, C. J.

STATEMENT OF FACTS.

In the month of June, 1912, the city council of the city of Coeur d'Alene passed and the mayor approved the following ordinance, numbered 380:

"An ordinance providing for the purchase by the city of Coeur d'Alene, of the water works system now owned by the Consumers'...