Fox v. Bicknell, 24251.

• Decision Date: 26 October 1923
• Docket Number: No. 24251.,24251.
• Citation: 141 N.E. 222,193 Ind. 537
• Parties: FOX v. BICKNELL et al.
• Court: Indiana Supreme Court

193 Ind. 537

141 N.E. 222

FOX

v.BICKNELL et al.

No. 24251.

Supreme Court of Indiana.

Oct. 26, 1923.

Appeal from Circuit Court, Knox County; Wm. C. Pentecost, Judge.

Action by Lester D. Fox against the City of Bicknell and others. From an adverse judgment, plaintiff appeals. Affirmed.

Herman M. Robbins, of Vincennes, for appellant.

Mattingly & Myers, of Washington, Ind., and Horace A. Foncannon, of Bicknell, for appellees.

TOWNSEND, J.

Appellant, a resident taxpayer, sought to enjoin the city of Bicknell from acquiring a waterworks plant owned by the Bicknell Water Company. The trial court sustained a demurrer to the complaint. The complaint shows by its allegations that the appellee city is doing and is proposing to do all things with reference to the acquisition of this plant pursuant to chapter 96 of the Acts of 1921, p. 205. This act provides that a municipality may contract to acquire such plant, subject to the approval of the Public Service Commission; that it may be paid for by bonds, payable solely and exclusively from the income and revenue of the plant; that the income and revenue of the plant shall be kept in a separate fund; that a portion of the revenue shall be set aside for the necessary operation and maintenance, another portion for an adequate depreciation account, and another portion for the payment of the principal and interest of the bonds. It also provides that the bondholders shall have a mortgage lien on the plant, which shall remain until the principal and interest are paid.

The sole question presented here is: Does this arrangement for the acquisition of this waterworks plant constitute a debt within the meaning of section 1, art. 13, of our Constitution? In other words: Is the $80,000 raised by these bonds, which are to be paid from the income of the plant and to be secured by a statutory mortgage on the plant, an indebtedness which affects the taxpayer of the municipality or deprives the municipality of property already acquired and paid for. If it is such an indebtedness, then the municipality, by the allegations of the pleading, is exceeding the constitutional limit of 2 per cent. It is insisted by appellant that the acquisition of the plant by the method proposed is but a subterfuge to evade our Constitution, and that the case at bar is like Voss v. Waterloo Water Co. (1904) 163 Ind. 69, 71 N. E. 208, 66 L. R. A. 95, 106 Am. St. Rep. 201, 2 Ann. Cas. 978, and that the principles therein laid down are applicable.

We cannot agree with appellant's contention. The town of Waterloo was the owner of the stock in the corporation, which was a dummy to evade the Constitution. The town also agreed to pay water and light rentals regardless of the reasonable cost of the service. It is true that, in the discussion of principles of law applicable to the Waterloo Case, supra, this court said some things about payment out of special funds and out of income from property acquired which, if taken apart from the special findings before the court and apart from a careful analysis of the authorities referred to, would sustain the contention of the appellant in the instant case. We have reference particularly to what is said in the paragraph beginning...