Kelly v. City of Minneapolis

• Decision Date: 09 December 1895
• Citation: 65 N.W. 115,63 Minn. 125
• Parties: KELLY ET AL. v. CITY OF MINNEAPOLIS.
• Court: Minnesota Supreme Court

63 Minn. 125

65 N.W. 115

KELLY ET AL.

v.CITY OF MINNEAPOLIS.

Supreme Court of Minnesota.

Dec. 9, 1895.

(Syllabus by the Court.)

1. Held, that certain certificates calling for the payment of money, issued by the park board of the city of Minneapolis, are not an indebtedness of the city, within the meaning of section 2, c. 204, Laws 1893, limiting the indebtedness of cities; and, further, that the amount of the bonds and money in the sinking fund of the city is to be deducted from the total amount of the outstanding bonds of the city for the purpose of determining its actual indebtedness under the provisions of this statute.

2. Held, that the commissioners of such sinking fund have no authority to purchase from the city its bonds, for the fund, at the time they are offered for sale by it.

Appeal from district court, Hennepin county; Seagrave Smith, Charles M. Pond, Robert D. Russell, Robert Jamison, Henry C. Belden, Judges.

Action by Anthony Kelly and others against the city of Minneapolis. From an order denying a motion for a temporary injunction, plaintiffs appeal. Reversed.

J. B. Atwater and P. M. Babcock, for appellants.

David F. Simpson, for respondent.

START, C. J.

This action was brought to have a certain issue of the bonds of the city of Minneapolis, of the par value of $200,000, known as “Reservoir Bonds,” adjudged void, and to restrain the treasurer of the city from paying, out of the sinking fund of the city, any money for the purchase of such bonds for the sinking fund, pursuant to an agreement to that effect between the city council and the board of sinking fund commissioners. The plaintiffs are taxpayers of the city, and from an order of the trial court denying their motion for a temporary injunction so restraining the treasurer this appeal was taken. The bonds were issued under the provisions of chapter 204, Laws 1893, which forbids any city in this state to issue bonds or to incur any debt or liability of any kind for any purpose except for the purchase, refunding, or payment of outstanding bonds, in excess of 5 per cent. of the assessed valuation of the taxable property of such city according to the last preceding assessment. The plaintiffs claim that this 5 per cent. debt limit has already been exceeded by the city, exclusive of these reservoir bonds; and, further, that the board of sinking fund commissioners have no authority to purchase from the city its bonds at the time they are offered for sale by it.

1. The first question is, had the city, if the amount of the reservoir bonds be added to its debt, exceeded its debt limit at the time of the proposed sale of the bonds and the commencement of this action? In deciding this question the claim of the plaintiffs that the sum of $206,567-an alleged indebtedness of the city to the courthouse and city hall commission-should be added to the indebtedness of the city must be rejected, for it does not affirmatively appear from the record that, if there ever was any such indebtedness, it existed at the time stated in the question. Eliminating this claim, it is sufficient to say, without going into mathematical details, that it appears from the admitted facts that, if the amount of certain park board certificates hereinafter to be noticed is not a part of the indebtedness of the city, and if the amount of the money and bonds in the sinking fund of the city is to be deducted from the total amount of the outstanding bonds of the city, the entire debt of the city, including these reservoir bonds, will not exceed its debt limit. The answer, then, to this first question involves a consideration of two subordinate ones: (a) Are the park board certificates an indebtedness of the city, within the meaning of the statute imposing the debt limit? (b) Is the amount of the money and bonds in the sinking fund to be deducted from the total amount of the city's outstanding and uncanceled bonds, for the purpose of determining its actual indebtedness? We are of the opinion that this first question must be answered no, and the second one yes, and we therefore answer the original question in the negative.

2. The park board certificates to which we have referred were issued under the provisions of chapter 30, Sp. Laws 1889, as amended, which provide for a board of park commissioners, and constitute such board a department of the government of the city of Minneapolis. This board is authorized to designate and acquire land in and adjacent to the city for public parks, and its here material powers are as follows: “The said board of commissioners, and their successors, shall have power, and it is hereby authorized, to obtain title for and in the name of the city of Minneapolis, to any lands so designated by it for the purpose of this act, by gift, devise, purchase or lease. And said board may enter into any contract in the name of said city, for the purchase of any lands to be paid for in such time, or times, and in such manner as the board may agree to; and said board may accept title to lands and give back a mortgage or mortgages in the name of said city, with or without bonds to secure the unpaid purchase price, provided, that no personal or general liability on the part of said city shall be created by any such contract, or mortgage, or bond beyond the means at the time available therefor, except the liability to pay such amounts as may be realized from benefits assessed on benefited property on account of the lands included in such contract or mortgage. And it is hereby made the duty of said board to pay on each such contract or mortgage, an amount equal to the sum or sums so realized from such assessments; and said board shall have power to accept and receive donations of money, property or lands, for the use of the said city for the purposes contemplated in this act.” Sp. Laws 1889, c. 30, § 2, as amended by Id. c. 103, § 1. The certificates in question were given for the purchase price of land for park purposes, and their payment secured by a mortgage on the land purchased. Each certificate states that the city of Minneapolis is indebted to the payee in the sum therein named, and recites that the consideration therefor is the conveyance to the city by the payee of land for park purposes, and that the certificate is secured by a mortgage on the land sold, and that it is payable out of the funds arising from assessments made upon real estate specially benefited by the park established on the land, and concludes with these words: “It being expressly understood and agreed that there is no liability on the part of said city to pay the amount evidenced by this certificate, secured by the above-described mortgage, out of any other fund than the fund above specified.” No certificates issued or contracts made by the park board can be given any legal effect contrary to or in excess of the powers conferred upon the board by the statute we have quoted, and they are, in fact, substantially in accordance with its provisions. The board has no power to make these certificates a lien generally upon all the parks of the city, and the record shows that no attempt has been made to secure their payment by the creation of such a lien. The provisions of the statute relied upon by plaintiffs to support their proposition to the contrary (section 5, c. 30, Sp. Laws 1889) refer only to park bonds issued for the purpose of obtaining money with which to acquire land for park purposes. It is admitted that such bonds are a part of the indebtedness of the city. Neither are these certificates secured by a mortgage on any portion of the property of the city previously owned by it, nor by a pledge of its revenues, as claimed by the plaintiffs. If such was the case, then their contention that the certificates are a part of the indebtedness of the city would be correct, for the statute providing a debt limit for cities cannot be evaded by the makeshift of issuing the bonds or other obligations of the city, and make them payable only from the general revenues of the city to be derived from a particular source, or by securing them upon its public buildings or other property, which, if sold to...