Kenyon v. City of Spokane

• Decision Date: 28 April 1897
• Citation: 17 Wash. 57,48 P. 783
• Parties: KENYON v. CITY OF SPOKANE ET AL. (BARROLL, INTERVENER.
• Court: Washington Supreme Court

48 P. 783

17 Wash. 57

KENYON v. CITY OF SPOKANE ET AL. (BARROLL, INTERVENER.

Supreme Court of Washington

April 28, 1897

Appeal from superior court, Spokane county; L. H. Prather, Judge.

Action by A. H. Kenyon against the city of Spokane and others. H. C Barroll intervened. Judgment for plaintiff and intervener and defendant city of Spokane appeals. Reversed.

W. H Plummer, for appellant.

Henley & Kellam, for respondents.

SCOTT C.J.

This action was brought to restrain the city of Spokane from issuing warrants in the sum of $350,000 to A. C. Frost & Co., the principal and interest of which were to be payable out of a special fund created by revenues derived from its waterworks system, for the purpose of refunding warrants already outstanding, which were issued to obtain money to construct such system, and which were payable out of such fund. H. C. Barroll intervened, alleging that the proposed action on the part of the city would violate his rights as a taxpayer, and would also violate his contractual rights as a holder of the prior warrants which were sought to be refunded. A demurrer to the complaints was interposed by the city, and overruled by the court, and from a judgment rendered in favor of the plaintiff and intervener the city has appealed.

The ordinance under which the prior warrants were issued was before this court for consideration in Winston v. City of Spokane, 12 Wash. 524, 41 P. 888, where the court held that the issuance of such warrants, payable only from a special fund created out of a certain percentage of the revenues derived from the waterworks, was not an incurring of a municipal indebtedness, within the meaning of the constitutional provisions on that subject. Those warrants bear 8 per cent. interest, and were payable in lawful money at any time when there was sufficient money in the fund to take them up respectively. The major portion of them are yet outstanding. The warrants proposed to be issued under the ordinance now before the court will bear but 6 per cent. interest, and are made payable in gold coin of its present standard of weight and fineness, and at stated intervals, viz. $8,000 on January 1, 1898, $9,000 January 1, 1899, and so on, the amount coming due each year increasing by $1,000 until all of them are paid. It is first contended that the city had no authority to make such warrants payable in any other than lawful money, in accordance with the moneys paid into the fund as the receipts of such water system, it being contended that such warrants operate simply as an assignment pro tanto of the fund, and therefore cannot be made payable in any other kind of money than that constituting the fund. But in the case of Packwood v. Kittitas Co., 15 Wash. 88, 45 P. 640, this court held that a municipality might issue bonds payable only in gold coin, where there was no legislative restriction. The respondents concede that this would be true were this a borrowing of money, but argue that the present case cannot be considered as a borrowing of money, as the city was only entering into an arrangement by which it was to account for and pay over to the holders of such warrants certain amounts of the moneys derived from the system. But it seems to us that it is a borrowing of money nevertheless, although there is no general obligation upon the part of the city to repay it, payment being limited to the fund created by setting aside a part of the revenues of the water system. So far as we are advised, there is nothing to prevent the city from making such revenues payable in gold coin, and, if there is, there is certainly nothing to prevent the city from converting the moneys so received into gold coin for the purpose of discharging these obligations; and we are of the opinion that the rule in the case last cited would govern this case also.

Attention has been called to an act authorizing counties, cities towns, and school districts to provide temporary funds for current expenses in anticipation of their revenues. Laws 1895, p. 297. Section 4 of said act gives the form of the obligations to be issued therefor, which provides for payment in lawful...