Lamar Water & Electric Light Co. v. City of Lamar

• Decision Date: 28 May 1894
• Citation: 26 S.W. 1025
• Court: Missouri Supreme Court
• Parties: LAMAR WATER & ELECTRIC LIGHT CO. v. CITY OF LAMAR.

26 S.W. 1025

LAMAR WATER & ELECTRIC LIGHT CO. v. CITY OF LAMAR.

Supreme Court of Missouri, Division No. 1.

May 28, 1894.

MUNICIPAL CORPORATIONS — LIMITATION OF INDEBTEDNESS — WATER RATES — CONTRACT FOR WATERWORKS.

1. Rev. St. § 1589, providing that the mayor and board of aldermen may be empowered by ordinance to agree with a water company to supply the city with water, when authorized by a two-thirds vote of the qualified voters of the city, does not require the approval of the proposed contract by an election before the passage of such ordinance.

2. An ordinance which is a contract, or which directs the making of a contract, for the performance of work or the furnishing of supplies in the future, need not be referred to the city treasurer for his certificate that there is sufficient unappropriated money in the treasury to meet its requirements.

3. Const. art. 10, § 11, provides that in cities and towns of between 1,000 and 10,000 inhabitants the rate of taxation shall not exceed 50 cents per $100 of its taxable property, but that it may be increased by approval of two-thirds of the qualified voters of the city for the purpose only of erecting public buildings, and that the restriction as to rates shall apply to all taxes, both general and special. Section 12 provides that no city or town shall become indebted in any year for more than its revenue for that year without the consent of two-thirds of

its voters, and In no case shall a city's debt exceed 5 per cent. of the value of its taxable property. Held, that a city of between 1,000 and 10,000 inhabitants could not levy a tax exceeding 50 cents per $100 of its taxable property to pay rent for waterworks, though approved by two-thirds of the qualified voters.

4. A city ordinance empowered the mayor and board of aldermen to contract with a water company to furnish the city with water provided that there should be collected annually a tax not exceeding 40 cents per hundred dollars to pay therefor. The city had, the year the ordinance was passed, and for four years prior thereto, levied a tax as high as allowed by the constitution, and after the execution of the contract levied the same tax for three years more, exclusive of the water tax. Held sufficient to show that the ordinance did not contemplate that the water rental should be paid out of the general tax.

5. Where an ordinance empowering the mayor and board of aldermen to contract with a water company to furnish the city with water is illegal because the special tax for the purpose of paying the rent for waterworks, together with the general tax, exceeds the constitutional limit, a contract made pursuant thereto is void.

6. The words, "income and revenue provided for such year," in Const. art. 10, § 12, subd. 1, providing that no county, city, or town shall become indebted in any one year for a greater amount without the assent of two-thirds of the voters, means income derived from any source, and not that derived from taxation alone.

Appeal from circuit court, Barton county.

Action by the Lamar Water & Electric Light Company against the city of Lamar. From a judgment for defendant, plaintiff appeals. Affirmed.

R. T. Railey, T. K. Skinker, and Thurman & Wray, for appellant. John B. Cole and H. C. Timmonds, for respondent.

BLACK, C. J.

This is a suit to collect a balance of $900 due on hydrant rents for the last half of 1891, and $3,000 for the year 1892. The petition declares upon a written contract alleged to have been executed on the 31st December, 1890. There is the further averment that the defendant executed the contract by and through its mayor and clerk, they being duly authorized so to do, which averment is denied. The answer also raises several constitutional questions as affirmative defenses. The record discloses the following facts: The defendant is a city of the fourth class, having 3,000 inhabitants. The board of aldermen passed an ordinance on the 21st April, 1890, setting forth the terms of a contract between the city of the one part and Messrs. Snyder and Guinney and their assigns of the other part, for the construction and operation of waterworks by the latter. The ordinance was approved by the mayor on the 22d of the same month. The ordinance provides that it shall take effect from the date of its approval; that the contract therein contemplated shall be signed by the mayor and attested by the clerk, and signed by Snyder and Guinney; and that the contract shall take effect when the ordinance is ratified by a two-thirds vote of the voters. An election was held on the 20th May, 1890, at which more than two-thirds of the voters voted for the contract. Snyder and Guinney then accepted in writing the terms of the ordinance. Snyder assigned his interest in the contract to Guinney, who assigned the contract to the Lamar Water Company. That corporation and the Lamar Electric Light & Power Company were duly consolidated under the name of the present plaintiff. The works were constructed, and accepted by the city, and thereupon the mayor and clerk, pursuant to a resolution of the board of aldermen, and the plaintiff, signed a contract, which is dated the 31st December, 1890. This contract is simply a copy of the ordinance, with a statement thereto added that the ordinance is now in full force and effect. By the seventh section of the ordinance the city agrees to and does rent 60 hydrants for 20 years, to be used for the purpose of extinguishing fires and flushing gutters and sewers, and to pay therefor $50 per annum for each hydrant, payable semiannually. The plaintiff agrees to furnish the hydrants, and keep them supplied with water, and to supply the inhabitants with water at specified rates. Section 10 secures to the city the right to purchase the works 10 years after their completion, at their equitable value. The company has the right to mortgage the works; and, in case they are mortgaged, the hydrant rents, or so much as may be necessary, are to be set apart as net earnings, to be paid to the holders of the interest coupons on the bonds so secured. Section 19 provides: "That for the purpose of meeting and paying the annual rental to the said A. H. Snyder and J. Guinney, their associates or assigns, by the city of Lamar, as provided in section seven of this ordinance, there shall be levied and collected annually during the continuance of this ordinance a tax, not exceeding forty cents on the hundred dollars' valuation, on all taxable property in the city, sufficient to pay said rental if necessary. Said tax shall be levied and collected at the same time and in the same manner as are taxes for general purposes, and, when collected, the same shall be set apart for the specific purpose of paying said installments of rental as they become due, as provided in this ordinance, and shall not be appropriated to any other purpose or purposes." The works were mortgaged for $45,000. The value of the taxable property in the city was $745,000 for 1888, $747,015 for 1889, $716,613 for 1890, and $890,160 for the year 1891. The city levied a general tax of 50 cents on the $100 valuation for the years 1886 to and including 1892, and for the years 1891 and 1892 it levied, in addition thereto, the water tax of 40 cents. The receipts from both taxes and from licenses and all other sources, and the expenditures, were as follows: For 1890 the receipts were $8,033 and expenditures $7.903 for 1891 the receipts were $6,550 and expenditures $7,369, and for 1892 the receipts were $7,761 and the expenditures $8,339. The evidence tends to show that at the date of this contract the city had a bonded debt of $2,300. It clearly appears that in 1889 the city made a contract with the Lamar Electric Light & Power Company, whereby it agreed to pay that company annually the sum of $1,524 for a period of 20 years for electric lights.

1. It is first objected that the ordinance is void because it was passed and approved before the proposed contract had been approved by a two-thirds vote. In other words, the claim is that an election was a condition precedent to the passage of a valid ordinance. Section 1589, Rev. St. 1889, provides that the mayor and board of aldermen shall have power, by ordinance, upon a vote of two-thirds of the qualified voters, to contract with any person or company, granting to such person or company the exclusive right to furnish gas, electricity, or water for the city and the inhabitants for a time not exceeding 20 years. We find nothing in this section which gives any support to the objection. The ordinance could not take effect as a contract until ratified by the requisite vote, but it was competent, and perfectly proper, to pass the ordinance to take effect when ratified. Indeed, an ordinance setting forth the terms of the contract, and then approved by the necessary vole, and accepted in writing by the persons proposing to build the works, was all that was necessary to make a perfect and complete contract. Section 20 of the ordinance, however, seems to contemplate a more formal contract, to be signed by the mayor for the city and by the other contracting parties. Such further formal contract was duly signed on the 31st December, 1890. We see no merit whatever in the objection.

2. The further objection that the contract is void because the ordinance was not referred to the city treasurer, on the second reading, for his statement, to be indorsed thereon, that a sufficient sum of money stood to the credit of the treasury, and unappropriated, to meet the requirements of the ordinance, was also properly overruled. Sections 1623, 1629, Rev. St. 1889, have no application to ordinances like the one in question. They apply to ordinances which direct warrants to be issued on the treasury, or operate as warrants; but they do not apply to ordinances which are contracts, or direct contracts, to be made for the performance of work or furnishing supplies in the future. When the work is done, or the...