Lang v. City of Cavalier

• Decision Date: 15 January 1930
• Docket Number: No. 5682.,5682.
• Citation: 228 N.W. 819,59 N.D. 75
• Parties: LANG v. CITY OF CAVALIER et al.
• Court: North Dakota Supreme Court

59 N.D. 75

228 N.W. 819

LANG

v.CITY OF CAVALIER et al.

No. 5682.

Supreme Court of North Dakota.

Jan. 15, 1930.

Syllabus by the Court.

A resident taxpayer of a city has the right to bring an action in his own behalf and on behalf of all other taxpayers to enjoin the unlawful disposition of public funds, and he is not required to show any interest other than that which he has as a taxpayer, or any damage or injury to him other than that which he will suffer as a taxpayer.

Plaintiff, a resident taxpayer, seeking to vindicate the rights of the public generally, is not, under the facts in this case, estopped from doing so because he as an individual may have been dilatory in bringing the action.

A municipal corporation takes its powers from the statutes which give it life, and has none which are not either expressly or impliedly conferred thereby or essential to effectuate the purposes of its creation. In defining the corporation's powers, the rule of strict construction applies, and any doubt as to their existence or extent must be resolved against the corporation; but, the existence and extent of such powers having been determined and measured, the rule of strict construction no longer applies, and the manner and means of exercising the same, where not prescribed by the Legislature, are left to the discretion of the municipal authorities.

That portion of section 183 of the Constitution, as amended (see Laws 1921, p. 258), authorizing any city to issue bonds upon any revenue producing utility owned by such city, or for the purchasing or acquiring the same, or building or establishment thereof, constitutes a grant of power and not a limitation, and cities are not thereby limited to the means thus provided in the acquisition of public utilities.

Section 4 of chapter 255, Laws 1923, as amended by chapter 197, Laws 1927, authorizing cities to pay the cost of purchasing or erecting certain public utilities by the issuance of special assessment warrants or bonds or by both warrants and bonds, does not thereby limit cities to the means thus provided in the acquisition or erection of public utilities.

A city does not create an “indebtedness” within the purview of the prohibition against incurring indebtedness as contained in section 183, Constitution, North Dakota (see Laws 1921, p. 258), by entering into a contract to purchase a public utility where such contract provides that the obligation thereby entailed is not a general obligation of the city, but a special obligation, payable only from the net revenues of the utility.

The validity of certain bonds issued by the defendant city of Cavalier is challenged by the plaintiff on the grounds that the election on the question of the issuance of such bonds was void because the question as stated was indefinite, and because it was attempted to delegate to the city council a power residing wholly in the electors; that the notice of election did not specify the interest rate and the purpose and nature of the bonds; and that the election was not properly conducted because it was held at one central voting place instead of at three voting places, one in each of the three wards of the city. Held, (1) that the preliminary resolution, the notice of election, and the ballot voted at the election conformed to the requirements of chapter 196, Laws 1927, and were therefore sufficient; (2) that, since there was no fraud in connection with the election, since notice of the election was given and of the time and place thereof, and since the electors generally participated therein, such election was at most irregular, and not void. Kerlin v. City of Devils Lake, 25 N. D. 207, 141 N. W. 756, Ann. Cas 1915C, 624.

The budget law and other statutory provisions (sections 3676 to 3680, inclusive, Comp. Laws 1913, as amended by chapter 188, Laws 1927, and sections 3684a1 to 3684a13, inclusive, Supplement to Comp. Laws 1913 [chapter 169, Laws 1925], as amended by chapter 189, Laws 1927), pertaining to the budgeting of municipal income and municipal expense and to the making of appropriations for payments to be made in carrying on municipal government, are concerned only with contributions to, and payments out of, funds made up or replenished by general taxation, and have no application to payments to be made under a contract for the purchase of a public utility which is to be paid for exclusively out of the net earnings derived from such utility, and which earnings are not and do not become a part of the general funds of the municipality.

Where any proposition is to be voted upon at an election held for that purpose, the proposition must be submitted to the voters in such a way as not to involve two or more distinct and unrelated questions.

Section 2, c. 255, Laws 1923, as amended by c. 197, Laws 1927, providing that no city shall purchase, erect, or substantially enlarge, improve, extend, or lease from others a public utility until authorized to do so at an election by a majority of the voters voting thereat, contemplates three distinct general purposes or objects: First, as to whether the city shall undertake the ownership of a public utility; second, if public utilities are already owned, whether the city shall substantially enlarge, improve, and extend them; third, whether the city shall lease such public utility from others. And, where pursuant to the provisions of this section the proposition submitted was as to whether the city should “purchase or erect” a public utility, the single question of public ownership was properly submitted to the electors, leaving the determination as to whether the city should purchase a plant already in existence or itself erect a plant to the discretion of its officers as incidental to the carrying out of the policy of public ownership determined upon by the electors.

Appeal from District Court, Cavalier County; G. Grimson, Judge.

Action by James Lang, as citizen and taxpayer of the City of Cavalier, on behalf of himself and all other taxpayers, against the City of Cavalier and others. From a judgment dismissing the action, plaintiff appeals. Affirmed.

Shure & Murphy, of Fargo, for appellant.

J. E. Garvey, of Cavalier (John P. Kyle of St. Paul, Minn., of counsel), for respondents.

NUESSLE, J.

The city of Cavalier is a municipal corporation. The defendants Garvey, Sveinson, and Green are its mayor, auditor, and treasurer, respectively. The plaintiff Lang is a citizen of, and taxpayer in, the city. He brings this action to restrain the defendant city and its officers from carrying out that certain contract for the installation of an electric light plant and the payment of the cost thereof. The case was tried to the court without a jury. The court made findings of fact and conclusions of law favorable to the defendants, and ordered judgment accordingly. The plaintiff appeals from this judgment, and demands a trial de novo in this court.

For many years Lang owned and operated the electric plant which supplied light and power to the city of Cavalier. In 1926 Lang sold his plant to the Otter Tail Power Company, a corporation engaged in the manufacture, distribution, and sale of electricity. About this time, and probably because of this sale, there was some agitation in Cavalier directed toward municipal ownership of public utilities. As a result of this agitation, an election was held on May 31, 1927, on the question of whether or not the city should purchase or erect and operate an electric plant and distribution system. The vote by a large majority was in favor of the city so doing. On July 26, 1927, an election was called and held to vote on the question of whether the city should increase its debt limit from 5 to 8 per cent. of its assessed valuation. The vote was in the affirmative. In the meantime the Fairbanks-Morse Company had been negotiating with the city authorities for the sale by the company to the city of an electric generating plant. A survey of the city was made, and its power and light requirements estimated. On the basis of the estimate as thus made, and on the representations of the Fairbanks-Morse Company as to the expense entailed in the operation of a plant such as it was proposed to provide and install, the city and the company on August 24 entered into an agreement under the terms of which the city was to provide a distribution system and a building in which an electric generating plant might be erected and installed, and the company was to furnish and install the plant in the building so provided. The city was to pay therefor the sum of $27,161.40 in fifty-eight equal installments of $468.30. Such payments were to be evidenced by pledge orders, the first of which was to be payable 30 days after the installation of the plant and the others thereafter at intervals of 30 days until all were paid. Until all of these pledge orders were paid, the plant so installed was to be considered as personal property belonging to the company, and, if the city failed to pay any order according to the terms thereof, then the company might repossess itself of the machinery and equipment.

Pursuant to the estimates as to the electric requirements of the city and its inhabitants and the cost of maintenance and operation of the plant, the city agreed as to the minimum charge that it should make for light and power, and the maximum that it might pay for salaries and labor in the operation of the plant. The city further agreed to create a special fund to be made up out of the net profits resulting from the operation of the plant, to keep the same intact for use in payment of the pledge orders, and to operate the plant until they were paid. It was also expressly stipulated that the city should not be held liable in any way on account of the purchase of said plant other than for the monthly payments thus to be made out of any net profits resulting from its operation. An ordinance was duly enacted establishing rates and creating a special fund...