Mead-Richer v. City of Toledo

• Citation: 114 Ohio App. 369,182 N.E.2d 846
• Decision Date: 04 December 1961
• Docket Number: MEAD-RICHER
• Parties: , 19 O.O.2d 389 et al., Appellants, v. CITY OF TOLEDO et al., Appellees.
• Court: United States Court of Appeals (Ohio)

Page 369

114 Ohio App. 369

182 N.E.2d 846, 19 O.O.2d 389

MEAD-RICHER et al., Appellants, v. CITY OF TOLEDO et al., Appellees.

Court of Appeals of Ohio, Sixth District, Lucas County.

Dec. 4, 1961.

Syllabus by the Court.

1. A sewerage system acquired, constructed, owned and operated by a city within its corporate limits, the service of which is to its inhabitants, is a public utility within the purview of Section 4, Article XVIII of the Constitution.

2. A city acquiring territory by annexation in which at the time a county interceptor sewer is in existence and connected with a city interceptor sewer as a part of the city sewer system may, under the terms of Section 729.52 of the Revised Code, pay out of the city sewer fund the assessments of the county on that part of such sewer becoming due thereon and refund to abutting property owner installments of assessments previously paid by them. Such area so annexed is a 'sewered' area and an 'enlargement' or an 'extension' of the city sewer system.

3. An ordinance authorizing payment by the city from its sewer fund of the assessments for that part of the county interceptor sewer annexed to the city is, in effect, a payment for the construction of such sewer lying within the city limits and is not in conflict with Section 729.52 of the Revised Code; but, if such facts do not admit of such construction of such statute, then the statute is invalid as limiting the authority, self-executing, provided and vested in the municipality under Section 4, Article XVIII of the Constitution. Such payment is for a public purpose and not an unlawful payment of a private debt or obligation.

4. Payment by the city of the county assessment for the construction of that part of the county interceptor sewer annexed to the city as a part of the city sewerage system out of the city sewer fund derived from charges by the city on sewer users for any debt incurred for the construction thereof is not for the purpose of providing revenue for the general fund of the city and such charges are not in the category of taxes subject to regulation by statute under Section 13 of Artice XVIII of the Constitution.

Boggs, Boggs & Boggs, Toledo, for appellants.

Robert C. Dorrell, Toledo, for appellees.

SMITH, Presiding Judge.

The plaintiffs, appellants herein, duly filed a taxpayer's suit against the defendants, appellees herein, the city of Toledo, a charter city, joining its mayor and members of counsel, seeking a permanent injunction enjoining payment by the city of assessments levied by the County of Lucas, on benefited property for the construction of an interceptor sewer, known as Sanitary Sewer No. 49 (a part of which is located within the city by virtue of annexation proceedings), out of the Sewer Rental Fund created by the city by collection of rental charges against city resident sewer users. The trial court denied the injunction, and taxpayers appeal to this court on questions of law and fact.

Hereinafter, plaintiffs, appellants herein, will be referred to as the taxpayers, and the defendants, appellees herein, as the city.

The taxpayers claim that such payment disbursed out of such fund is ultra vires in that this appropriation of the fund acquires the character of funds derived from taxation subject to constitutional regulation by the state Legislature and is in conflict with state statute, and also that such payment is not for a public purpose but an unlawful payment by the city of a private debt or obligation.

The city contends that the payments are for a public purpose in the operation of a municipal public utility, to wit, a public sewerage system, and, if its ordinance authorizing such disbursement of the sewer fund conflicts with the state statute, then the ordinance is, nevertheless, valid because the statute is unconstitutional as an invasion of the city's constitutional vested right as a home-rule charter city.

The questions presented are, first, whether the ordinance of the city is in conflict with state statute, and, second, if so, whether the state statute is invalid as an encroachment on the right of municipal home rule under the Constitution, and third, whether the sewer rental charge and the use thereof by the city come within the purview of Section 13 of Article XVIII of the Ohio Constitution, whereby 'laws may be passed to limit the power of municipalities to levy taxes.'

The evidence, stipulated by the parties to consist of the transcript of all testimony and exhibits attached thereto, offered and received in the Common Pleas Court, reveals that on May 10, 1937, the city passed an ordinance pursuant to Sections 3891-1 and 3891-5 of the General Code, which sections were re-enacted into Sections 729.49 and 729.52 of the Revised Code, effective October 1, 1953, to wit:

Section 729.49, Revised Code. 'The legislative authority of a municipal corporation which has installed or is installing sewerage, a system of sewerage, sewage pumping works, or sewage treatment or disposal works for public use, may, by ordinance, establish just and equitable rates or charges of rents to be paid to the municipal corporation for the use of such services, by every person, firm, or corporation whose premises are served by a connection thereto. Such charges shall constitute a lien upon the property served by such connection, and if not paid when due shall be collected in the same manner as other municipal corporation taxes. The legislative authority may change such rates or charges from time to time as is deemed advisable. The legislative authority of a municipal corporation operating under a charter may establish such schedule of rates and provide for its administration by designating the department or officer to be charged with the enforcement fof sections 729.49 to 729.52, inclusive, of the Revised Code.'

Section 729,52, Revised Code. 'The funds received from the collection of sewer rentals under section 729.49 of the Revised Code shall be deposited weekly with the treasurer of the municipal corporation. Money so deposited shall be kept as a separate and distinct fund and shall be known as the sewer fund. When appropriated by the legislative authority of the municipal corporation, the fund shall be subject to the order of the director of public service of a city or of the board of trustees of public affairs of a village. The director or board shall sign all orders drawn on the treasurer of the municipal corporation against such fund, which fund shall be used for the payment of the cost of the management, maintenance, operation, and repair of the sewerage system and sewage pumping, treatment, and disposal works. Any surplus in such fund may be used for the enlargement or replacement of the system and works, for the payment of the interest on any debt incurred for the construction thereof, and for the creation of a sinking fund for the payment of such debt, but shall not be used for the extension of a sewerage system to serve unsewered areas or for any other purpose.'

On January 1, 1960, the city enacted the following:

'That it hereby declares and determines as the policy of the city of Toledo that whenever an area is annexed to the city of Toledo in which there has been constructed or is in the process of construction of a sanitary intercepting sewer, the cost and expense of which has been assessed or will be assessed against the benefited property owners by the Board of Commissioners of Lucas County, Ohio, then, and in that event, beginning with the installment of assessment next due and payable, the city of Toledo upon sich annexation having been finally accepted by council, will assume and order to be paid to the Treasurer of Lucas County, Ohio, or to the property owner paying them, all such installments of assessments outstanding after said time and shall assessments to be paid annually, prior to assessments to be paid annually, prior to billing, as each such installment becomes due and payable. Assessments paid in full before certification and levy by the county auditor or installments of scuh assessments paid by the property owner after such time shall be refunded to the property owner paying them on the same basis.'

On February 8, 1960, the city passed two ordinances directing the auditor of the city to make withdrawals from the sanitary sewer fund and place such funds in a special account, known as 'Special Projects Account No. 1652,' on his books, and to draw vouchers against such 'Special Account' to the Treasurer of Lucas County in payment of the 1959 installment of assessment for county Intercepter Sewer No. 49 assessed against benefited property which had been annexed to the city after the completion of the construction of the sewer; and also to refund and pay to certain property owners the amount of the 1959 installment of assessment levied by the county commissioners for Sewer 49, which assessments had theretofore been paid. And, thereupon, the auditor withdrew from the sewer fund the sum of $7,721.84 and placed it in such special account. He then drew two vouchers payable to the Treasurer of Lucas County for payment of the 1959 installment of assessments in the amounts of $1,469 and $3,212.64; and, also from such special account, he drew vouchers totaling $3,040.20 in payment to property owners so assessed to reimburse them for the payment by them of such assessments against their property for Sewer No. 49.

The evidence further shows that intercepter sewers constructed in the city in the past have been financed out of funds obtained from bond issues without assessments being made upon the abutting properties; erties; and that Intercepter Sewer No. 49, constructed by the county, is an extension of the city Intercepter Sewer No. 1640, to which it is connected. It should be observed that payment by the city of that part of assessments for the construction of Intercepter Sewer No. 4. lying within the city uniformly puts the property annexed to the city on...