Morris v. Ellis

• Citation: 266 N.W. 921,221 Wis. 307
• Parties: MORRIS v. ELLIS ET AL.
• Decision Date: 28 April 1936
• Court: United States State Supreme Court of Wisconsin

221 Wis. 307

266 N.W. 921

MORRIS

v.ELLIS ET AL.

Supreme Court of Wisconsin.

April 28, 1936.

Appeal from a judgment of the Circuit Court for Vilas County; A. H. Reid, Judge.

Affirmed.

This is an action commenced on February 27, 1935, by Cora P. Morris, on behalf of herself and all others similarly situated, as plaintiff, against E. W. Ellis, Frank Hall, and O. A. Priebe, constituting the Eagle River Light and Water Commission, and Village of Eagle River, incorporated, defendants. The action sought declaratory relief and was tried to the court. On August 14, 1935, the court entered a judgment adjudging and declaring plaintiff's rights as demanded in the complaint. Defendants appeal.

The material facts will be stated in the opinion.Sanborn, Blake & Aberg and Glen H. Bell, all of Madison, and Ronald M. Adams, of Eagle River, for appellants.

Carlyle B. Wurster, of Merrill, and Lewis G. Brown, of Lake Geneva, for respondent.

WICKHEM, Justice.

On August 2, 1926, the board of the village of Eagle River adopted a resolution reciting that the state board of health had condemned the municipal water supply, declaring the necessity that wells be constructed and that acceptance of bids for the installation of wells be submitted to the electors. On November 1, 1926, at a special meeting of the village board, plans and specifications for a water supply system were adopted. At this time a notice to contractors for bids was approved. On January 17, 1927, the village board adopted a resolution reciting the offer of Layne-Bowler Chicago Company to construct a well guaranteeing 300 gallons of good potable water a minute with a 100,000-gallon storage tank and other accessories of the water supply system according to the plans and specifications, to sell the same to the village of Eagle River for $30,971, and to accept payment in the form of mortgage certificates secured by trust deed on the plant. This resolution directed that a special election be called to vote upon the acceptance of the contract and the issuance of the mortgage certificates. The election was held on February 1, 1927, and the electors voted 133 to 123 to authorize the board to execute the contract. On June 3, 1927, the village board adopted an ordinance providing for the issuance and prescribing the form of the trust deed and of the mortgage certificates. Plaintiff is a holder of two of these certificates. Both the trust deed and the certificates recite on their face that “No municipal liability is created hereby and this certificate is not supported or payable by direct taxation of said village.” On June 17, 1927, the contract between the village of Eagle River and the Layne-Bowler Company was executed. This contract recites the offer of the Layne-Bowler Company to construct the well water system in accordance with the plans on file, and sets forth the jurisdictional facts (the resolutions, referendum, etc.) The village agrees to furnish land upon which to locate wells and right of way. On July 6, 1927, the village purchased and paid for in cash the land on which the well was finally located. The new water system was unsatisfactory, but after some changes were made and the well had been operated for nearly a year, the board adopted a resolution accepting the well and authorizing the delivery to the Layne-Bowler Company of the mortgage certificates. The well continued to give trouble during the years 1930, 1931, 1932 and 1933. In August, 1933, the board adopted a resolution that the village borrow the necessary funds to insure a new well supply system.

It is unnecessary to recite the procedures taken in accordance with this resolution. It suffices to state that on December 1, 1934, the village placed a new well in operation at a cost of $18,000. This well was connected to the Layne-Bowler standpipe and distributed through the original mains. The village is in default on all payments of principal and interest accruing on the mortgage certificates after July 1, 1932. The complaint asks declaratory relief as follows: (1) That it is the duty of the village of Eagle River to take all proper and necessary steps to insure that the mortgage certificate redemption fund of its water utility is kept at a level sufficient to meet all maturing installments of principal and interest on the outstanding mortgage certificates; (2) that it is the duty of the village to ask for an increase in rates to protect against a default in the payment of principal and interest accruing on all outstanding certificates; (3) that the additions, extensions, and improvements heretofore referred to are subject to the first lien of the trust deed as security for the protection of the mortgage certificate holders; (4) that the entire water utility was intended to be and is covered by the lien of the trust deed for the benefit of the mortgage certificate holders; and (5) for such other relief as may be lawful and proper in the premises.

The answer sets up facts claimed to show that the referendum was wholly invalid and that consequently the Layne-Bowler Company contract, trust deed, and mortgage certificates are void. Defendant denies that the village has ever operated the well water system and its old water system as one public utility or that the Layne-Bowler system has become worn out or undesirable. It is alleged that in 1932 the Public Service Commission of Wisconsin, at the instance and request of some of the owners of mortgage certificates, instituted an investigation of the accounting practices of the Eagle River Water and Light Commission; that the Public Service Commission, after a hearing, entered an order which dealt with the accounting practices of this utility and the maintenance of the mortgage certificate redemption fund; that in September, 1934, the defendant village brought an action in the circuit court for Dane county, Wis., to review this order, and that this suit is pending. Judgment is demanded: (1) That the trust indenture and mortgage certificates be declared void; (2) in the alternative, that the complaint be dismissed in so far as it prays relief in connection with maintaining the mortgage redemption fund, or any application to the Public Service Commission of Wisconsin in connection with matters of accounting or the revenues from the different branches or parts of the water utility of the village of Eagle River; (3) declaring that the trust indenture securing the mortgage certificates is a lien upon only the Layne-Bowler well water system, and that the defendants have no duty or obligation to bring under the lien of said trust indenture the new well or property described heretofore. There is also an answer by the trustees of the trust deed asking for construction of the trust indenture, seeking dismissal of the action in so far as it deals with accounting practices of the Eagle River Light and Water Commission and the maintenance of the mortgage certificate redemption fund, and for instructions as trustee.

The judgment provided that the trust deed and certificates were valid; declared that the additions to the plant here involved are subject to the lien of the trust deed; adjudged that it was the duty of the village of Eagle River and the Eagle River Light and Water Commission promptly to apply to the Public Service Commission for an increase in rates and take all other steps reasonably calculated to increase its revenues and decrease its operating expenses to the end that the utility might be able to meet all lawful charges and expenses, including principal and interest on the mortgage certificates as the same fall due. It was further adjudged that the issues in this case are not the same as those presented before the Public Service Commission in which case appeal is pending to the circuit court for Dane county. It was further adjudged that the court reserves the right in this proceeding, upon proper application therefor, to make such further order, judgment, or mandate as may be necessary or proper to effectuate this judgment.

[1] It is first contended that this is not a proper case for declaratory relief. As to the first and second requests for relief, it is the contention of defendant that there is no controversy over the obligation of the village to take proper steps to increase its revenues to meet the expenses of operation and the retirement of the certificates. It is claimed that nobody disputes this obligation, and that the only question is what the village and water commission must do. However, if this is true, no prejudice can result from the adjudication of this undisputed obligation, and if other justiciable questions were presented, this would furnish no ground for reversal.

[2] The request that the court adjudicate that all additions, extensions, and improvements mentioned and described in the complaint are subject to the first lien of the trust deed is claimed not to be within the Declaratory Judgments Act (St.1935, § 269.56) for the reasons that this depends upon a construction of the trust indenture, and that this controversy is not ripe for judicial determination. It is defendants' position that no declaratory judgment is necessary since all questions relating to the property covered by the trust deed can be determined in a foreclosure action or other action taken upon the trust deed. The answer to this is expressly given in the opening paragraph of the act. Section 269.56 (1) reads in part: “Courts of record within their respective jurisdictions shall have power to declare rights, status and other legal relations whether or not further relief is or could be claimed.” Neither is the fact that other relief is or could be asked material, although the fact that a conventional cause of action is alleged and proved might justify a court in omitting the declaration and entering a judgment for such other relief as the facts warrant.

[3] It is also intimated that plaintiff has here asked and received a mere construction of a writing (the...