Payne v. City of Racine

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtMARTIN
Citation217 Wis. 550,259 N.W. 437
Decision Date05 March 1935
PartiesPAYNE v. CITY OF RACINE ET AL.

217 Wis. 550
259 N.W. 437

PAYNE
v.
CITY OF RACINE ET AL.

Supreme Court of Wisconsin.

March 5, 1935.


Appeal from an order of the Circuit Court for Racine County; E. B. Belden, Circuit Judge.

Suit by William Payne against the City of Racine and another. From an order sustaining a demurrer to the complaint, plaintiff appeals.--[By Editorial Staff.]

Affirmed.

This is a taxpayer's suit commenced on September 10, 1934, to restrain the city of Racine from proceeding to build and erect an intercepting sewer and sewage treatment plant and from spending any moneys for such purpose or incidental thereto, and from making, executing, or delivering bonds secured as provided in agreement entered into between said city and the United States of America relative to a certain loan and grant for the building of such project by federal aid, and from making, executing, or delivering a mortgage or mortgages incumbering in any manner the said sewage system as provided in said agreement; and, further, that said contract or agreement with the United States of America be declared null, void, and of no effect; and that the plaintiff shall have such other and further judgment, order, or relief as may be just and equitable in the premises. From an order entered October 20, 1934, sustaining a demurrer to the complaint, the plaintiff appeals. The facts will be stated in the opinion.

[259 N.W. 438]

Beck, Smith & Heft, of Racine, for appellant.

Cornelius Colbert, City Atty., of Racine (Adolph Kanneberg, of Madison, of counsel), for respondents.


MARTIN, Justice.

There is no dispute on the facts. In the year 1929 the city of Racine purchased real estate to be used as a site for a sewage disposal plant. In May, 1930, the city authorized and issued general obligation bonds in the sum of $400,000 for the planning, construction, and establishment of units of a sewage disposal system. Of the $400,000, approximately $374,000 was spent for the construction of the “Root River Interceptor” and the “Sixth Street Pumping Station”; $26,000 of this bond issue remains on hand. In July, 1931, the city authorized the issuance of $750,000 general obligation bonds for constructing additional units of a sewage disposal system. Only $150,000 of this issue was sold. Part of the proceeds of this issue was used for the construction of the “Lakeshore Interceptor,” a unit of the sewage disposal system, leaving a balance on hand of approximately $43,000, or a total balance on hand of $69,000 from the proceeds of the two bond issues mentioned. On March 13, 1934, a referendum was held in the city of Racine on the question of whether or not the city should complete the sewage disposal system by a federal grant of approximately $205,000 and a loan of approximately $535,000, approved by the Public Works Administration, and secure payment of the loan by issuing bonds in the amount of the loan payable solely out of the revenues of the sewage disposal system. The proposal was rejected at the election.

The bonds were not to be issued under chapter 67 of the Wisconsin Statutes; hence the referendum was not the referendum provided for in said chapter. No law or ordinance required the referendum. In the months of July and August, 1934, a loan and grant agreement between the city of Racine and the United States of America providing for the completion of the sewage disposal system with the financial assistance of the Federal Emergency Administration of Public Works was considered by the common council, approved by them, and executed on behalf of the city and the United States of America on August 30, 1934. This agreement provides that, if the city of Racine will construct an intercepting sewer and sewage treatment plant, the United States government will assist in financing the construction of the plant. The government will give a grant of 30 per cent. of the cost of labor and materials expended on the project and will purchase mortgage bonds to be issued under the provisions of section 66.06 (22) and section 66.06 (9), Stats., in a sum sufficient to cover the balance of the cost, said balance not to exceed a maximum of $598,000 unless an additional amount is approved by the government. The city of Racine in addition is to use the balance of $69,000 on hand from the sale of bonds previously issued for the construction of the system. The mortgage bonds so issued are to be secured by a pledge of the income of the sewage disposal system and the property of which the system as a whole consists.

The plaintiff contends that the term “public utility” as defined in the statutes does not include sewage systems; that the constitutional amendment to article 11, § 3, adopted in 1932, was not applicable to an extension of an existing sewage system; that chapter 133, Laws of 1933, attempted to enlarge the meaning of the term “public utility”; and, assuming that the constitutional amendment (1932) is applicable, that a municipal indebtedness is created when existing city property is mortgaged in addition to such proposed extension; further that the agreement between the city and the government which requires the expenditure of the $69,000 now on hand from the sale of bonds previously issued for the construction of the sewage system and the mortgaging of the real estate which the city purchased in December, 1929, upon which to erect a sewage treatment plant, creates a municipal indebtedness

[259 N.W. 439]

within the meaning of the constitutional debt limitation; also that the pledging of all income from “entire system” without segregation of the income attributable to the extension only creates a municipal indebtedness. Plaintiff further contends that the city has no authority to divert the $69,000 now on hand from the proceeds of the two former bond issues to the special purpose provided for in the agreement between the city and the government.

[1][2][3] Does the term “public utility” in the constitutional amendment embrace a sewage disposal system such as the city of Racine proposes to construct? Prior to the 1932 amendment, article 11, § 3, of the Wisconsin Constitution, provided in part as follows: “No county, city * * * or other municipal corporation shall be allowed to become indebted in any manner or for any purpose to any amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness. Any county, city * * * or other municipal corporation incurring any indebtedness as aforesaid, shall, before or at the time of doing so, provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within twenty years from the time of contracting the same. * * *”

In 1929 and 1931 the Wisconsin Legislature passed a joint resolution providing for, and in 1932 the people of the state of Wisconsin by referendum approved, the following, which thereby became an amendment to article 11, § 3: “Providing, that an indebtedness created for the purpose of purchasing, acquiring, leasing, constructing, extending, adding to, improving, conducting, controlling, operating or managing a public utility of a town, village or city, and secured solely by the property or income of such public utility, and whereby no municipal liability is created, shall not be considered an indebtedness of such town, village or city, and shall not be included in arriving at such five per centum debt limitation.”

The term “public utility” as used in the foregoing amendment must be considered to include all plants or activities which the Legislature can reasonably classify as public utilities in the ordinary meaning of the term. The rule of constitutional construction, where the document is submitted to the electors for adoption, is stated as follows: “Words or terms used in a constitution, being dependent on ratification by the people, must be understood in the sense most obvious to the common understanding at the time of its adoption, although a different rule might be applied in interpreting statutes and acts of the legislature. This gives rise to the recognized rule of...

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33 practice notes
  • Jacobs v. Major, No. 85-0341
    • United States
    • United States State Supreme Court of Wisconsin
    • June 23, 1987
    ...this section by the legislature as manifested in the first law passed following the adoption of the constitution. Payne v. Racine (1935), 217 Wis. 550, 259 N.W. 437.' Buse v. Smith, 74 Wis.2d 550, 568, 247 N.W. 141 In Beno the court found the term "civil process," which was not defined in t......
  • Dairyland Greyhound Park, Inc. v. Doyle, No. 2003AP421.
    • United States
    • Wisconsin Supreme Court
    • July 14, 2006
    ...manifested in the first laws passed following adoption of the provision. Buse, 74 Wis.2d at 568, 247 N.W.2d 141 (citing Payne v. Racine, 217 Wis. 550, 259 N.W. 437 (1935)). Legislation that implements a constitutional provision is thought to be a fair gauge of contemporary interpretation an......
  • Libertarian Party of Wisconsin v. State, No. 95-3114-OA
    • United States
    • United States State Supreme Court of Wisconsin
    • April 9, 1996
    ...or activities which the legislature can reasonably classify as public utilities in the ordinary meaning of the term." Payne v. Racine, 217 Wis. 550, 555, 259 N.W. 437 (1935). Moreover, "anything calculated to promote the education, the recreation or the pleasure of the public is to be inclu......
  • State ex rel. Hammermill Paper Co. v. La Plante, No. S
    • United States
    • United States State Supreme Court of Wisconsin
    • April 9, 1973
    ...is presumed to be constitutional and will be held unconstitutional only if it appears so beyond a reasonable doubt. Payne v. Racine, 217 Wis. 550, 561, 562, 259 N.W. 437; Gibson Auto Co. v. Finnegan, 217 Page 793 Wis. 401, 412, 413, 259 N.W. 420; Petition of Breidenbach, 214 Wis. 54, 60, 25......
  • Request a trial to view additional results
33 cases
  • Jacobs v. Major, No. 85-0341
    • United States
    • United States State Supreme Court of Wisconsin
    • June 23, 1987
    ...this section by the legislature as manifested in the first law passed following the adoption of the constitution. Payne v. Racine (1935), 217 Wis. 550, 259 N.W. 437.' Buse v. Smith, 74 Wis.2d 550, 568, 247 N.W. 141 In Beno the court found the term "civil process," which was not defined in t......
  • Dairyland Greyhound Park, Inc. v. Doyle, No. 2003AP421.
    • United States
    • Wisconsin Supreme Court
    • July 14, 2006
    ...manifested in the first laws passed following adoption of the provision. Buse, 74 Wis.2d at 568, 247 N.W.2d 141 (citing Payne v. Racine, 217 Wis. 550, 259 N.W. 437 (1935)). Legislation that implements a constitutional provision is thought to be a fair gauge of contemporary interpretation an......
  • Libertarian Party of Wisconsin v. State, No. 95-3114-OA
    • United States
    • United States State Supreme Court of Wisconsin
    • April 9, 1996
    ...or activities which the legislature can reasonably classify as public utilities in the ordinary meaning of the term." Payne v. Racine, 217 Wis. 550, 555, 259 N.W. 437 (1935). Moreover, "anything calculated to promote the education, the recreation or the pleasure of the public is to be inclu......
  • State ex rel. Hammermill Paper Co. v. La Plante, No. S
    • United States
    • United States State Supreme Court of Wisconsin
    • April 9, 1973
    ...is presumed to be constitutional and will be held unconstitutional only if it appears so beyond a reasonable doubt. Payne v. Racine, 217 Wis. 550, 561, 562, 259 N.W. 437; Gibson Auto Co. v. Finnegan, 217 Page 793 Wis. 401, 412, 413, 259 N.W. 420; Petition of Breidenbach, 214 Wis. 54, 60, 25......
  • Request a trial to view additional results

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