Sanitation, Etc. v. Lville. & Jeff. Co. Met. Swr. Dist.

• Decision Date: 13 February 1948
• Citation: 307 Ky. 422
• Parties: Sanitation Dist. No. 1 Of Jefferson County et al. v. Louisville & Jefferson County Metropolitan Sewer Dist. et al.
• Court: United States State Supreme Court — District of Kentucky

307 Ky. 422

Sanitation Dist. No. 1 Of Jefferson County et al. v. Louisville & Jefferson County Metropolitan Sewer Dist. et al.

Court of Appeals of Kentucky. Chancery Branch, Second Division.

February 13, 1948.

1. Statutes. — Statute was required to be construed in the light of conditions at the time of its enactment. KRS 220.530.

2. Health. — Act of 1940 creating Sanitation District No. 1 of Jefferson County was required to yield in cases of conflict to 1946 Act creating the Louisville and Jefferson County Metropolitan Sewer District. KRS 76.010 et seq., 220.010 et seq 3. Municipal Corporations. — No further debt is to be assumed by nor imposed on City of Louisville, payable out of its general revenues, in case of annexation of territory embraced within a sanitation district after enactment of statute creating the Louisville and Jefferson County Metropolitan Sewer District. KRS 76.010 et seq., 220.010 et seq.

4. Municipal Corporations. — The act creating the Louisville and Jefferson County Metropolitan Sewer District relieves the City of Louisville of responsibility for the cost of constructing, extending, or maintaining its sewerage system and places the entire duty upon the Metropolitan District as a political entity. KRS 76.010 et seq.

5. Municipal Corporations. — The annexation of territory of Sanitation District No. 1 to Louisville would not render the Louisville and Jefferson County Metropolitan Sewer District liable for any existing debt. KRS 76.010 et seq., 220.010 et seq.

6. Municipal Corporations. — If territory of Sanitation District No. 1 of Jefferson County should become annexed to Louisville, the district's obligations for its revenue bonds will continue to be a prior and extra charge on that system of sewers and the property using it according to the terms of the bonds. KRS 76.010 et seq., 220.010 et seq.

Appeal from Jefferson Circuit Court.

Franklin P. Hays, Skaggs, Hays & Fahey, Will H. Fulton and Woodward, Dawson, Hobson & Fulton for appellants.

J. Verser Conner, Gilbert Burnett and John R. Moreman for appellees.

Before W. Scott Miller, Judge.

OPINION OF THE COURT BY STANLEY, COMMISSIONER.

Reversing.

Sanitation District No. 1 of Jefferson County was organized under Chapter 220, Kentucky Revised Statutes, which is an act of 1940. See Somsen v. Sanitation District No. 1, 303 Ky. 284, 197 S.W. 2d 410. The Louisville & Jefferson County Metropolitan Sewer District was organized under Chapter 76, KRS, which is an act of 1946. See Veail v. Louisville & Jefferson County Metropolitan Sewer District, 303 Ky. 248, 197 S.W. 2d 413. The Sanitary District proposes to construct a sewer system at a cost of $2,000,000, for which it will issue revenue bonds. The two districts have negotiated a contract by which it shall be connected with the city system, now under the control and management of the Metropolitan District. The execution of the contract has been authorized by the respective governing boards, but it has not been consummated pending a judicial decree declaring the powers and rights of the parties with respect to certain provisions.

As stated in Louisville & Jefferson County Metropolitan Sewer District v. St. Matthews Sanitary Association, 307 Ky. 348, 208 S.W. 2d 490, it is necessary that the city system be used for the disposal of drainage and sewerage in that territory.

The contract stipulates that Sanitation District shall retain title to its property, subject to all encumbrances and liabilities pertaining to such ownership, and that Metropolitan District shall become only its agent. Among other provisions it is provided that Metropolitan shall collect from individual sewer users service charges according to its applicable schedule as compensation for the use of the sewers and for the maintenance and operation of Sanitation's system, the same as if it were a part of and within the Metropolitan system. It is also agreed that Metropolitan shall collect a surcharge established by Sanitation for the purpose of liquidating its revenue bonds and other purposes which Sanitation deems desirable. Metropolitan will employ the same method it does to collect its own revenues and turn the net amounts over to Sanitation. That District will adopt and enforce the rules and regulations of the Metropolitan District.

The contract recites that there is a difference of opinion between the parties with respect to the question of whether under the statutes Metropolitan District would become liable for the debts and liabilities of Sanitation District in case of annexation of the territory by the City of Louisville, or whether the users of the sewers would thereby be released from their obligations to pay subsequently accruing service charges. Another difference concerns the right of Sanitation District itself to annex additional area. It is further said that Metropolitan District is not willing to consummate the contract or may cancel it if it should become liable for the debts. Wherefore, it is stipulated that the questions shall be determined by the courts.

The circuit court declared the contract to be valid and its provisions to be authorized by law. The several specific declarations are acceptable to the parties except that which adjudges that in the event of annexation of the area or any part of it by the city, Metropolitan District would not become liable for any indebtedness of the Sanitation District, but all of its indebtedness would thereupon become a general obligation of the city, payable from general tax revenues, "except to the extent of such obligations of Sanitation District exceeded the income and revenue provided for such city for such year of annexation." To the extent of such excess, the debt would remain an indebtedness of the District and be collectible from property lying within its boundary to the same extent as if the annexation had not occurred. If only a portion of the district should be annexed, the assumption of debt by the city would be "in such proportion as the amount of rentals within the territory annexed bore to the amount of rentals in the entire district."

The difficulty arises from the fact that some of the provisions of these correlative acts of 1940 and 1946 are inconsistent. The special difficulty is in respect to the debt to be incurred in the construction of the sewers by Sanitation District in case the territory should be annexed as a part of the city. An annexation proceeding is now pending.

KRS 220.530 provides as follows: "Where a city having existing sewers constructed and maintained by general tax funds of the city annexes an entire sanitation district, the city shall be bound for all the debts and liabilities, and be the owner of all the property and rights, of the district, the users of sewers in the district shall be relieved from any further rentals and obligations, and the district shall thereupon be automatically dissolved."

There are further similar provisions as to the annexation of a part of a sanitation district.

The 1946 act (Chapter 104) contains the specific provision (Section 21) that "Insofar as the provisions of this Act are inconsistent with the provisions of any other law, the...