Schuldice v. City of Pittsburg

• Decision Date: 02 January 1912
• Docket Number: 111
• Citation: 234 Pa. 90,82 A. 1125
• Parties: Schuldice, Appellant, v. Pittsburg
• Court: Pennsylvania Supreme Court

82 A. 1125

234 Pa. 90

Schuldice, Appellant, v. Pittsburg

No. 111

Supreme Court of Pennsylvania

January 2, 1912

Argued October 18, 1911

Appeal, No. 111, Oct. T., 1911, by plaintiff, from decree of C.P. No. 2, Allegheny Co., Jan. T., 1911, No. 45, dismissing bill in equity in case of Charles A. Schuldice v. The City of Pittsburg, William A. Magee, Mayor, and Eustace S. Morrow City Controller. Affirmed.

Taxpayer's bill to enjoin a city from negotiating a loan without the assent of the electors, and to have declared void ordinances providing for the widening of certain city streets.

From the bill and answer FRAZER, P.J., found the following facts:

1. Plaintiff is a resident and taxpayer of the city of Pittsburg.

2. The city of Pittsburg is a city of the second class under the laws of this commonwealth. William A. Magee is the mayor, and Eustace S. Morrow is the city controller thereof.

3. The assessed value of the taxable property of the city of Pittsburg is $751,226,965, and the amount of the indebtedness of the city created and incurred without the express assent of the electors as provided by law, is $19,664,641.05.

4. By an ordinance duly passed by the select and common councils of the city and approved by the mayor, the proper officers of the city are authorized and directed to issue and sell bonds of the city, amounting in the aggregate to $81,000, for the purpose of providing funds to purchase water mains belonging to the Monongahela Water Company, and now laid in that portion of the city which was formerly known as the boroughs of Esplen and Elliott, and also for the purchase of water to be supplied to consumers in territory annexed to the city now supplied by the South Pittsburg Water Company.

5. By ordinances of the city of Pittsburg, duly passed by select and common councils and approved by the mayor the widening of Diamond street from Smithfield street to Gala alley, of Oliver avenue from Smithfield street to Grant street, and of Cherry way from Fifth avenue to Sixth avenue, was authorized, each of the ordinances authorizing the improvement of these highways providing "that the costs, damages and expenses occasioned thereby, and the damages caused by the change of grade of said public highways be assessed against and collected from the properties specially benefited thereby."

6. The highways referred to in the previous paragraph are located in the business center of the downtown district of the city of Pittsburg, where the value of real estate is greater than in any other locality of the city.

7. The damage to property abutting on these highways, resulting from land taken and change of grade, is estimated at $2,216,000 in the bill. To what extent that sum will be offset by benefits collected by the city is problematical. The defendants, however, in their answer aver that the ultimate liability of the city will not exceed the sum of $951,000 on account of the proposed improvements.

8. Included in the indebtedness of the city of Pittsburg of $19,664,641.05, as found in the third finding of facts, are the following items:

(a) The sum of $382,977.07, being the preliminary estimate of the cost of grading, paving and curbing certain public highways and constructing certain public sewers. For the purpose of completing those improvements contracts have been let. The work, however, is not finished and final estimates have not been made. The ordinances under which these improvements are being made provide that the cost and expenses of the same shall be paid and collected from property benefited thereby.

(b) The sum of $2,183,201.87, being the amount of a legal indebtedness of the city, evidenced by certain bonds known as the "Railroad Compromise Bonds." The indebtedness for which these bonds were issued was incurred, and the bonds issued, prior to the adoption of the present constitution.

(c) The sum of $121,000, evidenced by certain funded debt bonds, bearing date of January 1, 1872, and payable January 1, 1912, which indebtedness was incurred, and the bonds therefor issued, prior to the adoption of the present constitution.

(d) The sum of $5,214,700, evidenced by refunding bonds as follows:

Refunding bonds, dated June 1, 1882, maturing

June 1, 1912,

$77,000

Refunding bonds, dated June 1, 1883, maturing

June 1, 1913,

1,403,000

Refunding bonds, dated Dec. 1, 1885, maturing

Dec. 1, 1915,

3,734,700

These refunding bonds were issued by the city without the consent of the electors, in pursuance of the provisions of an act of assembly entitled: "An Act authorizing cities of the second class to issue bonds to an amount equal to the street bonds and temporary loan bonds now outstanding, not exceeding $6,000,000, for the purpose of retiring or paying temporary loan bonds and street bonds," approved May 9, 1879, P.L. 49. Of these bonds $2,933,500 were issued for the purpose of extinguishing and paying off certain prior bonds issued by the city for work done under contracts made for street improvements previous to the adoption of the present constitution; and $2,281,200 were issued for the purpose of extinguishing and retiring certain prior bonds issued by the city after January 1, 1874, for the improvement of certain streets. The indebtedness for which these bonds were issued was created under the provisions of an act of the general assembly, entitled: "An Act to provide for the improvement of Penn Avenue, and other avenues and streets in the City of Pittsburg," approved April 2, 1870, P.L. 796. Of the bonds refunded $2,134,600 were actually issued prior to January 1, 1874, for streets improved prior to that date, and the remainder were issued for improvements made subsequent to that date or immediately preceding it. The indebtedness created by issuing bonds under the Penn avenue act, for improvements made both before and after January 1, 1874, was refunded by the refunding bonds bearing date June 1, 1882, June 1, 1883, and December 1, 1885, referred to above. The refunding bonds are all of like form and character, and the indebtedness created by the city under the provisions of the Penn avenue act, whether created before or after January 1, 1874, was refunded indiscriminately by the issues of the refunding bonds herein referred to, so that the identity of the original issues was obliterated.

(e) Bonds to the amount of $1,566,400 purchased by the sinking fund commission, under the provisions of the Act of March 7, 1901, P.L. 20, and now held by that commission, which bonds were issued by the city since January 1, 1874, without the consent of the electors.

(f) Defendants further contend that the following items should be deducted from the aggregate indebtedness: (a) cash in the hands of the sinking fund commission for the redemption of bonds issued without the consent of the electors, amounting to $865,938.92; (b) the sum of $576,802.31, outstanding special assessments made against property benefited by municipal improvements. Of this latter sum $381,291.31 is due the city under special assessments, lawfully made and municipal liens already filed for the recovery of the same, but which still remain open and unpaid; and $195,511 consists of assessments lawfully made against properties benefited by improvements, which still remain open and unpaid, but where liens have not as yet been filed, the time in which the same are required by law to be filed not having expired. These assessments can be used for no other purpose than in the payment of the amounts due contractors for the improvements.

The court dismissed the bill.

Error assigned among others was the decree of the court.

Decree affirmed at cost of appellant.

Guy D. Wallace, for appellant. -- "Indebtedness" is to be taken in its ordinary meaning, and as used in the constitution means what the municipality is bound to pay or perform and does not mean the difference between what the municipality is bound to pay and the value of any assets it may own, or any claim it may have against other parties: Lake County v. Rollins, 130 U.S. 662 (9 S.Ct. Repr. 651); Beard v. Hopkinsville, 95 Ky. 239, 44 Am. St. 222; Brooke v. Philadelphia, 162 Pa. 123; Davis v. Braddock Boro., 48 Pitts. Leg. J. 145; Bank for Savings et al. v. Grace et al., 102 N.Y. 313 (7 N.E. Repr. 162); Chicago v. McDonald, 176 Ill. 404 (52 N.E. Repr. 982).

Lee C. Beatty, with him Charles A. O'Brien, for appellees. -- Bonds issued for the purpose of refunding an indebtedness incurred prior to January 1, 1874, are not to be considered a new debt, in ascertaining the constitutional limit of two per cent: Hirt v. Erie, 200 Pa. 223; Com. v. Councils of Pittsburg, 88 Pa. 66; Houston v. Lancaster, 191 Pa. 143

The amount of bonds and cash in sinking fund was properly deducted: Brooke v. Philadelphia, 162 Pa. 123; Bruce v. Pittsburg, 166 Pa. 152; Elliott v. Philadelphia, 229 Pa. 215; Kronsbein v. Rochester, 76 A.D. 494 (78 N.Y.S. 813).

Before BROWN, MESTREZAT, POTTER, ELKIN, STEWART and MOSCHZISKER, JJ.

OPINION

MR. JUSTICE ELKIN:

By this bill a taxpayer sought in the court below to enjoin the city of Pittsburg from negotiating a loan in the sum of $81,000 authorized by ordinance without the assent of the electors for certain specified municipal purposes. He also asked that three separate ordinances providing for the widening of certain streets and avenues be declared null and void, and that the appellees be restrained from taking any further steps to enforce the same. The ground upon which appellant asked the relief prayed for was that the city had already exceeded its borrowing capacity of two per centum as limited by the constitution without the assent of the electors. This raises a question of fact to be determined upon the basis of what the constitution requires. It therefore...