Stark v. City of Jamestown
| Decision Date | 26 April 1949 |
| Docket Number | 7132. |
| Citation | 37 N.W.2d 516,76 N.D. 422 |
| Court | North Dakota Supreme Court |
Syllabus by the Court.
1. Every reasonable presumption is in favor of the constitutionality of a statute enacted by the legislature. This presumption is conclusive, unless it is clearly shown that the enactment is prohibited by the constitution of the state or of the United States.
2. The only test of the validity of an act regularly passed by a state legislature is whether it violates any of the express or implied restrictions of the state or Federal constitutions.
3. It is not the object of a state constitution to make specific grants of legislative power, but to limit power where it otherwise would be general and unlimited. All power which is not limited by the constitution inheres in the people, and an act of a state legislature is legal when the constitution contains no prohibition against it.
4. The legislature has authority to define the powers of cities and to prescribe the manner of their exercise.
5. The Revenue Bond Law (NDRC 1943, Chapter 40-35) authorizes a city to acquire, operate, and maintain waterworks and sewer disposal systems, to prescribe and collect charges for the services furnished by such systems, and in anticipation of the collection of revenues therefrom to issue revenue bonds to finance in whole or in part the cost of the acquisition construction, reconstruction, improvement, betterment, or extension of such systems and to pledge to the punctual payment of such bonds and interest thereon all or any part of the revenues of such systems including the revenues of improvements, betterments, and extensions which may be constructed subsequent to the issuance of such bonds as well as the revenues of existing systems, plants, works, and instrumentalities, and the properties of the system so improved, bettered, or extended; and requires that each of such revenue bonds shall recite in substance that the bond including interest thereon, is payable solely from the revenue pledged to the payment thereof and that such bond does not constitute a debt of the city.
It is held that the legislative assembly did not transcend its constitutional powers in conferring upon cities the authority to issue revenue bonds in the circumstances and for the purposes prescribed by the Revenue Bond Law; that such bonds do not create any indebtedness or liability on the part of the city that issues the bonds and do not fall within any of the provisions of Sec. 183 of the constitution.
6. Issuance and sale of such revenue bonds by a city for improvements and extensions of an existing waterworks system and an existing sewage disposal plant owned by the city do not create an indebtedness or obligation of the city within the meaning of Section 183 of the constitution prescribing a city's debt limit, where such bonds as to both principal and interest are payable solely out of the future revenues of such waterworks and such sewage disposal plant, though the revenues to be derived from the entire waterworks system and from the entire sewage disposal plant, and not merely from the improvements and extensions thereto, are pledged for the payment of such revenue bonds, and the existing waterworks owned by the city had present income.
Robert E. Fredricks, of Jamestown, for appellants.
Harry E. Rittgers, of Jamestown, for respondents.
This action was brought by the plaintiff as a taxpayer in the City of Jamestown on behalf of himself and all other taxpayers similarly situated to enjoin the City of Jamestown and the mayor and members of the city council of said city from issuing and selling certain revenue bonds, which it is alleged the said defendants propose to issue and sell for the purpose of obtaining funds to make certain improvements in and to construct additions and extensions to water and sewer systems theretofore established in said city. The court made findings of fact and conclusions of law favorable to the defendants and ordered judgment denying the relief sought and further ordered a dismissal of the action. Judgment was entered accordingly and the plaintiff appeals from such judgment and demands a trial anew in this court.
The action is predicated upon the proposition that the issuance and sale of such revenue bonds would result in the defendant city incurring a debt in excess of the limitations prescribed by Section 183 of the Constitution of the State; and that the issuance and sale of such bonds are contrary to certain provisions of NDRC 1943, Chapter 40-35, known as the Revenue Bond Law. The issues presented in the case therefore involved the construction of certain provisions of the Revenue Bond Law, NDRC 1943, Chapter 40-35, in connection with Section 183 of the Constitution of this state.
The City of Jamestown owns and operates a water system and also a sewer system. Both systems have been in existence and operation for a considerable period of time. In 1937 a filtration plant was constructed and put into operation as a part of the water system. The filtration plant was designed for the treatment of 1,400 gallons of water per minute and at the present time during the summer months the filtration plant is being operated at not less than twice its normal capacity. Thus, it is shown that after July 1, 1946, some 259 new water services and meters had been installed, 91 of these had been installed after July 1, 1948. The settling tanks are too small to handle the increased volume of water and as a result lime is carried over into the filters causing them to become clogged and in turn requiring more frequent washing thereby increasing the amount of water used by the city, as about 120,000 gallons of water are used in each washing. That as a result of the use of the plant in excess of its capacity the hardness of water supplied to the users has been greatly increased and the quality of the water has been impaired. The present water storage facilities of the city consists of two tanks in the northern part of the city each having a total capacity of 130,000 gallons making a total maximum storage capacity of both banks of 260,000 gallons. The present storage tanks are old, badly rusted and corroded. They have been repaired repeatedly at much expense to the city in an attempt to prolong their use and at the time of the institution of this action one of the tanks was leaking badly at the base and both of the tanks were in such condition that they might break down and become useless at any time. The principal growth of the city has been toward the south and during the summer months the water pressure has decreased to such an extent that water frequently flows from the faucets at a mere trickle. In order to equalize the pressure throughout the city and furnish necessary fire protection, it is necessary that further storage facilities be constructed south of the city. The minimum practical storage capacity in order to meet all probable needs is two million gallons.
The present sewage disposal plant of the city was designed in 1928 and constructed during 1928 and 1929. When the plant was constructed some consideration was given to the future growth of the city but at the present time the plant is being used to its ultimate capacity and, in fact, the quantity of sewage is so large that the sewage is not being retained in the settling chambers for the period required for proper sedimentation. The present sludge chambers have a capacity of only about one-half the capacity prescribed by the present requirements of the State Health Department.
With this rather critical condition confronting them the city council employed a well known firm of engineers to examine the present water and sewer facilities and consider what steps must be taken to provide adequate water and sewer systems for the city. Such engineers submitted an extended report covering every conceivable phase of the matter and making specific recommendations as to the improvements that ought to be made in order to meet the needs of the city. Thereafter, the city council approved an improvement project involving expenditures of approximately $1,000,000 and decided to finance the entire cost of the improvement by revenue bonds to be paid solely out of the income from the water and sewer systems of the city. The city council caused to be submitted to the electors of the city the question whether the city council should be authorized to issue revenue bonds of the city in an aggregate amount not exceeding the physical value of the water and sewerage utility nor $1,000,000. The proceeds of such bonds to be utilized to pay for the proposed improvement to the water and sewerage utility but that no payments on such bonds either for principal or interest should be made out of 'tax levies or to constitute a debt or indebtedness of the city * * * but all thereof to be payable solely out of the net revenues to be produced by the operation of said utility.' The result of the election was that 1260 votes were cast in favor of the proposed bond issue and 120 votes were cast against the proposal.
There is no dispute between the parties but that there is an actual necessity for the proposed improvement. The only dispute concerns the plan or method which the city council has adopted for financing the proposed improvement. In plaintiff's brief on this appeal it is said: ...
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