Straughan v. City of Coeur D'Alene

• Decision Date: 21 December 1932
• Docket Number: 5905a,5905
• Citation: 53 Idaho 494,24 P.2d 321
• Parties: GEORGE STRAUGHAN, IVIN R. JOHNSON and H. A. ANDERSON, Appellants, v. CITY OF COEUR D'ALENE, a Municipal Corporation of the State of Idaho, JESS RAY SIMPSON, Mayor, PAUL SCHROEDER, F. H. LAFRENZ, GUS NELSON, RALPH GAINES, S. H. MCEUEN, L. M. STODDARD, P. J. BRODERICK and JAMES O'TOOLE, Councilmen of the City of Coeur d'Alene, Respondents
• Court: Idaho Supreme Court

24 P.2d 321

53 Idaho 494

GEORGE STRAUGHAN, IVIN R. JOHNSON and H. A. ANDERSON, Appellants, v. CITY OF COEUR D'ALENE, a Municipal Corporation of the State of Idaho, JESS RAY SIMPSON, Mayor, PAUL SCHROEDER, F. H. LAFRENZ, GUS NELSON, RALPH GAINES, S. H. MCEUEN, L. M. STODDARD, P. J. BRODERICK and JAMES O'TOOLE, Councilmen of the City of Coeur d'Alene, Respondents

Nos. 5905, 5905a

Supreme Court of Idaho

December 21, 1932

MUNICIPAL CORPORATIONS-POWERS TO INCUR INDEBTEDNESS-CONSTITUTIONAL LAW.

1. Statute and ordinances providing for acquisition by municipality of lighting plant and waterworks system by imposing "liability" upon municipality without providing for collection of annual tax for sinking and retirement fund to pay for such utilities, held unconstitutional (Laws 1931, chap. 152; Const., art. 8, sec 3).

2. Power to amend Constitution rests with the people.

3. Changing conditions and economic and social trends may be considered in determining constitutionality of legislation but they do not warrant judicial amendment of Constitution.

4. While legislative construction of Constitution is persuasive it is not controlling.

5. Taxpaying residents and citizens could maintain bill to restrain city from acquiring lighting and waterworks systems under statute and ordinances imposing liability upon city without providing for annual tax to discharge it contrary to Constitution (Laws 1931, chap. 152; Const., art. 8, sec. 3).

APPEALS from the District Court of the Eighth Judicial District, for Kootenai County. Hon. Gillies D. Hodge, Judge.

Actions for injunction. Judgments for defendants. Reversed.

Judgment reversed, with instructions. Costs to appellants.

Gray & McNaughton and Robt. H. Elder, for Appellants.

The ordinance and plan it adopts is unconstitutional because: (a) No indebtedness in any amount has been authorized by the electors; (b) No tax has been provided to discharge within twenty years the interest and principal of the indebtedness contemplated. (Def. Ex. "A.") (Feil v. City of Coeur d'Alene, 23 Idaho 32, 129 P. 643, 43 L. R. A., N. S., 1095; Miller v. City of Buhl, 48 Idaho 668, 284 P. 843, 72 A. L. R. 682; Boise Dev. Co. v. Boise City, 30 Idaho 675, 167 P. 1032; Williams v. Emmett, 51 Idaho 500, 6 P.2d 475.)

Legislative construction of the Constitution will ordinarily be given serious consideration by the courts, but where the act of the legislature is manifestly to evade the Constitution or to reverse a prior interpretation of the Constitution made by the highest court of the state, a stern attitude for the enforcement of the Constitution as written and previously construed will be taken. (Eau Claire Nat. Bank v. Benson, 106 Wis. 624, 82 N.W. 604; Lyle v. State, 80 Tex. Cr. 606, 193 S.W. 680; Cooley's Constitutional Limitations, 8th ed., vol. 1, p. 115.)

W. B. McFarland, for Respondents.

By the great weight of authority statutes such as the act of 1931 and the plan and procedure such as contemplated by the City of Coeur d'Alene are constitutional when viewed with reference to the constitutional provision limiting municipal debt. (Footnote to Miller v. Buhl, 72 A. L. R. 682; Garrett et al. v. Swanton et al., 216 Cal. 220, 13 P.2d 725; Carr v. Fenstermacher, 119 Neb. 172, 228 N.W. 114.)

There are many states with Constitutions identical, or nearly so, with ours, and under the decisions of these states the rule announced in the Feil case is not followed. (Shelton v. City of Los Angeles, 206 Cal. 544, 275 P. 421; Garrett v. Swanton, supra; City of Bowling Green v. Kirby, 220 Ky. 839, 295 S.W. 1004.)

GIVENS, J. Lee, C. J., Budge, C. J., Varian, JJ., and Johnson, D. J., concurring. Leeper, J., took no part. Morgan and Holden, JJ., dissent.

OPINION

GIVENS, J.

Appellants, taxpayers of the City of Coeur d'Alene, sought to enjoin the city councilmen and city from carrying into effect two ordinances regularly adopted by a sufficient vote of the citizens of the city, under the provisions of chapter 152, Sess. Laws 1931, one providing for the acquisition by the city of a municipal lighting plant; the other, a waterworks system.

While separate actions, they involve identical issues, and have been consolidated for consideration.

Appellants contend that chapter 152, Sess. Laws 1931, page 255, and the ordinances thereunder, are unconstitutional under the holdings of Feil v. City of Coeur d'Alene, 23 Idaho 32, 129 P. 643, 43 L. R. A., N. S., 1095; Miller v. City of Buhl, 48 Idaho 668, 284 P. 843, 72 A. L. R. 682, and Williams v. City of Emmett, 51 Idaho 500, 6 P.2d 475. Respondents do not urge that there are any vital distinctions between the contracts considered in Feil v. City of Coeur d'Alene and Miller v. City of Buhl, supra, and the contemplated municipal action herein, but urge that those cases should be overruled because not sustained by the weight of authority, and not in keeping with the modern trend of municipal political economy, and that the conclusions were arrived at therein by faulty reasoning.

Chapter 152, supra, and the two ordinances do, however, differ from the situation in the two above cases in two particulars; one, an election was held herein as authorized by the chapter, and rates for service are only required to be reasonable.

If, however, the method of acquiring the utility creates a liability within the contemplation of art. 8, sec. 3, holding an election satisfies only in part the requirement of said section, there remaining unfulfilled that of providing a sinking and retirement fund to pay for the utility.

It was held in Feil v. City of Coeur d'Alene, supra, that the provision as to rates in the ordinance therein considered, i. e., adequate to pay for the plant within twenty years, was of no particular effect, since in no event could the rates charged be other than reasonable.

There thus remains under the present contemplated method outlined by the statute carried into the ordinance the constitutional defect pointed out in the Feil case as to the imposition on the municipality of a liability in connection with the charge to, or payment by, the municipality for service rendered itself as distinguished from its inhabitants. The Feil case stated as follows:

"The city proposes by the ordinance No. 380 to purchase a water system and to become the owner thereof. It proposes, on the other hand, to make those who use water from this water system, the purchasers of water, pay for the waterworks system. The persons who are to pay for the system, however, will not be the owners when final payment is made. The property of the municipality is not taxed and no specific property is pledged. The citizens, as a whole, or as a class, are not taxed. So far as the municipality is concerned, it is to either have the free use of the water for municipal purposes or else it must levy a tax sufficient to raise revenue to pay its proportion into this fund. It certainly is not going to pay itself for the use of its own property, nor can it levy a tax for the purpose of paying into the city treasury rentals for the use of municipal property. If it contributes anything to this fund, it will necessarily have to levy a tax annually for the purpose of raising sufficient revenue to pay its proportionate share or reasonable rate in contributing to this common fund that is to be used to purchase this property. At this juncture, however, the city will be confronted with another serious problem. When it engages in public ownership of a water system and sells water and charges rates to individual consumers, the receipts from this source will at once become an income, under the provisions of sec. 3, art. 8, of the constitution, which it is forbidden to pledge or hypothecate for more than the current year, and yet it is hypothecating that income for twenty years. In other words, it purchases a property which, in the ordinary course of business, would produce a revenue or income to the city. As soon as these rentals are collected, they will belong to the city, and the fund, whether it be a general or a 'special fund,' will belong to the city and be city or municipal property.

"As said by the supreme court of Illinois in City of Joliet v. Alexander, 194 Ill. 457, 62 N.E. 861, It does not make any difference that the certificates (bonds) are payable out of the special fund, if the city is the owner of the fund. All its obligations are payable out of some particular fund. . . . The section of the constitution limiting indebtedness provides that at the time of incurring any indebtedness the city shall provide for the collection of a direct annual tax sufficient to pay the interest on the debt as it falls due, and to pay and discharge the principal within twenty years from the time of contracting the debt, and every indebtedness is payable from some particular fund.'"

"After it owns that property, the receipts from water rents would clearly be an income or revenue within the purview and meaning of the constitution, but in advance of the purchase it undertakes to appropriate and hypothecate that income for a period of twenty years so that it may not be an income after the purchase is made. This is mere jugglery with words. This revenue will be no less an income after this transaction is consummated than it would have been had the city bought and paid for the property at the time. If this method can be pursued for purchasing a waterworks system, the same method could be pursued in purchasing an electric light and power plant, and a similar method might be adopted for a purchase of a telephone system within the municipality, and so also a street railway, and there will be no limit, either to the power of purchase and acquisition or to the power of the city council to incur indebtedness upon the prospective...