Taxpayers and Citizens of City of Mobile v. Board of Water and Sewer Com'rs of City of Mobile

• Decision Date: 27 May 1954
• Parties: TAXPAYERS & CITIZENS OF CITY OF MOBILE et al. v. BOARD OF WATER & SEWER COM'RS OF CITY OF MOBILE. I Div. 602.
• Court: Alabama Supreme Court

Page 97

73 So.2d 97

261 Ala. 110

TAXPAYERS & CITIZENS OF CITY OF MOBILE et al. v. BOARD OF WATER & SEWER COM'RS OF CITY OF MOBILE.

I Div. 602.

Supreme Court of Alabama.

May 27, 1954.

Geo. J. Moore and Carl M. Booth, Circuit Sol., Mobile, for appellants.

S. P. Gaillard, Jr., Mobile, for appellee.

PER CURIAM.

There are two appeals shown by this record: one taken by the Board of Water and Sewer Commissioners of the City of Mobile (case No. 601 continued in this Court), and the other by certain Taxpayers and Citizens of the City of Mobile and its police jurisdiction, and the solicitor of the Thirteenth Judicial Circuit (case No. 602 in this Court). The only assignments of error appear to be made in case No. 602. The appellant in case No. 601 has not assigned errors, and to the errors assigned in case No. 602 the appellant in case No. 601 has joined issue by averring that there is no error in the record. This case is supplemental to one heretofore considered in this Court. City of Mobile v. Board of Water and Sewer Commissioners, 258 Ala. 669, 64 So.2d 824.

The instant case is said to be filed under the authority of Act No. 859, approved September 19, 1953, General Acts 1953, page 1148. That statute authorizes certain public corporations and public boards to institute proceedings in the circuit court for the purpose of validating proposed bonds or other evidences of debt prior to their issuance. The prior suit undertook to apply validation proceedings authorized to be conducted by the court as set out in Title 7, beginning with section 169, Code, which only applies to certain municipal corporations and other political subdivisions of the State.

It was questionable then whether the Board of Water and Sewer Commissioners of the City of Mobile, which had been organized under authority of Act No. 775, approved September 11, 1951, General Acts 1951, page 1359, was a political subdivision of the State within the meaning of section 169, supra. But the Court, without deciding that question, proceeded to make a declaration of the legal questions involved under the Declaratory Judgments Act of the State. Code 1940, Tit. 7, § 156 et seq. But the Act of 1953, supra, confers the validation power referred to in that case upon such an organization as the Board of Water and Sewer Commissioners of the City of Mobile.

The instant case has reference to a proposal to issue $10,000,000 of water service revenue bonds of the Board of Water and Sewer Commissioners of the City of Mobile in addition to the series of bonds which were validated in the former suit referred to above. The bonds there proposed to be issued were series A. They have been issued. The bonds now proposed to be issued are series B for $6,000,000 and series C for $4,000,000, and are subject to the deed of trust and other proceedings which were conducted in respect to that procedure and approved in the former suit. They were all authorized by the Act No. 775, approved September 11, 1951.

The trial court in the instant suit held that the proposed issue constituting series B and C being subject to the same legal status as series A, the proceedings for their consummation were legal and regular and ordered them to be validated.

On the former appeal the payment of the bonds then proposed to be issued were to be secured by a pledge of revenues to be collected by the board under a schedule of rates then in effect and those revenues were by that arrangement pledged under said deed of trust for the purpose of satisfying the obligations of the board thereby incurred. In said former suit this Court held that such pledge of revenue to be collected was not in violation of any constitutional provision brought to the attention of the Court. Those constitutional provisions were particularly sections 94, 222 and 225. In support of that conclusion the Court pointed out that the proposed bonds to be issued did not constitute in any sense of the word an obligation or indebtedness of the city because the board had become the purchaser for a valuable consideration and in good faith of the water and sewer system of the City of Mobile and, therefore, it was not bound by the election provision nor the limit of indebtedness fixed by the Constitution upon municipalities, nor the prohibitions of section 94, supra.

The schedule of rates then in effect was not in question insofar as their reasonableness was concerned. But on March 8, 1954 the Board of Water and Sewer Commissioners passed a resolution which increased the rate applicable alike to users within the police jurisdiction and those within the city limits of Mobile, which rate embraced sanitary sewer service as well as water supply. So that all water consumers were charged a rate based upon the water consumption, but that also included the right to use the sanitary sewer system.

In the instant litigation consumers of the water in the police jurisdiction and outside of the city limits where the sanitary sewer system did not extend, made complaint that it was unfair to charge them the same rate for water that was charged water consumers who used the sewer system, whereas they did not have the opportunity of doing so. Upon a hearing of that question in the circuit court, as appears in the final decree, the court recognized the justice of that claim and refused to validate that increase in the rate insofar as it applied to water consumers within the police jurisdiction and outside the city limits not having the opportunity of using the sewer system.

The record shows that subsequent to that holding by the court the board of commissioners passed a resolution amending the rate schedule adopted March 8, 1954, wherein the water consumers within the police...