Case ID: wis_124/html/0302-01.html
Source: Caselaw Access Project
Author: {"author": "Wmsnow, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Town of Vaughn, Respondent, vs. Town of Montreal, Appellant.
    
      February 2
    
    February 21, 1905.
    
    
      ‘Towns:- Division: Apportionment of “indebtedness then incurred:” Water rentals.
    
    Where, prior to the formation of a new town from a part of a town already organized, the latter had contracted to pay a certain sum annually to a water company for hydrant rentals, such rentals accruing after the division of the town were not, at the time of such division, any part of “the indebtedness then legally incurred” by the old town, within the meaning of sec. 672, Stats. 1898, providing for apportionment of such indebtedness.
    Appeal from an order of tbe circuit court for Iron county: •JoiiN K. PaRise, Circuit J"udge.
    
      Reversed.
    
    Tbe complaint in tbis action alleged, in substance, tbe following facts: In 1890 tbe plaintiff town entered into a contract witb tbe Hurley Water Company by wbicb it agreed to pay tbe water company $4,000 a year for hydrant rentals ■and water service for a period of years. In 1900 tbe defendant town was organized out of a portion of tbe territory of •plaintiff town, and tbe county board, by tbe ordinance of division, determined that tbe defendant town should be chargeable witb 23.15 per cent, of tbe indebtedness of tbe old town. Subsequent to such division tbe plaintiff town paid out ‘$16,333.33 for hydrant rentals under such contract, and it now brings tbis action to recover 23.15 per cent, thereof, viz., .$3,781.06, from tbe defendant town, as tbe share for which tbe defendant is liable under such ordinance of division. Tbe •defendant demurred to tbe complaint. Tbe court overruled tbe demurrer, and tbe defendant appeals.
    For tbe appellant there was a brief by Lamoreux ■& Shea, and oral argument by W. F. Shea.
    
    They argued, among other tilings, that such a contract as that here involved does not create any debt. It is not the contract, but the performance of the service under it, which gives rise to the debt. Herman v. Oconto, 110 Wis. 660, 672 — 674; Stedman v. Berlin, 97 Wis. 505, 511, 512; Smith v. Dedham, 144 Mass. 177, 10 N. E. 782; Crowder v. Sullivan, 128 Ind. 486, 28 N. E. 94; Ludingion W. S. Co. v. Ludington (Mich.) 78 N. W. 558; Saleno v. Neosho (Mo.) 27 L. R. A. 769; Cunningham v. ■Cleveland, 98 Eed. 657; Weston v. Syracuse, ,17 N. Y. 110; Beard v. Hoplcinsville (Ky.) 44 Am. St. Rep. 229 — 243, 23 L. R. A. 405, notes; Whitney Arms Co. v. Barlow, 68 N. Y. 34; Wood v. Partridge, 11 Mass. 488, 493.
    For the respondent there was a brief by Geo. C. Foster, attorney, and B. Sleight, of counsel, and oral argument by Mr. Foster and Mr. Sleight.
    
    They contended, inter alia, that in sec. 672, Stats. 1898, the legislature plainly had in mind debts to become due as well as debts already due, for it provides for payment of the new town’s proportion of the indebtedness “at such times as the same shall become payable.” Note, also, the use of the term “indebtedness” in sec. 944. Had the intention been otherwise, the term used in sec. 672 would not have been “indebtedness then legally incurred” but "“indebtedness then legally dueP See Knight v. Ashland, 61 Wis. 233, 245; Hensley v. People, 84.111. 544; In re Lam-bic’s Estate, 94 Mich. 489; U. S. Blowpipe Co. v. Spencer, 40 W. Va. 698.
   Wmsnow, J.

Sec. 672, Stats. 1898, provides as follows:

“Whenever the county board shall form a new town from parts of a town or towns already organized they shall, by their ordinance of division, determine what portion of the indebtedness then legally incurred by such old towns shall be chargeable to the respective portions so detached to form such new town; and such new town shall pay the proportion of such indebtedness so declared chargeable to such detached portions at such time as the same shall become payable; and for that purpose tbe town board of sucb new town shall levy a tax upon all tbe taxable property of sucb portions thereof so chargeable therewith.”

The only question presented upon this appeal is whether the annual hydrant rentals falling due after the division constitute “indebtedness then legally incurred,” i. e., at the time of the division. It seems to us entirely clear that this question must be answered in the negative. This court has held,, after careful consideration and review of the authorities, that such payments falling due upon the rendition of services in the future, though fixed by the terms of an existing contract, do not constitute “existing indebtedness,” within the meaning of sec. 3, art. XI, of the state constitution, which prohibits any municipal corporation from becoming indebted to an amount, “including existing indebtedness,” exceeding five per centum of its taxable property. Stedman v. Berlin, 97 Wis. 505, 73 N. W. 57; Herman v. Oconto, 110 Wis. 660, 86 N. W. 681. Possibly by some refined reasoning a distinction might be drawn between the terms “indebtedness existing” and “indebtedness incurred,” but for all practical purposes they seem to be synonymous. A debt which exists must have been incurred, and, on the other hand, if it has been incurred, and has not been in some way discharged, it exists. While the contract to pay hydrant rental in the future' as water is furnished is a contract obligation, no indebtedness accrues until the water has been furnished, and the statute speaks not of contract obligations in general, but of contract obligations which have become indebtedness.

By the Court. — Order reversed, and action remanded witH directions to sustain the demurrer to the complaint.