The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-07-03
They CANNOT Be PAID,
A Decision of Considerable
Interest to the City's
Creditors.
THE AUDITOR IS SUSTAINED.
Contractors Must Keep Informed
Regarding the Municipal =;
Finances. =.

The Supreme Court has decided the case
of A. Smith, assignee of City creditors,
against Auditor Broderick in favor" of the.
contention originally set up by the Audi
tor when he refused to pay the demand for
old claims. BY the decision, too, it: ap-
pears that there is no way in which the.
creditors can get their money, Tor the courts
will not allow it. and the constitution bars
any possibility of the question being sub.
mitted to the people.
The question involved was the right of
the City to pay from the funds of one year
the demands of the preceding one. The
decision sustains Auditor Broderick's con-
tention that such proceeding would not
be legal. The plaintiff Smith, was the as
signee of various claimants, the claims dat
ing prior to June 8, 1893, upon which date
he com menced his action against the City.
Just before the commencement of the &C
ton the Supervisors had passed a resolu-
ton authorizing the City and County At
torney to allow judgment to be rendered
against the City in all such cases as those
brought by Smith. Smith presented his
judgment to the Supervisors with de-
mand for its payment and this demand
was approved by the Finance Committee
on July 26, 1893. The authorized claim
was then presented to Auditor Broderick,
who refused to.approve the same and an
application for a writ of mandate COM
polling him to audit the.demand was made.
The amount of the claims was $35f8 03.
| The basis of the Auditors refusal to
audit the demand was that the claims
were for material furnished during the
year ending June 30, 1898, and that, there
fore, the funds of that year being ex
hausted, the demands could not be paid
out OF the income of the new fiscal year.
Section Is of article XI of the constitu-
ton, upon which the decisions of both the
Superior and the Supreme Court are based
is as follows:
No county, city, town, township, board of
education or school district shall incur any
indebtedness or liability in any manner, or for
any purpose, exceeding in any year the income
and revenue provided for it for such year,
without the assent of two-thirds of the qualified
electors thereof, voting at an election to be
held for the purpose
1t had already been decided by the Su-
preme Court that the trainers OF the con-
stitution meant by this section that in no
year were the expenses of municipality
to exceed its income. To the charge that
such construction of the statutes is IN
furious to the City and works a hardship
upon those who contract with it, the court
says:
We have neither the right nor the dispos-
ton, by judicial Interpretation, TO take away
the wholesome restriction thus imposed by the
constitution. Of course in giving effect to
this radical change from the pre-existing con-
ditions OF things. it will not be strange II some
shall be found TO suffer, but II must be remem-.
bered that all are presumed TO know the law,
and that whoever deals with municipality is
bound to know the extent of its powers.
There is ample power under the statutes
which constitute the charter OF San Francisco
to provide Tor all the contingencies that are
suggested in the arguments on behalf of ap-
pellant The Supervisors are authorized to
levy tax that will raise such an amount of
money .'as the said board may deem sufficient
TO provide for the payment of all demands
upon the treasury authorized. by law to be
paid out of the same" The limitation upon
this power, viz: 81 35 on the 500, is conceded
to be far beyond any possible necessities OF the
municipality.
The assessment roll OF property subject to
taxation is made prior to the levy of this tax,
and in determining the amount OF this tax to
be levied, the Supervisors, aided by the expe-
rience of the municipality in former years, and
by the estimates of the several departments of
the City, are enabled to exercise judicious
consideration of the expenditures likely to be
incurred during the year. and TO make such
provision for unforeseen emergencies as ordi-
nary prudence would suggest. If
the amount of money so providedfs not needed
for the expenditures of the year, 1t can be car
ried forward into the next fiscal year; whereas
if the revenue thus provided is not sufficient
to meet the expenditures, there is no provision
for meeting the deficiency, except by the "as-
sent OF two-thirds OF the qualified electors
thereof voting at an election TO be held for the
purpose"
The fact that the demand of the appel
liant was reduced to a judgment does not,
in the opinion of the court, give him any
stronger right of recovery. The provision
of the constitution mentioned cannot be
evaded by consent on the part OF the
officers of a municipality that judgment
may be entered against it upon an open
demand that constitutes no liability. The
effect of the Judgment was only to make
definite and of record claim which was
before open to controversy and to convert
disputed into an audited claim. The fact
that the Judgment was evidence of an obi
CATION does not foreclose investigation as
10 the nature of the obligation as well as
the liability which it imposes.
Regarding the proposition of levying
tax in a subsequent year to pay the de-
ficiencies of the previous ones the court
says:
The collection in the subsequent fiscal year
of tax levied by the Board OF Supervisors for
the express purpose of paying this judgment
did not give to the plaintiff any additional
right TO the payment OF his claim, or any right
to the money thus collected. The provision
of the constitution limiting the power of the
municipality in increasing liability to the
income and revenue provided for it in such
year." means that only the income and reve-
nue. that had been provided for the expendi-
lures for the year prior to increasing the liza
bility, can pc appropriated for the payment of
such expenditures To hold that any def
cheney in the revenue of one year can be met
from taxes collected ina subsequent year I'M
der the guise that they, had been collected for
the express purpose of meeting such def
cheney, would sweep away the entire restric-
ton which the constitution intended to place
upon municipal extravaganza.
Unless it was the duty of the Auditor to allow
the claim of the appellant the writ of mandate
cannot be allowed. By section 81 of the con-
solidation act that officer is required to be
constantly acquainted with the exact condi-
ton of the treasury and every lawful demand
upon it," BY section S4 of the same act when
ever q claim against the treasury is presented
to him for auditing he must satisfy himself
whether the money is legally due and remains
unpaid, and whether the payment thereof
from the treasury OF the City and County is
authorized by law, and out of what fund"
Section SO declares that If he allow any de-
mand on the treasury not authorized by the
act he shall be liable to the City and County
individually and on his official bond for the
amount so illegally allowed Inasmuch, there
fore, as it appears from the facts found by the
court that the claim of the appellant was not a
legal demand upon the treasury, which he had
the right to have paid out of the funds therein
at the time he presented the same to the
Auditor, the Auditor was justified in refusing
its allowance.
The judgment is affirmed.
The members of the Associated Creditors
of the City and County of San Francisco
did not believe that the decision OF the
Supreme Court could have been other than
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