New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-10-23
GENERAL TRACY
UPHELD BY COURT
DEBT LIMIT OF CITY
DETERMINED.
Contract Liabilities for I'm
proUements Mast Be Includ-
ed-Diuided Opinion.

cision the Court of Appeals to-day fixed
New York City's margin of unused
bonded Indebtedness on June So 1908, at
S54. ,646, sustaining General Benja-
min F. Tracy. except in two particulars,
as forecast exclusively in Wednesdays
Tribune.
General Tracy. as referee. reported
that the margin on June so. 1908. was
S106, ,205. IA. The court holds that there
must be included in the constitutional
debt computation S54.0OO.OO0 for con-
tract liabilities of the city for public i'm
provements. less the amount already
charged against the city as earned con-
tracts, which is S2.553. 1888. and exempt
water bonds held in sinking funds.
amounting to $685., 1913 26, leaving $4S.-
097.44s "A to be included in the city's
Indebtedness which was not inclHded in
General Tracy's report.
Jefferson NJ. Levy, David Meyer and
the Fleischmann Realty and Construc-
ton Company sought by injunction 20
prevent further subway construction in
New York. including the Fourth avenue
subway, in Brooklyn. at a cost of S15,-
SS6.3s1, on the ground that the city
would exceed it's constitutional debt
limit. The lower courts sustained Cen
eral Tracy's findings.
The two particulars in which the court
reverses General Tracy will materially
reduce the leeway afforded the city for
new subway construction. In the first
particular where the court overruled
General Tracy it is decided that there
shall be included in all debt computation
contracts which have been certified by
the city Controller, where heretofore the
amount of such contracts was included
in the debt computation only to the ex-
tent as they were completed from time
to time.
SINKING FUND INCLUDED.
Regarding the second particular in
which the court differs from General
Tracy, heretofore special sinking fund
securities have not been computed in the
general Indebtedness of the city. but un-
der this decision they must be.
While it cannot be estimated at pres
ent Just how much leeway the city has
under the Court Of Appeals decision. it
seems to be apparent that the proposed
constitutional amendment to be voted on
at the November election must be ap-
proved by the people il any substantial
construction is TO be continued In New
York City. If the people approve the
proposed constitutional amendment the
city will have at it's disposal for subway
construction after January 1 next about
S179.000,0OO, as it is estimated that
Sl25,OO0,O0O can be raised by the pro-
posed amendment.
Three opinions were written in the
case. the chief one ~ Judge Gray and
the other two by Chief Judge Cullen and
Judge Haight. Chief Judge Cullen and
Judges Werner and Hiscock concur with
Judge Gray, except as to the allowance
of the securities in the sinking fund TO
meet the water debt created since the
constitution of 1894 as a deduction from
the general Indebtedness of the city
Judges z. T. Bartlett and Vann concur
with Judge Haight, who wrote the dis
senting opinion. Judges E. T. Bartlett,
Haight. Vann. Werner and Hiscock con-
cur with Chief Judge Cullen as to the eff
feet of the sinking funds Judge GRAY
dissents from Chief Judge Cullen on this
point.
JUDGE GRAY'S OPINION.
The prevailing opinion by Judge Gray
holds that the distinction made by Cen
eral Tracy, that contracts for public i'm
provements do not create debt, but are
agreements for future indebtedness. is
an erroneous one 1t says:
This iS "a alrino n xyiaxry oP %I,o
tional provision which is too technical
and which tends to narrow too much Il
provision intended to safeguard the
municipalities of the state against COM
ing under an excessive Indebtedness. If
We are to fix the margin of the constitu-
tional limit for indebtedness with refer
ence to what are the fixed obligations of
the city, as are its stocks or its bonds
then these contract obligations must be
included; but am strongly of the Opin-
ion that to do so will result in the failure
of the purpose which led to the constitu-
tional provision. That purpose is obvi-
Gus. 1t was to prevent the Municipalities
from improVidently contracting debts for
other than ordinary current expenses of
administration. II was TO restrict their
borrowing capacity and thus to minimize
the mischievous consequences to the tax
payers of extravaganza in city expendi-
lures.
The words in which the people have
expressed their Will In the fundamental
law of the state should be read in the
broadest sense which will give effect to
It, The constitutional provision is a
limitation upon the power of the city
to become indebted; that is to say, to
contract any indebtedness which shall
exceed an amount fixed with reference
10 its taxable real estate, and If the
question whether liabilities upon con-
tract obligations are TO be included in
ascertaining the present indebtedness is
a debatable one, then il should be re-
solved in favor of the view which eff
fectuates the purpose of the provision in
all its integrity.
II is conceded that none of these con-
tracts, involving expenditures for up
ward OF S54, 100000, was payable from
current revenues or annual tax collec-
tions. They were made for permanent
public improvements. pursuant 20 Sec
fion 149 of the charter, under certifica-
ton by the Controller. as to the fund ap-
plicable thereto. They are chargeable 70
and are payable from bonds TO be issued
for a term of years. Such bonds are to
he Maid from future taxation. and their
issue has been authorized by the munich
pal authorities prior 10 the execution OF
the contracts.
Why should these contracts not be re-
earded as constituting an Indebtedness
Of the city? The law presumes that a
Dsrtv TO a contract will perform his
agreements If the incurrlng of con-
- .+,,oI obligatiOn to DaY for public i'm