Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1915-08-20
MAY AVOID SPECIAL
ELECTION ON BONDS
Continued from Page One.

CURED in by Chief Justice Morris
and Judges Holcomb, Parker and
Main.
The bond issue was declared illegal
for two principal reasons; first, that
the city, after establishing a special
waterworks fund, as permitted by
law, drew on the general fund TO
pay some $4,000 to $4,000 for ex-.
penses incident to the project and
the condemnation suit, and, second,
that it had agreed to pay the bond
buyers a commission of $4,000 to
cover cost of preparation and legal
expenses, which the court declared a
subterfuge to evade the statutory re-
Quirenent that such bonds be sold at
par. A third point was that the
transaction was illegal because
usurious, the rate of interest pro-
vided per cent, being increased by
the $4,000 commission.
Change of Plan Illegal.
The court on the first point, ruled
that the city might have carried out
it's plans by making the bonds lien
against the general fund or against
a special fund, but that, after de-
Gliding upon the latter method, it
could not change and use general
fund moneys without a vote of the
people, as they had directed the ex-
penditures out of the special fund
only. On this point the decision said:
"The special fund and the acquisi-
ton of a waterworks under the plan
entirely separate from the general
funds of the city. The legislature
has not provided, neither has it given
authority to the council, to treat the
general funds as banking fund to
be loaned, as it were, to an independ-
ent enterprise, to be repaid upon the
happening of a contingency. Nor
could the council repay it's voluntary
loan out of the earnings of the water
plant if it's right to do so were ques-
toned. Under the ordinance. and
probably under the statute, the earn
ings or revenues are pledge in
gross to meet the bonds. If the reve-
nues were insufficient to meet the one
or the other. the payment of the
bonds might be compelled to the
ultimate loss or impoverishment of
the general fund. The payments, or
loans, whatever they may be called,
are a present charge upon the gen.
eral fund and a possible future
charge, and will presently, if they
have not already, put the city beyond
it's constitutional debt limit"
The appeal of the waterworks COM
pany from the decision in the con-
demnation suit, awarding the city the
plant for $88,5O0, is still pending in
the supreme court. BY preliminary
decision, however, the supreme court
had held that the city might take
possession of the plant pending de-
cision on the appeal, by paying the
$SS,5O0 into court, and this the city
administration expected to do, if the
bond issue had been held legal
Pending this action and in order
to facilitate the paving in progress in
the Maple Park. South Main, Seven
teenth, Columbia and Water street
having dicfrictc tho citv admin cf 70
ton, confident that the waterworks
plant would soon be operated by the
municipality, tore up the company's
old mains in these streets and laid
new ones, assessing the cost 10 the
ahutting property-owners under the
customary Improvement district plan.
Complicates Situation Further.
The laying of these new mains and
the expense attached complexities still!
further the situation created by the
supreme court decision. Common
talk has it that the city and company
had a stipulation by which the COM
pany agreed to take over and pay
decided adversely to the city, but
this Manager c. A. Harmony of the
company denies, saying that. though
H. c. Heermans, representing the
bondholders, signed it, Wilbur B.
Foshay. president of the Washington
Public Service company, did not.
Asked what policy the company
would pursue, Manager Harmony
said:
eff the city will leave us alone so
our credit will be restored as it was
before proceedings to take over the
plant were started, the company will
take over the mains and pay for
them. but if the city starts in again
to acquire the plant, the company
won't pay for the mains because it
can't get the money"