Case Name: George M. Faulkner, Appellant, v. City of Seattle, Respondent
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1898-05-16
Citations: 19 Wash. 320
Docket Number: No. 2932
Parties: George M. Faulkner, Appellant, v. City of Seattle, Respondent.
Judges: 
Reporter: Washington Reports
Volume: 19
Pages: 320–324

Head Matter:
[No. 2932.
Decided May 16, 1898.]
George M. Faulkner, Appellant, v. City of Seattle, Respondent.
MUNICIPAL CORPORATIONS — INDEBTEDNESS'—BONDS ON SPECIAL FUND — WATERWORKS — CHANGE OF SYSTEM — ELECTIONS.
The issuance of bonds for the construction of a waterworks system payable from a fund to be created from a certain percentage of the gross revenues of the system, would not create a debt against the city, although it might ultimately prove that the proportion of revenues from the system allowed for current expenses in its operation would be inadequate to fully meet such expenses.
The fact that a special fund, which is to be provided for the construction of a system of waterworks, is not in existence, would not make expenditures incurred on the credit of that fund and which are provided as payable therefrom, an indebtedness against the city.
The submission of a proposition to the voters of a city for an extensive addition to its system of waterworks and for a change from a pumping to a gravity system, is governed by Laws 1893, p. 12, § 2, which provides that a plan therefor may be submitted to the people and adopted by majority vote, if no indebtedness is created against the city; and such addition does not come within the purview of Laws 1895, p. 18 (Bal. Code, §§ 835-837), requiring a three-fifths vote in favor of a change of system, as the latter statute contemplates and governs changes in a system in process of construction.
Appeal from Superior Court, King County. — Hon. Wm. Hickman Moore, Judge.
Affirmed.
W. T. Scott, for appellant.
W. E. Humphrey, and Edward Von Tdbél (John K. Brown, of counsel), for respondent.

Opinion:
The opinion of the court was delivered by
Scott, C. J.
This action was brought to enjoin the city from proceeding with the construction of a water works improvement known as the " Cedar River Gravity System." The appeal is from a judgment sustaining a general demurrer to the complaint. In October, 1895, an ordinance was passed providing for an election to submit the question as to whether the city should make certain additions to an existing pumping system then in use and owned by the city, the proposed additions being set forth in detail, together with the proposed manner of payment for the construction thereof. The election resulting favorably to the proposed scheme, thereafter another ordinance was passed providing for the condemnation and acquisition of property for the purpose of constructing said system as outlined in the previous ordinance, and appropriating one thousand dollars to pay certain preliminary expenses. The ordinance further provided for the letting of a contract for the construction of the system and the issuance of bonds payable from a fund to be derived by setting aside 15 per cent, of the gross receipts of the system, and that the contract should contain a provision that the contractor should take all warrants issued by the city in payment of any and all real estate rights, easements, and privileges necessary to the prosecution of the work, at par. But the ordinance contained the further provision that "payment for all such real estate rights, easements and privileges shall be made from sums obtained by the sale of warrants to the contractor as hereinbefore provided by this section, or from such other funds as the city council shall provide." The contract has not been let, but the city was about to proceed to obtain rights of way, etc., preliminary thereto. The appellant contends for a reversal of the judgment on the grounds that the construction of said system would create a debt against the city and that it is indebted in an amount exceeding the constitutional limit; also because the conditions precedent provided in the ordinance for obtaining the funds necessary for the improvement have not been complied with; and that the fund is not in existence and cannot come into existence until the completion and. acceptance of the improvements, and until that time that there could be no money in the fund against which warrants could be drawn for the costs and expenses connected therewith; and also for the reason that the question was never submitted to the electors, the proposed improvements not being an addition, but being a change of system. It is conceded that bonds issued only against a fund to be created from the revenues of the system would not create a debt against the city. Winston v. Spokane, 12 Wash. 524 (41 Pac. 888). But it is contended in this case that under the allegations of the complaint a debt would be created because the city proposes to bind itself to devote Y5 per cent, of the gross receipts to the payment of the bonds and that it further appears that the remaining 25 per cent, would not be sufficient to cover the operating expenses of the system. But, conceding this to be true, we are of the opinion that it does not appear that any debt would be created by the contract. There is no uncertainty about the proposition so far as the payment of the proposed bonds is concerned, for the ordinance expressly provides that the contractor shall have no claim against the city beyond the fund provided. It is impossible to determine at this time whether 25 per cent, of the gross receipts will be sufficient to cover operating expenses, and the allegations, of the complaint in that respect can be regarded as nothing more than conclusions or estimates. Furthermore, it is not apparent, in case the operating expenses should exceed said 25 per cent., that the city could not provide for a payment thereof in some lawful manner. Of course it could not be done by issuing warrants, which would create an additional indebtedness against the city in excess of the limit, bnt it does not appear that there is any intention to do this. It is apparent that the reservation of 25 per cent, of the gross receipts for the management of the system is to be regarded as an estimate upon the part of the city, to be assented to by the contractor, as to what would be sufficient for the operation of the plant, and it might not follow that, in case it should be found insufficient, an- additional amount could not be set aside or raised in some way. At any rate, the contract for the construction of the improvements is limited in every way from the creation of any debt in excess of the limit, and as far as all funds and costs are concerned it is this contract that must suffer rather than that the debt limit can be violated. It is also urged that as the fund is not now in existence and as the city is proposing to acquire rights of way and property rights prior to the creation of the fund, this would be a violation of the provision with reference to its debt limit, but that does not follow necessarily. There may be some method for immediate payment provided for property condemned, or an agreement possibly postponing and limiting payment to the fund contemplated under the contract for the construction of the works. If the city should wrongfully attempt to make payment for rights of way out of its general fund, the parties holding claims against that fund possibly could interfere, but it is not apparent that there is any intention to deplete this fund. Appellant further contends that, because the ordinance authorizes a change of system from a pumping to a gravity one, and also because of the extent of the alterations and additions, it can not be regarded as an addition merely, but is an entire change of system, and for that reason it was necessary that it should be assented to by three-fifths of all the electors voting on the proposition. But if this were conceded, it does not appear from the complaint that three-fifths of the people voting did not vote in favor of it. Although it is alleged that the ordinance provided for the submission of the matter to a majority of the electors, this is not equivalent to an allegation that three-fifths did not vote in favor of it. However, the further claim of the respondent must be sustained, that under chapter 8 of the Laws of 1893, p. 12, a majority vote was sufficient so long as there was no provision that the city was to become indebted for the construction of the plant, and it was not under chapter 13 of the Laws of 1895, p. 18 (Bal. Code, § 835-837), which refers to a change in a system in process of construction.
"We are of the opinion, under the facts shown, that the city might proceed with the preliminary work as is proposed, although it has not the power to issue warrants against the fund to be derived by the sale of warrants to the contractor in advance of the letting of the contract, as provision for payment may be made in some other manner, as indicated.
Affirmed.
Lea vis, Dunbar, Gordon, and Anders, LI., concur.