Case Name: THE SAN FRANCISCO GAS COMPANY v. HENRY BRICKWEDEL
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1882-12-28
Citations: 62 Cal. 641
Docket Number: No. 8,510
Parties: THE SAN FRANCISCO GAS COMPANY v. HENRY BRICKWEDEL.
Judges: 
Reporter: California Reports
Volume: 62
Pages: 641–646

Head Matter:
[No. 8,510.
In Bank.]
December 28, 1882.
THE SAN FRANCISCO GAS COMPANY v. HENRY BRICKWEDEL.
Mandamus—Debt or Municipality—Constitutional Law.—Mandamus to the defendant, as Auditor of San Francisco, to compel him to audit certain bills for gas furnished the city. The defense set up in the answer was: 1. That the revenue for the year in which the indebtedness was incurred had been exhausted at the time of the presentation of the bills; and, 2. That the plaintiff was indebted to the city and county in a larger amount for taxes.
Held; Under Section 18 of Article xi. of the Constitution, no indebtedness or liability can be incurred by a municipality (except in the manner therein stated) exceeding in any year the income and revenue actually received by it. In other words, each year’s income and revenue must pay each year’s indebtedness and liability, and no indebtedness or liability incurred in any one year shall be paid out of the income or revenue of any future year.
Id.—Id.—Taxes—Debt—Definition.—Thornton, J., concurring in the leading opinion, was also of the opinion that a tax is a debt within the meaning of Section 82 of the Consolidation Act; and that under that section the plaintiff, if the allegations of the answer were true, was not entitled to the writ.
Id.—Id.—Id.—McKinstry, J., was of the opinion that the writ ought not to issue, and therefore dissented from the order of reference.
Application for writ of mandamus to Henry Brickwedel, Auditor of the City and County of San Francisco, to compel him to audit certain demands for gas furnished to said city and county.
Clement, Osment, & Clement, for Plaintiff.
John.F. Swift and J. F. Cowdery, for Defendant.

Opinion:
Ro'ss,'J.:
We think it clear that when the framers of the present Constitution said, as they did by Section 18 of Article xi. of that instrument, that " 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 that purpose," etc., they meant that no such indebtedness or liability should be incurred (except in the manner stated) exceeding in any year the income and revenue actually received by such county, city, town, township, board of education, or school district. In other words, that each year's income and revenue must pay each year's indebtedness and liability, and that no indebtedness or liability incurred in any one year shall be paid out of the income or revenue of any future year. The system previously prevailing in some of the municipalities of the State, by which liabilities and indebtedness were incurred by them far in excess of their income and revenue for the year in which the same were contracted, thus creating a floating indebtedness which had to be paid out of the income and revenue of future years, and which, in turn, necessitated the carrying forward of other indebtedness, was a fruitful source of municipal extravagance. The evil consequences of that system had been felt by the people at home and witnessed elsewhere. It was to put a stop to all of that, that the constitutional provision in question was adopted. The change was eminently wise. A somewhat similar provision in the old Constitution with respect to State indebtedness saved the people of the State a vast amount of money. (People v. Johnson, 6 Cal. 503; Nongues v. Douglass, 7 id. 65.)
We have neither the right nor the disposition, by judicial interpretation, to take away the wholesome restriction upon municipalities thus imposed by the Constitution. Of course, in giving effect to this radical change from the pre-existing condition of things, it will not be strange if some shall be found to suffer. But it must be remembered that all are presumed to know the law, and that whoever deals with a munici pality is bound to know the extent of its powers. Those who contract with it, or furnish it supplies, do so with reference to the law, and must see that limit is not exceeded. With proper care on their part and on the part of the representatives of the municipality, there is no danger of loss.
From the petition and the answer before us we are unable to ascertain the facts essential to the proper determination of the petitioner's application. The answer sets up affirmatively certain matters of fact, which are by the law deemed denied by the petitioner. For the purpose of ascertaining the ultimate facts in respect to the income and revenue of the city and county for the fiscal year 1881-2, and in respect to the disposition and disbursement of that income and revenue, and in respect to petitioner's demands, we must refer the cause for proof and findings.
Ordered that the cause be and is hereby referred to Honorable J. F. Finn, Judge of the Superior Court of the City and County of San Francisco, who will, on proper notice to the respective parties, take proof and report findings of fact to this Court in accordance with the views above expressed.
Myrick and McKee, JJ., concurred.