Case Name: T. J. HIGGINS et al., Respondents, v. CITY OF SAN DIEGO et al, Respondents, and SAN DIEGO WATER COMPANY, Appellant
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1897-10-09
Citations: 118 Cal. 524
Docket Number: No. 19459
Parties: T. J. HIGGINS et al., Respondents, v. CITY OF SAN DIEGO et al, Respondents, and SAN DIEGO WATER COMPANY, Appellant.
Judges: Temple, J., concurred.
Reporter: California Reports
Volume: 118
Pages: 524–556

Head Matter:
[No. 19459.
In Bank.
October 9, 1897.]
T. J. HIGGINS et al., Respondents, v. CITY OF SAN DIEGO et al, Respondents, and SAN DIEGO WATER COMPANY, Appellant.
Municipal Corporations—Subsidy pob Railbo ad—Illeg al Contea ct.—A municipal corporation not authorized to grant aid to a railroad cannot, directly nor indirectly, make any contract for the payment of money, where an indefinite and inseparable part of the stipulated amount is payable in consideration of the unlawful object of subsidizing a railroad.
Id.—Void Lease op Water Plant to City—Condition pob Building Railroad—Evasive Conteact—Lease to Nominal Parties—Sublease to City without Condition.—A lease to a city by a water company of its entire plant for a term of years, in which the rent reserved is in part con sideration oí a condition that the water company shall construct a railroad within a specified time, is invalid and void; and where, by an evasive contrivance, the lease containing such condition. was made to nominal parties, who, in accordance with the understanding, immediately subleased the plant to the city for the entire term, and for the full amount of rental, but without expressing such condition in the sublease, and the city was thereby induced to agree to pay, under the name of rent, the whole consideration for the undertaking of the water company to build the railroad, and thus indirectly to subsidize the railroad, the contracts of lease and sublease are wholly void from their inception.
Id.—Option to Terminate Lease—Void Purchase by City—Rights of Nom-inad Lessees.—The city not being permitted to subsidize a railroad directly or indirectly, could not buy an option, to be exercised either by itself or by others, to-terminate its agreement to pay rent, upon failure of the lessor to build a railroad; and although the right to terminate the agreement for failure to construct the railroad was left in the nominal lessees, it is immaterial whether that right was to be exercised in their own behalf and at their own discretion, oí-as trustees for the city.
Id.—Condition Subsequent—Consideration.—The fact that the condition for the construction of the railroad was put in the form of a condition subsequent, upon the breach of which the lease might be terminated, does not prevent the condition from forming part of the consideration for the stipulated payments of rent; but the option to terminate the lease for breach of such condition is valuable to the party paying the rent, and burdensome to the party charged with the condition, and is a good consideration for the agreement to pay the rent.
Id.—Waiver of Condition — Nonperformance—Void Contract.—The contract being void for want of power in the city to expend corporate funds in aid of the construction of a railroad, it cannot aid the contract that the city waived compliance with the condition for its construction, and it is immaterial that the railroad was never constructed or operated, or that its construction was never commenced.
Id.—Void Resodution of Councid as to Lease—Absence of Auditor’s Certificate—No Presumption of Authority.—A resolution of a city-council authorizing the mayor to execute a lease of a water plant, which had not previous to its passage been presented to the auditor as required by the city charter, and which lacked his required certificate that the contemplated indebtedness or liability could be incurred without a violation of the restrictions imposed by the charter, is fatally defective and void; nor had the water company the right to presume that the council would not have authorized the mayor to act, in violation of the charter, without the proper certificate of the auditor.
Id.—Vadidity of Charter Provision.—The provision of the city charier requiring the auditor’s certificate is not invalid, as being an attempt to invest a ministerial officer with judicial powers and functions; but such provision is a mere restriction upon the legi dative power of the council, requiring them to go to the best source of information for the fact upon which their right to act depends.
Id.—Supply of Water for City—Ordinance Required—Joint Resolution Nugatory.—Where the only authority conferred upon the council by the charter to adopt and carry out means for securing a supply of water for the use of the city and its inhabitants is found in the enumeration of matters as to which the council is empowered to pass ordinances, which cannot take effect without publication, an unpublished joint resolution authorizing the mayor to lease a water plant is nugatory.
Id.—Contract fob Future Payment by City—Case Affirmed.—The case of MeBean v. Fresno, 112 Cal. 159, affirmed as to the power of a city to make contracts in futuro, involving the payment of moneys annually during a long period of time, without violating the provision against indebtedness in excess of revenue, if the annual payment does not exceed the revenue for the year in which it is to be made, and also as to the conditions under which such contracts may extend beyond the term of office of the trustees who authorize it.
Id.—Invalid Contbact—Ratification—Estoppel.—Where the objection to a contract made by a city for the lease of a water plant is that it is void as involving a subsidy for a railroad, the contract is incapable of ratification, directly or indirectly, and the city cannot be estopped from denying the validity of the contract because the water company was required by the city to expend a large sum of money in extending- the plant, and because the city refused to redeliver possession of the plant when demanded.
Id.—General Power of City as to Water Supply—Lease of Plant from Year to Year—Reasonable Value of Use—Provision against Excess of Revenue.—Although the express contract of the city to lease the water plant for a term of years at a fixed rental was invalid and void, yet as the city has the general power to contract for a water supply for itself and its inhabitants, it may lease a water plant for a year, and renew it from year to year, and it is liable to pay the reasonable value of the use of the plant actually enjoyed, provided the claim of the water company for the reasonable value of the use does not exceed the amount of unappropriated revenue for the respective fiscal years during which the city had the use of the plant; but claims for such use accruing at a time when there were no unappropriated funds to meet them are void, like other claims upon exhausted revenues, and will not warrant a judgment of any character.
Id.—EokM of Judgment for Reasonable Value of Use—General Judgment against City—Provision as to Payment.—A judgment for the reasonable value of the use of the water plant, after ascertaining in what years the claims of the water company for such value were not in excess of the unappropriated revenues of that year to meet them, should not be rendered so as to be payable only out of those revenues, but should be in the form of an ordinary general judgment for whatever amount shall be found due, without any direction as to the revenues out of which the judgment shall be satisfied, or any direction as to the method of its payment, for which some future provision mght be made by the city, although there might be no revenues of the fiscal year in which the debt was incurred out of which it could be satisfied.
APPEAL from a judgment of tlie Superior Court of San Diego County. J. W. McKinley, Judge.
Tbe facts are stated in tbe opinion of tbe court.
"Works & Works, for Appellant.
II. E. Doolittle, City Attorney, T. L. Lewis, Deputy City Attorney, William H. Fuller, and C. L. Barber, for City of San Diego and its Auditor and Treasurer, Bespondents.
Luce & McDonald, for San Diego Flume Company, Despondent. ■
Haines & Ward, for Plaintiffs, Bespondents.

Opinion:
THE COURT.
On a former bearing of this cause judgment in favor of tbe city of San Diego was reversed, with direction to tbe superior court to enter judgment in favor of tbe water company for tbe reasonable value of tbe use of its distributing plant, etc., said judgment to be payable only out of tbe revenue of those fiscal 3 cars during wbicb tbe city held possession of tbe plant. A rebearing was ordered principally upon tbe question as to tbe proper form of tbe judgment. Hpon further consideration of tbe case, we have reached tbe con-| elusion that the water company should have an ordinary general judgment for whatever amount shall be found due it, without any direction as to tbe revenues out of wbicb tbe judgment shall be satisfied. Tbe opinion rendered at tbe former bearing must also be modified in tbe other particulars hereinafter stated.
We have no desire to disturb tbe principle that no indebtedness or liability incurred in any one year shall be paid out of tbe ordinary income or revenue of any future year, which principle has been declared by a long line of decisions running from tbe case of San Francisco Gas Co. v. Brickwedel, 62 Cal. 641, to McBean v. Fresno, 112 Cal. 159; 53 Am. St. Rep. 191. Future provision might be made for tbe payment of a debt, although there might be no revenues of the fiscal year in wbicb tbe debt was incurred out of wbicb it could be satisfied—as, for instance, by tbe adoption by tbe people of a proposal to pay it, or by other methods that might possibly be suggested; and a direction in a judgment that it should be paid only out of the revenues of a certain year might be held to preclude its payment in any other way. Merely putting a demand in tbe form of a general judgment would not in any way take it out of the general rule flra.t the ordinary revenues of a future year cannot be applied to the payment of a liability in a previous year, as held in Smith v. Broderick, 107 Cal. 644; 48 Am. St. Rep. 167. We think, therefore, that in a case like the one at bar, there should be a general judgment in the usual form without any direction as to the method of its payment. In Weaver v. San Francisco, 111 Cal. 319, and in one or two other cases, where it was directed that .the judgment should be satisfied out of the revenues I of the fiscal year in which the services sued for were performed, the court was only considering the question whether the ordinary revenues of a fiscal year could be applied to the satisfaction of debts of a previous year; and there was not in the mind of the court the possibility of a provision for raising an extraordinary revenue by a vote of the people, or in some other way, for the express purpose of paying such debts. If that view had been suggested to the court, the judgment in those cases would undoubtedly have been a general one. At all events^ we are satisfied that, for the reasons above suggested, the judgment in such a case should be general and without any restriction that might embarrass future action.
Our former opinion is also modified so far as it may seem in any of its expressions to go beyond the decision in McBean v. Fresno, supra, upon the question of the validity of a contract of a municipal corporation extending over a series of years beyond the term of office of the trustees who authorize it.
Our former opinion is also modified as follows: We cannot direct the superior court to enter a judgment upon tire findings for the reasonable value to the city of the water company's plant and of the water supplied, because it does not appear that the claims of the water company all accrued at a time- when there were unappropriated revenues to meet them, and it will be necessary for the court to ascertain as the basis of its judgment against the city just when the claims of the water company for reasonable value of use, etc., equaled the amount of unappropriated revenues for the respective fiscal years during which, the city had the use of the water company's plant. Claims for use of plant and value of water supplied after such time are like other claims upon exhausted revenues; they are void, and will not warrant a judgment of any character.
In all other respects onr former opinion is readopted.
The judgment of the superior court is, reversed., and the cause remanded for further proceedings in accordance with our former opinion as herein modified.