Court Opinion

ID: 3880771
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:12:21.024932+00
Date Added: 2024-06-11T13:46:58.105181
License: Public Domain

August 13, 1928. The opinion of the Court was delivered by
This is a controversy submitted without action, under Section 675 of the Code of Civil Procedure. The petitioner, a resident taxpayer of the City of Charleston, seeks an injunction to restrain the respondents, the commissioners of public works of said city, from issuing $300,000 of the notes of the commission, the proceeds of which are proposed to be used in the construction of the necessary means for the transportation of water from Edisto River to Goose Creek basin, the present water basin for the city's waterworks system.
Under Section 4432, Vol. 3, Code of 1922, the commission has full control and management of the waterworks system of the city, with power to require and exact payment of such rates, tolls, and charges as they may establish for the use of water. It is provided by said section that the commission shall have no power to incur any indebtedness without the concurrence of the city council. The waterworks system is owned and stands in the name of the city.
In the years 1926 and 1927, on account of light rainfall, the supply of water for the waterworks system was so limited that the commissioners of public works decided, for the protection of the public, that a connection should be made with the Edisto River, and a water supply obtained from there to augment the supply created by the present water basin of the system, which connection would assure for all time an adequate supply of water. The City of Charleston having no available funds to meet this cost, the commissioners of public works determined to finance the cost by borrowing on notes of the commission; said notes maturing *Page 472 
over a period of five years, the payment of the same, both principal and interest, to be made out of the net revenues of the operation of the system, which revenues, according to the present income, would be amply sufficient to take care of the notes, both principal and interest, and, in order to protect the holders of the notes, the commissioners of public works agreed that the water rate during the period that the notes were outstanding would not be reduced. Accordingly application was made to city council of Charleston for authority to incur this indebtedness, and the following resolution was adopted by city council, concurring in the incurring of this indebtedness:
"It is resolved that city council of Charleston, S.C. hereby concurs in the commissioners of public works for the City of Charleston incurring an indebtedness of not exceeding three hundred thousand ($300,000.00) dollars for the purpose of making the necessary outlay for transporting water from the Edisto River to the Goose Creek Basin."
Thereupon resolutions were adopted by commissioners of public works of the City of Charleston, S.C. providing for the issuance by the commission of its notes in the sum of $300,000, maturing $55,000 on April 1, 1929; $57,000 on April 1, 1920; $60,000 on April 1, 1931; $63,000 on April 1, 1932; and $65,000 on April 1, 1933; said notes to bear the lowest rate of interest at the highest price offered by bidders; that as security for said notes the net revenues of the operations of the waterworks system were to be pledged, and the pledge of the commissioners of public works was to be given to the purchasers of said notes that the water rate would not be reduced during the time that said notes remained unpaid; that said notes were offered for sale, but all bids rejected, and are about to be again offered for sale, and will be issued and sold unless restrained by the Court.
The petitioner avers that the issuance of said notes will be illegal for the following reasons: *Page 473 
"1. That the said notes, though issued in the name of the commissioners of public works for the City of Charleston, are in reality obligations of the City Council of Charleston, the incurring of which obligation without a petition and election is unconstitutional.
"2. That, being an obligation of the City of Charleston, the amount can only be paid by a tax upon all property in the City of Charleston, and the petitioner as a taxpayer will have levied against his property for the payment of said notes an illegal and unconstitutional tax.
"3. That Section 4432 of the Civil Code of South Carolina of 1922, Volume 3, is in violation of Section 5, Article 8, of the Constitution, in that the Constitution provides that cities and towns alone are authorized to furnish water to individuals, firms, and corporations for reasonable compensation, whereas the statute provides that these powers shall be exercised by the commissioners of public works.
"4. The commissioners of public works of the City of Charleston have no power and authority under the law to incur indebtedness.
"5. The commissioners of public works of the City of Charleston, if they have authority to incur indebtedness, it is only such indebtedness as represents current bills for the management of the waterworks system, and have no authority to incur an indebtedness other than above and to evidence such indebtedness by negotiable notes as is now proposed to be done.
"6. The commissioners of public works of the City of Charleston, if such notes can be issued, have no power or authority to pledge for the payment thereof the net revenue of the operation of the waterworks system, it being respectfully submitted that, if the revenue of the operation of the system is more than sufficient to pay operating expenses and create a proper sinking fund for depletion and depreciation, it is incumbent upon said commissioners to reduce the water *Page 474 
rates charged to consumers to such basis as will be necessary for above purposes only.
"7. That, inasmuch as the City of Charleston owns the waterworks plant, the cost of the extension proposed to be made should be financed out of funds of the municipality, and not on the obligations of the commissioners of public works, to be paid out of the revenues derived from the operations of the system.
"8. The commissioners of public works of the City of Charleston have no power or authority to contract with the purchasers of said notes that the present water rates will not be reduced during the existence of the obligations proposed to be issued, as the revenues derived from the present rates might hereafter be so large that it will not only create sufficient revenue to meet said obligations, but will create an unduly large surplus, and thereby an illegal burden will be placed on consumers by reason of the inability of the commissioners to reduce said rates, due to the outstanding contract with the note holders."
The creation of the corporate body styled "Board of Commissioners of Public Works" is directly connected with, a part and parcel of, Sections 4430, 4431, and 4432, Vol. 3, Code of Laws, which provide for the construction and operation of waterworks by municipalities and an election upon the question of issuing bonds. At the election upon this question, the elector votes for the members of the board, as well as upon the issuing of bonds. The board is charged with the duty of disbursing the proceeds of the bonds thus voted. If the vote upon the bonds should fail, the election of the board would necessarily be a nullity, showing how intimately related to each other are the two propositions. If the election should result in favor of the bonds, the board elected, and later an additional supplemental issue should be carried at a subsequent election, doubtless to prevent confusion the board formerly elected would be charged with its disbursement. In other words, the board *Page 475 
is limited to the disbursement of the proceeds of the bonds voted, unless a subsequent issue is voted by the municipal voters. It follows, therefore, that the board has no authority to increase the original issue of bonds, or, what is the same thing, negotiable promissory notes signed by it.
We think that the opinions of Justices Woods and Hydrick, concurring in the result of the case ofUnion v. Commissioners, 91 S.C. 248;74 S.E., 496, are conclusive upon the proposition that, under the statute and the Constitution, the Board of Commissioners of public works are but agents of the municipality, and as such have no authority to incur any indebtedness other than that incidental to the operation and maintenance of the waterworks constructed out of the proceeds of the bonds voted, and even that incidental indebtedness is subject to the concurrence of the City Council. The city could not issue the notes without compliance with Section 4430, and certainly its agent could not enjoy greater powers than the principal.
The judgment of this Court is that the prayer of the petition be granted. The petitioner may apply to this Court for a formal order of injunction in conformity with this opinion.
MESSRS. JUSTICES BLEASE, STABLER and CARTER concur.