Court Opinion

ID: 8016085
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:04:43.63306+00
Date Added: 2024-06-11T16:35:24.600260
License: Public Domain

DISSENTING OPINION.
WOODSON J.
This is a mandamus proceeding instituted in the circuit court of Newton county to compel the mayor and board of aldermen of the city of Neosho to pay over to the relator certain funds in the treasury of the city collected as water rentals under and by virtue of City Ordinances Nos. 113 and 232 of the said city of Neosho.
There is but little controversy as to the facts, and they are substantially as follows:
Neosho is a city of the fourth class, and said city by said ordinance No. 113 granted a franchise to one S. Y. Saleno to construct and operate a system of waterworks in said city, and contracted for water to be furnished to the city and its inhabitants, and agreed to *86pay. an annual water rental of two thousand dollars for the first fifty hydrants erected by Saleno, and for all in excess of that number an additional rental of thirty dollars each, all of which in this case amounted to $3,050 a year, and to be paid in semiannual installments of $1,525 each on the first days of January and July of each year for a period of twenty years, and fixed a schedule of prices to be charged the inhabitants of the city for the water used hy them. This ordinance has been before this court upon two former occasions; on each it was held valid and binding on the city. ■
After many years of litigation the water rentals, interest and costs amounted to an indebtedness aggregating $25,000' or $26,000, with no money in the treasury of the city to pay it. In order to meet that condition of affairs, the city of Neosho, on February 14, 1899, duly enacted by its mayor and board of aldermen Ordinance No. 232, which is as follows:
“Ordinance No. 232.
“An ordinance to provide for the compromise of all matters of difference between the city of Neosho and the Neosho City Water Company arising out of the contract ordinance of the 22nd day of September, 1890, numbered 113; and for the city of Neosho purchasing, taking over and operating the waterworks constructed under said ordinance; and for the satisfaction of the judgments and hydrant rental claims against the said city of Neosho in favor of said Neosho City Water Company; and for the securing a better fire protection and water service for the said city of Neosho and selling water to its inhabitants; and for the issue of twenty-five thousand dollars of interest-hearing ten— twenty (years) city bonds, and the levy of a tax for a sinking fund to pay the same and for securing to the said Neosho City Water Company semiannual installment payments, for twelve years, of eight hundred *87and seventy-five dollars each, for use of waterworks as a compromise measure; and for the repeal of said ordinance No. 113 SO' far as inconsistent with this ordinance.
“Be it ordained by tbe board of aldermen of tbe city of Neosbo as follows:
“ Section 1. That, with tbe assent of tbe voters of said city, by a two-tbirds affirmative majority vote, at tbe time hereinafter provided, the following contract is hereby authorized to be made, and the same may be accordingly certified by the mayor and clerk and authenticated by the seal of the city of Neosho, Missouri, as a final compromise contract with the Neosho City Water Company, as assignee of S. Y. Salem, viz: This contract is made in full compromise and settlement of all and every judgment^ claim and demand against said city under ordinance No. 113, and it is agreed as follows: -
“The Neosho City Water Company, as assignee of said S. V. Saleno, agrees to transfer, by proper legal conveyance, the title, possession and use of the entire system of waterworks, land, water springs, pipe lines, pipes, right o'f way, easements, franchises, hydrant, and all other property thereto belonging or used in operating the same, free and clear of any charge or incumbrance, to the city of Neosho with the right to the city to operate and control the same, collect all rent or toll for supplying water .to all persons whatsoever, and have and use, subject to the reservation hereinafter mentioned, all the proceeds and hydrant rental of said plant for a period of twelve years from January 1, 1899, and release the city from all hydrant rental and liability relating to the same under the provisions of said ordinance No. 113, except as herein expressly provided, and in consideration thereof the city agrees to pay for the use, control and possession of said works the sum of $875 every six months, on or before the first *88day of July and first day of January of each year for a period of twelve years, from January 1, 1899; and in consideration of said payments and the payment of twenty-five thousand dollars for judgments and in full settlement of all claims and differences existing between said parties as in this ordinance provided, it is agreed and contracted that the city shall own said works absolutely, and it is further agreed that the Neosho City Water Company, as the legal assignee of said S. V. Saleno, shall on the day the twenty-five thousand dollars is paid to said company as herein provided, make out,'execute and deliver a deed and conveyance in due and legal form, assigning, setting over and conveying to said city the entire plant and waterworks system, including land, water springs, right of way, pipe lines, pipes, hydrant, easements, franchises, and all other property of every kind belonging thereto, or used in connection therewith, both real and personal, with all the office books for the use in continuing the service of water to private persons, free of all liens, charges and incumbrances, and will give a perfect title to the same to the city of Neosho.
“On the payment of the said sum of twenty-five thousand dollars by said city to said Neoslm Water Company, all judgments and other indebtedness, except as herein provided, in favor of said Water Company and against said city shall be deemed fully paid and discharged, and said Water Company shall cause to be entered on the proper court records formal satisfaction of each and every such judgment, and all suits of whatever nature now pending between said parties shall, be dismissed, each party paying its own costs.
“Section 2. It is provided, however, that there shall be reserved to the said company for additional security for the payment of said sum of eight hundred and seventy-five dollars semiannually the following *89rights, viz: All earnings, proceeds and revenues arising from water service to private consumers for each and every successive period of six months during the continuance of the contract hereby authorised, to-wit', twelve years, shall not he used for any other purpose than to pay the semiannual installment of eight hundred and seventy-five dollars for such term for the use of the waterworks as herein provided until said payment is made (aggregating $21,000); it being understood that all the rest, residue and remainder of the said earnings and proceeds, after satisfaction of said semiannual installment shall be free for any legitimate use by said city; and it is further provided that if the said city fail to make payment for any six months term as agreed herein for thirty days after the same is due, the said Water Company may. take possession of the said works and operate the same and collect earnings from private consumers until all the unpaid installments be satisfied out of the same; and it is further provided and agreed that the city shall keep the said works in good condition and continue to serve its inhabitants and collect therefor substantially the same rates for water service as heretofore collected by the company for like services, until all of said indebtedness is paid.”
Section 3 of said ordinance provides for the issue and sale of twenty-five thousand dollars in bonds and the payment of that amount to the Neosho Water Company “in payment of all present indebtedness and part payment of the purchase price of said waterworks system. ’ ’
Section 4 of said ordinance provides for the levy and collection of an annual tax to constitute a sinking fund to pay the twenty-five thousand dollars in bonds.
Sections 5, 6, and 7 of said ordinance provide for its submission to the voters of the city for ratification.
*90Which ordinance was duly accepted by the Water Company.
This ordinance was not ratified by a tw;o-thirds vote of the qualified voters of the city; at least the record is silent as to whether an election was held for such purpose, or what its result was.
No provison was made by the city at the time of or before the enactment of said ordinance for the levy and collection of an annual tax to pay the interest and to constitute a sinking fund to pay the principal of the twenty-one thousand dollars payable in semiannual installments, in twenty years; although such a provision was made for the payment of the bonds, but in lieu of the constitutional provision for a sinking fund the parties substituted a mortgage dr pledge upon the receipts of the water system.
The city sold the bonds provided for under said ordinance, paid over to the Neosho City Water Company the proceeds (twenty-five thousand dollars), and said Water Company executed and delivered to the city a warranty deed, dated April 24, 1899, conveying to the city by the covenants of grant, bargain and sell its entire water system, lands, pipe lines, hydrants, etc., free and clear of any and all encumbrances. The Water Company’s judgments against the city were paid and satisfaction entered, pending suits were dismissed and costs paid, etc. The city took title and possession of said waterworks under said conveyance and has maintained and operated the same ever since. The. city paid three semiannual payments of $875 each,, the two for 1899 and first one for 1890 (due July 1) and then defaulted.
In 1903 W. T. Matters and other citizens and taxpayers of the city brought a mandamus proceeding in the name of the State at the relation of a taxpayer, requiring the mayor and board of aldermen to segregate, set apart' and reserve the water rentals for each six *91months in a sum equal to $875', to' he' applied in the payment of the Water Company’s interest in said rentals as reserved by the contract and Ordinance No. 232. Some of the city’s officers returned that they stood ready to so apply the water rentals, and others denied the validity of the contract on various grounds, among others, that the contract was in violation of section 12 of article 10 of the Constitution.-
The case was tried and the evidence tending to show the assessed valuation for the year 1899, and prior years, was introduced in evidence, as well as the ordinance and other testimony; and the court, after hearing the evidence, rendered judgment for the plaintiff, directed the issue of a peremptory writ of mandamus requiring the city authorities to set apart from the water rentals the sum of $875' on the first days of January and July of each year for the payment to the Water Company of its rental under the terms of said contract, and requiring the city not to use the water rentals until such sums were paid. This judgment remains in full force and effect.
And the evidence tended to- show the Water Company in the meantime assigned its rights to the Michigan Pipe Line Company, and that company assigned its rights to the relator, Henry B. Smith. In the meantime the city authorities restored to the fund arising from water rentals a sufficient sum to pay off and discharge the rentals due the Water Company, and has ever since set apart sufficient of the water rentals for that purpose in obedience to the peremptory writ of mandamus so issued by the circuit court, and there was in the treasury at the time, set apart under this judgment and order of the circuit court, sufficient funds to pay off and discharge all the water rentals due this relator.
Respondents introduced evidence tending to show the assessed valuation of the year 1899 and prior thereto was not introduced in evidence in the case of Matters *92et al. against the city in the mandamus proceedings; that the relator was not the assignee of the Michigan Pipe Line Company; that the expenses paid by the city for the repairs and operation of the waterworks were more than the total income derived therefrom; that the money set aside as water rentals was, in fact, taken from the general revenue of the city; and that the assessed valuation of the city was $603,860; as shown by the last previous assessment prior to the date of Ordinance No. 232.
The court, after hearing the testimony, rendered judgment for plaintiffs, directing a peremptory writ of mandamus to be issued, requiring the city to pay over to the relator all hydrant rental which was collected after the institution of the first mandamus proceedings and requiring future rentals to be segregated and paid over to relator.
Both the relator and respondents objected to the findings and judgment of the court, and in due time they filed their motions for a new trial and in arrest, which were by the court overruled, and they have duly prosecuted their joint appeal to this court.
I. The position of the relator is that Ordinance No. 232 is an amendatory ordinance to No. 113 and that the former repeals the latter in so far only as they are inconsistent with each other; that the deed executed by the Water Company “to the city of Neosho must be read in connection with the contract and ordinance upon which the same is based, and that when so read the contract and ordinance create a reservation in favor of the Water Company for the portion of the water rentals received from water consumers as was set apart and segregated by the city in pursuance of the mandamus proceedings instituted by W. T. Matters; that the rentals, $875, every six months reserved by the Water Company under the compromise contract and ordinance are not a debt within the meaning of the Consti*93tution, and, therefore not in violation of section 12 of article 10 thereof; that the compromise contract has been adjudged valid by the circuit court of Barton county in the mandamus cause above mentioned.
Relator also contends that should the' court conclude that said contract required the city to pay the Water Company the semiannual installments out of the general revenue and that such contract constitutes a debt within the meaning of the Constitution, then that part of the contract in relation to paying out of the water rentals is binding, and the other clauses may be rejected, as the means of payment provided for by the two clauses are independent of each other.
The contention of the respondents is that the contract upon which relator’s claim is based is void as being in violation of section 12 of article 10 of the Constitution, because creating a debt in excess of five per cent of the assessed valuation of the city property as shown by the assessment next before the last previous assessment thereof; that the ordinance in question created an indebtedness to the amount of $46,000, while the assessed valuation of the city was only $603,860', so that the debt exceeded by $15,807 the five per cent limitation provided for by the Constitution. And also void because no provision was made for the levy and collection of an annual tax sufficient to pay the interest as it fell due and to constitute a sinking fund for the payment of the principal.
The statement of the facts and the position of the parties have been taken largely from the well and carefully prepared briefs of the able counsel in this cause. But in the view we have taken of the case it will not be necessary to pass upon all the questions presented by them.
. At' the threshold of this case, the question presented for our consideration is the character of the obligation of the city of Neosho to the Water Company re*94garding the $46,000' mentioned in Ordinance No. 232. That $46,000 was the purchase price promised by the city to the Water Company for the water system. The city paid $25,000 of that sum in bonds, issued for that purpose, and agreed to pay the balance in installments of $875 each, semiannually, on the first days of January and July, for the period of twelve years, which amounts to $21,000; and it was further agreed that, as additional security for the payment of said sums of $875 semiannually, the city should take possession of the waterworks and collect the water rentals from the water consumers, and pay that sum to the Water Company every six months, as above stated.
Now, the question arises, are those debts within the meaning of the Constitution?
In so far as the $25,000 represented by .the bonds are concerned, there is no controversy, as the city concedes their validity, but contends that the $25,000 added to the $21,000 makes a total of $46,000, which is in excess of five per cent of the assessed valuation of the city, which was $603,860', and for that reason the ordinance and contract regarding the $21,000 are in violation of section 12, article 10, of the Constitution, which is as follows:
“No county, city, town, township, school district or other political corporation or subdivision of the 'State, shall be allowed to become indebted in any manner or for any purpose to an amount exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the voters théreof voting at an election to be held for that purpose; nor in cases requiring such assent shall any indebtedness be allowed to be incurred to an amount including existing indebtedness in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the assessment for State and *95county purposes, previous to the incurring of such indebtedness.”
It will be seen that the section just quoted says no city shall become indebted. The indebtedness there mentioned refers to new debts or obligations created or contracted for by the city and does not refer to prior valid debts and obligations of the city, except, however, they must be considered and included in the estimation whenever any new or additional indebtedness is proposed to be saddled upon the city. The object of the Constitution is to prevent the city from going into debt beyond a certain amount and not to extinguish its valid obligations. That being true, it becomes necessary to determine to which of the above classes of indebtedness the $21,000 belongs, to the new or the'old.
It must be borne in mind that at the time of the enactment of Ordinance No. 232 this court had, in two cases, held that Ordinance No. 113 and the contract of S. V. Saleno with the city were valid and binding upon the city. [Saleno v. City of Neosho, 127 Mo. 627; Neosho City Water Company v. City of Neosho, 136 Mo. 498.]
Said ordinance No. 113 provided that the City of Neosho shall pay Saleno or his assigns $1,525' semiannually, on the first days of January and July, for twenty years as hydrant rent. The sum. total of that itém for twenty years is $61,000, which the city was bound to pay according to the terms of that ordinance, conditioned upon Saleno furnishing the water called for thereby.
At the end of the litigation above mentioned, as near as we can ascertain, seven years of the twenty had expired, and at the time when the city purchased the. waterworks there was then due the water company for hydrant'rentals, interest and costs about $25,000'. This sum, at that time, under the terms of Ordinance No. 113 and the decisions before mentioned, had ripened in*96to an absolute and unconditional debt of tbe city. This twenty-five thousand dollars was paid out of tbe proceeds of tbe sale of tbe bonds provided for in Ordinance No. 232, and tbe balance thereof, $21,000, was still a conditional liability due tbe water company, of course, and unpaid on tbe day tbe waterworks were transferred to tbe city. Said $21,000 was a part of a larger sum, namely $61,000, tbe city was conditionally bound to pay Saleno or bis assign by said ordinance No. 113, upon condition that be furnished tbe water for tbe whole twenty years; and by Ordinance No. 232 tbe city renewed its obligations for that sum to tbe Water Company upon tbe terms and conditions therein stated. By tbis arrangement tbe city contracted no new debt or obligation, but simply made new arrangements to pay an old debt or a then existing valid obligation, and at tbe same time canceled $15,000 of its obligation created by Ordinance No. 113 which is shown by deducting tbe $46,000 from tbe $61,000'. Not only that, tbe city also became tbe owner of tbe waterworks, subject to tbe payment of tbe semiannual rental installments of $875, which it bad tbe right to acquire under Ordinance No. 113.
It is shown conclusively from tbe foregoing statment of facts that tbe city made no contract whereby it promised to pay tbe Water Company any sum of money whatever which it did not previously owe to it.
We know of no law prohibiting tbe city from making new contracts in renewal of prior valid obligations.
Section 11 of article 10 of tbe Constitution, and statutes enacted in pursuance thereof, came before tbe Supreme Court of tbe United States upon tbe following state of facts: A county in tbis State by its county court subscribed for stock in a railway company and issued bonds of tbe county and sold them for tbe purpose of procuring tbe money with which to pay for the stock. Under the law as it existed at tbe time the *97bonds were issued tbe county court bad power to levy sufficient taxes to pay tbe bonds and coupons as tbey matured, but in 1875 tbe present Constitution was adopted wbicb limited tbe power of tbe county court to levy a tax in excess of one-balf of one per cent on tbe taxable property of tbe county for all purposes and under that limitation tbe court was unable to levy sufficient taxes to pay tbe running expenses of tbe county and take up tbe bonds and coupons as tbey matured. Tbe holders brought suit on tbe bonds and recovered judgment against tbe county for tbe amount of tbe bonds and coupons, wbicb tbe county refused to pay because it bad no funds on band for that purpose. Tbe judgment creditor then brought mandamus proceeding against tbe county court, asking for an order directing said court to make a special assessment, under tbe old law, wbicb was in force when tbe bonds were issued, for tbe payment of tbe judgment. Tbe Supreme Court in passing upon that case held that tbe judgment in favor of tbe bondholder and tbe bonds and coupons in legal contemplation were but the continuation of the debt incurred by subscribing for tbe stock of tbe railway company, and that all tbe law and machinery thereof wbicb were in force at tbe time the subscription was made were still in force and would remain so until tbe judgment was fully paid and satisfied, and that all laws of tbe State wbicb were passed since tbe bonds in question were issued purporting to take away from tbe county court tbe power to levy taxes necessary to meet tbe payments were invalid and of no force or effect. [Ralls County Court v. United States, 105 U. S. 733; Scotland County Court v. Hill, 140 U. S. 41.]
While section 11 is a limitation on tbe taxing power of tbe city, and section 12 a limitation .upon tbe contracting power, yet tbe same principle is involved in *98each; that is, neither was intended to affect present existing indebtedness regardless of the various forms it might pass through. It might be evidenced by a subscription of stock, an issue of bonds, a contract by way of judgment, or a contract by ordinance. It is the identity of the debt that is looked at and not the evidence of its existence. In this case the original obligation of the city of Neosho to Saleno for the hydrant rent by agreement of the parties and by operation of Ordinance No. 232 was expressly reserved and kept alive and carried forward into the compromise contract, and is the same identical obligation that is now involved in this litigation, most of which has ripened into an actual instead of a conditional indebtedness by reason of the fact that the water has been furnished according to the terms of the ordinances and the contract of compromise.
Neither the city of Neosho by ordinance nor the State by an act of the Legislature had any more power to relieve the city of that obligation without the consent of the Water Company than the Legislature had to relieve the county of its obligation to pay the bonds in the case before mentioned, notwithstanding the fact that the debt or obligation may have exceeded the constitutional limit at the time the city purchased the waterworks.
That excess, if it existed, was caused by the wrongful act of the city by not paying the installments of rents as they fell due. This court has twice held that the obligations of the city created by Ordinance No. 113 were valid and binding on the city, notwithstanding section 12 of article 10' of the Constitution. According to those decisions this excess was valid and binding upon the city under the old Ordinance No. 113, then by parity of reasoning the same identical excess which was expressly reserved to the Water Company by the contract of sale to the city must also be held to be valid and binding under the new ordinance No. 232.
*99II. Eespondent contends that mandamus will not lie in this case, because relator’s claim has not been reduced to judgment.
We do not concur in that contention. The rights of Saleno and the Water Company and those of the city were fully determined and adjudicated in the case of Saleno v. City of Neosho, 127 Mo. 627, and Neosho City Water Company v. City of Neosho, 136 Mo. 498.
All questions as to the validity of the rentals mentioned in Ordinance No. 113 and which are expressly reserved in Ordinance No. 232 cannot be again litigated in this case. [Harshman v. Knox County, 122 U. S. 318; Ralls County Court v. United States, 105 U. S. 734.]
And the judgments are binding upon the .parties thereto and their privies, whether in contract, estate, blood or in law, which includes the relator in this case. [Litchfield v. Goodnow, 123 U. S. 551.]
There are many other questions discussed in the briefs of the learned counsel on both sides of this case, but we deem it wholly unnecessary to pass .upon them, as the questions herein passed upon fully dispose of the case.
The judgment of the circuit court in favor of both the relator and respondents is reversed and remanded with directions to that court to enter judgment for relator in conformity to the views herein expressed.
Fox, J., concurs.