Court Opinion

ID: 3852226
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:33:44.946374+00
Date Added: 2024-06-11T07:40:58.010690
License: Public Domain

Section 8, article IX, of the Constitution, provides that the debt of any county, city, borough, township, school district or other municipality or incorporated district, except as provided herein, and, in section 15 of this article, shall never exceed 7% upon the assessed value of the taxable property therein, but the debt of the City of Philadelphia may be increased in such amount that the total debt of said city shall not exceed 10% upon the assessed value of the taxable property therein.
Either this section is to be interpreted literally or it isnot. If interpreted literally, it means that no matter what theface value of Philadelphia's indebtedness may be at any time, if that face value exceeds 10% of the assessed value of property therein, it is pro tanto void. In other words, if Philadelphia's debt at any time should be $400,000,000 and at some time thereafter the assessed value of the taxable property in Philadelphia would fall to $3,600,000,000, the creditors of the city would have to write off 10% of the amount owing them by the city.
That this section has never been by any court so literally interpreted as to reach this absurd result is undisputed, *Page 44 
and that it should not be so interpreted was expressly held by this court in Addyston Pipe and Steel Co. v. City of Corry,197 Pa. 41, 49, 46 A. 1035. It follows then that the section in question is not to be interpreted literally but is to be given an interpretation that is reasonable and consistent with the intent of the framers of the Constitution.
When a constitutional provision is not to be interpreted literally, it should be given a construction that will not lead to an unreasonable result. See 25 R. C. L., section 256, page 1018, and Cooper Mfg. Co. v. Ferguson et al., 113 U.S. 727. InU.S. v. Kirby, 74 U.S. 482, 486, the Supreme Court of the United States, speaking through Mr. Justice FIELD, said: "All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd consequence. . . . The reason of the law in such cases should prevail over its letter." The same logic applies, of course, to the interpretation of constitutions as to the interpretation of statutes. In McCulloch v. Maryland, 4 Wheat. 310, at 408, Chief Justice MARSHALL expressed his recognition of the rule of reason and the avoidance of absurd consequences in interpreting the Constitution, in the following language: "The exigencies of the nation may require that the treasure raised in the north should be transported to the south, that raised in the east conveyed to the west, or that this order should be reversed. Is that construction of the Constitution to be preferred which would render these operations difficult, hazardous, and expensive? Can we adopt that construction (unless the words imperiously require it) which would impute to the framers of that instrument, when granting these powers for the public good, the intention of impeding their exercise by withholding a choice of means?"
To hold that when the City of Philadelphia on July 8, 1929, authorized the issue of bonds in the amount of $50,500,000, the city could then have sold the entire issue *Page 45 
without violating the Constitution, but that when bonds of that issue in the total sum of $37,800,000 had been sold, the city could not, without violating the Constitution, later sell the balance of the authorized issue because the assessed valuation of taxable property in the city had meantime dropped from $4,664,263,490.41 to $3,618,863,241.15, would lead to an absurd result and seriously interfere with the proper administration of the city government. When in 1929 the issue of $50,500,000 worth of bonds was authorized by the proper authorities and sanctioned by the vote of the electors the entire sum so authorized was appropriated to the various departments of the city government to which the purposes of the borrowing as set forth in the ordinance properly appertained. To deny the city the power now to issue all or any part of the balance of this authorized issue of bonds, means the serious crippling of the city's subway program and the abandonment of other worthy projects of a permanent nature, the financing of which was the purpose of authorizing the loan in question. The city solicitor in his paper book aptly points out: "In the present instance the purpose in the proposed issue of bonds is, inter alia, to finance improvements which are bound to enhance property valuation for taxation purposes, at an interest rate far below that to which the city is now required to respond for so much of the new fund as has already been placed under contract and taken the shape of warrants or mandamus executions. There is, for example, in Philadelphia, as the court may well judicially notice, a partly completed subway railway subject to deterioration and decay, upon which millions of dollars have been already expended. To complete this structure and extend the railway facilities to the southern end of Philadelphia as is proposed would inevitably add very greatly to the taxable valuation of real estate and personal estate in that section of the city, as well as serve the convenience and needs of the electors who authorized these loans by their vote. The purpose in the *Page 46 
present instance which induced the council and the electors to authorize this loan was to finance improvements of a permanent nature by borrowing for a period of fifty years. This obligation can now be met at a minimum interest charge. To meet at the present time or in the immediate future from current funds the liability thus authorized to be assumed, meantime paying interest at the rate of 6%, would entail an unlooked-for hardship upon the community."
According to the contrary view, a city might undertake the financing of a $50,000,000 improvement, authorize the issuing of bonds to that extent at a time when that sum would not make the city's total debt exceed 10% of the assessed valuation of taxable property in the city, and yet if the city, in order to save interest charges, issued these bonds only as the work progressed, it might find itself, if the assessed valuation of taxable property shrunk in the meantime, enjoined from further expenditures on a partially completed improvement. If that view prevailed, those who purchase Philadelphia municipal bonds from time to time would, in order to be certain that they were not buying void bonds, have to ascertain at the precise time they bought the bonds that the assessed valuation of the taxable property in Philadelphia was at least ten times the amount of the total city bonds outstanding plus the bonds they proposed to buy. Constitutional provisions should not be interpreted so as to lead to such unfortunate results.
For the orderly administration of municipal affairs in respect to bond issues, there must be an exact time at which the city's borrowing power is to be determined. The framers of the Constitution knew that property values fluctuate, and they obviously did not intend that the validity of the sales ofduly authorized municipal bonds should depend on such fluctuations. If the validity of bonds is to be determined on the date they are sold, it follows that the city mightauthorize an issue of bonds on a date when it would be illegal to sell them because *Page 47 
of low real estate valuation, yet it could sell them as soon as the assessed valuation of the property in the city rose to a point ten times higher than the face value of these bonds plus all others sold. This would be an anomaly never contemplated by the framers of the Constitution. The only practicable date on which a city's borrowing power should be measured is the date a loan is authorized. This court has heretofore held that the date of a loan's authorization, not the date of the marketing of the bonds, was the vital date in cases of this character. Nothing could be more definite than the language of Mr. Justice DEAN, speaking for this court in Brooke v. Phila., 162 Pa. 123,29 A. 387, as follows: "The real debt of the city [of Philadelphia] is the authorized debt, less the amount of the city certificates purchased and uncancelled in that [sinking] fund." This was followed in 1914, 20 years later, by the decision in McGuire v. Phila., 245 Pa. 287, 91 A. 622, which was heard on original jurisdiction to enjoin the city from making a loan in excess of the constitutional limitation. There this court speaking through Mr. Justice BROWN said: "Every authorization of a municipal loan is to be regarded as exhausting pro tanto the municipality's borrowing capacity." This court's decision in that case gives support to the proposition that the time at which it shall be determined whether or not a municipality's debt exceeds the limit imposed by the Constitution is the time the debt is authorized. This, the only practical rule to apply, has been recognized in other states. The Supreme Court of Missouri in Steinbrenner et al. v.City of St. Joseph et al., 285 Mo. 318, 226 S.W. 890, said: ". . . The statutes under which these bonds were being issued contemplated the property values at the time the officials were acting, and not what might be the property value at the actual sale and disposition of the bonds."
A municipal debt is "created" within the meaning of the constitutional provision under review whenever it is duly authorized. This is the only rule that is practicably *Page 48 
adapted to the administration of municipal affairs. A rule that the validity of bonds should be measured by the assessed valuation of taxable property at the time the bonds are sold from time to time is unworkable and would lead to fiscal confusion. When the language of any part of a Constitution is clearly not to be interpreted literally, as I have pointed out that section 8, article IX, of our state Constitution never has been and for practicable purposes cannot be, those whose duty it is to give judicial interpretation to a constitutional provision should bear in mind what Justice STORY said of constitutions, to wit: "They are instruments of a practical nature, founded on the common business of human life, adapted to common wants, designed for common use, and fitted for common understandings" (1 Story, Constitution, section 451). In section 454 of this same treatise, Justice STORY deprecates that method of constitutional interpretation which, as he expresses it, "weighs only the force of single words, as philosophers or critics, and not whole clauses and objects, as statesmen and practical reasoners." STORY says further, section 455: ". . . A constitution of government does not, and cannot, from its nature, depend in any great degree upon mere verbal criticism, or upon the import of single words. Such criticism may not be wholly without use; it may sometimes illustrate or unfold the appropriate sense; but unless it stands well with the context and subject-matter, it must yield to the latter. While, then, we may well resort to the meaning of single words to assist our inquiries, we should never forget that it is an instrument of government we are to construe; and . . . that must be the truest exposition which best harmonizes with its design, its objects, and its general structure."
When the municipal authorities authorize an issue of bonds, the constitutionality of their act must, in order to have a rule of feasible fiscal administration, be measured by the property valuation then existing. No other *Page 49 
rule is practicable. If the valuation of property falls after the bonds are authorized that fact should no more affect their validity than it does after the bonds have all been bought and paid for. A literal interpretation of section 8, article IX, of the Constitution, could not have been intended by those who formulated it, for a literal interpretation would make all Philadelphia city debts pro tanto invalid if their sum total exceeded 10% of the assessed value of the taxable property in Philadelphia. Such an absurd result of a literal interpretation calls for the rejection of it, as this court did reject it thirty-six years ago in Addyston Pipe and Steel Co. v. City ofCorry (supra). The same rule of reasonable constitutional construction calls for the rejection of the literal but, in my judgment, impracticable interpretation contended for by the plaintiff in this case.