Wheeler v. City of Denver

CARLAND, Circuit Judge (after stating the facts as above). [1] So far as the legality of section 264a as a law is concerned we think the objections urged in the bill were all decided adversely to the contentions of appellants in Denver v. New York Trust Co., 229 U. S. 123, 33 Sup. Ct. 657, 57 L. Ed. 1101. It was there said: “That section 264a was merely au amendment of the charter, and that the mode of its submission and adoption was in accord with the applicable restrictions of the state Constitution,” and “that the amendment supersedes protanto the original provisions of the charter with which it is not in accord. The purpose in adopting it was to introduce something new, to make a change in existing provisions, and being adopted conformably to the constitutional and charter requirements, the new or changed provisions became at once a part of the charter, thereby supplanting or modifying the original provisions to the extent of any conflict” We also- are of the opinion that in view of the language of paragraph 1 of section 264a, - and of the general repealing clause at the end of the section, that the validity of the bonds in question, so-far as the questions raised in this case are concerned, must be determined ftom an examination of said section and that alone. We are strongly persuaded to adopt this view not only . from the language .used but from a consideration of the fact that the electors of the city and county of Denver knew of the trouble existing between the city and county of Denver, hereinafter called city and county, and the Denver Union Water Company, hereinafter called water company, and that they legislated particularly with reference thereto and specifically said: — 17 — “Nothing in the preceding sections or in this charter, except as herein specifically provided shall apply to the acquisition or operation of a waterworks for supplying the city and county of Denver, and its inhabitants with water for all uses and purposes.” [2] The first and important contention of appellants why the bonds must be declared void may be stated as follows: The city and county and the public utilities commission, hereinafter called commission, are both without power to issue bonds except as specific authority may be conferred in each instance by vote of the qualified taxpaying electors. This authority when conferred must be strictly construed, and all reasonable doubt of its existence must be resolved against the granting of the power. In the case at bar the qualified taxpaying electors authorized the issuance of $8,000,000 in bonds on condition that they should suffice to provide a municipal water plant or system, and everything incidental or necessary thereto, or construct and put into operation a complete system of waterworks for supplying said city and county and the inhabitants thereof with water for all uses and purposes; that the taxpayers have never voted upon the question of issuing $8,000,000 in bonds to construct a partial or in-completed plant, to finish which and make it usable, would cost a much larger sum, and that to hold that they so voted would sanction a manifest fraud upon the taxpayers. Therefore the issuance of the bonds should be enjoined because upon the record it is admitted that a complete system of waterworks cannot now be and never could have been constructed for $8,000,000. In the consideration of this contention we are of the opinion that we must hold on the record before us that a complete system of waterworks such as would be required to supply the city and county with water, cannot be constructed for $8,000,000. This court, however, possesses only judicial power. It may not legislate nor correct merely unwise legislation or unwise official action. No one can read section 264a without reaching the conclusion that the taxpaying electors understood that $8,000,000 would construct and put into operation a complete system of waterworks for supplying the city and county and the inhabitants thereof with water for all uses and purposes. Paragraph 8. But are the bonds voted void because the amount of bonds authorized will not construct and put into operation a complete system of waterworks? What rule of law has been violated in the estimate made by the electors as to the amount required to construct and put into operation a complete system of waterworks? What rule of law has been violated conceding the electors made a mistake as to the amount required for the purpose mentioned? It may be conceded that it would be unwise for the commission to start the construction of a waterworks system with only a part of the expense authorized. But as has been stated the judicial power cannot reach merely unwise official action. It would seem to be the duty of the commission or the city and county to go back to the electors for authority to issue additional bonds; but the judicial power does not extend to compelling the performance of official duty where a discretion is involved. It is’urged — 18 — as a legal ground for holding the bonds void, that to decide otherwise would be to sanction a manifest fraud on the taxpayers. We do not intend to sanction a fraud upon any one, nor do we, when we decide that the evils complained of on this branch of the case are beyond our reach. In order to hold the bonds void for the reason now being discussed, we would be compelled to construe section 264a as providing either directly or by clear implication that the bonds .should not be issued or used unless a complete system of waterworks could be built for $8,000,000. If this was the idea of. the electors it would have been an easy matter to have inserted in the section language to the effect, that in case it was found that $8,000,000 would not construct a complete waterworks system that the bonds should not be issued or used. No such proviso was so inserted, and we have no authority so to do. It certainly cannot be the law that simply because the electors authorizing a bond issue have made a mistake as to the amount of bonds' required to construct any public improvement, that therefore the bonds are void, in the absence of any legislation or provision that they shall be void in case the public improvement shall cost more than the amount of bonds authorized. It is rather the exception than, the rule that public improvements are built within the limit of the amount of money appropriated therefor. Counsel for appellees cite the case of People ex rel. Murphy v. Kelly, 76 N. Y. 475, in support of the proposition that even if it is conceded that the waterworks system for the city and county cannot be constructed and completed for $8,000,000, that fact would not prevent the issuance of the $8,000,000 already voted, and the commencement of the waterworks system by the commission. In the case cited the trustees of the New York and Brooklyn Bridge had made two requests for money with which to construct the Brooklyn Bridge, of the mayor and comptroller of New York, amounting in the aggregate to $1,000,000. These requests were resisted on the ground that the proviso in th¿ act of the Legislature of New York of 1875 (Laws 1875, c. 300) provided : “That the whole amount to he paid by both cities [Brooklyn and New York] shall not exceed eight millions of dollars.” It was claimed by the comptroller that the bridge although partially constructed could not be completed for the sum of $8,000,000, and as the cost was limited by law to $8,000,000 no more money should be paid to the trustees. The action was one in mandamus to compel the payment of the calls made by the trustees of the New York and Brooklyn Bridge.' The Court of Appeals of New York, by a divided court, decided that the limitation of the amount to be paid contained in the proviso above mentioned did not prohibit the trustees' from proceeding with the construction of the bridge, for the reason that if it had been intended that the trustees should not enter upon the completion of the bridge without first determining 'whether or not it would cost more than $8,000,000, a matter of such controlling importance would have been expressed in plain and explicit language. — 19 — This is along the line of reasoning which we have advanced in reference to section 264a. In regard to the Brooklyn Bridge Case, however, it must be said that at the time the act of 1875 was passed which contained the proviso above mentioned and other matters in connection with the building of the Brooklyn Bridge, there had already been expended upon the bridge about $5,000,000, and there was greater reason for the court to hold in that case that the Legislature of New York did not mean by the proviso above mentioned that the structure then partially completed, upon which upwards of $5,000,000 had been expended, should be lost and rendered worthless unless the expense of its completion could be kept within the sum mentioned. In the case at bar the bonds have not been issued and no work has been done as we understand it, towards the construction of a complete waterworks system, so that the conditions which existed in the Brooklyn Bridge Case do not exist here. We prefer to place our judgment in overruling the contention now under discussion upon the principle that the bonds in question being within the limit authorized by the votes of the taxpayers, may not be held void merely because a complete system of waterworks will cost more than the amount of the bonds voted, in the absence of some express provision or clear implication that the waterworks system was not to be constructed unless it could be constructed for $8,000,000. Paragraph 7, under which the bonds were voted, provides: “Such bonds, or so much thereof as the commission may deem necessary, shall be sold or used, by it to construct and put into operation a complete system of waterworks for supplying said city and county and its inhabitants with water for all uses and purposes, and said commission shall forthwith proceed to construct the same.” [3] It is next contended that by virtue of the language of paragraph 8, section 264a, that the investigation and determination by the commission of the value of the water company’s plant, and the cost of constructing a new complete plant, was a condition precedent to be performed prior to the vote, which authorized the issuance of the bonds, and the nonperformance of these duties by the commission rendered the bonds so voted void. In regard to this contention, it is manifest that the failure of the water company to in any way comply with paragraph 6, section 264a, rendered it impossible for the council to submit to the qualified taxpaying electors the question of issuing $8,000,000 in bonds for the purchase and repair of the waterworks of the water company. In this condition of affairs there was submitted at a special election called as provided in paragraph 6 the question provided in paragraph 7, and as a result thereof the bonds in question were authorized. The question then is, was it lawful to submit the question provided for in paragraph 7 at the special election provided for in paragraph 6, or was the commission after the water company had failed and refused to comply with paragraph 6 confined absolutely to the provisions of paragraph 8. Section 264a became a law May 17, 1910. By its terms the water company was to place in escrow a good and sufficient deed of conveyance of its waterworks on or before July 1, 1910. A special elec — 20 — tion was to be held on the first Tuesday in September, 1910, in case the deed of conveyance of the water company should be deposited in escrow, as above stated, for the purpose of determining whether $8,000,000 in bonds should be issued to purchase and repair the existing water plant. This question was not submitted at the special election as the water company did not deposit its deed as provided in paragraph 6, but under paragraph 7 in lieu of the question stated in paragraph 6, the question in paragraph 7 was submitted at said special election.. The language of paragraph 7 in regard to the submission of the question therein provided for uses the words “shall be submitted.” Paragraph 8 provides that tire commission, in case the water company has not accepted $7,000,000 for its plant, as provided in paragraph 6, shall proceed to make a careful investigation of the value of said plant for the uses and purposes of the city and county, and its inhabitants, and also proceed to make a careful estimate of the cost of constructing and completing a new waterworks system for the city and county and the inhabitants thereof, and that said commission may submit an alternative bond proposition at the special election provided for in paragraph 6 for the issuance of bonds in such sum as the commission may d.eem it advisable for the acquisition or construction of the water plant or any part thereof by any of the ways within its powers. In the light of what has transpired it would no doubt have been better vhad the commission proceeded under paragraph 8, still it could not know-before July 1, 1910, whether the Water Company would accept $7,000,000 in bonds for its plant, and the time between July 1, 1910, and September 6, 1910, the date of the special election, would in our judgment be entirely insufficient to make a careful investigation of the value of the water company’s plant, and of the cost of constructing and completing a new water system. Indeed we think that it would have been impossible for the commission to have performed the duties required under paragraph 8 within the time limited. This is demonstrated by the time that it took the engineering committee subsequently appointed to make an investigation of the cost of constructing a new system of waterworks. So far as mere procedure is concerned we think the commission’s failure to act under paragraph 8 was justified. And we are also of the opinion that such failure to act in no wise invalidated the election which was actually held. The language of paragraph 7 is mandatory, and the question upon which the qualified electors were to vote was clearly defined. [4] It is further claimed that, whether the commission was obliged to follow paragraph 8 or not the failure to make a careful, estimate of the cost of constructing a new system of waterworks prior to the special election at which $8,000,000 in bonds were authorized renders the vote nugatory. The case of Carlson v. City of Helena, 39 Mont. 82, 102 Pac. 39, 17 Ann. Cas. 1233, is cited by appellants to sustain their contentions that the vote by which the. taxpaying electors of the city and county of Denver.authorized the .bonds in question was nugatory, because prior — 21 — to said election the pi.tblic utilities commission had not ascertained that a supply of water could be had, and the probable cost thereof. The case cited was brought by Carlson as a taxpayer and resident of the city of Helena, to restrain the issue of $600,000 of bonds of the city for the purpose of procuring a water supply and installing a system of pipes for its distribution, and $70,000 of bonds for the purpose of extending one of the sewers of said city. The facts bearing upon the point decided in that case which it is claimed is an authority in the present case were as follows: On March 3, 1908, the mayor and city council of the city' of Helena determined that it was for the best interests of the city to own and control its water supply and water system, and that a supply could be obtained from McClellan creek, and brought into the city by an expenditure of $600,000, and also that a needed extension of the sewer system of the city could be effected, by an expenditure of $70,000, whereupon the mayor and city council of the city enacted an ordinance reciting these facts and providing for a submission to the taxpayers of the city of the question whether the limit of indebtedness should be extended to procure the funds for these purposes. The ordinance provided that a special election be held in the city of Helena on the 25th day of April, 1908, for the purpose of ascertaining the will of the taxpayers to be affected thereby, as to whether authority should be given and power conferred upon the city council to increase the indebtedness of said city, over and above the 3 per cent, limit fixed by law, by the issuance: (1) Of water bonds of said city to the amount of $600,000, for the purpose of securing a water supply for said city from McClellan creek and constructing a water system for said city; (2) of sewer bonds to the amount of $70,000 for the purpose of sewer extension. The election was held pursuant to the ordinance and it showed a large majority in favor of both bond issues. Thereupon and in pursuance of the authority given by the electors an ordinance was passed providing for the issuance of the bonds. Judgment was entered by the trial court on demurrer for Carlson and the city appealed. It was contended in the appellate court that the city council had no authority to submit to the electors the question whether a particular water supply must be obtained, or. if it had, that the question could not be submitted in this restricted form until it had first been ascertained that the particular supply was available and what its cost would be. In other words, the contention was that the council was authorized to consult the taxpayers generally as to whether it might proceed to acquire a supply of water for the city, but that it could not divest itself of the discretion vested in it by law as the governing body of the city by leaving it to the electors to select a particular supply, namely, from the waters of McClellan creek. It was claimed that the objection was fundamental because the discretion to procure a particular supply was vested in the council, and that this discretion could not ordinarily he exercised until the council had ascertained that the particular- supply was available, and that the cost of acquiring and installing it could be compassed by the amount of the indebtedness to be incurred. The Supreme Court of Montana sustained this contention. The court said: — 22 — “If the council should have first ascertained that the particular supply could be acquired, and that the cost of it, together with the cost of installment, is within the compass of the sum which the city can lawfully expend for that purpose, then there could be no possible objection to allowing the voters to speak as to the propriety of securing the particular supply. The council would then have exercised the discretion which is vested in it by law. If, however, all these matters have not already been determined, the vote becomes nugatory, because the assent given by the voters for the acquisition of the particular supply limits the discretion of the council, with the result that if it is thereafter found that the contemplated supply cannot be secured, or that the cost of installment is beyond the financial capacity of the city or not within the compass of the sum secured by the sale of the bonds under the extension already voted, the debt incurred can serve no purpose. It appears from the complaint that the council has authorized condemnation proceedings to acquire the right to the use of the water of McClellan creek, but that these proceedings have not yet been determined. It thus appears, and it is admitted by counsel for appellant, that the cost of acquiring the right has not been ascertained. If the intention to acquire it should be abandoned for any cause hereafter—and it cannot now be surmised what difficulties may be encountered—the city would have in its treasury the money derived from the sale of the bonds, without any use to which the council could devote it. The orderly course of procedure would be to submit the question generally whether the indebtedness, not in excess of a definite amount within the limit, should be incurred; then the council would be left free, in case the indebtedness should be authorized, to use its discretion in securing one supply or another, according as its judgment would dictate. The discretion of the council in this particular is exclusive, and it cannot lawfully divest itself of it by casting it upon the voters, with the probably, or even possibly, absurd consequences to which we have adverted. 28 Cyc. 277, and cases cited in notes; Dillon on Municipal Corporations (4th Ed.) § 96. Having ascertained that a supply can be obtained, the council may then proceed, and under the authority granted by the electors to incur the necessary indebtedness, to issue and sell bonds, acquire any supply which its judgment may dictate, and ha^e it Installed so that it may become available. It might, perhaps, be said that the vote upon the submission in its restricted form could not be held binding upon the council in case it should turn out that the right to the use of the water in McClellan creek could not be acquired. This may with equal propriety be answered by the statement that the voters were not asked to extend the limit generally for water supply purposes, and it cannot be said that assent to incur the indebtedness would have' been given if the question had been submitted generally, as the statute contemplates. Skinner v. City of Santa Rosa, 107 Cal. 465, 40 Pac. 742, 29 L. R. A. 512.”. There can be no question in this case that the submission of the question voted upon to the qualified taxpaying electors in any way interfered with the discretion of the commission or the council of the city and county as to where the supply of water should be obtained, so the case cited is inapplicable on that point. The case, however, does seem to hold that it was necessary for the council of the city of Helena, Mont., before it submitted the bond proposition to a vote of the taxpayers, to have ascertained whether or not a water supply and water system could be obtained and constructed for the sum of $600,000; and one of the grounds upon which the court seems to have held the bonds void was that the council never did ascertain prior to the vote what a water system for the city of Helena would cpst. We all must admit that that would be the business way of going about the matter, but where as in the case at bar the charter authorizes the creation of an indebtedness in the sum of $8,000,000 to provide a municipal water plant or system and everything incidental or necessary thereto for — 23 — supplying the city and county and all its inhabitants with water for all uses and purposes upon a vote of the taxpaying electors, and the charter further provides that the question shall be submitted as provided in paragraph 6 of 264a, we cannot conclude that the mere failure of the commission to ascertain the probable cost of a new system would render the vote provided by law nugatory. In our judgment section 264a left it to the discretion of the commission whether it should follow paragraph 7 or paragraph 8. [5] It is further contended that the commission failed and neglected to fix the date, form, and maturity of the $8,000,000 of bonds prior to the special election of September 6, 1910, and that, therefore, the commission has no power to issue the same. It appears that by the ordinance effective January 15, 1914, the council of the city and county fixed the form and date of the bonds. They were to bear date January 1, 1914, and all the installments of said bonds were to mature not later than 30 years from the date of original issue, and all of the bonds should absolutely mature and be payable 30 years after their date. It also appears from the record that while litigation did not prevent the commission from fixing the form, date, and maturity of the bonds prior to the special election, it did cause the delay to a large extent which happened subsequently thereto. Paragraph 5 of 264a empowers the commission to fix the date, form, and maturity of the bonds without any limitation as to the time it should do so. The taxpaying electors must be charged with a knowledge of this law, and when they voted the bonds they did so charged with such knowledge. The question submitted to the taxpaying electors was the question the law required to be submitted to them and that was sufficient. [6, 7] Section 6 of Ordinance No. 4, Series of 1914, provides for a tax upon all taxable property in the city and county sufficient to pay the annual interest on said bonds, and to provide a sinking fund to extinguish the principal of said bonds at their maturity. Section 7 of said ordinance provides that when the water plant or system shall have been constructed that the revenue derived from the operation of said water plant or system, or so much thereof as is not actually needed for the operation and maintenance of the said water plant or system, shall he paid into the treasury of the said city and county for the purpose of creating a sinking fund to extinguish the principal and interest of the said bonds within the said period of thirty years, and that whenever there is any money so paid into the treasury of the city and county from the revenues of the said water plant, then and in that event and until said sums of money are exhausted, no part of the levy provided for in this connection to be levied upon the taxable property of the city and county, shall be utilized in the extinguishment of the principal and interest of said bonds. It is now contended that the law only authorized the commission to provide for a sinking fund to be created out of the net earnings derived from the operation of the.water plant when constructed; and sections 258, 261, and 263 of article 9 of the charter are cited in support of this contention. We infer from the language of the ordinance — 24 — that it was the intention of the commission and- council to mqke such a provision for a sinking fund as would render it certain that the bonds with interest would be paid. The ordinance does provide a sinking fund to be paid out of a net revenue arising from the operation of the waterworks system; and it further provides that no part of the levy provided for in section 6 to be levied upon taxable property of the city and county, shall be used where there is sufficient income arising from net revenue. It is claimed also that the commission ought to have stated in the proposition submitted to the vote of the taxpaying electors how it proposed to create a sinking fund for the payment of the principal and interest of the bonds. So far as submitting the proposition to the electors is concerned the law did not require it, and we may not say the bonds are void, because something was not submitted to the taxpaying electors that the law did not provide should be submitted. Nor can we-hold the bonds invalid merely because the commission and council have-made a provision for a sinking fund that may not have been necessary. Any irregularity in this respect can be easily corrected by the commission and council. [8, 9] It is also contended that the public utilities commission has-no authority under section 264a to issue what is termed “straight, flat,, 30-year bonds,” but they were to issue only “call bonds,” and that in-any event it was-the mandatory duty of the commission to determine-whether said bonds were to be straight, flat bonds or call bonds prior to the special election. Paragraph 5 of section 264a provides: “No such bonds shall be used or sold at less than par, nor sold except after-advertisement as in this charter provided for the sale of public improvement bonds, and they may be called for redemption by the commission in like manner as provided in section 314.” It is conceded that the commission under the grant of power to say at what time the bonds should mature would have the right to issue-straight, flat, 30-year bonds. But it is claimed that the language last quoted restricts and limits the power of the commission in some way-so as to deprive them of their authority to issue straight, flat, 30-year-bonds. We do not think so, and consider the reasoning to the contrary highly technical. It is insisted, however, that in any .event it was the-mandatory duty of the commission to determine whether the bonds-were to be straight, flat, 30-year bonds or call' bonds prior to said election, and to inform the taxpayers thereof. As we have said before-there are many things that the qommission might have done, but we think it is enough to require them to do what the law commanded, and we find no command in the law for informing the taxpayers of whether the bonds would be straight, flat, 30-year bonds or call bonds. Very many authorities have been cited by counsel on both sides upon-the questions raised on this-appeal. They have all been examined and' it would extend this opinion to an unwarranted length to review them however briefly. We have found no case where the facts to which the law must be applied were the same as in this case. The most serious question presented is whether or not the issuance of the bonds should, be restrained because the sum voted to construct the waterworks sys — 25 — tem is not sufficient to construct a complete system of waterworks, on the theory that the taxpaying voters would not have authorized the issuance of 88,000,000 in bonds to build a waterworks system if they had known that the system could not be built for that money. [10] After a careful consideration of this question we have concluded that under the facts in this case the court would not be authorized to speculate as to what the taxpaying electors would have done had they known that $8,000,000 would not construct a complete system of waterworks. We are also of the opinion, as before stated, that we are not warranted in construing section 264a, so as to prohibit the construction of a waterworks system unless said system could be built for $8,000;000. It results, therefore, that the court committed no error in excluding the testimony offered at the trial, as it was either irrelevant and immaterial in itself or because as the record already showed the facts desired to be proved, it was merely cumulative. Judgment affirmed.