Keihl v. City of South Bend

ROSS, Circuit Judge, after stating the facts as above, delivered the opinion of the court. The subject-matter of the action, involving as it does the acts and rights of the receiver of the federal court, constitutes a case arising under the laws of the United States, and therefore was within the jurisdiction of the court below. The motion to dismiss the writ of error is, therefore, denied. The constitution of the si ate of Washington provides: “No county, city, town, school district, or othei municipal corporation shall for any purpose become indebted in any manner to an amount exceeding one and one-half per centum of the taxable properly in such county, city, town, school district, or other municipal corporation, without the assent of three-ftfths of the voters therein voting at an election to he held for that purpose, nor in cases requiring such assent shall the total indebtedness a.t any time exceed five per centum of the taxable properly therein, to be ascertained by the last assessment for state and county purposes previous to the incurring of such indebtedness, except that in incorporated cities (lie assessment shall be taken from the last assessment for city purposes.” Const. art. 8, § 6. The complaint alleges that the contract upon which the action is based was made April 8, 1893, — -the date of the adoption of the ordinance numbered 118. At that time the city of South Bend had an outstanding bonded indebtedness of $60,000. The regular assessment for city purposes next preceding that date was made June 2, 1892, and aggregated $1,908,478. The then general city debt, over and above that evidenced by bonds, less cash in ,the city treasury, was $10,085.87; making the aggregate amount of the city indebtedness at the time of the making of the contract sued on $70,035.37, — far in exces's of the constitutional limit to the indebtedness of the city. If, therefore, the effect of the contract declared on between the South Bend Water Company and the city of South Bend was itself the attempted creation of an indebtedness on the part of the city for water to be supplied to the city and its inhabitants by the water company, it was clearly void, as being in contravention of the express provision of the constitution of the state. That provision constitutes an absolute limitation upon the power of the city to contract any indebtedness for any purpose whatever beyond the limit specified, except by virtue of the vote of the people to be affected. Lake Co. v. Rollins, 130 U. S. 662, 9 Sup. Ct. 651; Lake Co. v. Graham, 130 U. S. 674, 9 Sup. Ct. 654; Doon Township v. Cummins, 142 U. S. 366, 12 Sup. Ct. 220. The contract here involved provided that the water company should put in the city 25 and such other hydrants as the city should choose to order for the supply of water, and that the city would pay to the company, as rental, during the period of 30 years, $7.50 each month for each of the hydrants provided for that was in good order during the preceding month; such rental, according to the contract, to be provided for by a sufficient tax “levied and collected [924] annually upon all taxable property in -said city to meet the payments for hydrants rented as herein provided, which tax shall be irrepealable during the continuance of the franchise herein .provided,” and to be paid by warrants drawn on the general fund of the city. We are unable to see how this contract can be properly said to have created an indebtedness against the city at the time of its execution. There is at least one element of uncertainty about it that renders it impossible to fix upon, or even estimate, what amount the city may become indebted in under its provisions; for the rental provided for is only to be paid for such hydrants, as were in good order during the month preceding the time for the payment of the rental. If none of them were in good order during that period, nothing would become payable from the city therefor under the contract. If some were in good order and others not, for the rental of only those that were in good order would the city be liable. Certainly, under such circumstances as these, it seems unreasonable to hold that an indebtedness arose against the city at the time of the execution of the contract. If so, in what amount? It is impossible for any one to say. It is only in-the event the company supplies water by means of the specified hydrants, and in the event they are kept in good order, that an indebtedness therefor on the part of the city arises; and then only at the rate of $7.50 a month for each of the hydrants that were in good order during the preceding month. We are of opinion that the contract in question cannot be properly held to have in and of itself created an indebtedness in contravention of the constitution of the state. It provided, however, for conditions upon which an indebtedness against the city might arise. If, when such indebtedness would otherwise arise, the city was already indebted in an amount equal or exceeding the constitutional limit, it would fall within the constitutional prohibition, and never acquire any validity; for all contracts are made subject to constitutional as well as statutory provisions, and in this case the South Bend Water. Company contracted with knowledge of the fact that by the constitution of the state, of which the city of South Bend formed a part, it was provided that the city should not, for any purpose, become indebted in any manner to an amount exceeding per centum of the taxable property of the city, according to the last preceding assessment roll, without the assent of three-fifths of the voters therein voting at an election to be held for that purpose. In the present case there was no such assent, and the facts show that at the. time the indebtedness sued for would otherwise have arisen the city was already indebted far beyond 1-J- per centum of the taxable property of the city according to the last preceding assessment roll. Judgment affirmed.