Summary
holding an initial ordinance authorizing the acquisition or construction of a public utility and providing for the method of financing the project was subject to referendum but subsequent ordinances "incidental to and in furtherance of such project" would not be subject to referendum
Summary of this case from Swetzof v. PhilemonoffOpinion
Nos. 25901 and 25902
Decided June 24, 1936.
Municipal corporations — Acquisition or construction of public utility — Sections 4 and 5, Article XVIII, Constitution — Initial, but not later incidental ordinance, subject to referendum.
In proceeding to acquire or construct a public utility under the provisions of Sections 4 and 5 of Article XVIII of the Ohio Constitution, the city commission passed Ordinance 3123-C, authorizing such purchase or construction. On the same day the commission passed a resolution declaring it to be necessary to issue bonds in a definite amount and to levy a tax outside of limitations for the payment of interest on bonds and for their retirement. Held: Ordinance 3123-C was the initial ordinance authorizing such purchase or construction and was subject to referendum. Later ordinances incidental to and in furtherance of such project are not subject to referendum under the above constitutional provisions. ( State, ex rel. Diehl, Jr., v. Abele, 119 Ohio St. 210, disapproved and overruled.)
IN MANDAMUS.
These two suits are actions in mandamus against the City Commission of Sandusky and its president and members. They are original actions filed in this court and heard on demurrer to the answer of the respondents. The pleadings are somewhat lengthy, since they set out in full copies of the ordinances and resolutions adopted by the City Commission. Since the respondents did not controvert the proceedings had before the City Commission, legal and not factual questions are presented. The city of Sandusky adopted a charter providing for a commission-manager form of government, and was acting under the commission form when the following proceedings were had.
On August 7, 1933, the City Commission passed Ordinance 3123-C, declaring it necessary for the city to construct or purchase a municipal light and power plant and equip it with transmission and distribution lines for supplying electricity to the city and its inhabitants. No referendum was had on that ordinance, which is still in full force.
On the same day, to wit, August 7, 1933, the City Commission passed Resolution 466-C, declaring the necessity of issuing bonds of the city in the amount of $1,400,000 for the construction or purchase of the municipal light and power plant and its equipment, and the acquisition of necessary lines therefor. This resolution authorized the submission of this question to a vote of the electors of the city. The resolution declared that it would be necessary to issue bonds in the sum named by a vote of the people and to levy a tax outside of the limitation imposed by Article XII, Section 2, of the Constitution to pay the interest on and to retire the bonds; and that the levying of this tax should be submitted to the electors of the city at the next regular election on November 7, 1933. The resolution stated that the issuance of the bonds would be authorized by a later ordinance and would be payable in thirty-two semi-annual installments maturing substantially in equal amounts during a period of sixteen years after their authorization, and should bear interest at the rate to be fixed by the commission, not exceeding six per cent per annum, payable semi-annually. The resolution authorized that the clerk of the commission, not less than sixty days before the election, should certify a copy of the resolution to the County Auditor for his calculation of the average annual levy throughout the life of the bonds which would be required to pay the interest and retire them.
On September 11, 1933, the City Commission passed Resolution 468-C, declaring a desire to proceed with the issuing of bonds of the city in the principal amount of $1,400,000 for the purposes named in the prior resolution, and directed the certification of this resolution, together with other information required by Section 2293-19, General Code, to the Board of Elections of Erie county. Resolution 468-C required the clerk of the commission to give notice of the election in accordance with Section 2293-21, General Code, and required him to publish due notice of such election, which notice should state the amount of the proposed bond issue, the purpose for which such bonds were to be issued, the maximum number of years during which the bonds should run, and the estimated additional tax rate outside of the limitation imposed by the foregoing section of the state Constitution. No referendum was had either upon Resolution 466-C or upon Resolution 468-C. In pursuance to the last named resolution, an election was held in accordance with its provisions. Notice of such election was duly published, and the question of issuing such bonds was submitted to the qualified electors of the city on November 7, 1933. The published notice relating to the issue or non-issue of the bonds was as follows: "Shall bonds be issued by the city of Sandusky, Ohio, for the purpose of constructing or purchasing a municipal electric light and power plant, consisting of works for the generation and transmission of electricity and equipping the same, including transmission and distribution lines for supplying electricity to the city of Sandusky, Ohio, and the inhabitants thereof, including the acquisition of the necessary land therefor in the sum of One Million Four Hundred Thousand Dollars ($1,400,000) and a levy of taxes be made outside of the fifteen (15) mill limitation, estimated by the County Auditor to average 3.37 mills for a maximum period of sixteen years to pay the principal and interest of such bonds." At said election on November 7, 1933, the vote on the question of issuing said bonds was as follows: For the bond issue, 6515 votes; against the bond issue, 2377 votes.
On January 27, 1936, the City Commission passed Ordinance 3389-C, this ordinance reciting that whereas, at the election held in November 1933 on the proposition of issuing bonds in the sum of $1,400,000 for the purpose stated, at least 65% of those voting had voted in favor of their issuance, etc., the commission declared that it was deemed necessary to issue bonds in the sum named in order to provide a fund for the purpose of constructing or purchasing electric plant, etc.; declaring that said bonds should be issued in the amount named in the denomination of $500 each, to be dated March 1, 1938, and to bear interest at the rate of 6% per annum payable on the first days of March and September of each year until the principal sum should be paid, etc. The resolution declared that it was necessary, and the commission determined that notes should be issued in anticipation of the issuing of the bonds; that anticipatory notes in the sum of $1,400,000 should be issued bearing interest at the rate of 4% per annum. The anticipatory notes were to be the general obligations of the city and not mortgage bonds issued by virtue of Section 12, Article XVIII of the Constitution.
On February 24, 1936, a petition for referendum on Ordinance 3389-C, containing a sufficient number of names, was filed with the City Commission, its president and the City Manager. The commission refused to reconsider a repeal of said ordinance or to make any provision by way of a referendum thereon. Thereafter the committee representing the petitioners for referendum made demand upon the City Solicitor to bring an action in mandamus compelling the commission to pass an ordinance setting a date for referendum on Ordinance 3389-C. Acceding to the demand of the petitioners, the City Solicitor filed this action in mandamus for the purpose stated.
Cause No. 25902 is a separate action seeking referendum on Ordinance 3390-C. This ordinance was passed February 3, 1936, and authorized the City Manager to enter into a contract for a survey of the municipal light and power plant project. On February 24, 1936, a petition by a committee of taxpayers was filed with the City Commission asking it to reconsider and repeal Ordinance 3390-C, or to make provision for a referendum election on said ordinance. The commission refused the request of the petitioners. Thereupon, in pursuance of a demand made upon him by the committee, the City Solicitor instituted this action seeking to compel the City Commission to provide by ordinance for the fixing of a date for an election for the submission of Ordinance 3390-C to the electors of the city for approval or rejection.
Mr. William E. Didelius, city solicitor, for relator.
Mr. Bernard S. Keyt and Mr. Henry Hart, for respondents.
These causes were presented to this court upon general demurrers to the answers of the respondents. The demurrers search the record. The legal questions involved in each case are similar, and the disposition of Cause No. 25901 is dispositive of the other.
Considering now Cause No. 25901. The answer of the respondents alleges that Ordinance 3389-C, passed in 1936, relating to the issue of anticipatory notes, was "not a new, separate or main step in the acquiring of said utility, but is merely carrying into effect the mandate of the electors expressed at said election, when Resolution 466-C was adopted." The quoted language in the answer is a legal conclusion. However, it aptly states the legal question presented. Section 4, Article XVIII of the Constitution, empowers municipalities with the right to acquire, construct, own, lease and operate public utilities. Section 5 of the same article authorizes municipalities, proceeding under the former section, to act by ordinance, which ordinance becomes effective within thirty days if no petition is filed for referendum.
At the threshold of this case, it may be well to state that we are confronted with a legal question which requires either the approval or disapproval of the conclusion reached by this court in State, ex rel. Diehl, Jr., v. Abele, 119 Ohio St. 210, 162 N.E. 807, decided by a divided court in 1928. That case held that where a municipality, acting under the foregoing constitutional provisions, proceeded to construct a public utility, "not only the initial ordinance authorizing such construction, but every other ordinance in furtherance of such construction, is subject to referendum." The position taken by counsel for relator is that, when the utility is being acquired or constructed under the constitutional provisions hereinbefore referred to, each and every "step" taken by the commission in furtherance of the power plant project is subject to a referendum. He contends that Ordinances 3389-C and 3390-C, one pertaining to the issue of anticipatory notes, the other pertaining to the survey of the power plant project, were steps necessary to be taken in furtherance of the purpose stated in the initial ordinance, and that both were subject to referendum under the principle announced in the Abele case, supra; and since it must be conceded that the purposes of both ordinances were incidental to and in furtherance of the project adopted in Ordinance 3123-C, this case requires a re-examination of State, ex rel. Diehl, Jr., v. Abele et al., supra. The amount to be expended was not named in the initial ordinance of August 7, 1933; but on the same day the commission passed a resolution declaring the necessity of issuing bonds in the amount of $1,400,000 for the construction or purchase of a municipal power plant and its equipment, and authorizing a submission of the question to the voters of the city. Later, still acting pursuant to the purpose stated in the last named ordinance, full and complete notice of the contemplated project, including detailed information relative to the bonds to be issued, was given to the electorate, more than 65% of whom voted for the issuing of the bonds. Under this record, therefore, there was a referendum of the people upon the construction or purchase of the utility as well as upon the amount of bonds which were to be issued for its payment.
When, acting under the provisions of Sections 4 and 5 of Article XVIII of the Ohio Constitution, the City Commission passed Ordinance 3123-C, authorizing the acquirement or construction of a public utility, accompanied by a resolution of the same date notifying the electors of the necessity of issuing bonds in a definite amount, of the levying of a tax for the payment thereof, and giving to the public the details described in the notice; and when such resolution authorized the submission of the question to a vote of the electors of the city, we think that such ordinance was subject to referendum; and, since the time of the passage of the ordinance and resolution coincided, there was preserved to petitioners the thirty-day period after the passage of the ordinance for referendum action. Later ordinances incidental to and in furtherance of such project are not subject to referendum under the provisions of Section 5, Article XVIII of the state Constitution. That section refers to but one ordinance, and that is an ordinance providing for the acquirement of a public utility. The use of the phrase, "no such ordinance," implies that an ordinance initiating the acquirement or construction of the utility, and not successive ordinances in furtherance of that purpose, is subject to referendum. The legal contention of the relator that each successive step in the furtherance of the public utility project is open to referendum might often lead to anomalous situations which, in our judgment, the Constitution did not intend to create. Where an ordinance has been passed providing for the acquirement or construction of a public utility and the method of payment therefor, if the contention of counsel for the relator should be upheld, later ordinance contracts adopted for the construction of the utility could be thwarted by referenda on the ordinance contracts. For example: If, in the instant case, contracts for the purchase of land and the completion of buildings had been fully executed and a later ordinance providing for contracts for the construction of transmission lines should be adopted, under the theory advanced by counsel for relator the entire project could be thwarted by an adverse referendum vote on the last ordinance. This is in effect the judicial pronouncement made in the Abele case, supra. For the reasons stated, we disapprove and overrule that case.
In each of these cases the demurrer to the answer of the respondents will be overruled and the writs asked for will be denied.
Writs denied.
WEYGANDT, C.J., STEPHENSON, WILLIAMS and MATTHIAS, JJ., concur.