Opinion
Decided May 17, 1926.
Municipal corporations — Initiated ordinance authorizing contract for gas supply, valid legislative act — Section 1f, Article II, Constitution — Sections 4206 et seq., and 4227-1, General Code — Constitutional provisions for contracting with public utilities, a limitation on council only — Section 5, Article XVIII, Constitution.
Municipal ordinance, initiated by petition, authorizing and directing city officer to enter into contract with company to supply gas to city, held legislative act, and hence valid, under Article II, Section 1 f, Constitution, reserving to municipalities right to initiate on questions that council may control by legislative action, and statutes pursuant thereto, Sections 4206 et seq., and 4227-1, General Code, notwithstanding Article XVIII, Section 5, Constitution, which is mere limitation upon city council.
APPEAL: Court of Appeals for Butler county.
Mr. Warren Gard, for plaintiff.
Mr. L.J. Ziliox, for defendant city of Hamilton.
Messrs. Shotts Millikin, for defendant Hamilton Furnace Co.
This action to enjoin the city of Hamilton, Ohio, from performing a contract that it entered into with the Hamilton Furnace Company to furnish artificial gas to said city and its inhabitants is based on the claim of the plaintiff that the ordinance authorizing and directing the director of public service of that city to enter into such contract is illegal, unconstitutional, and void. The ordinance in question was proposed by an initiated petition, filed with the auditor of the city on August 5, 1925. It was submitted to the electors thereof at the regular election November 3, 1925, and was carried by a majority of the votes cast on the question. Several grounds are urged for holding the ordinance unconstitutional.
The case was submitted on the pleadings and the agreed statement of facts, and, as we view it, there is but one question for determination, namely: Was the initiated ordinance, under the Constitution and laws of Ohio, proposed and adopted as a legislative act?
Before passing to the consideration of that question, it should be stated that the city of Hamilton owns and operates a municipal gas plant and system of distribution, and that there is nothing in this record that fixes the rates or conditions under which the inhabitants of the city are to receive and pay for gas. So that we confine ourselves to the one question above stated.
Section 1 f of Article II of the Constitution reads: "The initiative and referendum powers are hereby reserved to the people of each municipality on all questions which such municipalities may now or hereafter be authorized by law to control by legislative action."
Since the adoption of the Municipal Code in 1902, the powers of council are limited and defined by Section 4211, General Code: "The powers of council shall be legislative only, and it shall perform no administrative duties whatever. * * * All contracts requiring the authority of council for their execution shall be entered into and conducted to performance by the board or officers having charge of the matters to which they relate, and after authority to make such contracts has been given and the necessary appropriation made, council shall take no further action thereon."
This is authority for the council of a municipality to authorize the director of public safety or service to enter into contracts under the conditions and limitations stated in this section of the statute, and by Section 1 f of Article II of the Constitution there is reserved to the people of such municipality the right to initiate legislation upon all questions that council may now or hereafter be authorized to control by legislative acts.
Under title XII, division V of the General Code of Ohio, council of villages is vested with certain specified authority, and, as a part of the delegation of power to municipalities by the state, Section 4227-1, General Code, limits or reserves to the people certain rights under the Constitution and laws of Ohio in this language: "Ordinances and other measures providing for the exercise of any and all powers of government granted by the Constitution or now delegated or hereafter delegated to any municipal corporation, by the General Assembly, may be proposed by initiative petition."
The Constitution of the state and the delegation of power to municipalities by the General Assembly would seem to be complete were it not for Section 5, Article XVIII, of the Constitution, which restricts the powers of municipalities under certain conditions. Its language is: "Any municipality proceeding to acquire, construct, own, lease or operate a public utility, or to contract with any person or company therefor, shall act by ordinance and no such ordinance shall take effect until after thirty days from its passage."
This section then proceeds to suspend the operation of the ordinance for 30 days, and provides for a referendum. We are therefore confronted with the general constitutional provision reserving to municipalities the right of the initiative, and by statutes enacted in pursuance of that provision of the Constitution, and by the special provision stated in Section 5, Article XVIII, specifically limiting the manner in which contracts may be entered into with reference to public utilities.
If these provisions of the Constitution are antagonistic, the special provision must prevail over the general reservation; but, if construed together, the general provision would give the right of the initiative in all legislative matters. Section 5 of Article XVIII would be a limitation on the act of council in enacting an ordinance with reference to public utilities, it specifically conferring the right of referendum on an ordinance enacted by council.
This view seems to be strengthened by the fact that other sections of the Constitution give legislative bodies the right to declare emergency legislation; but, under this section, there could not be an emergency with reference to an ordinance passed authorizing a contract with a public utility.
If we give effect to the general provision of the Constitution, the authorizing statutes enacted thereunder, and the special provision relating to ordinances enacted by council, the only construction that could be given to the latter would be that it was a limitation on the powers of council and did not in any way affect the rights reserved to the people to initiate an ordinance authorizing a contract.
So that in the last analysis the question for determination is as to whether or not the authorizing of a contract is a legislative act.
Counsel for plaintiff cites and relies on City of Indianapolis v. Indianapolis Gas-Light Coke Co., 66 Ind. 396, which holds that municipalities have no power by legislation to make contracts, and that a contract with a gas or light company is made in the exercise of its business or administrative capacity, and not in the exercise of its legislative power. We do not have before us the Constitution and laws of the state of Indiana, nor the ordinance of the city of Indianapolis, so that we do not know the basis of that decision.
As long ago as 1853, the Supreme Court of the United States, in the case of Piqua Branch of State Bank of Ohio v. Knoop, Treas., 57 U.S., (16 How.), 369, 14 L. Ed., 977, held that the General Assembly of the state had authority to make a contract, and that that contract was binding notwithstanding the state subsequently passed laws governing the general taxation of property, which, if enforced, would violate the terms of the contract entered into between the state and the bank. In a very lengthy opinion by Justice McLean that contract was upheld.
In two cases in 212 U.S., one being City of Knoxville v. Knoxville Water Co., page 1, 29 S. Ct., 148, 53 L. Ed., 371, and the other, Willcox v. Consolidated Gas Co., page 19, 29 S. Ct., 192, 53 L. Ed., 382, 48 L.R.A., (N.S.), 1134, 15 Ann. Cas., 1034, it was held that rate-making is a legislative function, whether exercised by the Legislature or by a subordinate body to which power has been delegated, such as a municipality. These cases were followed by the Supreme Court of Ohio in the case of Newark Natural Gas Fuel Co. v. City of Newark, 92 Ohio St. 393-399, 111 N.E. 150.
In this view we are constrained to hold that the ordinance, initiated by petition, was a legislative act, for which reason the prayer of the petition will be denied.
Injunction denied.
BUCHWALTER, P.J., and HAMILTON, J., concur.