Opinion
Decided July 17, 1933.
Municipal corporations — Public utilities — Rate ordinance, after acceptance, constitutes contract and subject to referendum, when — Constitutional right to acquire or construct utility, includes right to contract — Constitutional provisions apply to electric company contract — Holding in Supreme Court syllabus not obiter — Constitutional, and not charter, provisions govern referendum time limitations — Mandamus denied to compel submission, where referendum petition filed after 30 days — Article XVIII, Sections 4 and 5, Constitution.
1. Proposal by ordinance to buy utility company's product and service at given figure subject to express regulations and written acceptance thereof by utility company constituted valid contract subject to existing law respecting submission to electors (Article XVIII, Sections 4 and 5, Constitution).
2. Municipality's right under Constitution to acquire or construct public utility carries with it necessary and indispensable right to contract (Article XVIII, Section 4, Constitution).
3. Constitutional provisions authorizing municipalities to own or lease public utility or to contract with others for product and service apply to contract by electric company to furnish its product and service to city and inhabitants (Article XVIII, Sections 4 and 5, Constitution).
4. Holding in case involving validity of contract between city and power company that contract was authorized by Constitution and was binding unless disapproved by electors held not obiter.
5. Constitutional provisions, rather than charter provisions, govern regarding time within which referendum petition must be filed after enactment of ordinance making contract with public utility (Article XVIII, Section 5, Constitution).
6. Where petition for referendum was filed after 30-day period provided by Constitution after enactment of ordinance proposing terms of contract with public utility, city councilmen could not be compelled by mandamus to provide for referendum (Article XVIII, Section 5, Constitution).
IN MANDAMUS.
Mr. S.V. McMahon, Mr. F.W. Zimmerman, Mr. J.P. Mooney, Mr. Jos. B. Keenan, and Mr. Herbert Cuyler, for relator. Mr. W. George Kerr, Mr. Wm. C. Dixson, and Mr. Alfred Clum, for respondents.
For some years last past the Cleveland Electric Illuminating Company has supplied its product and service to the city of Cleveland and its inhabitants under a ten-year contract in the form of a duly enacted and accepted ordinance of the city, No. 64186, at a price of five cents per kilowatt hour and a minimum monthly charge of seventy-five cents, which contract expires July 6, 1934.
On the 27th day of February, 1933, the council passed Ordinance No. 99091, which was duly accepted by the Cleveland Electric Illuminating Company on the 30th day of March, 1933, by the terms of which the illuminating company agreed to furnish its product and service to the city and its inhabitants at a maximum rate of four cents per kilowatt hour, and a minimum monthly charge of sixty cents, until July 6, 1939, and by Section 3 thereof repealed Ordinance No. 64186.
On the 7th day of April, 1933, the relator and others filed a sufficient petition with the clerk of the council demanding that said Ordinance No. 99091 be either repealed or a date fixed for an election by way of referendum thereon. The respondents, members of the city council, refused to reconsider or repeal said ordinance, and have refused to make provision for an election thereon.
The relator brought this action in this court praying for a peremptory writ of mandamus to compel the respondents as city councilmen to reconsider and repeal said Ordinance No. 99091 or make provision for a vote thereon in accordance with the provisions of the charter of the city of Cleveland.
The respondents filed an answer in which the principal allegations of fact contained in the petition are admitted, but say that the referendum petition, so called, was filed with the clerk of the council thirty-nine days after the enactment of the ordinance. The respondents further say that Sections 4 and 5 of Article XVIII of the Constitution of Ohio control. These sections read as follows:
Section 4: "Any municipality may acquire, construct, own, lease and operate within or without its corporate limits, any public utility the product or service of which is or is to be supplied to the municipality or its inhabitants, and may contract with others for any such product or service. The acquisition of any such public utility may be by condemnation or otherwise, and a municipality may acquire thereby the use of, or full title to, the property and franchise of any company or person supplying to the municipality or its inhabitants the service or product of any such utility."
Section 5: "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. If within said thirty days a petition signed by ten per centum of the electors of the municipality shall be filed with the executive authority thereof demanding a referendum on such ordinance it shall not take effect until submitted to the electors and approved by a majority of those voting thereon. The submission of any such question shall be governed by all the provisions of section 8 of this article as to the submission of the question of choosing a charter commission."
The charter provides that referendum petitions shall be filed with the clerk of the council within forty days after the enactment of the ordinance. Section 5 provides that the petition for a referendum shall be filed within thirty days with the executive authority of a municipality. These provisions, with others regulating the submission, disclose a clear conflict between the charter and the Constitution if Section 4 above comprehends the contract for furnishing product and service. That this conflict exists in this event is conceded by counsel.
It seems to be further conceded that a determination of the meaning that shall be given to the phrase found in Section 4 above, "and may contract with others for any such product or service," read together with the phrase found in Section 5 above, "or to contract with any person or company therefor," will be decisive of the instant case. It seems to be conceded that, if the language quoted comprehends the subject-matter of the ordinance involved herein, then and in that event the Constitution controls, and the provisions of the charter in relation thereto have no application.
First, it was strenuously contended by counsel for the relator that the enactment of this Ordinance No. 99091, and the acceptance thereof by the illuminating company, did not constitute a valid contract. It is our conclusion that they do. Said ordinance amounted to an offer when passed on February 27, 1933. The acceptance thereof by the illuminating company on March 30, 1933, resulted in a valid contract. A proposal by ordinance to buy the product and service at a given figure, subject to express regulations, and the written acceptance thereof by the utility company, constitute a valid, binding contract, subject, however, to existing law relating to submission to the electors by way of referendum. In Ohio River Power Co. v. City of Steubenville, 99 Ohio St. 421, 124 N.E. 246, the situation was reversed. The public utility made the offer which was accepted by the city by ordinance, and the courts held this to be a binding contract.
Attention is called to the most recent decision of the Supreme Court in the case of City of Akron v. Public Utilities Commission, 126 Ohio St. 333, 185 N.E. 415, the syllabus of which reads as follows: "Where a city, by ordinance regularly passed, fixes a rate whereby a particular public utility will be permitted to market its product to the city for a specified time, and the proffer contained in such ordinance is accepted, in writing, by such public utility, a contract is thereby made between the city and the public utility, and a contract rate is established which the Public Utilities Commission has no power to alter during the term of the contract. (Link v. Public Utilities Commission, 102 Ohio St. 336 [131 N.E. 796], approved and followed.)"
A careful reading of the sections of Article XVIII of the state Constitution will render significant the fact that among all the activities of a municipality, such as water service, sewers, street improvements, grade crossing eliminations, etc., none receive specific mention and attention except those of public utilities.
The relator seems to agree that if the ordinance relates to the acquisition, construction, ownership, or leasing of a public utility, then and in that event Sections 4 and 5, Article XVIII of the Constitution, would control and the provisions of the charter be inapplicable. All agree that, if the Constitution speaks specifically on a subject, statutes and home rule charters are superseded by the higher law.
What was the ultimate object and purpose of the framers of these sections? It does not seem to us that the paramount purpose was the ownership of a public utility, but rather of the product and service thereof to the end that the needs and comforts of the inhabitants might be met. The product and service was the ultimate objective, and dealing therein was the thing sought to be safeguarded. Any dealings therein or in respect thereto, whether through municipal ownership of the utility or through contract with others for its product and service, were specifically reserved by the language used in these sections. There was no more reason for safeguarding the construction of a public utility rather than that of a garbage reduction plant or kindred municipal activity if product and service were not the prime consideration.
The relator claims that the phrases above quoted mean the same as if the word "therefor" was translated to read "for the acquisition, construction or leasing of a public utility." Such meaning would render the phrase useless and be a mere repetition of a right or power theretofore granted by implication. The right to acquire or construct carries with it the necessary and indispensable right to contract, the authority to make all contracts required to accomplish the undertaking. Only by giving to the language that meaning contended for by the respondents do you attribute any useful purpose to including these phrases in the sections.
The Constitution, through these sections, empowers each municipality to acquire, construct, own, lease, and operate a public utility, that its product and service may be available, or to contract with others for such product and service. However, if and when it undertakes to exercise this authority, it must be done only by ordinance, and this ordinance shall not become effective for thirty days. And, if a sufficient referendum petition be filed within thirty days, such ordinance shall not go into effect until duly submitted to a vote and approved by a majority. The submission shall be governed by all the provisions of Section 8. These sections are self-executing on authority of one holding herein cited. Section 4 contains the grant of power, and Section 5 provides the only method and manner of exercising it. State, ex rel. City of Toledo, v. Weiler, 101 Ohio St. 123, 127, 128 N.E. 88.
Considering, as we do, that it was the dealing with the public utility, with a view to acquiring product and service, that was the outstanding paramount objective, we believe that the phrases above quoted also relate to contracts covering the marketing of product and service.
It seems to us further that this question has been judicially determined. The fourth paragraph of the syllabus in the case of Ohio River Power Co. v. City of Steubenville, 99 Ohio St. 421, 124 N.E. 246, reads as follows: "A contract entered into between a public utility and a municipality of this state, whereby the public utility agrees to supply its product or service to the municipality or its inhabitants for a period of ten years, at a rate, price, charge, toll or rental specified in such contract, is expressly authorized by Section 4, Article XVIII of the Constitution of Ohio, and is valid and binding upon the parties thereto, unless disapproved by a majority of the electors voting thereon, at a referendum election held under the provisions of Section 5, Article XVIII of the Constitution of this state."
The syllabus is the law of the case. The principle announced has not been modified or reversed to our knowledge. Counsel for relator claim this is obiter. With this we do not agree. The court was considering the validity of a contract entered into between the city and the power company, wherein the city made the offer by ordinance, and the same was accepted by the power company, and decision of the question contained in the syllabus was clearly incidental to a decision of the validity of the contract involved. The discussion appears on page 428 of the opinion.
In the case of Link v. Public Utilities Commission, 102 Ohio St. 336, 131 N.E. 796, the court decided that the Public Utilities Commission had no jurisdiction to review a valid contract made by and between a municipality and a utility company for its product and service, and that Section 4, Article XVIII, is self-executing, and that no action of the Legislature is essential to authorize such a contract, thereby inferentially holding that the constitutional provisions control.
To further support our opinion that the law on this subject is settled in this state, to the effect that the language of the Constitution contained in Sections 4 and 5, Article XVIII, clearly includes contracts between a municipality and a utility company for its product and service, we cite the following authorities. In some of them the specific holding is contained in the opinion, but they all disclose a consistent adherence to the principle announced in the syllabus of the Steubenville case: Dravo-Doyle v. Village of Orrville, 93 Ohio St. 236, 243, 112 N.E. 508; State, ex rel. Campbell, Pros. Atty., v. Cincinnati Street Ry. Co., 97 Ohio St. 283, 297, 119 N.E. 735; Link v. Public Utilities Commission, 102 Ohio St. 336, 338, 131 N.E. 796; State, ex rel. Diehl, Jr., v. Abele, 119 Ohio St. 210, 162 N.E. 807; City of Columbus v. Public Utilities Commission, 103 Ohio St. 79, 124, 133 N.E. 800.
Opposed to the foregoing authorities is a statement in the opinion in the case of James v. Ketterer, 125 Ohio St. 165, 180 N.E. 704, in the following words: "The charter being silent, those interested certainly had the right to proceed under the general law of the state that saved to the people their right of initiative and referendum. And they were not driven to Sections 4 and 5 of Article XVIII of the Constitution, as those provisions relate solely to the acquirement of a public utility by the municipality. State, ex rel. Diehl, v. Abele, 119 Ohio St. 210, 162 N.E. 807."
The court in the Ketterer case had under consideration the charter of the city of Columbus, which provided for referendum on ordinances, but did not provide for submission of a resolution. It was decided that the first measure, consisting of the resolution of necessity taken in respect to a proposed street improvement, was not covered by the charter of the city. In connection with the decision of this question, the foregoing language was incorporated in the opinion, and seems to be opposed to the repeated pronouncements of the court on the question at issue here. We do not regard this language used in above opinion as amounting to a modification or reversal of the syllabus of the Steubenville case and subsequent authorities cited.
In our opinion these authorities settle the question before us. The meaning attributed by the respondents to the phrases from Sections 4 and 5, the principal issue before us, seems to us the correct one. It seems to us the only reasonable and logical interpretation. Any other interpretation would render the language useless, and be merely a repetition of the grant of power. For the foregoing reasons we hold that the relator is not entitled to the relief prayed for, and the writ of mandamus is denied.
Writ denied.
McGILL, J., concurs.
I am of the opinion that, in matters of legislation purely local in their character, a charter city, such as the city of Cleveland is, may by charter provide for its own method of procedure in order to submit such legislation to a vote of the people, either through the channel of initiative or channel of referendum; that the charter provisions govern, and are exclusive in the matter now before us.