Town of Opp v. Donaldson , 230 Ala. 689 ( 1935 )

I am persuaded the revenue from the waterworks operated by the town of Opp may properly be pledged for the advancement sought without infringement upon any constitutional provision. These revenues differ from those obtained by the municipality in its governmental capacity, such as licenses and taxes. They are but returns from a purely corporate undertaking owned and managed by the municipality for the benefit of its inhabitants. It has many attributes of a private business enterprise. Funds are sought for the enlargement and improvement of the plant. Clearly the town could turn back into the system the present revenues for its improvement, and I have become convinced it may properly pledge the anticipated revenues as well.

The following language from the Florida Supreme Court in the recent case of State v. City of Miami, 113 Fla. 280, 152 So. 6,12, is expressive of my views in this regard:

"So long, therefore, as such financing is limited to the borrowing of money solely on the security of anticipated utility revenues, when the object of the borrowing and the contemplated purpose or intended use of the borrowed funds is confined strictly to a reinvestment of the same in the existing plant through which such funds have been earned, in order to make it more efficient or economical in operation, or to enlarge its usefulness to the municipality, the borrowing is not prohibited by the Constitution.

"We reach this conclusion by looking at the substance rather than the form of such financing, for it amounts to nothing more than a conversion of the prospective earnings into a capital investment, whether the earnings are presently funded or not."

I realize that upon this question there has been sharp conflict of authority. But I am persuaded the more recent cases, and those better reasoned, support the view here expressed. See note to Bankhead v. Town of Sulligent, 229 Ala. 45,155 So. 869, 96 A.L.R. 1381, 1393-1397. And it will appear that the case of Joliet v. Alexander, 194 Ill. 457,62 N.E. 861, upon which much reliance was placed in Re Opinion of the Justices, 226 Ala. 570, 148 So. 111, has been greatly weakened, though not expressly repudiated, by later decisions of the Illinois court. Ward v. City of Chicago, 342 Ill. 167,173 N.E. 810; Maffitt v. City of Decatur, 322 Ill. 82,152 N.E. 602. See, also, Underwood v. Fairbanks, Morse Co.,205 Ind. 316, 185 N.E. 118. But I forego further discussion, and respectfully dissent.

THOMAS, J., concurs in the foregoing views.