Appeal of the City of Erie , 91 Pa. 398 ( 1879 )

Mr. Justice Gordon

delivered the opinion of the court,

It is admitted that the present indebtedness of the city of Erie is largely in excess of seven per centum on the assessed valuation of its taxable property, and that by the terms and conditions of the agreement into which the city has entered with those representing the estate of Charles M. Reed, deceased, for the building of a market-house, the city will become liable if said contract is carried out, for an annual sum of money equal to six per cent, upon a valuation of from $25,000 to $50,000. In other words, the intent is to fix upon the corporation an obligation to pay each and every year, for the period of twenty-five years, the sum of $1500 or $3000, depending upon the cost of the structure to be erected.

Now, the question is, will the execution of this contract increase the city indebtedness? Will it impose a debt upon the municipality within the purview of the 8th sect, of the 9th art. of the constitution ? That section reads :—

“ The debt of any county, city, borough, township, school, district or other municipality or incorporated district, except as herein provided, shall never exceed seven per centum upon the assessed value of the property therein.”

Now, a debt means a fixed and certain obligation to pay money or some other valuable thing or things, either in the present or in the future. Let us suppose, then, this contract to be executed on part of Reed’s estate; the market-house is built and ready for use; is the city now under a fixed and certain obligation to pay at the end of one year the sum of $1500 ? And if this sum is not so paid, will the city indebtedness be increased by just that amount? It certainly does not require a very astute intellect to answer these questions.

Here is an agreement to pay, and that agreement to pay must be provided for by a taxation over and above what is now necessary for the current expenses of the municipality. But this is just what the constitution was intended to prevent; to prevent the citizen from being overburthened with municipal taxation. It is idle to urge that the restriction includes only a bonded indebtedness, for such is neither the constitutional letter nor spirit. A floating debt usually ends in a bonded debt, and the former is just as obligatory as the latter. What difference does it make to the overtaxed citizen whether the debt his property is confiscated to pay is called floating or bonded ?

But it is said the Act of Assembly empowers the city to build or rent a market-house, and that a market-house is necessary for the convenience of the people. Let it be so; corporations, like natural persons, must do without conveniences when they have not the money to pay for them. If the ordinary revenues of the city of Erie aré not sufficient to meet its legitimate wants, and if it must continually take upon itself new obligations for that purpose, it is clear that bankruptcy and financial ruin must occur sooner or later, and Avhen these do occur, it must learn, nolens volens, to live within its revenues. Therefore, it would seem to be true Avisdom to grapple with this evil at once, for it only assumes a greater magnitude by procrastination. Be this, however, as it may, and conceding that in the sight of municipal officers this kind of wisdom is but foolishness, nevertheless it is the foolishness of the constitution of this Commonwealth, and so it must prevail.

Many authorities have been cited for the defence, none of which seem to us to bear upon the point in issue. There is one, however, Avhich we notice because of its general pertinency. In Dill. on Mun. Corp., sect. 88, the learned author cites an Iowa case, involving the validity of a contract by a city for a supply of water, in which it is said: “ When a contract made by a municipal corporation pertains to its ordinary expenses, and is, together with other like expenses, within the limit of its current revenues and such special taxes as it may legally and in good faith intend to levy therefor, such contract does not constitute the ‘ incurring of indebtedness’ within the meaning of the constitutional provision limiting the power of municipal corporations to contract debts.” This, we hesitate not to say, is a sound constitutional interpretation, and in a similar case might well be adopted in the construction of our own constitution. If the contracts and engagements of municipal corporations do not overreach their current revenues, no objections can lawfully be made to them, however great the indebtedness of such municipalities may be; for in such case their engagements do not extend beyond their present means of payment, and so no debt is created.

Had the defendant in the bill before us, instead of demurring, made answer that its annual revenues were sufficient, over and above the r ^ment of the interest of its indebtedness and the ordinary ex' .ases of the city government, to meet the rent proposed to be paid, a very different case would have been presented for consideration. But the demurrer, admitting, as it does, the allegations of the bill, raises the single question of the power of the city to contract a new debt, notwithstanding its present indebtedness exceeds the constitutional limit, and this without reference to its resources or present ability to meet and pay the contract intended to be entered into. As we have seen, without a violation of the supreme law of the Commonwealth, this cannot he done.

Decree affirmed and appeal dismissed at costs of appellant.