City of Austin v. McCall , 95 Tex. 565 ( 1902 )

On the 13th day of April, 1882, the city of Austin, a municipal corporation organized under special act of the Legislature of Texas, entered into a contract, by ordinance duly passed by the city council, with the Austin Water, Light and Power Company of the city of Austin, a corporation organized under the laws of the State of Texas, whereby the right and privilege were granted to the company to furnish water to the city of Austin for the period of twenty years, at the rate of $12,100 per annum. This contract was carried out by both parties for a number of years, when the city of Austin, having constructed a water and light plant of its own, refused to take water from the Austin Water, Light and Power Company, whereupon suits were filed in the United States Circuit Court at various times, which resulted in large judgments against the city, amounting to $65,000; and there existed a claim of the water, light and power company against the city for water furnished, and for which claim no suit had been instituted or judgment rendered. The judgments and the claim aggregated $82,317.19. On September 30, 1901, the mayor and the city council of Austin passed a resolution whereby the city agreed to purchase the plant of the Austin Water, Light and Power Company at the price of $175,000, and to pay all judgments and claims against the city for water furnished prior to that date, if the pending suits should be decided against the city. The amount was to be paid by the city in installments not to exceed $25,000 per annum, and to be applied (1) to the extinguishment of the interest for each year on the whole sum of purchase price, judgments, and claims against the city; (2) to the payment of the principal and interest of the judgments and claims of the water and light company against the city; and (3) to the payment of the purchase price of the plant.

The taxable value of all property in the city of Austin, as shown by the tax rolls for the year 1900, amounting to $9,030,000, the tax of one-fourth of 1 per cent upon the valuation would not yield $25,000.

The mayor and city council were proceeding to consummate the purchase of the plant under the contract made by the resolution before stated, when John D. McCall, a citizen and taxpayer of the city, owning property valued for taxation at the sum of $5000, obtained an injunction, enjoining the city of Austin and its mayor and city council from making the purchase under the said contract. The allegations of the petition for injunction, so far as necessary, will be stated in the opinion, and the pertinent provisions of the charter of the city of Austin will be referred to and stated.

The case was submitted to the district judge upon an agreed statement of the facts, and a judgment was entered perpetuating the writ of injunction, which judgment was affirmed by the Court of Civil Appeals.

Counsel for the city claim that power to purchase the water, light and power plant is conferred upon the city by section 70, paragraph 46, of its charter, from which we quote as follows: "To erect, construct, build, operate, and maintain a water and electric light system to supply the city and its inhabitants with water and electric lights, by constructing and maintaining a reservoir of water in and about the channel of the Colorado River, within and without the city limits, by means of the dam across the same, as the same is now constructed, to serve as a reservoir and to furnish power to operate an electric light system, and build such other reservoirs as may be necessary, at such an elevated point within and without the city, as may be necessary to supply the higher portions of the city with water." The defendant in error contends that the portion of the charter before quoted was repealed by section 103 of said charter, which is in these words: "The board (the water, light and power commission) and their successors shall take and hold possession of, and have and receive general and exclusive supervision, management, and control of the system of waterworks, electric lights and power plants of the city of Austin, and all property, funds, and business belonging or appertaining thereto; and it shall have the exclusive power, and it is charged with the duty, as a branch of the city government, to furnish all water, light, and power adequate to the requirements of the city of Austin for public use, * * * and shall have the power to improve, extend, add to, or change said system under its control, as the board may from time to time determine, and to dispose of all property not needed for the proper management of the plant and system." The section last quoted does not confer upon the water and light commission any power which is inconsistent with that conferred upon the city council by section 70, paragraph 46, as above quoted. The city, by its charter, is empowered to construct, operate, and maintain a water and electric light system, which is entirely consistent with the provisions of section 103, which confers upon the water and light commission the authority to receive and have exclusive supervision, management, and control of the system of waterworks, electric lights and power plants of the city of Austin, and all property, funds, and business belonging or appertaining thereto; also the power to construct wells, canals, and such improvements as it might deem needful for properly carrying on the business in pursuance of its powers as such board. The city council represents the city, — having power to contract and to perform agreements. The water and light commission is an instrument created by the law, by which the city of Austin performs the duties and exercises the powers conferred upon the water and light commission. The commission is not a corporate body. The authority of the water and light commission is confined to such plants as it may receive from the city government. It acts for the city, is not authorized to buy, nor is it necessary for the exercise of the powers granted that it should acquire another plant. We conclude that the water and light commission has no power to construct or to purchase a plant. Its powers relate to and are confined to a plant or plants provided by the city.

We recur to the question, does section 70 of its charter confer upon the city authority to purchase the Austin light and power plant? The terms of the statute by which the city is authorized to construct waterworks are so definite and prescribe so specifically the place where the plant shall be constructed, and the manner in which it shall be built, that it can not be construed as authorizing the city to acquire such plant in any other manner. An implied power must arise out of, and be appropriate to the execution of, an express power; but the execution of the power to construct the waterworks by means of a dam on the Colorado River does not require the purchase of a plant already constructed. We therefore conclude that the city of Austin did not have authority to make the contract, unless it is given by the amendment of September 21, 1901.

The amendment to the charter of the city of Austin was entitled as follows: "An act to amend sections 33, 34, 36, 37, and 63 of an act entitled `An act to incorporate the city of Austin, grant it a new charter and fix its bounds,' approved April 13, 1901, so as to provide for the refunding of its bonded debt and further define its powers and duties relative to its bonded indebtedness, to define the powers of said city in reference to the streets and highways within its corporate limits, and to authorize said city to pledge not exceeding one-fourth of its general revenue for the payment and security of judgments and claims herein specified." Section 33 of the charter, as far as it bears upon the question, is as follows: "A part of said general revenue, not to exceed one-fourth of one per cent of the total taxable values as aforesaid of said city may, by the city council, be appropriated and pledged for the liquidation, settlement and payment of the money to become due by virtue of the terms of any contract which may be by said city made for the purchase of any water, light or power plant at present owned and operated in said city by private persons or corporations." The defendant in error insists that this amendment is in conflict with article 3, section 35, of the Constitution of this State, which is in these words: "No bill * * * shall contain more than one subject, which shall be expressed in its title." The rule for construing that provision of the Constitution is aptly expressed in Morris v. Gussett, 62 Tex. 741 [62 Tex. 741], as follows: "The tendency of the decisions is to construe the constitutional provisions on this subject liberally, `rather than to embarrass legislation by a construction whose strictness is unnecessary to the accomplishment of the beneficial purposes for which it was adopted.'" It is not contended that the caption of this bill would not be sufficient if it omitted the qualifying clause "so as," etc.; but it is claimed that this clause of the caption limits the law to the subjects mentioned in the title. Granting this to be correct, does not the clause of the caption embrace the subject matter of the amendment of section 33? If we read the caption as it applies to section 33, it would be expressed thus: "An act to amend section 33 * * * of an act entitled `An act to incorporate the city of Austin, * * *' so as to authorize said city to pledge not exceeding one-fourth of its general revenue for the payment and security of judgments and claims herein specified." The words "herein specified" can not refer to the caption of the act, because it specifies no claims, but it refers to the body of the act as specifying claims which are included in the caption. Looking to the body of the amendment, we find that the only claim mentioned is such as might arise out of a contract the city might make "for the purchase of any water, light and power plant at present owned and operated in said city by private persons or corporations." It is legitimate in the construction of a law to refer to the caption for explanation (Sutherland, Statutory Construction, section 210), and it is equally permissible in the construction of the caption to refer to the body of the act. Otoe County v. Baldwin,111 U.S. 16. An act of the Legislature of the State of Nebraska was entitled as follows: "An act to enable counties, cities, and precincts to borrow money on their bonds, or to issue bonds, to aid in the construction or completion of works of internal improvement in this State." In the body of the act authority was given to the counties, cities, and precincts to issue bonds in aid of improvements, not limiting them to those situated within the State of Nebraska. It was contended that the subject of the statute was not embraced in the terms of the caption and that the law was void under the Constitution, which contains this provision: "No bill shall contain more than one subject, which shall be clearly expressed in the title." Taken alone, the plain and grammatical construction of the phrase "in this State" was to qualify the preceding subject "works of internal improvement," but the bill transposed the language and authorized counties, cities, and precincts "in this State" to issue bonds, etc. The Supreme Court of the United States, in passing upon the question of the validity of that law, looked to the body of the act for the construction of the caption, and determined that the proper interpretation of the caption was to apply the qualifying phrase "in this State" to counties, cities, and precincts, as in the body of the law. That court said: "It would, we think, be a strained construction to hold that the title of the act is to be so interpreted as to be limited to works situated in the State, when such limitation does not exist in the body of the act, and when the words `in the State,' in the title, may fairly be regarded as applicable to the prior words `counties, cities, and precincts,' to which words they are applied in the body of the act." The reason upon which the constitutional requirement rests is to give notice of the object of the act. This is done in this instance by reference to the body of the bill, and satisfies the demands of the Constitution.

Section 33 of the charter of the city of Austin, as amended, empowers the city to pledge one-fourth of its general revenue for the payment of any money that might become due for the purchase by the city of the water, light, and power plant. It is true the power to purchase is not expressed in so many words, but it is so clearly implied that the mind instinctively supplies it in reading the clause of the charter. The city could not provide for the payment of money upon a contract made in the purchase of the plant unless the city had made the purchase; therefore the power to purchase is necessary to the execution of the power expressly conferred. This leads to the conclusion that the power to purchase the water plant in question was conferred upon the city by the amendment to section 33 before quoted.

Article 11, section 5, of the Constitution of this State contains this limitation upon the power of cities to create debts: "No debt shall ever be created by any city unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent thereon." The defendant in error contends that the contract proposed to be made between the city and the Austin Water, Light and Power Company is violative of the foregoing provision of the Constitution, in this, that it makes no provision for sinking fund upon the debt. The plaintiff in error insists that no debt will be created, but undertakes to show that the $175,000 originates in a compromise of a claim in favor of the water, light and power company against the city on a liability which might accrue in the future. It is plain to us that a purchase of the water plant for a consideration of $175,000 creates a debt within the meaning of the Constitution, and that such debt can not be lawfully created unless a provision be made for the sinking fund of not less than 2 per cent. The terms of the proposed contract specifically exclude any sinking fund upon this debt, — for it appropriates to the payment of the existing claims against the city all of the annual payments to be made by the city, except the interest upon the $175,000. No argument or reasoning could elucidate so plain a proposition as that. We hold that the contract as proposed would be in violation of the Constitution and that it should be enjoined and prohibited.

We find no error in the rulings complained of by the first five assignments in the application, and do not find it necessary to discuss them, except the fourth, by which it is asserted that a taxpaying citizen of a municipal corporation can not enjoin the making of an illegal contract by the corporation. The citizen need not wait until an unlawful contract has been consummated, but may prevent the wrongful act by injunction. Crampton v. Zabriskie, 101 U.S. 609. In that case Justice Field stated the law in this language:

"Of the right of resident taxpayers to invoke the interposition of a court of equity to prevent an illegal disposition of the moneys of the county, or the illegal creation of a debt which they in common with other property-holders of the county may otherwise be compelled to pay, there is at this day no serious question. The right has been recognized by the State courts in numerous cases; and from the nature of the powers exercised by municipal corporations, the great danger of their abuse and the necessity of prompt action to prevent irremediable injuries, it would seem eminently proper for courts of equity to interfere upon the application of the taxpayers of a county to prevent the consummation of a wrong, when the officers of those corporations assume, in excess of their powers, to create burdens upon property holders. Certainly, in the absence of legislation restricting the right to interfere in such cases to public officers of the State or county, there would seem to be no substantial reason why a bill by or on behalf of individual taxpayers should not be entertained to prevent the misuse of corporate powers. The courts may be safely trusted to prevent the abuse of their process in such cases."

It is ordered that the judgments of the District Court and of the Court of Civil Appeals be and the same are hereby reversed, and this court proceeding to enter the judgment that should have been entered by the District Court, it is ordered that the temporary injunction issued herein be and the same is hereby dissolved in all respects, except in so far as it restrains the city council and officers from entering into the proposed contract, and in this respect it is perpetuated, enjoining and restraining the said city council from entering into said contract with the Austin Water, Light and Power Company; but this shall not be construed to prevent the purchase of the plant under a contract made in conformity to this opinion. It is ordered that plaintiff in error recover from defendant in error all costs of the Court of Civil Appeals and this court, and that defendant in error recover of the City of Austin the costs of the District Court.