Water Works and School
Waupaca Post
THE “FACTS” AND “THE LAW
APPLICABLE THERETO”
Editor of The Waupaca Post.
Various
petitions I understand, have been presented to the common council by some of
the voters of the city, requesting it to take the necessary action thereon by
submitting to the voters the question of bonding the city for the purpose of
obtaining $35,000 or $40,000 for the erection of a new high school building,
which petitions, so far, have not been granted, and in consequence thereof has
created considerable feeling among the citizens and the subject quite generally
discussed.
The
principal questions involved in the discussions have been and are still:
1.
The duty of the common council, when petitioned by the voters of the
city about submitting the question to a vote of the people.
2.
Whether the present bonded indebtedness of the city is such an amount
that the bonding of the city for $35,000 or $40,000, for such purpose would
exceed the constitutional limitation of five percent of the taxable property of
the city.
It is claimed by some that
it would, and in support thereof they figure, with other present
Indebtedness of the city the
sum of $40,000, unpaid on the waterworks plant.
By
others this contention is denied and in support thereof they contend that the
$43,000, unpaid on the water works plant should not be computed as a part of
the present indebtedness of the city.
The questions are important ones, but of easy solution, provided an honest
effort be made to get simply the facts and a right understanding of the law
applicable thereto. The questions are of
too much moment to be treated lightly; they call for the unbiased judgment of
each voter, and he who does not determine the right of these questions by this
rule his conclusions should have but little, if any, weight or consideration.
There
is an old saying, and quite true, “There are none so
blind as those who will not see”.
In
the statements which I here make, under the heading of “Facts” and “The law
applicable thereto”. I shall confine
myself to the records as they appear in the city clerk’s office and the
opinions of the supreme court.
Facts.
On
This
ordinance, among other things, provides, for a supply of water to the city of
Waupaca and its inhabitants; contracting with Andrew M. Hansen and Frank S.
Baldwin, their successors or assigns for a supply of water for public or
private use, and giving to the city of Waupaca an option to purchase said
works, and defining their rights, duties, privileges and powers. See ordinance.
Under
said ordinance, Andrew M. Hansen and Frank S. Baldwin, their legal
representatives or assigns were empowered and authorized, subject to
limitations contained in said ordinance, to construct, maintain and operate
water works in the city of
The
duration of said ordinance of franchise was for a period of thirty-five years
from and after the passage of the ordinance, except as therein provided. See ordinance.
The
construction of the water works system was to be commenced within ninety days
after the acceptance of the ordinance and completed to successful operation
before the 1st day of January, 1907, subject to certain limitations
or exception. See ordinance.
It
was provided in said ordinance that he city of
The
city of Waupaca agreed and promised, in said ordinance, to pay the annual
rental of $57.15, for each and every of the first seventy hydrants located upon
said original pipe system and the sum of $50.00, for each and every hydrant
upon any extension, that might be ordered under the same, to be paid in
quarterly installments. See section 10
of ordinance.
The
ordinance further provides that “a sufficient tax shall be levied and collected
annually upon all taxable property in the city subject by law to taxation, to
meet the payments under this ordinance as they may respectively mature during
the existence of any contract for fire service, which tax shall be irrepealable
from and after the passage of this ordinance.
And in case the city shall be authorized to levy a special tax for such
purpose, such tax shall be annually levied, and the proceeds thereof shall be
kept as a separate fund to be known as a fire hydrant fund, and shall be
exclusively devoted to the payment of hydrant rental under this ordinance, and
shall not be otherwise employed; except, that any excess of said tax in any
year over the amount necessary to pay the rental for such year, may be used for
any purpose to the city council shall direct.”
See section 11 of ordinance.
It
is further provided in said ordinance that in consideration of the benefits
which shall be derived by the aid city and its inhabitants from the
construction and operation of said water works and in further consideration of
the water supply so used for public use and as an inducement for said Hansen
and Baldwin, or their assigns to said water works, the franchise, license and
authority granted, and it is also provided in said ordinance that it shall
remain in effect t for the term of thirty-five years, and for the same
consideration and the same inducement, the city of Waupaca rented the fire
hydrants for and during the term of thirty-five years from the completion of
the works. See ordinance, section 15.
The
ordinance or franchise further provides, that the cost of the construction
should not exceed $41,500, exclusive of the cost of the power, power meaning
not only the necessary power machinery, but also the real estate necessary to
be used in connection with said machinery, and that said water works plant
should not be bonded for a greater sum than $41,500, and that said Hansen and
Baldwin, their successors or assigns should, without further consideration,
execute and deliver to the city of Waupaca, a deed of conveyance, conveying to
the city of Waupaca said water works system and all privileges and
appurtenances thereto appertaining, upon the common council of the city requesting
it so to do; provided said request he made within one year from the completion
of said water works plant. See section
16 or ordinance.
The
ordinance further provides “in the event that the grantees (who are named in
said ordinance as Hansen and Baldwin) or their assigns shall issue mortgage
bonds, secured by mortgage, or deed of trust, upon said water works, franchise,
rental rights, and liberties, so much of the hydrant rentals pavable under the
terms of this contract, as will discharge the interest upon said bonds as shown
by the coupons thereon, as it will mature from time to time, shall be paid from
time to time, to the trustee or trustees of such bonds, and when and as such
hydrant rentals are payable by the city, and such sums shall be paid so long as
the interest on such bonds remain due and unpaid, and the city council is
hereby authorized and instructed to sign the certificate certifying to the
provisions of this contract, and to affix the seal of the city to such
certificate.
“That
the said city shall not be required at any time to pay the said trustees, any
greater amount than the amount due to grantees, or their assigns; and all
payments made to said trustee, or trustees, shall be made exclusively to pay
interest on said bonds so long as the same remain due and unpaid, and the whole
amount, after the said bonds have been paid by the said grantees, or their
assigns, shall be paid over to the said grantees or assigns, by the said
city.” See section 17 of the ordinance.
Subsequently,
to wit, on the1st day of June, 1897, the ordinance was amended, by giving the
right to mortgage the water works plant for a sum not exceeding $54,500. See ordinance.
The
above sections of the ordinances or franchises are all the ones relating to
money obligations on the part of the city of
If
any one will read the entire ordinances or the above provisions impartially and
intelligently, and reason on its provisions in the same way, can anyone say that
the city obligated itself to pay the indebtedness against the water works plant
in any other manner or way than by paying the hydrant rentals from year to year
as the same became due and payable. The
city never bonded the plant. The city
could not bond the plant without submitting the question to a vote of the
people, and it could not assume a bonded indebtedness upon the plant without
submitting the question to a vote of the people. If any act of the common council could in any
wise be construed as having promised and agreed to pay the bonded indebtedness
in whole, its acts are ultra vires, that is, beyond the power of the council to
do so, and therefore, if any such promises was ever made, it is absolutely void
and has no binding force.
The
city of
After
the franchise had been granted to Hansen and Baldwin, the Waupaca Water Works
Co. was formed, and it built the water plant, and after doing so, mortgaged it
to the Fidelity Trust and Guaranty Co. of Buffalo, N.Y. for $54,500, and said
Guaranty Co. is designated by said city of Waupaca as its agent and trustee to
receive and apply such funds so to be paid as hydrant rental to the payment of
the principal and interest thereon of a series of first mortgage bonds of the
Waupaca Water Works company, aggregating $54,500. See certificate on the back of each bond.
On
the 17th day of November, 1897, the city took, by quit-claim deed
the equity which the Waupaca Water Works Co. had in the water plant. This act on the part of the city of
Section
four reads as follows, “In all cases where any system water works or lighting
has been, or may hereafter be constructed, in any city or village in this
state, by any person or persons, corporation or corporations, shall have
heretofore executed, or shall hereafter execute any bond or bonds and secure
the payment of the same by a mortgage upon, or trust deed of such system of
water works or lighting, such city or village may purchase of such person or
persons, corporation or corporations, all of the interest and equity of
redemption of such person or persons, corporation or corporations in such
system of water works or lighting, or both, and take possession thereof and
operate the same.
“If
it shall be necessary or desirable for such city or village, in making such
purchase of such interest and equity of redemption in such system of water
works or lighting, or both, to issue the bonds of such city or village, the
proposition or propositions for the purchase of such interest and equity of
redemption and the issuing of such bonds, shall be submitted to the electors of
such city or village at a special election to be called for that purpose.” Read section four of chapter 361, laws
1897. The section then goes on and
directs how the notice for purchasing and bonding the plant shall be given, and
the form of the ballot, etc. The section
then goes on, where the city buys without being obliged to bond the plant for
the purchase, as follows: “The purchase
by any city or village of the interest and equity of redemption of any person
or persons, corporation or corporations, in any system of water works or
lighting, as above provide, shall not in anyway or manner create any liability
on the part of such city or village to pay, satisfy or in any way discharged
any bonds issued, or any mortgage or trust deed upon such system of water
works, of lighting, prior to the purchase of such interest and equity of
redemption by such city or village, nor shall the amount of such bond and
mortgage or trust deed, or any portion thereof, be or be deemed to be, in any
way or manner, an indebtedness of or a liability against such city or village, nor shall the amount of such bonds be deemed,
or be construed to be an indebtedness of such city or village within the
meaning of section 3, of article 11 of the constitution of this state as
amended.”
The
provisions of this section shall be applicable in all cases where any city or
village has heretofore, or may hereafter reserve to itself, in any franchise
granted by it, for the construction or operation of a system of waterworks or
lighting, the option and right to purchase such water works or lighting
works.” Read section four, chap. 361, laws of
“The
Law Applicable Thereto”
This
statute above mentioned was squarely before the supreme court in the case of
Connor vs.
The
contention that, by purchasing this plant subject to the mortgage thereon
securing payment of the $125,000 of the company’s bonds, the ultimate payment
of them by the city has become so unavoidable that for all practical purposes
it is bound to pay them and must be held indebted for their amount, so as to
infringe the constitutional prohibition against becoming indebted to an amount
more than five percent of the assessed value of taxable property, is not
without very persuasive authority, if the question can be considered an open
one in this court. We do not think it
can, however. In the Milwaukee park-land
cases (Perrigo vs. Milwaukee, 92 Wis. 236,65.N.W.
1018) this court fully considered whether, when a city purchased property, or
acquired the right to purchase in or burden upon that property were held by
others, so that the city to hold it and protect the interest acquired in it,
must pay large sums of money, the city thereby became indebted for such sums in
the constitutional sense. We reviewed
the conflicting array of decisions, and, rejecting the reasoning of those the
respondents now cite, we decided the question in the negative. The distinguishing element, as then defined,
consisted in the fact that the city could not be coerced by the creditor of its
grantor into applying to his claim either its general revenue or property owned
by it at the time of the contract, but
Continued
on Supplement
(no supplement could be found)