Higgins v. City of San Diego

63 P. 470, 131 Cal. 294, 1901 Cal. LEXIS 1124
CourtCalifornia Supreme Court
DecidedJanuary 3, 1901
DocketL.A. No. 724.
StatusPublished
Cited by21 cases

This text of 63 P. 470 (Higgins v. City of San Diego) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Higgins v. City of San Diego, 63 P. 470, 131 Cal. 294, 1901 Cal. LEXIS 1124 (Cal. 1901).

Opinions

*296 CHIPMAN, C.

Plaintiffs brought this action, as taxpayers of the city of San Diego, to set aside a contract of lease between the said city and defendant water company. The case was tried on the cross-complaint of the water company and the answer of the defendant city thereto, the plaintiffs having withdrawn from the action. The court found that the lease in question was void, and that the company was not entitled to recover the reasonable value of the use of its property by the city, nor was it 'entitled to damages for that breach of the contract. On appeal, the decision of the lower court was affirmed as to the invalidity of the contract of lease, but the court held that the company was entitled to recover the reasonable value of the use of its plant and water. (Higgins v. San Diego, 118 Cal. 524, 528.) On rehearing, as to the form of judgment the court held that the company was entitled to an "ordinary general judgment for whatever amount shall be found due it, without any direction as to the revenues out of which the judgment shall be satisfied.” The directions given to guide the trial court will be better understood from the following excerpt from the court opinion on the rehearing: "We cannot direct the superior court to enter a judgment upon the findings for the reasonable value to the city of the use of the water company’s plant and of the water supplied, because it does not appear that the claims of the water company all accrued at a time when there were unappropriated revenues to meet them, and it will be necessary for the court to ascertain, as the basis of its judgment against the city, just when the claims of the water company for the reasonable value of use aforesaid, etc., equaled the amount of unappropriated revenues for the respective fiscal year during which the city had the use of the water company’s plant. 'Claims for the Use of plant and the value of water supplied after such time are like other claims upon exhausted revenues; they are void, and will not warrant a judgment of any character.”

At the first trial the lower court found the reasonable value of the use of the plant and water per 'month, and at the second trial evidence was given of the payments made from time to time on account and the money in the treasury to the credit of the various funds at the end of each month, and also show *297 ing the amounts accruing and unpaid each month during the time the plant was held hy the city. The period of use was from June 1, 1891, to March 7, 1893. In ascertaining the unappropriated revenues to meet the water company’s claims, the trial court found that there were hut two funds provided hy the city which were applicable to their payment, to wit, the "water fund” and the "general fund”; that there was no money in either of these funds, when the unpaid claims of the company accrued, available for their payment for the year 1891; that- there was to the credit of these two funds for the year 1893, available for the payment of the company’s claims for that year, only the sum of $5,431.39; that for the year 1893 there was available, in addition to payments made, the further sum of $5,997.33 to the credit of said two funds. This sum was sufficient to pay in full the balance due for 1893. Upon these findings the court gave judgment against the city for the sum of $11,418.51, leaving quite a large sum unprovided for. From this judgment the water company appeals.

The constitutional provision involved is section 18, article XI: “bio county, city, .... shall incur any indebtedness or liability in any manner, or for any purpose, exceeding in any year the income and revenue provided for it for such year without the assent of two-thirds of the qualified electors,” etc.

Appellant’s contention is, that all contracts or liabilities incurred by the city during any fiscal year are valid and binding up to the amount of the revenues of the year, and that it is only contracts made or liabilities incurred after that time or beyond the revenue for the year that are void. Applied practically, the contention is: 1. That there were certain funds primarily applicable to the payment of the company’s claims, to wit, the general fund, the street fund, the street sprinkling fund, and the water fund; and 3. That of all other funds, except possibly the school fund, all surplus remaining on hand at the end of the fiscal year in each fund, after paying the liabilities chargeable against that fund, must be applied to the payment of the general liabilities of the city for that fiscal year before being carried forward to the next year. This is the principal question presented by the appeal, and we give appellant’s statement of its position still further as follows: *298 Conceding that moneys apportioned to any fund cannot be used for any other purpose until the object for which it has been apportioned has been accomplished, the learned counsel say: “But what we insist upon is, that when the object for which it has been apportioned has been accomplished by meeting all the claims specially chargeable to that fund, the surplus is applicable to the payment of other debts or liabilities of that year, and cannot be carried over into another year leaving debts of the present year unpaid.”

If the municipal revenues were all thrown into a general fund out of which all claims could he paid to the limit of such revenues, the solution would be much simplified. But this is not the case. Under the charter of the city there are certain designated funds, and the charter requires the revenues raised by taxation and from other sources, such as licenses, fines, etc., to be apportioned to these various funds.

In a series of cases, commencing with San Francisco Gas Co. v. Brickwedel, 62 Cal. 64, this court has decided that no indebtedness shall be incurred (except in the manner stated in the constitution) exceeding in any one year the revenue actually received by the municipality; i. e., thait each year’s income must pay each year’s liability, no part of which shall he paid out of the income of any future year. Other cases dealing with this provision of the constitution are Shaw v. Statler, 74 Cal. 258; Schwartz v. Wilson, 75 Cal. 502; Smith v. Broderick, 107 Cal. 644 1 ; Weaver v. San Francisco, 111 Cal. 319; McBean v. City of Fresno, 112 Cal. 159 2 ; Bradford v. San Francisco, 112 Cal. 537; Higgins v. San Diego, supra. The precise question now before us as applicable to municipal expenditures, has not, we believe, been decided.

Looking to the language of the constitution we find the only inhibition to be that “no .... city .... shall incur any indebtedness or liability .... exceeding in any year the income and revenue provided for it for such year,” etc. The natural and reasonable construction to he given this language is that all legitimate indebtedness of the municipality for any year must not exceed all the revenues and income provided for that year, and all indebtedness beyond such provision becomes *299 void and cannot be paid out of the funds of a succeeding year or at all except by the assent of two-thirds of the qualified voters.

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Bluebook (online)
63 P. 470, 131 Cal. 294, 1901 Cal. LEXIS 1124, Counsel Stack Legal Research, https://law.counselstack.com/opinion/higgins-v-city-of-san-diego-cal-1901.