City of Rochester v. Quintard , 72 N.Y. Sup. Ct. 460 ( 1892 )

Dwight, P. J.

The only question involved in the controversy is that of the constitutionality of an act of the legislature of this state passed April 20, 1892, which purports to authorize the city of Bochester to issue bonds to pay for an additional supply of water.. Laws 1892, e. 358. The maximum amount of the bonds to be issued was fixed by the act at $1,750,000, and the maximum period for which they should run at 50 years. Pursuant to the provisions of this act, bonds were issued to the amount of $1,000,000, par value, which, by their terms, were to become due in 50 years, and were redeemable at any time after 20 years from their date. At a sale, under the provisions of the act, of the bonds so issued, the defendant became the purchaser of bonds of the par value of $300,000, at the price of $305,250. Subsequently he declined to receive and pay for the' bonds so purchased by him, on the ground alleged, that the act of the legislature under which they were issued was unconstitutional and void; and this submission was entered into to determine the question of his liability to complete his purchase by receiving such bonds and paying the price bid by him therefor. The objection specified by the defendant relates solely to the period which, by the act in question, was fixed for the running of the bonds, and in that respect it is contended in his behalf that the act is in violation of section 11 of article 8 of the constitution. That section is, in full, as follows: “Sec. 11. No county, city, town, or village shall hereafter give any money or property, or loan its money or credit, to or in aid of any individual, association, or corporation, or become, directly or indirectly, the owner of stock in or bonds of any association or corporation; nor shall any such county, city, town, or village be allowed to incur any indebtedness except for county, city, town, or village purposes. ' This section shall not prevent such county, city, town, or village from making such provision for the aid or support of its poor as may be authorized by law. No county containing a city of over one hundred thousand inhabitants, or any such city, shall be allowed to become indebted, for any purpose, or in any manner, to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city subject to taxation as it appeared by the assessment rolls of said county or city on the last assessment for state or county taxes prior to the incurring of such indebtedness; and all indebtedness in excess of such limitation, except such as may now exist, shall be absolutely void, except as herein otherwise provided. No such county or such city whose present indebtedness exceeds ten per centum of the assessed valuation of its real estate subject to taxation shall be allowed to become indebted in any further amount until such indebtedness shall be reduced within such limit. This section shall not be construed to prevent the issuing of certificates of indebtedness or revenue bonds issued in anticipation of the collection of taxes for amounts actually contained, or to be contained, in the taxes for the year when such certificates or revenue bonds are issued and payable out of such taxes. Nor shall this section be construed to prevent the issue of bonds to provide for the supply of water, but the term of the bonds issued to provide for the supply of water shall not exceed twenty years, and a sinking fund shall be created on the issuing of said bonds, for their redemption, by raising annually a sum which will produce an amount equal to the sum of the principal and interest of said bonds at their maturity. The amount hereafter to be raised by tax for county or city purposes in any county containing a city of over one hundred thousand inhabitants, or any such city of this state, in addition to providing for the principal and interest of existing debt, shall not, in the aggregate, exceed in any one year two per centum of the assessed valuation of the real and personal estate of such county or city, to be ascertained as prescribed in this section in respect to county or city debt. ” It will be seen that by the terms of this section no restriction whatever is laid upon any city in respect to the amount of indebtedness to be incurred by it for city purposes, except upon cities having each a population in excess of 100,000 inhabitants, and that even this restriction is subject tc an exception in favor of the issue of bonds to provide for a supply of water. The restriction is that no city of more than 100,000 inhabitants shall incur an indebtedness to an amount exceeding 10 per centum of the assessed valuation of its real estate, and that all indebtedness in. excess of such limitation shall be void, “except as herein otherwise provided.” An exception is thereafter provided to the restriction thus imposed in favor of the issue of bonds for the expense of procuring a water supply for such city and its inhabitants, and to this exception is attached the proviso that the term of the bonds so issued shall not exceed 20 years. It is plain that the exception cannot be wider in its application than the restriction itself, nor the proviso wider than the exception to which it is attached. It was unnecessary to provide an exception in favor óf a water supply, for cities of less than 100,000 inhabitants, because no restriction was laid upon them in respect to any indebtedness for municipal purposes; and equally unnecessary to provide an exception in behalf of cities of more than 100,000 inhabitants, except in cases where the total indebtedness of such city, including that to be incurred for the purpose mentioned, would exceed the limit prescribed. This construction of the constitutional provision in question, taken as a whole, gains support from a consideration of the history of the successive enactment of its several parts. By the constitution of 1846 (article 8, § 9,) it was made the duty of the legislature to restrict the power of cities in respect to borrowing money, contracting debts, and loaning their credit, but no limit was set to such power by the constitution itself. A brief section, numbered 11, was added to article 8 by the amendment of 1874. It consisted of the first two sentences of the present section 11, and forbade any city to loan its money or credit to any individual, association, or corporation, or to incur any indebtedness, except for city purposes. All the remainder of section 11 was added by the amendment of 1884, and it contains the only provisions of our present constitution in respect to the amount of debt to be incurred by any of the cities of the state. Its restrictions, as we have seen, apply to cities of more than a specified population. It provides an exception to those restrictions in the case of a debt to be incurred for a specified purpose, and it prescribes the term of the bonds which may be issued in the exceptional case provided for. If these views embody the correct construction of the constitutional provisions which we have been considering, then the city of Rochester, although (by reason of its population) subject to the restriction imposed by the amendment of 1884, is not required to avail itself of the exception thereto, for the reason that its total indebtedness, with the addition of the bonds in question, does not reach the limit of the restriction, and therefore the proviso in respect to the term of the bonds to be issued has no application to this case. We thus reach the conclusion that the act of the legislature under which the bonds in question were issued is not violative of any provision of the constitution, but is valid; and that the contract of the defendant to purchase bonds issued under its provision is binding upon him. Judgment should be directed for the plaintiff on the submission, with costs. All concur.