Whitbeck v. Funk , 140 Or. 70 ( 1932 )

IN BANC. Proceedings by Walter W. Whitbeck for a writ of mandamus to George R. Funk, as auditor of the city of Portland. From a judgment dismissing an alternative writ, plaintiff appeals.

AFFIRMED. Plaintiff appeals from the judgment of the circuit court dismissing an alternative writ of mandamus, issued to compel the defendant George R. Funk, auditor of the city of Portland, to file a referendum petition demanding a reference of Ordinance No. 61566 to the voters of the city of Portland. This ordinance selects and designates certain real property on Front street in the city for use as a public market and authorizes its purchase and the preparation and execution of a contract. There is an emergency clause attached to the ordinance. It is claimed by the plaintiff that the emergency clause was invalid for the reason that the ordinance is a "franchise ordinance" and, therefore, could not become effective under section 173 of the charter until the expiration of sixty days after its passage. The charter of the city of Portland vests in the council power and authority to provide for the establishment of market houses and places and to regulate the location and management thereof. Section 155 of the charter provides as follows:

"Section 155. Council May Issue and Sell Certificates: The Council is hereby granted power to issue and sell interest bearing public utility certificates for the construction or acquisition by purchase, condemnation or otherwise of any public utility to be operated within the city. The certificates shall be secured by a mortgage or mortgages upon such public utility plant and the revenues thereof, but the same shall not be a general liability of the city and shall be paid solely from the revenues derived from the plant or from the sale thereof. Such power shall be exercised only by ordinances which shall be subject to referendum in like manner and upon like terms and conditions as ordinances granting franchises."

Section 173 of the charter directs the manner of exercising the referendum as to franchises, as follows:

"Section 173. When Franchise Takes Effect. No franchise shall take effect until sixty days after its passage unless it shall receive a majority of the votes cast thereon at a referendum election held for that purpose within a less time. The filing of a petition for referendum shall defer the taking effect of a franchise until after the election. A petition signed by 2000 registered voters shall be sufficient to call a referendum upon any franchise ordinance."

On August 5, 1931, the council, by virtue of the authority vested in these charter provisions, enacted Ordinance No. 61192, providing for the issuance and sale of public market utility certificates of the city of Portland, Oregon, in an amount not exceeding $2,500,000, and authorizing the execution of a trust mortgage upon said real property to secure the certificates. This ordinance recited that it was the purpose and intention that the city of Portland should obligate itself to establish a public market as a public utility and to purchase land, buildings and equipment therefor. It was further provided that the selection of the site "shall hereafter be made by the Council by ordinance." No referendum of this ordinance was invoked, and, under the provisions of section 155 of the charter, Ordinance No. 61192 became effective on October 5, 1931.

Pursuant to the provisions of Ordinance No. 61192, the council on October 9, 1931, passed Ordinance No. 61566, which is the ordinance in question. Thereafter, pursuant to Resolution No. 20291, approving the form thereof, on October 28, 1931, a contract was executed with the Public Market Company of Portland for the construction of a market building on Front street, and the acquisition of the building and lands by the city on its completion.

On November 10, 1931, plaintiff presented the referendum petition demanding that Ordinance No. 61566 be submitted to a vote of the people. It is admitted that the petition is sufficient in form and has more than two thousand signers, and that the same is entitled to be filed for verification by the auditor as to the number and genuineness of the signatures and qualifications of the persons signing the same, if the ordinance is subject to the referendum.

The auditor refused to receive the petition or verify the number and genuineness of the signatures and qualifications of the signers for the reason that the ordinance is an administrative act of the council, not subject to referendum, and, further, that the enactment is not an ordinance exercising power to issue and sell interest bearing public utility certificates under section 155 of the charter, and hence is not subject to the special referendum provided for by that section. Plaintiff contends that Ordinance No. 61566 is a franchise ordinance and, therefore, comes within the provisions of section 173 of the charter, quoted above, and is subject to the referendum.

A franchise is a special privilege granted by the government to a person or corporation, which privilege does not belong to the citizens of a country generally, of common right: 26 C.J. 1008, § 1. A franchise confers the right to exercise powers or to do and perform acts which, without such grant, the person to whom it is granted could not do or perform:Oregon v. Portland General Electric Co., 52 Or. 502, 526 (95 P. 722, 98 P. 160); Western Union Tele. Co. v. Hurlburt, 83 Or. 633,636 (163 P. 1170). A franchise consists in the incorporeal right. It does not involve an interest in land. The property acquired is not the franchise: Oregon v. Portland GeneralElectric Co., supra. The ordinance in question is not a franchise.

The constitution of Oregon reserves to the legal voters of every municipality the referendum on all local, special and municipal legislation: Section 1(a), Art. IV, Const. of Oregon. The crucial test for determining what is legislative and what is administrative is whether the ordinance is one making a new law or one executing a law already in existence: Campbell v.Eugene, 116 Or. 264 (240 P. 418); Monahan v. Funk, 137 Or. 580 (3 P.2d 778).

The act of purchasing a parcel of real estate is not legislative: Joplin v. Ten Brook, 124 Or. 36 (263 P. 893);Monahan v. Funk, supra; Roy v. Beveridge, 125 Or. 92 (266 P. 230).

The Ordinance No. 61566, selecting and designating certain property for use as a public market and authorizing the purchase thereof and the preparation and execution of a contract, was not municipal legislation. The legislation authorizing the issuance of public market utility certificates for the construction or acquisition by purchase of a public utility within the city and providing for the security of the certificates is contained in section 155 of the city charter, and the council, by Ordinance No. 61192, ordained provisions for the issuance and sale of public market utility certificates in an amount not exceeding $2,500,000 and authorizing the execution of a trust mortgage against real property to secure the certificates. This ordinance recites that it was the purpose and intention of the city of Portland to obligate itself to establish a public market, as a public utility, and to purchase land, buildings and equipment thereof, and further provided that the selection of the site should thereafter be made by the council by ordinance. This ordinance was subject to the referendum under the provisions of section 155 of the charter. Not so, however, with Ordinance No. 61566. This ordinance does not enact legislation. It is merely carrying out a business transaction designating real property for use as a public market and authorizing the purchase thereof and the preparation and execution of the contract. The ordinance shows, first, that it selects and designates certain property described therein for use as a public market and authorizes the purchase thereof from the Public Market Company of Portland, Oregon, together with a building to be constructed and equipped thereon by the Public Market Company of Portland; second, it authorizes the Mayor and Auditor to execute, on behalf of the city, a contract with the Public Market Company of Portland for the purchase of said real property and building. It grants neither to the Public Market Company of Portland nor to the city itself the right to operate a public market as a public utility. It is purely and simply an ordinance selecting a site for a public market and providing for its purchase, together with a building to be erected and equipped thereon by the Public Market Company of Portland.

The ordinance does not contemplate that the Public Market Company shall operate and maintain the market, but the city shall operate and maintain the same as a public utility. The sovereign power cannot well grant a franchise to itself, since in such a case it would operate, not by virtue of a franchise but by virtue of its sovereignty. While an ordinance or law granting special privileges to a private corporation may be a franchise, if a like ordinance or law authorizes the municipality itself to carry on the same activity, it would not be a franchise: Marin Water Power Co. v. Sausalito, 49 Cal. App. 78 (193 P. 294).

The act of the auditor in refusing to receive the petition for referendum was proper and the judgment of the circuit court dismissing the alternative writ of mandamus was correct.

The judgment is affirmed.

ROSSMAN and KELLY, JJ., not sitting.