Village of Oberlin v. Morris

The village of Oberlin passed the necessary legislation providing for the issuance of bonds with which to provide the village and the inhabitants thereof with electricity. This action was begun at the request of a taxpayer to test the right of the village to issue and sell said bonds.

The legislation throughout, including the calling of the election to authorize the issue of the bonds, declared the purpose to be "to construct or purchase a municipal electric light and power plant, consisting of works for the generation and transmission of electricity and equipping the same, including transmission and distribution lines for supplying electricity to the village of Oberlin and the inhabitants thereof, including the acquisition of the necessary land therefor."

The claimed defect is that "to construct or purchase" constitutes a dual purpose, and that hence the resolution providing for the improvement related to more than one purpose and was therefore void.

The matter has been submitted to the court upon a demurrer to the amended petition, with the understanding that, if the court sustains the demurrer, final judgment may be entered dismissing plaintiff's petition.

In 1898, the statutory law of Ohio conferred upon municipalities the right to issue bonds "for erecting or purchasing" public utilities, and in that year the Supreme Court held that an ordinance providing for an election in reference to an issue of the city's bonds for the purpose of "the purchase and erection of water works" was void because it stated a dual purpose.

That decision on that point was then, and is now, contrary to the general weight of authority in the United States.

Said decision was made in the case of Elyria Gas Water Co. v. City of Elyria, 57 Ohio St. 374, 49 N.E. 335.

Since that time the Constitution of Ohio has been amended so as to confer constitutional authority upon municipalities to acquire public utilities, whereas theretofore such authority was only statutory.

Since that decision the Legislature of Ohio has adopted what is known as the Uniform Bond Act (Section 2293-1 et seq., General Code), the purpose of which was to accomplish a uniformity of practice tending to promote the marketing of such bonds within and without the state of Ohio.

At the time of that enactment the great weight of authority was to the effect that municipal legislation to "erect or purchase" a single utility related to but one purpose; and evidently for the purpose of bringing the practice of Ohio in line with such established practice in other states the Legislature of Ohio provided in the Uniform Bond Act that "`One purpose' shall be construed to include * * * all expenditures * * * for any one utility * * * for the same general purpose." Section 2293-20, General Code.

A careful consideration of the whole of said Section 2293-20, in connection with the other provisions of said Uniform Bond Act, and the law as established by the decisions of the courts in this and other states, leads us to the conclusion, and we so hold, that it was the intention of the Legislature to overcome the effect of the decision in said Elyria Gas Water Co. case, and to prescribe a method for the issuance of bonds in Ohio which would give to Ohio bonds the same market advantages as those of other states, and to adopt the rule prevailing in a majority of jurisdictions, which is that a proposition submitted to the people to "erect or purchase" a public utility is a single proposition, and that, on the adoption thereof, the option to erect or to purchase becomes a matter of discretion, vested in the proper representatives of the municipality. 5 A.L.R., 538, annotation.

The demurrer to the amended petition will be sustained, and, the plaintiff not desiring to plead further, its petition is dismissed at its costs.

Petition dismissed.

FUNK and STEVENS, JJ., concur.