Appeal of City of Wilkes-Barre

Opinion,

Mr. Justice Gordon :

The plaintiff’s bill, in this case, charges as follows: “ That the defendant is a municipal corporation, chartered by act of Assembly, approved May 4,1871, and the supplement of April 2,1872, and the council of said city is authorized by the second section of said supplement, to levy and collect annually, for city purposes, any tax not exceeding two per centum on the dollar of the value assessed. That the said council is about to levy and collect a tax of two per centum on the dollar of the assessed valuation for the ordinary purposes of conducting the city affairs, viz.: for streets, fire department, sewers, police, lights, salaries, etc., and in addition thereto the said council is about to levy a sinking fund tax of three mills on the dollar of the assessed valuation, to be applied to the extinguishment of eight per cent, of the interest and principal of the bonds and funded debt of the said city incurred or refunded since the adoption of the constitution in 1874, and to the extinguishment of three mills on the dollar of the bonds and funded debt of tbe city incurred prior to tbe adoption of the said constitution, and not yet paid or refunded. That your orator is advised and believes that the said council is not authorized to levy, for any purpose whatever, any tax in excess of two per centum on the assessed valuation, and therefore, that the three mill tax aforesaid is void, and that the councils must provide for the said sinking fund out of the two per cent, tax.” The prayers are for an injunction, mandamus and other relief.

To tbe bill as above set forth the defendant demurred, alleging in support thereof, that the action of the city council was authorized by the second section of the act of April 20, 1874, and by the act of March 3, 1877; which latter named act, § 2, provides as follows: “ That for the purpose of creating a sinking fund for the gradual extinguishment of the bonds and funded debt of the respective cities of this commonwealth, the council of each thereof shall annually (until payment of the bonds and funded debt be fully provided for) levy and collect, in addition to the other taxes of said corporation, a tax not less than one fourth of one mill, and not exceeding three mills, upon the assessed valuation of the taxable property of each of said cities, to be called the sinking fund tax, which shall be paid into the city treasury, and shall be applied towards the extinguishment of said bonds and funded debt in the order of date of the issue thereof, and to no other purpose whatever.” It will be observed that the act recited is a re-enactment of the 11th section of the act of the 23d of May, 1874, P. L. 234, except that it fixes the minimum tax at one fourth of a mill instead of one mill, which was the previous limitation. Upon this demurrer the court gave judgment against the defendant, and thereupon ordered an injunction to restrain the city from assessing and collecting the proposed three mill tax.

The reasoning upon which the learned judge based this conclusion was, in substance, as follows: the 3d section of article 15 of the constitution, provides that every city in the commonwealth shall provide a sinking fund for the payment of its funded debt. This provision applies as well to funded debts then in existence as to such debts as may thereafter be created. The act of April 20,1874, provided only in part for the enforcement of the constitutional mandate, in that it embraced only indebtedness thereafter to be incurred, or refunded, and not for previously existing funded debts. From this the learned judge was led to think that the first clause of section 11 of the act of May 23, 1874, was passed to meet what he supposed to be an omission in the preceding act, and that the three mill tax therein authorized to be levied, “in addition to the other taxes of said corporation,” was to continue only until such precedent indebtedness was provided for. But we cannot adopt this method of reasoning, because it seems to us to be faulty in at least two particulars.

(1) There is nothing in the act itself which indicates that the legislature intended to limit it to pre-existing debts. The expressed purpose is to create a sinking fund “ for the gradual extinguishment of the bonds and funded debt of the respective cities of this commonwealth,” and the additional levy and collection were to be made annually, “ until payment of the bonds and funded debt be fully provided for.” But what is there in this which limits this provision to the bonds and funded debts of- municipalities outstanding at the adoption of the constitution? On the other hand, this same section provides : “ That the councils of any city of the first class, the debt of which exceeds seven per centum upon the assessed value of taxable property therein, shall be and they are hereby authorized to increase the said debt one per centum upon such valuation.” To meet the indebtedness thus incurred, the city is required to provide for an assessed tax sufficient to pay the interest, and also the principal, of “ said loan ” within thirty years. When, therefore, by the same section which creates the sinking fund, subsequent indebtedness is provided for, we may well conclude that the legislature intended that this fund should include such indebtedness as well as that which preceded it. Again, as the act under consideration has no necessary connection with the precedent act of April 20th, we cannot see why it must be construed with it; certainly, the former might be repealed without affecting the latter in the least. But suppose such necessity exists, why should we not adopt the conclusion that the 11th section of the more recent act was intended to supply what was omitted in the former; that is, the means for the creation of a sinking fund? This, we are inclined to think, would be a better interpretation than that proposed by the court below.

(2) It is admitted that, at least, part of the funded debt of the city of Wilkes-Barre, existing prior to the adoption of the constitution, remains unpaid. It is true it has been refunded, bat refunding is not payment. We must presume, says the court below, “ That the city is annually levying a sufficient tax, under the act of Assembly of the 20th of April, 1874, to provide for the payment of the interest, and the liquidation of the principal at maturity.” But this presumption is rebutted by the fact that the city has made no such provision, except by the levy of the three mill tax which the court has enjoined. On the learned judge’s own reasoning, therefore, we convict him of error, for here is a pre-existing debt, the liquidation of which is unprovided for, and for which liquidation the sinking fund act, as he contends, was specially provided.

As to the contention that the three mill tax is to be regarded as part of and to be deducted from the twenty mill tax authorized by the city charter, little need be said, for it is a contradiction of the language of the act. The three mill tax is to be “in addition to the other taxes of said corporation,” and we cannot understand “ other taxes ” to mean anything else than those taxes which the city had previously the power to levy, and they amounted to twenty mills. When, therefore, the plaintiff undertakes to subtract the three mills from “ the other taxes,” he simply inverts the language of the act, and ought not in reason to expect us to adopt a conclusion so utterly opposed to the words of the statute.

The decree of the court below is now reversed, and the bill is dismissed at the costs of the appellee.