Opinion
Decided April 18, 1928.
Municipal corporations — Mortgage bonds in excess of general bonded debt for enlargement of electric plant — Liability not imposed on property other than utility — Section 12, Article XVIII, Constitution — Earnings separated and applied to bond retirement, plant operation and upkeep — Ordinance passed under suspension of rules — Section 4224, General Code — Unnecessary to read ordinance three times on same day — Contract awarded to lowest and best bidder.
1. Village ordinance, authorizing issuance of bonds for enlargement of village electric light, heat, and power plant, and providing that earnings from plant should be deposited in separate account and be used exclusively for payment of interest and principal on bonds and upkeep of plant, and nowhere providing that such expenses should be paid by village, held not violative of Section 12, Article XVIII of the Constitution, prohibiting imposing of liability for mortgage bonds issued in excess of general bonded debt limit other than on property and revenues of public utility involved.
2. Where rule of Section 4224, General Code, requiring an ordinance to be read on three different days, was properly suspended by three-fourths vote of all members elected to village council, ordinance was not invalid because not read three times on the same day on which it was passed.
3. In taxpayer's action against village officials to enjoin letting of contract for extension and enlargement of village electric light, heat, and power plant and issuing of bonds to provide for cost thereof, evidence held to justify finding that contract was let to the lowest and best bidder.
ERROR: Court of Appeals for Clermont county.
Messrs. Nichols, Speidel Nichols, for plaintiff in error.
Mr. Charles A. Brannock, Messrs. Waite, Schindel Bayless and Mr. Herbert Shaffer, for defendants in error.
Plaintiff in error, P.A. Pathe, brought an action as a taxpayer against the officials of the village of Bethel, Ohio, seeking an injunction against the letting of a contract for the extension and enlargement of the village electric light, heat and power plant, and the issuing of bonds to provide for the cost thereof.
Upon the trial of the cause the court refused an injunction. From that judgment, plaintiff below prosecutes error to this court.
Plaintiff in error first contends that Ordinance No. 80, which is the basic ordinance for the issuing of the bonds, is illegal and void and in violation of Section 12 of Article XVIII of the Constitution of Ohio, for three reasons: First, that the ordinance requires the village of Bethel to keep the public utility in question in repair, and to maintain the same in first-class condition; second, that the ordinance requires the village of Bethel to keep the plant insured against loss by fire or tornado, in an amount equal to the bonds outstanding; and, third, that under certain contingencies the ordinance requires the village to pay for electric light current for street-lighting purposes.
It is contended that these obligations contravene Section 12 of Article XVIII of the Constitution of Ohio, relating to mortgage bonds for public utilities:
"Section 12. Any municipality which acquires, constructs or extends any public utility and desires to raise money for such purposes may issue mortgage bonds therefor beyond the general limit of bonded indebtedness prescribed by law; provided that such mortgage bonds issued beyond the general limit of bonded indebtedness prescribed by law shall not impose any liability upon such municipality but shall be secured only upon the property and revenues of such public utility, including a franchise stating the terms upon which, in case of foreclosure, the purchaser may operate the same, which franchise shall in no case extend for a longer period than twenty years from the date of the sale of such utility and franchise on foreclosure."
Whether or not the provisions of Section 12 of Article XVIII limit the imposition of liability further than as security for the bonds outstanding, it is not necessary to decide, since the ordinance itself provides that the earnings from the plant shall be deposited in a separate deposit account and kept separate and apart from other funds of the village, and shall not be used for any purposes except the payment of interest and principal on bonds and the operation and upkeep of the plant. Nowhere in the ordinance is it provided that the expenses incurred in the operation, upkeep, or insurance of the plant shall be paid by the village, otherwise than from the earnings of the plant. This being true, this provision imposes no liability other than upon the property and revenues of the public utility in question.
Had the ordinance provided that the cost of upkeep, operation, and insurance should be paid for from the general revenues of the village, we would have a different question.
Our conclusion is that on these propositions Ordinance No. 80 is not illegal and void, and does not contravene Section 12 of Article XVIII of the Constitution.
The second contention is that the ordinance is void for the reason that it was not passed in the manner prescribed by the statutes of Ohio. This proposition is argued on the ground that the ordinance, although passed under a suspension of the rules, was not read three times on the same day.
It is conceded that the rule requiring an ordinance to be read on three different days was properly suspended, but that the suspension did not dispense with the three readings on the same day.
The pertinent part of Section 4224, General Code of Ohio, reads:
"No by-law, ordinance or resolution * * * shall be passed, unless it has been fully and distinctly read on three different days, and with respect to any such by-law, ordinance or resolution, there shall be no authority to dispense with this rule, except by a three-fourths vote of all members elected thereto, * * *."
It will be noted that the section nowhere provides in terms for three readings. It provides for reading on three different days. Three readings are therefore but the result of mathematical calculation, and the fact that it was to be read on three different days would necessarily require three different readings. But the section provides that this requirement may be dispensed with by a three-fourths vote of all members elected to council.
We are of opinion that this rule was properly dispensed with, and the ordinance properly passed.
Counsel for plaintiff in error cite the case of Costakis v. Village of Yorkville, 109 Ohio St. 184, 142 N.E. 30. That case is not an authority here, as the same question was not presented there. It being conceded there that the ordinance was read three times on the same day, it was a question as to whether or not the rule was properly dispensed with. It is true that Chief Justice Marshall states in the opinion, and it is so suggested in the syllabus, that three readings were permissible on the same day upon a suspension of the rule, but nowhere does it state that this was necessary to the validity of the ordinance, if the rule was properly dispensed with. In passing, we may say that the use of the words "three readings" seems to us to be an inadvertence, since the statute nowhere speaks of three readings.
The only case in Ohio directly on this point is the case of Schroder v. Overmann, 6 O.D. (N.P.), 133, 5 N.P., 392, decision by Judge Morris Buchwalter, and we are in accord with that decision.
The ordinance was therefore properly passed.
It is next contended that the contract was not let to the lowest bidder, and acts and circumstances tantamount to fraud on the part of the officials of the village in letting the contract to the Fairbanks Morse Company are charged.
This question must necessarily be decided on the weight of the evidence, and involves the discretion of the officials, as well as their good faith.
The record discloses that there were three bids in answer to the advertisement for bids. The bids were made on general specifications. Each bidder presented his bid on detailed specifications in compliance with the general specifications.
The record discloses that the Fairbanks Morse Company's bid for machinery and materials was for a plant of approximately 50 per cent. more capacity than the next lower bid. There was some expert evidence introduced by the plaintiff to the effect that the next lower bid, called the Worthington bid, was for a plant of sufficient capacity to satisfy all the needs of the village. The lowest bid was considerably lower than the Worthington bid. It does not appear that this bid was satisfactory in any respect.
There is evidence that there were some private conversations between some of the officials of the village and the representatives of the Fairbanks Morse Company, prior to the letting of the contract, but there is no direct evidence of corruption or bad faith.
Our conclusion is that, under the evidence, the trial court was justified in finding the Fairbanks Morse Company's bid to be the best bid, and that its finding is not manifestly against the weight of the evidence on these questions.
There were some other minor points suggested as grounds of error, but they are not of a substantial character, and are not stressed.
We find no prejudicial error in the record, and the judgment will be affirmed.
Judgment affirmed.
HAMILTON, P.J., and MILLS, J., concur.