Opinion
No. 22557
Decided February 11, 1931 Reheard and decided June 17, 1931.
Constitutional law — Police power — Public health and welfare — Legislation authorizing establishment of sewer districts outside municipalities — Water and sewer systems relate to public health and welfare — Justiciable question whether police power legislation relates to public welfare — Wisdom of legislation, extent of threatened danger and efficacy of remedy, political questions — Legislation valid although discretion in county commissioners to determine whether conditions justify improvement — Gross abuse of discretion to establish sewer district outside municipality, when — Injunction lies before negotiable obligations issued to pay for improvement — Commissioners disqualified by compensation contingent upon authorizing improvement, when — Section 6602-14, General Code — Taxing entire county for bonds for sewer not benefiting all property, not unconstitutional — Section 2, Article XII, Constitution — County sewers and water supply systems — Section 6602-1 et seq., General Code, constitutional — Section 7, Article X, Constitution — Special assessment and deficiency bonds valid, when — Gross abuse of discretion not defense to action by innocent holder of bonds, when.
1. Legislation designed to preserve and promote the public health and public welfare, by authorizing the establishment of sewer districts in thickly populated districts outside of municipalities, is within the sovereign police power of the state and subject to legislative will.
2. Systems for water supply and storm and sanitary sewers, to be established in thickly populated districts outside of municipalities, have a real and substantial relation to the public health and public welfare.
3. Whether the purpose to be served by legislation pursuant to the police power of the state bears a reasonable and substantial relation to the public welfare is a justiciable question. The wisdom of such legislation, the extent of the threatened danger, and the efficacy of the remedy are political questions.
4. Such legislation is not rendered invalid by reposing in county commissioners a discretion in determining whether conditions in a given locality will justify the improvement.
5. It is a gross abuse of the discretion reposed in county commissioners to establish a sewer district outside of a municipality and to construct therein a system of sewers and water supply, where there is not a present population sufficiently large and compact to cause a present menace.
6. It is a gross abuse of the exercise of that discretion to establish such a sewer system in a sparsely inhabited district or as a part and parcel of a plan to promote a private enterprise, or where there is no substantial menace to health; and where such abuse can be fairly made to appear, a court of equity may enjoin the construction, at any time before the issuance of negotiable obligations to provide the funds for same.
7. The contingent compensation to county commissioners given by Section 6602-14, General Code, and the interest of the commissioners in the establishment of the improvements therein authorized is such as to disqualify the commissioners if objection is made before obligations are created, but in the absence of objections timely made, the commissioners have jurisdiction to order the improvement, and this is true whether their action is executive, legislative or quasi-judicial in character.
8. An ad valorem tax levy upon all the taxable property of a county to pay the principal and interest of bonds issued to provide funds to construct a sewer system for a small territory contiguous to a municipality, which improvement confers no direct benefit to property in the county remote in location from said improvement, does not violate the provisions of Section 2 of Article XII of the Ohio Constitution, requiring all real and personal property to be taxed by a uniform rule, and according to its true value in money.
9. Sections 6602-1 to 6602-33c, inclusive, General Code, are enacted pursuant to the authority conferred by Section 7, Article X, of the Constitution. It is a lawful exercise of that authority to levy special assessments according to benefits upon real estate within any sewer district so established, to pay certificates of indebtedness, and it is also lawful to issue bonds to provide for the payment of any deficiency of any installments of interest and principal of such certificates by a general levy upon all taxable real and personal property in the county even though such property may not be directly benefited by the improvement. ( Railroad Co. v. Commissioners, 48 Ohio St. 249, approved and followed.)
10 Where bonds are issued by county commissioners in anticipation of the collection of special assessments, and to retire certificates of indebtedness theretofore issued to provide funds to construct a sewer system outside a municipality and the procedure has been regular, and the bonds so issued contain recitals of the pledge of the faith and credit of the county, and that they are issued pursuant to the uniform bond act and other pertinent Ohio statutes, and that special assessments have been levied upon benefited property as a primary obligation for the payment of such bonds, it is no defense to a suit for the payment of such bonds in the ownership of an innocent holder for value that the commissioners in ordering such improvement had grossly abused their power.
IN MANDAMUS.
This is an original suit in this court seeking the writ of mandamus to compel the board of commissioners of the county of Allen in the state of Ohio to make payment of past-due interest and past-due installments of principal upon certain bonds issued by the board of commissioners of Allen county, and for that purpose to collect special assessments levied upon property benefited by certain improvements which were made with the proceeds of the sale of said bonds, and requesting that the board of commissioners further be required to provide for the levy and collection annually of general taxes upon all taxable real and personal property in said county in an amount sufficient to pay the principal and interest of said bonds as they mature.
The relator, J. Charles Bowman, in his amended petition alleges that he is the owner of certain of said bonds, and that he brings this action in his own behalf and in behalf of other owners of bonds of the several series issued under authority of Sections 6602-1 to 6602-14, General Code, in establishing sewer districts, in constructing, maintaining, and operating in said sewer districts storm and sanitary sewer systems, and in providing a supply of water to the inhabitants of said districts, under authority of Sections 6602-17 to 6602-33c, General Code.
The petition alleges that on August 28, 1924, the Westwood sewer district was established by resolution of the board of county commissioners, and that said resolution provided for the construction and maintenance of a sewer system in a district lying immediately west of and adjoining the city of Lima; that a large part of said territory comprising said district was platted into building lots upon which many residences had been built. The petition further alleges that on January 27, 1925, the Lost Creek sewer district was established by resolution of said board, providing for the construction and maintenance of a sewer system for both storm and sanitary sewers, said district comprising 740 acres of land, a substantial part of which was platted into building lots, upon which many residences had been built. The amended petition further alleges that the establishment of said districts and the construction of storm and sanitary sewers were necessary for the preservation and promotion of the public health and welfare of said Allen county, and all the people of said county, that, prior to the construction of said sewer systems, the sewage and storm water of said districts were emptied into streams, whereby the same were polluted, and that it was determined to drain the same into sewage disposal plants where the same could be treated to safeguard the health of the citizens and residents of Allen county. The petition further alleges that, in the establishment of said sewer systems, a sanitary engineer and a consulting engineer were employed to prepare general and detailed plans, and that plans were in fact prepared and approved and adopted by the board of commissioners. The petition further alleges that all and singular the provisions of the statutes in such cases made and provided were faithfully followed. The petition further alleges that on October 18, 1924, the said board of commissioners adopted a resolution declaring the necessity for the construction and maintenance of a public water supply system in said Westwood sewer district, and on same day passed a further resolution declaring the necessity for the construction and maintenance of a public storm sewer in said Westwood district, and on the same day adopted a further resolution declaring the necessity for a public sanitary sewer system in said Westwood district; that on May 14, 1926, said board passed a further resolution declaring the necessity for constructing a public sanitary sewer system in Oak Hill subdivisions Nos. 1 and 2 in said Westwood district, and on the same date adopted a resolution declaring the necessity for a public sanitary and storm sewer system and water supply system in Rosedale subdivision of said Westwood district; and that on November 2, 1925, the board adopted a resolution declaring the necessity for a public water supply system in said Lost Creek sewer district, and on August 29, 1925, declared the necessity for constructing a public sanitary sewer system in said Lost Creek sewer district.
It is further alleged that each of said resolutions was published in a newspaper of general circulation in Allen county, as provided by law; that all of said improvements were constructed by contract after legal advertisement and bids in accordance with plans and specifications on file, the statutory procedure in all respects being followed; that, upon the letting of the contract, certificates of indebtedness were issued, and upon each of said certificates of indebtedness was printed a certificate showing the purpose for which it was issued; and that said certificates were declared to be full general obligations of the county of Allen, pledging the faith, credit, and revenue of said county, and stating that bonds of said county would be issued in anticipation of the collection of the special assessments in order to retire said certificates of indebtedness, and that such bonds, when issued, would be full general obligations of the county pledging the faith, credit, and revenues of said county.
Said certificates further stated that, in the event said assessments should not be levied, or bonds should not be issued to retire said certificates, general taxes would be levied upon the taxable property real and personal of said county to provide for their payment. Such certificates were made payable to bearer, and were fully negotiable. They were advertised for public sale and sold at public bidding, and from such sale sufficient money was realized to pay for the construction and placing in operation of all said improvements, and said improvements were in fact constructed and put into operation, and each and all of them are still in operation, whereby it is alleged that drainage from said districts has been diverted from said streams and the pollution thereof prevented.
It is further alleged that, after completion of said improvements, the proper steps were taken to levy special assessments upon all the property of said districts in an aggregate amount sufficient to pay the cost of said construction, and that same were certified to the auditor, and by him placed upon the special assessment duplicate of said county for collection. It is further alleged that thereafter, on August 20, 1928, upon the completion of said improvement, six several series of bonds were issued in anticipation of the collection of said special assessments, and to retire said certificates of indebtedness, in the aggregate sum of $1,153,822.91, bearing interest at 5 1/2 per cent. per annum, the principal thereof to be payable in 20 annual installments beginning April 1, 1931. Each of the bonds so issued contained therein printed the following provisions:
"The said County of Allen is hereby held and firmly bound and its faith and credit and all the taxable real and personal property therein are hereby pledged for the prompt payment of this bond and interest thereon at maturity."
"This bond is * * * issued * * * pursuant to the Uniform Bond Act and other pertinent laws of Ohio.
"It is hereby declared and certified that provision has been made as required by the Constitution and Laws of Ohio for the payment of this bond and interest to accrue thereon by special assessments levied on real estate within said sewer district specially benefited by said improvement and taxes levied and to be levied upon all the taxable property within said county of Allen, and that all acts, conditions and things required to be done and to exist precedent to and in the issuance of this bond and others of the same series have been properly done and performed and do exist in regular and due form, time and manner as required by the Constitution and Laws of Ohio and that the total indebtedness of said county, including this bond and tax levies required to pay the principal and interest of this bond and others of the same series, do not exceed any constitutional or statutory limitations."
The petition further alleges that on the dates when said bonds were issued the real and personal property of Allen county subject to said general taxation was appraised at $142,185,430; that the installments of interest payable April 1, 1929 and 1930, and October 1, 1929 and 1930, remain unpaid, that the principal of said bonds payable April 1, 1931, in the sum of $52,822.91, remains unpaid, and that the board of commissioners have refused, after demand, to proceed to make the collections of special assessments and have refused to levy and collect general taxes for the amount of said bonds. The petition further alleges that the procedure provided in Sections 6602-1 to 6602-14, General Code, is similar to the procedure for other public improvements, and that the relator and other purchasers of said bonds relied upon the validity of said statutes and upon the validity and binding obligation of said bonds upon the political subdivisions issuing the same. The petition further alleges that each and all of said improvements were by the commissioners of Allen county and the state department of health of Ohio deemed and declared to be necessary for the preservation and promotion of the public health and welfare of Allen county, and that the plans and specifications for said improvements were submitted to, and approved by, the department of health of the state of Ohio through the state director of health.
For answer to the petition the commissioners admit the establishment of said sewer districts and the construction and establishment of said sewers and systems of water supply, but deny the necessity for said improvements or that the territory comprised within said districts was inhabited as alleged in the petition. Their answer denies that any substantial portion of said territory was platted into lots, or that it was inhabited by other than a limited number of farmers. It denies that the lack of said improvements was a menace to health or that the construction of said improvements has resulted in removing any alleged pollution to the streams flowing through said district. It denies that any requirement had ever been made by the state department of health looking to removing any sources of pollution in said districts. It denies the authority of the county commissioners to make said improvements and the legality of the proceedings looking to such authorization. The answer alleges that said improvements are no benefit to the taxpayers of said county living outside of territory comprised within said districts, and that the establishment of said sewer districts and the construction of sewers therein is not conducive to the public health and welfare of the inhabitants of Allen county, nor to any of said inhabitants outside of said sewer districts. It further alleges that, at the time of the attempted establishment of said sewer districts, the lands included therein were farm lands being used solely for agricultural purposes needing no system for the disposal of sewage or storm water, and that, in truth and in fact, the outlets of said sewers are in the same streams where the water drained from said district formerly flowed, and that, if there was any menace to the health of Allen county and the residents thereof, the same has been increased rather than diminished. It denies that said proposed improvement and the plans thereof were ever submitted to, or approved by, the state department of health.
The answer further alleges that the said statutes under which said improvements have been constructed are in contravention of Section 2 of Article XII of the Constitution of the state of Ohio, Sections 16 and 19 of Article I of the Constitution of Ohio, and Section 1 of Amendment XIV of the Constitution of the United States.
To the answer a reply was filed, the detailed statements of which are not necessary to be here repeated.
Although issues of fact were made by the pleadings, they have been cleared by stipulations which reduce the matter before the court to propositions of law. By such stipulations it is admitted that the city of Lima had increased in population from 41,326 in 1920 to 42,217 in 1930, an increase of 891 in 10 years. The area of Lima is stated to be approximately 4 square miles, and it is stipulated that the sewer districts include approximately 3 1/2 square miles. Westwood sewer district comprises 1,501 acres, but the acreage served with water supply, sanitary and storm sewer is 370 acres. The remaining 965 acres were subjected to special assessments either for water or sewer service. Only 80 acres of that district were platted into lots. It contained only 37 residences, nearly all being farm houses, and all the land used is being used almost exclusively for agricultural purposes. The Lost Creek sewer district comprises 740 acres, of which 325 acres were platted. There are 15 residences in that district, nearly all being farm homes, and the land being almost exclusively used for agricultural purposes. Only the platted acreage was served with water and sewerage but the entire 740 acres were subjected to special assessments. The lands included in both of said districts had sufficient natural drainage, and no part of the area was swampy or subject to floods which said sewerage would tend to remedy. There were other statements contained in the stipulation of facts which have no important bearing upon the legal questions involved.
Messrs. Denman, Miller, Christian Beatty and Mr. Wm. H. Harris, for relator.
Mr. Ernest M. Botkin, prosecuting attorney, Mr. Jos. H. Flick, Mr. Jas. J. Weadock, Sr., Mr. H.E. Garling, Mr. Melvin C. Light and Mr. John H. Davison, for respondents.
The first matter to challenge our attention is the claim of the defendants that relator has mistaken his remedy and that mandamus does not lie, because there is an adequate remedy at law. The single authority cited in support of that claim is Davenport v. County of Dodge, 105 U.S. 237, 26 L.Ed., 1018. Chief Justice Waite, in delivering the opinion of the court in that case, declared as a rule of federal procedure that a judgment at law is necessary to support the writ of mandamus to enforce the levy and collection of taxes to pay public improvement bonds issued by the board of county commissioners. If this action had been brought in the federal courts, that decision would be conclusive authority. It is well settled that rules of practice and procedure established for the guidance of federal courts have no binding force upon courts exercising state jurisdiction. It has been settled by a long line of authorities in this state, beginning with State, ex rel. Robertson, v. Board of Education of Perrysburg Township, 27 Ohio St. 96, and extending down to State, ex rel. Huntington National Bank, v. Putnam, Mayor, 121 Ohio St. 109, 167 N.E. 360, a late case, that bonds and other incontestable obligations of any of the political subdivisions of the state may have collection enforced otherwise than by judgment, and that the remedy of mandamus is available to the owner and holder of such obligations where the taxing authorities of such subdivision have refused to levy special assessments or general taxes for the purpose of procuring funds to pay the same. Other cases in which this has been clearly held are State v. Commissioners, 37 Ohio St. 526; Brissel v. State, ex rel. McCammon, 87 Ohio St. 154, 172, 100 N.E. 348; State, ex rel. Price, Atty. Genl., v. Huwe, 103 Ohio St. 546, 556, 134 N.E. 456.
It is true that the writ of mandamus can only be awarded against public officials where such officials rest under a clear legal duty. This duty is imposed in Ohio by two recent enactments.
Section 2293-24, General Code, provides: "Bonds or notes issued in anticipation of the levy of special assessments or the collection thereof shall be full general obligations of the issuing subdivision, and for the payment of the principal and interest of same the full faith, credit and revenues of such subdivision shall be pledged."
Section 5625-3, General Code, provides: "The taxing authority of each subdivision and taxing unit shall, subject to the limitations and restrictions of this act, levy such taxes annually as are necessary to pay the interest and sinking fund on and retire at maturity the bonds, notes and certificates of indebtedness of such subdivision and taxing unit * * *."
Again, it must be admitted that, if the bonds in this case do not constitute legal obligations, neither mandamus nor an action at law may be invoked to enforce their payment. It only remains, therefore, to determine whether they are valid, legal, enforceable obligations. Before entering upon that discussion it must not be overlooked that relator claims that, even if they were not valid obligations when issued, the defendants are estopped from setting up their illegality, because the bonds are in the hands of innocent holders for value, and were acquired by the present holders before their maturity, without notice of any defects, and that bonds issued by the political subdivisions of the state are entitled to the same protection against equities accorded to other negotiable instruments. This principle has been declared by this court in State v. Commissioners, 37 Ohio St. 526, in the following language: "A purchaser of such bonds, who has no actual knowledge of any defect in their execution, is not bound to look beyond the findings and record of the commissioners, for the purpose of ascertaining whether conditions precedent to their execution have been performed."
Another authority on the same point is State, ex rel. Robertson, v. Board of Education, supra, more particularly the language of the opinion at page 98 of 27 Ohio State.
It has been stated in unmistakable language by this court in Counterman v. Dublin Township, 38 Ohio St. 515, that an unconstitutional law cannot be made the basis of any obligation on the part of any of the subdivisions of the state, that a taxpayer may maintain an action to restrain the collection of a levy for the payment of bonds issued under such act, and that no estoppel is created by the fact that the bonds were issued and the money arising from the sale thereof expended for the purposes stated in the act with the knowledge of the plaintiff, even though the value of the property subject to taxation is thereby enhanced, and even though the improvement authorized by the unconstitutional act would be useful to the citizens of the political subdivision, and even though the plaintiff did not commence his action to restrain the issue or negotiation of the bonds or the prosecution of the work. The same principle in somewhat milder form was stated in Wyscaver v. Atkinson, 37 Ohio St. 80. This principle is declared upon the incontestible ground that an act of the General Assembly in conflict with the Constitution is a mere nullity, and no one is estopped to assert its invalidity. The principle declared in that case has never been departed from. The relator in this case can therefore only succeed in the event the pertinent portions of Sections 6602-1 to 6602-33c are constitutional.
We will pass for the moment from the discussion of the constitutionality of these sections in general to a discussion of Section 6602-14 in particular. That section provides that, in addition to the regular salary of the county commissioners, they shall receive additional compensation for services in connection with the establishment of sewer districts outside of municipalities. The county commissioners in this particular improvement received a total of $4,427.64. It is claimed that the county commissioners, in determining whether or not there was a necessity for the improvement, and whether or not they should determine to proceed to construct the improvement, were acting in a quasi-judicial capacity, and that, by reason of their substantial pecuniary interest in creating the district and constructing the improvement, they were so far disqualified as to render the entire proceeding wholly void.
Its constitutionality is challenged as being in violation of Section 16 of Article I of the Ohio Constitution, and Section I of the Fourteenth Amendment, which contain guarantees of due process of law. The basis of the claims of the defendant is that, in order to receive the fees provided by Section 6602-14, General Code, the commissioners must decide in favor of the improvement, and, further, that there is an inducement to increase rather than to diminish the cost of the improvement, because, in addition to the per diem for the services in determining the necessity for the improvement, the commissioners are allowed a percentage of the entire cost of installing the improvement.
In support of the claim of unconstitutionality, counsel for defendants cite a single authority, viz., Tumey v. Ohio, 273 U.S. 510, 47 S.Ct., 437, 71 L.Ed., 749, 50 A. L. R., 1243. In that case the Supreme Court of the United States held there was a violation of due process, in that the mayor who heard and decided a misdemeanor case adjudged costs against the defendant, in which costs the mayor had a personal interest to the extent of approximately $12 by reason of not being entitled to any fees except in case of judgment against the defendant. In some of the counties of this state there are very elaborate ditch improvements, and the fees to the county commissioners are very substantial sums. In other counties they are relatively small.
It is our purpose to faithfully follow the Tumey case, in so far as the principles declared in that case can be given application. The board of county commissioners is an administrative board, but it nevertheless exercises quasi-judicial functions. The proceedings for determining the necessity for sewers, and the levy of assessments upon property according to benefits to pay for such improvements, are judicial in character. The board of commissioners exercises only those powers which are conferred upon it by legislation, and the parties who are affected by the proceedings are injured to the same extent as if the same order were made by a regularly constituted court of justice. The net result to property owners must be the same whether accomplished through judicial or quasi-judicial authority. At page 522 of 273 U.S. 47 S.Ct., 437, 441, in the Tumey case, it is declared by Chief Justice Taft as a general rule that officers acting in a judicial or quasi-judicial capacity are disqualified by their interest in the controversy, and numerous cases are cited in support of that proposition. The opinion then discusses at length the degree and nature of the interest which will disqualify the judge.
It must be borne in mind that the only legal principle decided by the Supreme Court of the United States in the Tumey case was that the mayor was disqualified, and the reversal of the judgment was grounded upon the fact that objection on the ground of the mayor's disqualification was made at the first opportunity. The attack upon the judgment by Turnkey was a direct attack in an error proceeding, and it was not necessary to declare, nor did the Supreme Court in fact declare, that the judgment was void. Immediately following the announcement of the judgment of reversal in the Tumey case, numerous cases were brought to this court to interpret the decision of the United States Supreme Court, and to determine whether the Supreme Court of the United States had declared the judgment in the Tumey case void or only voidable. This court, by a divided court, reached the conclusion that the judgment was only declared to be voidable, and that, in other cases where the objection was not timely made, and no error prosecuted on that ground, the objection could not be made for the first time in a court of review; neither was such judgment subject to collateral attack. Error was not prosecuted in those cases to the Supreme Court of the United States, except in a single instance, where a conviction was before a mayor who was compensated by salary instead of being compensated out of costs collected as a part of the judgment of conviction. We therefore have no expression from the Supreme Court of the United States as to whether the later decisions of this court interpreting the Tumey decision are correct. The interpretation of this court is, however, in perfect harmony with numerous other decisions which have sought to interpret the Tumey decision: Brown v. Kleysteuber, Mayor, 149 Va. 438, 141 S.E. 252; Commonwealth v. Dabbierio, 290 Pa. 174, 138 A. 679; Bryant v. State, 146 Miss. 533, 112 So. 675; Ex parte Meeks, (D.C.), 20 F.2d 543; Boyd v. State, (Miss.), 114 So. 353; Fleming v. Greenwood, (Miss.), 115 So. 221; Owens v. Dancy, (C.C.A.), 36 F.2d 882; Hill v. State, 174 Ark. 886, 298 S.W. 321; Uihlein v. St. Paul, (C.C.A.), 32 F.2d 748.
In Tari v. State, 117 Ohio St. 481, 159 N.E. 594, 57 A.L.R., 284, this court declared that a judgment of conviction before a justice of the peace, who was disqualified by reason of interest, was nevertheless valid, if no objection was made by the defendant at or before the trial, and that the failure to make the objection in the trial court should be deemed to be a waiver of the disqualification. The reasoning of the opinion in that case need not be repeated at this time. Applying the reasoning of that case, the conclusion must be reached that the order of the board of county commissioners determining the necessity for the improvement, and levying the assessments upon property in payment of the same, in the absence of any objection on the ground of disqualification, must be held to be a valid order.
And this must be more particularly true if it is not made until after bonds based upon the improvement have been negotiated into the hands of innocent holders for value.
We will first discuss this matter upon the theory that the statutes are constitutional. If it be assumed by the defendants in this case that the statutes are constitutional, the only defense made by this record lies in the claim of the abuse of power on the part of the county commissioners in ordering the improvement. As the basis of this claim, it is urged that the improvement not only was of no benefit to the residents outside of the districts created, but that the improvement could be of no possible benefit to them and was even detrimental. Without repeating the facts heretofore stated, it need only be added that it will be difficult to discover or even conceive a more flagrant abuse of power or a more flagrant violation of the trust and confidence reposed in public officials than the action of the county commissioners in providing for these improvements. No party to this action and no attorney for any party contends that these improvements could in the slightest measure have promoted the health and safety, or that they could even tend to safeguard the health, of the citizens of Allen county or the city of Lima, or even of the citizens of the townships in which the districts are located, because the lands which comprise the districts were farm lands used almost exclusively for agricultural purposes, and the dwellings were the usual farm homes of agricultural communities. No one is so bold at this time as to say that there was any necessity for the improvement at that time and place. Whatever the issues of fact made by the pleadings, it is not doubted that the purpose of the improvements was to promote the platting and sale of lots. The most that can be said in behalf of the improvement at the time it was made is that the city of Lima might increase in population to the point where these lands would be built upon, and that possibly a sufficient number of dwellings might be constructed to require water and sewage improvements to guard the inhabitants of the city of Lima, and possibly the inhabitants of the county of Allen outside of the city of Lima, who need protection against the menace of pollution. This court can look upon the improvement in no other light than as a promotion scheme to which public officials have devoted the money of taxpayers. The lands included in both said districts had sufficient natural drainage, and no part of said area was swampy or subject to floods. These facts have been plainly stated, and should be plainly stated, because it is by extreme cases that the soundness of legal propositions as well as the validity of statutes are questioned. While these facts have been plainly stated, they have not been exaggerated. In fact, it would be difficult to exaggerate them.
This is indeed an extreme case, and the plight of the taxpayers is such as to excite sympathy, but an extreme case cannot be permitted to make bad law.
This case cannot be decided by weighing facts or equities. The county commissioners are not the interested parties. In its final results, the interested parties on the one hand are the innocent holders of the negotiable bonds acquired in due course, and, on the other hand, the taxpayers, who, if not equally interested, have been grossly imposed upon. While, as before stated, the principles of estoppel do not apply, the situation in which the taxpayers find themselves is one created by their own chosen officials and agents. The bondholders are not in any wise at fault, unless it be decided that purchasers of bonds in each instance must at their peril inquire as to the nature of the improvement, and whether there was a real necessity therefor. As the law now stands, and has stood from time immemorial, it is only necessary to inquire whether the law is constitutional and whether the proceedings are regular, the necessity for the improvement being a political question to be determined by the commissioners of the county, or the council of the municipality, as the case may be.
We are asked by the defendants representing the taxpayers to determine that the validity of bonds in the hands of innocent holders depends as a question of fact upon whether the improvement was needed, and upon whether the residents of Allen county outside of the sewer districts utilized the systems of sewerage and water supply. It is declared in Board of Commissioners of Hamilton County v. Mighels, 7 Ohio St. 109, 119: "A county organization is created almost exclusively with a view to the policy of the State at large, for purposes of political organization and civil administration, in matters of finance, of education, of provision for the poor, of military organization, of the means of travel and transport, and especially for the general administration of justice. With scarcely an exception, all the powers and functions of the county organization have a direct and exclusive reference to the general policy of the State, and are, in fact, but a branch of the general administration of that policy."
The county is the unit through which many of the important functions of the government are carried on. The credit of the county must stand behind all public improvements other than those which pertain to the state at large. One part of the county cannot be separated from another for purposes of taxation. The fact that there may be residents in remote portions of Allen county who will receive no possible benefit from these improvements, and who are in no apparent danger from those contagions which are usually caused by pollution, cannot stand in the way of a general governmental policy declared by the Legislature in the interest of public health and public welfare. If the law is unwise, it might be subjected to a referendum. If the improvement ordered by the county commissioners is wholly unwarranted it might be enjoined. But, when completed, and county obligations have been issued and purchased in the market those obligations cannot thereafter be questioned. The question must resolve itself into the single inquiry, viz, whether the law which authorizes the action of the county commissioners is a constitutional exercise of legislative power. With the wisdom of the law the courts have no concern. The only judicial inquiry into the constitutionality of a statute involves the question of legislative power, not legislative wisdom. Under the Ohio Constitution, the legislative authority of the General Assembly is circumscribed only by the express limitations of the slate and federal Constitutions. In matters of public policy, or, in other words, the police power, it has the same general power with the same limitations. State Board of Health v. City of Greenville, 86 Ohio St. 1, 98 N.E. 1019, Ann Cas., 1913D, 52; Leonard, Jr., v. State, 100 Ohio St. 305, 127 N.E. 464; Williams v. Scudder, 102 Ohio St. 305, 131 N.E. 481; Miami County v. City of Dayton, 92 Ohio St. 215, 110 N.E. 726; Chesbrough v. Commissioners, 37 Ohio St. 508.
These particular statutes providing for sewer systems and sewer improvements outside of municipalities, to be constructed by county commissioners, and to be paid for by special assessments and general tax levies, have never before been interpreted by this court, but similar statutes have many times been determined to be valid by the courts of other states where it has without exception been held that special assessments to pay for such improvements can be levied according to benefits, and that the credit of the taxing district outside of the assessed district can be pledged for the payment of bonds to provide the money for the construction of the improvement. Kingman et al., Petitioners Under Metropolitan Sewerage Act, 153 Mass. 566, 27 N.E. 778, 12 L.R.A., 417; Dahler v. Washington Suburban Sanitary Comm., 133 Md. 644, 106 A. 10; Taylorsville Sanitary Dist. v. Winslow, 317 Ill. 25, 147 N.E. 401.
A typical case is Keene v. Jefferson County, 135 Ala. 465, 33 So. 435, 438.
To show the potential usefulness of such statutes, and that they bear a substantial relation to the public welfare, we quote from the statement of the Alabama case: "It is shown that about two-thirds of the population of Jefferson county, of more than 100,000 people, live in the two valleys and at the foothills, through which the trunk lines of the sewers are proposed to be run, and that three-fourths in value of all the property in the county is within the area of drainage covered by these two trunk lines of sewer. The system in its beneficial effects, extends to the entire county for the protection of its water courses from pollution, and was intended to meet not only the present needs, but to fulfill in the future, the requirements of sanitation and health in cities and towns, and in all the thickly settled portions of the county."
It is of course apparent that those facts were wholly different from the facts in the instant case, but they do clearly illustrate how such statutes relate to the public welfare. Another somewhat similar case is that of Dinneen v. Rider, 152 Md. 343, 136 A. 754.
Counsel for the taxpayers have cited one case which is clearly an authority in favor of the bondholders, to wit, State, ex rel. New Richmond, v. Davidson, 114 Wis. 563, 88 N.W. 596, 90 N.W. 1067, 58 L.R.A., 739. In that case a state tax was levied to pay the expenses of the city of New Richmond incurred in meeting immediate needs arising from the destruction caused by a cyclone which killed and injured many of the inhabitants. The tax levied by the state was justified in that case because it was necessary to "bury the dead, care for the injured, clear up the debris to prevent disease and pestilence, and to relieve and aid the homeless, destitute, and impoverished." In the opinion, at page 578 of 114 Wis., 88 N.W. 596, 90 N.W. 1067, 1070, the court quoted from Brodhead v. Milwaukee, 19 Wis. 624, 88 Am. Dec., 711: "To justify a court in declaring a tax void, and arresting proceedings for its collection, the absence of all possible public interest in the purposes for which the funds are raised must be so clear and palpable as to be immediately perceptible to every mind. Claims founded in equity and justice, in the largest sense of those terms, or in gratitude or charity, will support a tax."
The decisions of our own state, while not dealing with sewer systems outside of municipalities, have frequently dealt with other improvements outside of municipalities, and the same principles must necessarily apply. The power to levy a general tax throughout the county is authorized by Section 7, Article X, of the Ohio Constitution, and is not dependent upon the receipt of direct benefit by the taxpayers of the county or the equal distribution of potential benefits in proportion to the burdens of the tax levied. Cooley on Taxation (4th Ed.), Section 20; Railroad Co. v. Commissioners, 48 Ohio St. 249, 27 N.E. 548; Miami County v. City of Dayton, 92 Ohio St. 215, 110 N.E. 726; State, ex rel. Holtz, v. Commissioners of Henry County, 41 Ohio St. 423; State v. Commissioners, 37 Ohio St. 526. The same principle has been declared in Illinois Central Rd. Co. v. Decatur, 147 U.S. 190, 13 S. Ct., 293, 37 L.Ed., 132.
The construction of water supply systems and storm and sanitary sewer systems by municipalities has long been recognized by the Legislature as a valid exercise of governmental powers in promoting the public health and welfare by municipalities, and the same may be said as to a levy of general taxes spread over the entire property of such municipalities, even though the direct benefits were confined to but a small portion of the municipality. This principle has been so often declared and so well settled that citation of authority is unnecessary. It has also been so often held in this state that the entire credit of the county can be pledged to provide the funds for the construction of highways that those authorities need not be discussed.
It is contended by defendants, however, that above do not apply here because in the instant case the improvement is a purely private one. Many authorities have been cited on that proposition, but an examination of them will disclose that in every instance where the taxpayers have prevailed there was an attack upon the improvement itself, and not a defense made to the bonds after they were issued and purchased by innocent holders. It is believed that not a single respectable authority can be found where the purpose was avowedly a public one, and the improvement was completed, and the obligations of the taxing subdivision had been issued to, and were owned by, innocent holders. The only instances which have been brought to our notice where the taxpayers have successfully defended against bonds were those where the law itself which authorized the improvement was an unconstitutional exercise of legislative power.
It is not seriously contended in the instant case that the proceedings leading up to the improvement and the issuing of bonds were irregular, or that the statutory provisions have not been faithfully met. If any procedural steps have been disregarded, they have been cured by the issuance of bonds containing the necessary recitals of the lawful purposes for which they have been issued, which bonds have therefore become incontestable by reason of the provisions of Section 2293-37 of the General Code.
Much that is urged in the briefs and arguments of counsel for the defendants concerning the lack of benefit to taxpayers in remote portions of Allen county has no application to this case. Those principles apply more particularly to special assessments upon property according to benefits. It has been held by the courts of this state, the courts of other states, and the United States Supreme Court, that no special benefit need be shown to accrue to property as the basis for the levy of general taxes. Railroad Co. v. Commissioners, 48 Ohio St. 249, 27 N.E. 548; Illinois Central Rd. Co. v. Decatur, 147 U.S. 190, 13 S.Ct., 293, 37 L.Ed., 132; St. Louis S.W. Ry. Co. v. Nattin, Tax Collector, 277 U.S. 157, 48 S.Ct., 438, 72 L.Ed., 830; Memphis Charleston Ry. Co. v. Pace, 282 U.S. 241, 51 S.Ct., 108.
The tests of constitutionality have been concisely stated by Mr. Justice Harlan in Jacobson v. Massachusetts, 197 U.S. 11, 25 S.Ct., 358, 363, 49 L.Ed., 643, 3 Ann. Cas., 765: 'If there is any such power in the judiciary to review legislative action in respect of a matter affecting the general welfare, it can only be when that which the legislature has done comes within the rule that if a statute purporting to have been enacted to protect the public health, the public morals or the public safety, has no real or substantial relation to those objects, or is, beyond all question, a plain, palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution."
Manifestly, the law itself cannot be rendered unconstitutional by any possible abuse of it in some particular improvement. The law must be judged by its potential usefulness, and the members of the Legislature are permitted to assume that the public officials who administer it will properly use, and not grossly abuse it.
In some of the briefs filed amici curiae in this case, including that of the Attorney General, the argument has been made that to deny the right of recovery upon these bonds would impair the credit of the state of Ohio and its political subdivisions in the money market. The stigma of repudiation is set up as an alleged reason why the constitutionality of the law should be upheld. This court would be remiss in its duty if it did not state in this connection that no court should be influenced by any such argument. Any court should have the courage to declare a law to be invalid if it violates constitutional limitations, let the result be ever so disastrous to the state or the owners of the bonds. The court has not been influenced in the least by that argument.
We therefore conclude that the law is constitutional; that it does not violate any provision of the Constitution of Ohio, or the due process or equal protection clauses of the Fourteenth Federal Amendment; that the county commissioners had jurisdiction to determine the necessity for the improvement, and that the purchasers of bonds are not required at their peril to determine as a question of fact whether the improvement was for a private purpose; we further conclude that the credit of the entire county may legally be pledged for the deficiency in the payment of bonds issued to pay for the, improvement in the first instance, after exhaustion of special assessments; and that the proceedings have been regular and have become incontestable. The writ prayed for in this case must therefore be allowed.
Writ allowed.
JONES, MATTHIAS, DAY and KINKADE, JJ., Concur.
The case upon rehearing is even stronger against the validity of the bonds than it was upon the original hearing. It is now conceded that these sewers were built in farm land; the average acreage of each house within the two districts being 40 acres in one district and 60 acres in another district. Hence the improvements contemplated when these bonds were issued were sewers, and water supply systems in connection with such sewers, to be instituted in sewer districts which were to become necessary to the public health only as the allotment project became successful and the lots were sold. A prime inducement for the selling of the lots was to be the building of these sewers. Hence, under the guise of public health, the taxpayers were to be saddled with the burden of a sewer system said to be necessary to eliminate disease, which, in fact, was to be used to attract the population and produce the very congestion which of itself might result in disease. There is a general use and benefit to citizens of the county from the establishment of a sewer system built to take care of a condition immediately menacing the public health, and this regardless of the fact that the individual taxpayer has not in all instances access to use of the system. This is obviously the case in congested and in city districts. But the statute here under consideration did not provide for the establishment of sewers within city districts, but related only to territory outside of municipalities. It contained no provision requiring that such sewers be built in congested districts only. The normal working of the law is shown in the instant case, in which the total bonded debt of Allen county is doubled to pay for sewers built within a special localized territory without the shadow of a public need. The same statement applies as to fire protection. Extensive water systems for supplying fire protection to farm property are not a public need.
The case involves the constitutionality of Sections 6602-1 to 6602-9, inclusive, General Code (112 Ohio Laws, 276 et seq.), and Sections 6602-17 to 6602-32c, inclusive, General Code (112 Ohio Laws, 292 et seq.), providing for the establishment of county sewer districts and water systems for established sewer districts. It does not involve the constitutionality of the Sanitary District Act of Ohio (Sections 6602-34 to 6602-106, inclusive, General Code), relating to sanitary districts, nor does it involve any provisions with reference to the establishment of sewer improvements within municipalities. Much of what was said and written in the briefs, on the rehearing of this case, related to the general question whether sewers constitute improvements necessary for public health. It is conceded that, in general, taxation for sewers is authorized under the police power. I pass over the question of the unconstitutionality of Sections 6602-3a and 6602-3b, which deprive the taxpayer of his right of appeal from the action of the board of county commissioners, and from the action of the state department of health declaring such improvement necessary, and also pass over the vicious feature of the enactment that the county commissioners were to be paid, and actually were paid, extra compensation for allowing these improvements. These are earmarks of the character of the whole enactment. The specific question confronting us here is the constitutionality of a statute which permits county commissioners to establish sewer districts in farm lands without the shadow of any public necessity existing, or without such even being threatened, and to saddle the expense upon the county at large through the medium of the issuance of bonds.
Sections 2293-24 and 5625-3, General Code, authorize the issuance of the writ if the bonds are valid. But are they valid? Section 2293-37, General Code, does not preclude an inquiry into the question as to whether the bonds are issued for a lawful purpose. The relator's action is necessarily predicated upon the legality of the bonds.
It is stated that a rule of property has been established upon which the bondholders had a right to rely, and that therefore these bonds cannot be invalidated. As a matter of fact, the law was recently enacted (112 Ohio Laws, 275), and its constitutionality has never been ruled on in this court.
Moreover, by the issuance of the bonds the taxpayer is not estopped to raise an objection in this or any other court. No case has been cited to this effect. At no step in the proceedings has the taxpayer participated. He is not in the position of an official or of a property holder within the district assessed for special benefits. Mr. Justice Brewer, in the case of Pleasant Township v. Ætna Life Ins. Co., 138 U.S. 67, 11 S.Ct., 215, 34 L.Ed., 864, speaking for the United States Supreme Court, calls attention to the fact that the purchaser of bonds issued under an act void for unconstitutionality purchases at his peril.
It was specifically held in Counterman v. Dublin Township, 38 Ohio St. 515, that a taxpayer was not estopped from maintaining an action to restrain the enforcement of a tax levied under a statute which had been held to be unconstitutional.
No case exactly on all fours with this case is cited in any brief, but many illustrations of the principles contended for in this dissenting opinion are to be found. The normal result of the act shows that it is not a health law, and that it has no relation to the public health. Even if the statute contains a colorable statement of a sanitary object, it has no valid ground of basis in the police power. In the Matter of Jacobs, 98 N.Y. 98, 50 Am. Rep., 636; Freund on the Police Power, 138. The Legislature cannot authorize county commissioners upon their mere declaration of public necessity and danger to the public safety or health to tax the county at large for an improvement of a purely private character.
It is a well-settled principle of constitutional law that no taxes can be levied except for the purpose of raising money which is to be expended for the public use. Moreover, the tax must be levied for the use of the public of the district taxed. 26 Ruling Case Law, 41; 1 Cooley on Taxation (4th Ed.), Section 316, page 664; Commissioners of Johnston County v. Lacy, Treas., 174 N.C. 141, 93 S.E. 482, 2 A. L. R., 726; Keith v. Lockhart, 171 N.C. 451, 88 S.E. 640, Ann. Gas., 1918D, 916; Manistee Lumber Co. v. Township of Springfield, 92 Mich. 277, 52 N.W. 468; Farris v. Vannier, Treas., 6 Dak., 186, 42 N.W. 31, 3 L.R.A., 713; Wells v. City of Weston, 22 Mo., 384, 66 Am. Dec., 627; Sanborn v. Commissioners of Rice County, 9 Minn. 273 (Gil., 258); Beach v. Bradstreet, Comptroller, 85 Conn. 344, 82 A. 1030, Ann. Cas., 1913B, 946; Robinson v. City of Norfolk, 108 Va. 14, 60 S.E. 762, 15 L.R.A. (N.S.), 294, 128 Am. St. Rep., 934.
An act of the Legislature authorizing contributions to be levied for a purpose which, though it be public, is one in which the people from whom they are exacted have no interest, is not a tax law, but a sentence commanding the periodical payment of a certain sum by one set of people to another, in the nature of an indemnity or tribute. Sharpless v. Mayor, etc., of Philadelphia, 21 Pa. 147, 59 Am. Dec., 759.
It is true that the Legislature has a wide discretion in determining the amount of territory which will derive a benefit from the improvement for which the tax is levied. 26 Ruling Case Law, 73.
If the expense imposed upon one subdivision of the state as a contribution to the expense of another subdivision is in some degree for the benefit of the former, this will suffice to make the tax legal. Town of Keene v. Town of Roxbury, 81 N.H. 332, 126 A. 7.
If some persons derive more benefit from the use of the money than others, this will not invalidate the tax if it is used to promote the general welfare and the prosperity of the people. Carman v. Hickman County, 185 Ky. 630, 215 S.W. 408.
However, in this instance we have not the case of an improvement such as a county road or a county park, the establishment of which, although in one part of the county, is an obvious benefit to every one in the county, even though some persons may derive more benefit therefrom than others. By the very nature of the case, these local sewer systems can be used only in the district, by the people residing in the district, or by their invitees or licensees. A taxpayer of Allen county living in the southeast corner can use freely any road in the northwest corner of such county; but a taxpayer in the southeast corner of Allen county is not at liberty to use a local sewer system in the northwest corner of such county. Sewers must be necessary to the public health if they are to be erected at public expense. But sewers in farm land are not necessary to the public health.
Hence we have here a provision that the taxpayers in that part of Allen county outside of the sewer district shall contribute to the support of an enterprise which is wholly for the benefit of the persons within the district. But a tax cannot be exacted from the taxpayers of Allen county for a district in which they have no interest. An illustration of this principle is that one taxing district, whether it be state, county, municipality, or district established for the particular purpose, cannot be taxed for the benefit of another district. Thus the people of one municipality cannot be taxed for the benefit of the people of another municipality.
A municipality cannot be compelled to turn over a portion of its funds to the county in which it is situated in order to pay the expense of a county function. Campbell County v. City of Newport, 174 Ky. 712, 193 S.W. 1, L.R.A., 1917D, 791.
The Legislature cannot entail upon a single county of the state, by a tax upon the taxable property therein, the entire expense of a site for a state institution, even though the burden is sought and approved by a majority of the electors voting at a special election called for the purpose. Wasson v. Commissioners of Wayne County, 49 Ohio St. 622, 32 N.E. 472, 17 L.R.A., 795.
The statute in question in the Wasson case was held to be unconstitutional under Section 2, Article XII, of the Constitution, which provides that laws shall be passed taxing by uniform rule all real and personal property according to its true value in money.
This same principle was extended even to roads by the Supreme Court of Oregon in a case very like the instant one, Simon v. Northup, 27 Or. 487, 40 P. 560, 30 L.R.A., 171, which held that that part of the act of 1895 which provided for the taxation of the property of the county for the payment of the debt of the city of Portland, previously incurred in the purchase and construction of certain highways, was void. The court held that it was not within the taxing power of the Legislature to compel one town, city, or locality to contribute to the payment of the debts of another.
Under the general statutes, sewers and water systems in the city of Lima are built at the expense of Lima alone. The establishment of such systems within Lima, owing to the congestion of population, is of real moment to the public health and safety of Allen county. But, under this holding, sewers and water systems outside of Lima, established without the slightest existing necessity, and intended to create the very evil which they are said to obviate, are to be paid for by the citizens of Lima, together with other taxpayers of Allen county.
All technical arguments to the contrary, this results in taxation which is not levied according to a uniform rule, and, until Wasson v. Commissioners of Wayne County, supra, is overruled, the case law of Ohio declares this principle.
Since the precise relief prayed for in this case is that Allen county pay the debts of two special districts, local only, and not incurred in the protection of the public health of the county, the bonds are not valid, and in that respect are not issued for a lawful purpose. The innocent taxpayer should not be made to assume the burden of the innocent bondholder. The enactments in question violate Section 2 of Article XII of the Constitution. The writ should be denied.
The judgment of the majority of this court, reversing its former judgment in this case, seems to be one of expediency, impelled by a commendable desire to protect the investment of an innocent bondholder. The opinion of the majority frankly states that, had the question of the necessity for the creation of the district and the construction of the improvement been raised before the sale of the bonds, it, the majority, would have been obliged to hold, not only that no such necessity existed, but also that, by reason of the fact that the board of county commissioners was to profit to the extent of $4,427.64 by finding such necessity to exist, it was disqualified, under the pronouncement of the Supreme Court of the United States in the case of Tumey v. State, 273 U.S. 510, 47 S.Ct., 437, 71 L.Ed., 749, 50 A. L. R., 1243, to pass upon such questions; but that the principle of that case does not apply because neither question was timely raised.
The majority seems to forget that the general taxpayer is a party to this iniquitous thing for the first time in this case; that he stands before this court unprejudiced by any act of his, either of omission or commission, and has voiced his protest at his first opportunity. He is in a very different situation from the situation of the owner of the property specially assessed according to the benefits in the sewer district.
As between the innocent bondholder and the owners of the property in the sewer district, enjoying the benefit of the bondholder's investment, I am quite willing to resolve every doubt in favor of the bondholder and invoke any applicable doctrine which will compel the exhaustion of such property toward the payment of the sewer assessments and of the bonds; but I am unable to interpret my duty to be to exercise the mandatory power of this court to compel the payment by the general taxpayer of a debt which he did not contract, which was contracted neither for his benefit nor for the benefit of the public, which can never inure to his benefit or the benefit of the public, and which was contracted without the knowledge or fault of such general taxpayer or the public. I am unable to divorce from my mind the fact that justice is not served by invading the rights of the innocent general taxpayer to preserve the rights of the innocent bondholder; that, for every dollar so received by the innocent bondholder, a dollar has been unjustly and unlawfully exacted from the equally innocent general taxpayer.
The majority of the court seems to be unduly awed by the possible far-reaching effect of this court's original judgment in this case, and seems to assume that, if this court should hold unconstitutional legislation which attempts to authorize the county commissioners to pledge the faith of the county to further the promotion of a real estate allotment by installing sewers for a district that produces no sewage, under the guise of preserving the public health, legislation authorizing the commissioners of the county in the furtherance of the public health to pledge the faith of the county to relieve an existing unsanitary condition is henceforth jeopardized. I do not share such fear. On the contrary, my fear now, by reason of the present judgment in this case, is for the future status of general taxpayers.