Opinion
No. 25311
Decided July 15, 1936.
Municipal corporations — Fiscal officer's certificate that funds appropriated or available for contract — Section 5625-33(d), General Code — Inapplicable to public utility rate ordinances and service contract.
The provisions of Section 5625-33 (d), General Code, requiring as a condition precedent to the execution of a contract by a municipality that there be a certificate of the fiscal officer that funds to meet the same have been appropriated for such purpose and then in the treasury or in process of collection, have no application to public utility rate ordinances and service contracts. ( Mutual Electric Co. v. Village of Pomeroy, 99 Ohio St. 75, approved and followed.)
ERROR to the Court of Appeals of Fayette county.
For sake of brevity, plaintiff in error will be alluded to as the water company, and the defendant in error as the city.
This action was instituted in the Court of Common Pleas of Fayette county on April 13, 1933, by the Water Service Company against the city of Washington. Judgment was sought against the city for the sum of $10,200 and interest for fire hydrant rentals claimed to be due from April 1, 1932, to April 1, 1933, under a city ordinance. The facts contained in the water company's petition essential to the presentation of the legal question involved are as follows:
On May 5, 1930, the city enacted an ordinance fixing the price which the water company was to charge for supplying water for a period of three years from June 5, 1930. On September 3, 1930, this ordinance was duly accepted in writing by the water company and its written acceptance filed with the city. Such ordinance provided that, for a three-year period beginning June 5, 1930, the water company should charge for water furnished for the city and its inhabitants and consumers for public and private use and for fire protection not exceeding the rates provided in the ordinance. The ordinance further provided that, for water furnished for the use of public buildings, the same rate should be charged as for private consumers, which was set out in the ordinance. For fire hydrant uses the ordinance contained the following provision: "For the use and maintenance of all fire hydrants now in use and all additional fire hydrants installed by order of council, including water for flushing sewers, the rental or charge therefor to the city shall not exceed $50 per annum, for each hydrant so installed. Such rentals shall be paid quarterly to said company on the first days of April, July, October and January of each year."
After its written acceptance of the ordinance, the water company furnished to the city water for flushing sewers and for fire protection to the city and its inhabitants; but the petition alleges that the city did not pay the sums due quarterly during the period from April 1, 1932, to April 1, 1933, for the use of fire hydrants, as requested by the plaintiff, although 204 fire hydrants were installed and in use during such period. The petition further alleges that on August 29, 1930, the water company filed with the Ohio Public Utilities Commission a schedule of rates for water service, which schedule became effective September 22, 1930, in which schedule was set forth a charge not exceeding $50 per annum for each hydrant, payable quarterly to the water company on the first days of April, July, October and January of each year. The petition avers that this schedule has ever since remained in full force and effect.
To this petition the city filed its demurrer on the ground that the petition does not show a cause of action in that the plaintiff failed to allege "that the certificate required by Subdivision D of Section 5625-33 of the General Code of Ohio had been executed and attached to the contract as required by said section." The Common Pleas Court sustained the city's demurrer to the petition and the water company not desiring to plead further, judgment was rendered against it. That judgment was affirmed in the Court of Appeals. The case came into this court by virtue of the allowance of a motion for certification.
Messrs. Miller, Thompson Dunbar, Mr. Troy T. Junk and Mr. Henry J. Linton, for plaintiff in error.
Mr. Max Dice, for defendant in error.
From the foregoing statement it is to be observed that but one question of law is presented by the demurrer to the petition and that is whether the ordinance in question falls within the requirements of Section 5625-33 (d), General Code. The pertinent provisions of this statute are as follows:
"No subdivision or taxing unit shall * * * make any contract or give any order involving expenditure of money unless there is attached thereto a certificate of the fiscal officer of the subdivision that the amount required to meet the same (or in the case of a continuing contract to be performed in whole, or in part, in an ensuing fiscal year, the amount required to meet the same in the fiscal year in which the contract is made), has been lawfully appropriated for such purposes and is in the treasury or in process of collection to the credit of an appropriate fund free from any previous encumbrances."
Our question, therefore, is whether the charge for water service at the specified rate is unenforceable against the city by reason of the want of such certificate by the fiscal officer of the city. It is conceded that no such certificate was made or filed.
The ordinance in question in this case was one which involved primarily the fixing of rates. It is essentially a rate-making ordinance. It prescribes the rates for product and service for individual citizens and the city itself. Having reference particularly to the water used by the city through hydrants for fire and other purposes, the rate therefor is prescribed, and the sum to be paid for each hydrant installed and maintained upon direction of the city is fixed and specified. Hence, the obligation assumed by the city is to pay, at the times stated, for water furnished at the rate specified in the ordinance.
The principle involved has heretofore been considered by this court in the case of Mutual Electric Co. v. Village of Pomeroy, 99 Ohio St. 75, 124 N.E. 58. There the ordinance, the validity of which was challenged, was one fixing the rate or price which the Mutual Electric Light Company might charge for lighting the streets of the village of Pomeroy for a period not exceeding ten years. The terms of the ordinance were accepted in writing. Thereafter electric current was furnished for the purpose stated, but the village refused to pay in accordance with the rate specified, or any amount whatever. The defense to the action instituted to recover the amount due was that, notwithstanding a certain other company had a franchise in the village and was equipped to furnish electric current for street lighting purposes, there had been no advertisement for bids for public lighting. The specific question presented was whether the provisions of Section 4221, General Code, requiring advertisement for bids where contemplated expenditures exceeded five hundred dollars, applied to such ordinance. This court held that it did not, and announced in the syllabus that "Section 4221, General Code, has no application whatever to a contract between a municipality and a public utility, where the council of a municipality has the power to fix and regulate the price to be charged for such public utility."
Not only the decision of that case, but the reasoning of the court in reaching its conclusion are applicable here, for the ordinances in each case are evidently quite similar in their purpose, object and effect. As observed by Judge Donahue in the opinion in the Pomeroy case, the ordinance did not involve the expenditure of any fixed amount; it contained no stipulation as to the extent of service the village would be required to take or pay for; but, on the contrary, only fixed a rate for electric current and provided for monthly payments at that rate for current actually consumed. The company did not charge more than the rate fixed and, acceptance in writing having been filed, the village could not require it to furnish current at a less rate during the period stated. As further observed, the ordinance fixed the rate for whatever current the municipality should use in lighting its streets and public places, which would of course be the measure of its liability for such service. The clear distinction between such arrangement and the obligation of usual and ordinary contracts is there pointed out. The conclusion of the court in the Pomeroy case, however, was based upon a further reason, particularly pertinent and applicable in this case; and it is here that the court applied the rule of construction that special provisions of one section of the statute relating to a particular subject matter, although apparently in conflict with the general provisions of another section, must nevertheless be read as an exception thereto.
The ordinance in the Pomeroy case, as the ordinance in the instant case, purported to be contractual in its terms; but it was enacted by the council in exercise of its legislative power conferred by Section 3982 of the General Code, which authorizes council of municipalities to prescribe prices and rates for electricity, gas or water. It was further provided by statute then and now that, upon the filing of a written acceptance of such terms and conditions by a company, council could not require the company to furnish such service at a less price during the period fixed by the ordinance.
As further pointed out, it may have been contemplated that the rate-fixing and contract-making powers should be exercised in separate ordinances but that there is no apparent reason why the council could not combine the action in the one ordinance, as is, in fact, usually done. Broad authority is conferred by these provisions, which is limited only by the right of referendum and the right of appeal to the utilities commission under the provisions of Section 614-44, General Code. There is an additional reason for the application of the rule announced in the Pomeroy case to the instant case. Any construction and application of provisions of Section 5625-33, General Code, other than that above indicated, would give rise to serious question of its constitutionality.
Subsequent to the decision of the Pomeroy case, Section 504-2, General Code, was amended. Prior thereto, upon the expiration of a franchise, the utility was at liberty to discontinue service and, on the other hand, discontinuance of such service could be required by the municipality. East Ohio Gas Co. v. City of Akron, 81 Ohio St. 33, 90 N.E. 40. At the time of the passage of this ordinance, and now, a utility may not at will terminate its service. Such abandonment is now within the regulatory powers of the state utilities commission under provisions of Section 504-3, General Code. The obligation, therefore, to continue the service is one rather under legislative requirement than contractual obligation. In any event, that statutory provision must be read into every such contract. The enactment of these statutory provisions furnishes additional grounds for the inapplicability of Section 5625-33, General Code, to any obligation assumed by the municipality under the ordinance here in question. This statutory restriction is not found, nor is any reference made thereto, in the statutory provisions regulating public utilities. It could scarcely have been contemplated that such statute would limit or affect a rate-making ordinance where, upon the acceptance of its terms, the utility became bound but the municipality had no obligation whatever further than to pay at the rate fixed by its own ordinance if and to the extent that it did actually use such service.
The statement of Judge Donahue that "The ordinance in question, while it purports to be contractual in its nature, is clearly an exercise of the legislative power" is particularly applicable here; for, as we have seen by reason of the enactment of the provisions of Sections 504-2 and 504-3, General Code, with effective provisions of a drastic, mandatory and compulsory character, the action of the municipal council in the enactment of the ordinance here in question even more manifestly becomes an exercise of legislative power. Under present statutory requirements regulating and controlling public utilities, their duties and obligations are made mandatory. They are not conditioned upon filing the certificate or even upon the existence of a franchise or a contract.
We have seen that the contract, so far as there is one by virtue of the enactment of the ordinance and the acceptance of its terms, is one which affects and determines the rate to be paid for the service rendered thereunder. The obligation of the company to continue to furnish the service, regardless of franchise or contract, is statutory. These statutory requirements are made and enforced for the protection of the public and, where rates are not agreed upon, the controversy comes within the jurisdiction of the Public Utilities Commission. In this situation, the provisions of the statute familiarly known as the Burns Law become impracticable, if not impossible, of application. The provisions of Section 5625-33 (d), General Code, are absolutely irreconcilable with the various statutes regulating and controlling public utilities, and the provisions of the latter particularly and specifically apply, and therefore must prevail and become determinative of the question. For the reasons stated, we have reached the conclusion that the demurrer to the petition should have been overruled. The judgment of the Court of Appeals is therefore reversed.
Judgment reversed.
STEPHENSON, WILLIAMS, JONES and DAY, JJ., concur.
WEYGANDT, C.J., dissents.