Nos. 28199 and 28200
Decided November 12, 1941.
Municipal corporations — Suit by solicitor for injunction — Section 4311, General Code — Court may allow taxpayers to become intervening parties, when — Acquisition or construction of public utility — Section 5, Article XVIII, Constitution — Ordinance subject to referendum, when — Mortgage bonds may be secured by municipally owned utility property, when — Uniform Bond Act (Section 2293-1 et seq., General Code), inapplicable — Utility mortgage bonds issued under Section 12, Article XVIII, Constitution.
1. Where the solicitor of a municipal corporation has instituted a suit for injunction under Section 4311, General Code, at the request of a taxpayer, and the court finds that such solicitor is not proceeding in good faith or with due diligence, the court has the inherent power to allow interested taxpayers to become intervening parties to the action, who thereupon have the same rights to plead, participate in the proceedings and appeal as if they had been original parties.
2. The municipal ordinance subject to referendum within the contemplation of Section 5, Article XVIII of the Constitution of Ohio, is one which not only declares the necessity for the acquisition or construction of a public utility, but includes or is accompanied by some comprehensible statement of the general plan for financing the project.
3. A municipality issuing utility mortgage bonds within the provisions of Section 12, Article XVIII of the Constitution, may secure such bonds not only by the property acquired or constructed with the proceeds from the sale of the bonds, but also by such other municipally owned property which is a necessary part of such utility and directly connected with its operation.
4. Section 12, Article XVIII of the Constitution, is self-executing and self-sufficient, and utility mortgage bonds created and issued strictly within its terms are not affected by other parts of the Constitution or by the Uniform Bond Act (Section 2293-1 et seq., General Code).
APPEALS from the Court of Appeals of Butler county.
On August 18, 1938, the city commission of the charter city of Middletown, Ohio, passed Ordinance No. 2226, bearing the title:
"An Ordinance Declaring It Necessary for the City of Middletown, Butler County, Ohio, to Construct or Purchase a Municipal Electric Light and Power Plant Together With All the Necessary Equipment Therefor, Including [Transmission and Distribution Lines and] the Acquisition of the Necessary Land."
So far as the record discloses, no referendum petition was filed to this ordinance.
On November 18, 1938, the Middletown city commission enacted Ordinance No. 2237, as an emergency measure, bearing the title:
"An Ordinance to Authorize the Issuance of $1,800,000 Mortgage Revenue Bonds of the City of Middletown, Ohio, Under Section 12 of Article 18 of the Constitution of the State of Ohio, for the Purpose of Constructing or Purchasing a Municipal Electric Light Plant Together With All the Necessary Equipment Therefor, Including the Acquisition of the Necessary Land: To Provide a Franchise to Take Effect in the Event of Foreclosure of Said Mortgage, and to Declare an Emergency."
Such ordinance was published the next day, November 19, 1938, and purported to become effective on that date.
Soon after the passage and publication of Ordinance No. 2237, The Cincinnati Gas Electric Company, as a taxpayer of the city of Middletown, and Horace O. Miller, also claiming to be a taxpayer, requested the city solicitor of that municipality to bring an action to enjoin the execution of such ordinance because of alleged invalidity.
Acceding to such requests and acting under Section 4311, General Code, the city solicitor on December 2, 1938, filed a petition in the name of the municipal corporation in the Court of Common Pleas of Butler county against the city commissioners and others, praying that such commissioners be permanently enjoined from executing such ordinance, from proceeding under a written contract involving the sale of the bonds authorized by the ordinance to Van Lahr, Doll Isphording, Inc. (at five points under par with interest at three and one-half per cent), and from issuing such bonds; and that Earl E. Grant, chairman of the city commission, and C. H. Campbell, auditor and fiscal officer of the city of Middletown, be enjoined from executing and delivering such bonds. The petition alleged that Ordinance No. 2237 was invalid because it violated the Constitution of Ohio and failed to comply with the Uniform Bond Act (Section 2293-1 et seq., General Code).
An amendment to the petition was filed on December 15, 1938, adding allegations which drew into the controversy Ordinance No. 2226, and attacked Ordinance No. 2237 in greater detail.
Both Horace O. Miller and The Cincinnati Gas Electric Company made application to intervene as parties to the action, and, later, at the conclusion of the hearing on the application, the trial court allowed such intervention.
Horace O. Miller then filed an intervening petition, charging in effect fraud and collusion in connection with the contract for the sale of the bonds authorized by Ordinance No. 2237; that the date fixed for the maturity of the bonds violated the charter of the city of Middletown; and challenging the right of the city commissioners to attach an emergency clause to such ordinance. The Court of Common Pleas correctly found, as set out in its opinion, that there was no evidence sustaining the charge of fraud and collusion.
An intervening petition was likewise filed by The Cincinnati Gas Electric Company, attacking the validity of Ordinance No. 2237 and containing a prayer similar to the one made in the original petition.
Finally the cause came on for hearing on the petitions, the amendments thereto, answers and the evidence, including some sixty-six exhibits. The trial court entered a decree perpetually enjoining the defendants from carrying out the provisions of Ordinance No. 2237, and subsequently overruled the motion for a new trial.
In its opinion the court indicated that Ordinance No. 2237 was subject to referendum, and that the issuance of bonds thereunder in the manner provided would constitute a violation of Section 13, Article XVIII, of the Constitution, and of the Uniform Bond Act.
An appeal was taken to the Court of Appeals, where the judgment below was modified and affirmed.
By its judgment entry the Court of Appeals found that the lower court erred in allowing Horace O. Miller and The Cincinnati Gas Electric Company to become parties to the action, and dismissed them. However, they were permitted to appear as amici curiae.
The Court of Appeals further found that Bond Ordinance No. 2237 was a valid ordinance properly passed in conformity with the Constitution (Sections 4 and 12, Article XVIII), was not affected by the Uniform Bond Act but was subject to referendum (Section 5, Article XVIII of the Constitution).
Whereupon, it was considered and adjudged "that said ordinance being subject to referendum, any procedure under such ordinance is enjoined until such time as it is determined that any referendum if filed thereto was filed in compliance with the provisions of the Constitution and that if such referendum has been duly and legally instituted, any procedure under such ordinance should be enjoined until such time as a favorable vote has been had thereon * * *."
Two separate appeals were filed from the judgment of the appellate court, one by The Cincinnati Gas Electric Company "in its own right as an intervening appellee and as a taxpayer on behalf of the city of Middletown, after demand upon and refusal by the city attorney of the city of Middletown to institute" an appeal, and the other by H.O. Miller and Elliott D. Levey "on behalf of said city and of themselves and on behalf of all citizens, taxpayers, and electric current consumers and rate payers similarly situated." This latter appeal was also taken after a demand had been made on the city attorney to institute an appeal and he had refused to do so. The cause was admitted to this court as of right, and motions to require the Court of Appeals to certify its record were also allowed.
Mr. Elliott D. Levey and Mr. C.W. Elliott, for appellant, H. O. Miller.
Messrs. Peck, Shaffer, Williams Gorman, Messrs. Ernst, Cassatt Cottle and Mr. Calvin. S. Weakley, for appellant, The Cincinnati Gas Electric Company.
Mr. Thomas M. Miller and Mr. Paul R. Gingher, for appellee, the city commission of Middletown.
A majority of the court entertains the view that where the solicitor of a municipality has instituted a suit for injunction under Section 4311, General Code, at the request of a taxpayer, and the court becomes satisfied that such solicitor is not proceeding in good faith or with due diligence, the court has the inherent power to allow interested taxpayers to become intervening parties to the action, who thereupon have the same rights to plead, participate in the proceedings and appeal as if they had been original parties.
A majority of the court is also of the opinion that the trial court in the present cause rightly permitted Horace O. Miller and The Cincinnati Gas Electric Company to become parties to the action.
The writer and Chief Justice Weygandt find themselves in disagreement with the majority of their associates on the above procedural question. It is their conviction that where, at the request of a taxpayer, the solicitor of a municipal corporation makes application to the proper court for an order of injunction under Section 4311, General Code, such taxpayer may not thereafter become an intervening party to the litigation with the right to shape the proceedings according to his own notions. Neither has such taxpayer, not a party, the right to appeal from an adverse judgment in the cause.
Sections 4311 and 4314, General Code are controlling. The former reads:
"The solicitor shall apply in the name of the corporation, to a court of competent jurisdiction for an order of injunction to restrain the misapplication of funds of the corporation, or the abuse of its corporate powers, or the execution or performance of any contract made in behalf of the corporation in contravention of the laws or ordinance governing it, or which was procured by fraud or corruption."
The latter states: "In case the solicitor fails upon the written request of any taxpayer of the corporation to make any application provided for in the preceding three sections, such taxpayer may institute suit in his own name, on behalf of the corporation; and any taxpayer of any municipal corporation in which there is no solicitor may bring such suit on behalf of such corporation. No such suit or proceeding shall be entertained by any court until the taxpayer shall have given security for the costs of the proceeding."
From a perusal of these quoted statutes it will be noted that Section 4311 provides merely that "the solicitor shall apply * * * to a court of competent jurisdiction for an order of injunction." And, by virtue of Section 4314, any right of the taxpayer to act does not arise until "the solicitor fails * * * to make any [such] application."
Here, the solicitor did respond at the instance of the taxpayers by filing an injunction proceeding in a court of competent jurisdiction, and to recognize the taxpayers' contention that they should be permitted to become parties because of the solicitor's claimed indifference, necessitates adding to the statute considerable language omitted by the General Assembly.
The presumption may ordinarily be indulged that when the solicitor of a municipality undertakes the prosecution of an action under Section 4311, General Code, at the request of a taxpayer, he will pursue the undertaking in good faith and to the best of his ability. If he deems the proposed litigation unjustified and without merit, he may decline to proceed, at which point and only at which point is the taxpayer enabled to bring suit.
In this connection it is important to bear in mind that the purpose of the action is not to protect any interest peculiar to the taxpayer himself but to protect a right belonging to the municipality and its inhabitants generally.
The writer's position is that the General Assembly having within its prerogatives prescribed a definite and exclusive method of challenging the alleged wrongful conduct of municipal officers, the judicial branch of the government is not at liberty to substitute a different and conflicting plan. Legislation permitting a taxpayer to become an intervening party when the court believes the solicitor is not acting diligently or in good faith would no doubt be desirable, but the court has no right to supply any such deficiency.
Several of the lower courts of Ohio at various times have been confronted with this same question and have determined that when the solicitor of a municipality brings an action under and in accordance with Section 4311, General Code, a taxpayer may not thereafter become a party by way of intervention.
The conclusion seems inescapable then that, under the facts of this case, Horace O. Miller and The Cincinnati Gas Electric Company could not rightfully enter the controversy as intervening parties, and that the Court of Common Pleas was in error in permitting them to do so. Compare, Pierce v. Hagans, 79 Ohio St. 9, 86 N.E. 519, 36 L.R.A. (N.S.), 1.
The right of appeal is not an inherent or inalienable right, but must be conferred by authority upon the person who would enjoy it. 2 American Jurisprudence, 847, Section 6. It was unknown to the common law. 4 Corpus Juris Secundum, 81, Section 18. The Constitution of Ohio prescribes the jurisdiction of certain courts, but is silent as to who may prosecute an appeal. It is therefore necessary to turn to the statutory law of the state. Neither Section 4314, General Code, nor the other sections with which it is associated require the solicitor to take an appeal. Nor is the taxpayer accorded that right in the event the solicitor remains immobile.
The other field of appropriate search is the Appellate Procedure Act (Section 12223-1 et seq., General Code). There, the word "appellant" and the phrase "party appealing" are frequently used interchangeably, and the apparent legislative intent was to confer the right of appeal on such persons as are parties to an action. The terms "party aggrieved" or "person aggrieved" do not occur. No statutes have come to our attention broad enough in scope to permit an appeal by a taxpayer, on behalf of a municipality or in his own right, under conditions resembling those in the pending cause.
Moreover, this court has remarked under a former statute that the right of appeal is confined to parties to the record. "Third persons are not authorized to act by the law; nor would good policy allow them to interfere and remove causes, by appeal. It is manifest that such a practice could not be tolerated, as it would produce many evils * * *." Reid v. Quigley, 16 Ohio, 445, 447. See, also, Fiedeldey v. Diserens, 26 Ohio St. 312, 314.
Turning to other jurisdictions, we find the rule of general acceptance to be that in the absence of an express statute on the subject, one interested in litigation as a member of the public or indirectly as a taxpayer may not prosecute an appeal. McCandless v. Pratt, 211 U.S. 437, 53 L.Ed., 271, 29 S.Ct., 144; Clark, State Highway Commr., v. Warner, County Clerk, 85 Okla. 153, 204 P. 929; Nichcolas v. Lawrence, 161 Va. 589, 171 S.E. 673.
In Kentucky-Tennessee Light Power Co. v. City of Paris (C. C. A. 6), 48 F.2d 795 (certiorari denied, 284 U.S. 638, 76 L.Ed., 543, 52 S.Ct., 20), it was decided that where a city had commenced a suit to rescind a contract for the leasing and sale of a public utility made by its governing body, a taxpayer could not intervene and possessed no status which entitled him to appeal.
The case of In re Cole's Estate, 102 Wis. 1, 78 N.W. 402, 72 Am. St. Rep., 854, is sometimes cited as announcing a contrary rule. However, the taxpayer there allowed to appeal was properly in court as a party.
As concerns both the first and second propositions above discussed, the difficulty confronting the taxpayers is the lack of a statute or statutes affording them the privileges for which they are contending.
This brings us, therefore, to a consideration of the substantive questions presented on the appeals.
First: Was Ordinance No. 2237, enacted by the city commission of Middletown, subject to referendum?
Section 5, Article XVIII of the Constitution, provides in substance that no municipal ordinance covering the acquisition, construction, etc., of a public utility shall become effective until thirty days after its passage, and during such time shall be open to a referendum petition.
It was held in State, ex rel. Didelius, City Solicitor, v. City Commission of Sandusky, 131 Ohio St. 356, 2 N.E.2d 862, that the referendum provisions of Section 5, Article XVIII of the Constitution, relate only to the initial ordinance.
However, such case undoubtedly contemplates as an initial ordinance one "providing for the acquirement or construction of a public utility and the method of payment therefor."
In the pending case, Ordinance No. 2226, first passed, merely declared the necessity for the construction or purchase of a municipal electric light and power plant with the requisite equipment, etc., therefor, and nothing more. This was not a complete initial ordinance within the holding of the Sandusky case, referred to just above, requiring some definite accompanying statement of the plan of financing to make it so.
It is our opinion, therefore, that Ordinance No. 2237 is of the character comprehended by the terms of Section 5, Article XVIII of the Constitution, and amenable to referendum in accordance with that section.
The next question is: Did the Court of Appeals possess the power to pass on the constitutionality of Ordinance No. 2237, upon a finding that it should not go into effect until after a favorable referendum vote?
While it may not have been necessary for the Court of Appeals to pass on the constitutionality of Ordinance No. 2237, by reason of the position taken in relation to its subjectivity to referendum, such action was appropriate.
The question was squarely raised by the pleadings, is discernible in the bill of exceptions, was considered and decided by the trial court and has been vigorously argued by counsel in every court where the cause has been presented.
The third question is: May a municipality in issuing mortgage utility bonds under Section 12, Article XVIII of the Constitution, secure such bonds not only by the property acquired or constructed with the proceeds from the sale of such bonds, but also by other property composing a part of the utility?
Section 4, Article XVIII of the Constitution, reads in part: "Any municipality may acquire, construct, own, lease and operate within or without its corporate limits, any public utility * * *."
Section 5, Article XVIII, requires that such project shall be accomplished by ordinance not effective until thirty days after its passage, and subject to referendum.
Section 12, Article XVIII, which is the important one in this case, provides: "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 in no case shall extend for a longer period than twenty years from the date of the sale of such utility and franchise on foreclosure."
It has been declared that Section 12 is self-executing. (28 Ohio Jurisprudence [Supplement], Section 106, note.) Obviously it was adopted to enable a municipality to acquire, construct or extend a public utility without imposing a liability on property other than that of the utility itself. Taking the words used in their ordinary sense, they convey the meaning that all property directly connected with the operation of the utility, plus its revenues and franchise, may be pledged for the payment of the mortgage bonds.
If the contention were to be accepted that such mortgage bonds may cover only that part of a utility actually financed therewith, a situation would arise impairing the value of the constitutional provision, vitiating its purpose and making it difficult if not impossible to find a market for the bonds.
Section 12 speaks for itself. It is not ambiguous, is self-sufficient and self-contained, and an impartial reading of it leads to the conclusion that it authorizes a municipality to secure the mortgage bonds described by the inclusion of all the property and revenues of the utility, present and future.
The last question is: Do Section 13, Article XVIII of the Constitution, and the Uniform Bond Act govern the issuance of utility mortgage bonds projected solely under Section 12, Article XVIII of the Constitution?
It is insisted that Section 12 is to be read in connection with Section 13, Article XVIII of the Constitution, and when this is done it becomes plain that utility mortgage bonds can be issued and sold only in conformity with the Uniform Bond Act.
We do not so regard the matter, and are in accord with the analysis made in the brief filed on behalf of the city of Cincinnati, as amicus curiae, wherein it is said:
"We submit that the following is a fair statement of the effect of the two sections consonant both with their language and with their obvious intent.
"(a) Municipalities may issue general obligation bonds for utility purposes, so long as such bonds are within 'the general limit of bonded indebtedness prescribed by law.' ( State, ex rel., v. Weiler, 101 Ohio St. 123 [128 N.E. 88].)
"(b) Municipalities may issue mortgage bonds for utility purposes 'beyond the general limit of bonded indebtedness prescribed by law' and may secure them by a pledge of the property and revenues of lie utility, but such mortgage bonds shall not constitute a debt charge against the general credit of the city.
"(c) The General Assembly may enact laws prescribing a 'general limit of bonded indebtedness' within which a municipality may pledge its full faith and credit.
"(d) The General Assembly may impose other restrictions on the power of a municipality to incur debts which shall be a general charge against the municipality.
"(e) The General Assembly may limit the power of municipalities to raise revenues by taxation."
It follows that while the Uniform Bond Act undoubtedly applies to general obligation bonds for which a tax must be levied, it does not apply to utility mortgage bonds created and issued exclusively under Section 12, Article XVIII of the Constitution, as in the present case.
The argument is made that the instant litigation is affected by the cases of Village of Brewster v. Hill, 128 Ohio St. 343, 190 N.E. 766, and State, ex rel. Public Institutional Building Authority, v. Griffith, Secy. of State, 135 Ohio St. 604, 22 N.E.2d 200. In the former, Section 6, Article VIII of the Constitution, was invoked to invalidate a contract for the purchase of generating machinery by the village of Brewster, and in the latter Sections 1 and 3 of Article VIII, appertaining to the prescribed debt limitation beyond which the state may not obligate itself, were involved. We do not consider either of these cases in point. Neither referred to nor was concerned with Section 12, Article XVIII of the Constitution, and both were decided upon facts wholly dissimilar to the ones now engaging our attention. A case more in point, and lending support to the position herein taken, is Kasch v. Miller, Supt. of Public Works, 104 Ohio St. 281, 135 N.E. 813.
The judgment of the Court of Appeals is therefore affirmed.
TURNER, WILLIAMS, MATTHIAS and BETTMAN, JJ., concur.
WEYGANDT, C.J., and ZIMMERMAN, J., concur in paragraphs 2, 3 and 4 of the syllabus and in the judgment, but dissent from paragraph 1 of the syllabus.
HART, J., concurs in paragraphs I and 2 of the syllabus but dissents from paragraphs 3 and 4 of the syllabus and from the judgment.
The judgment of the Court of Appeals would have been reversed for dismissing H.O. Miller and The Cincinnati Gas Electric Company were it not for the fact that they were made parties in the Common Pleas Court, were allowed to appear as amici curiae in the Court of Appeals, and have been recognized as parties in this court. They have had the opportunity to present their evidence and arguments and to appeal this cause to both the Court of Appeals and this court. Therefore, no prejudice has resulted to them. Section 11364, General Code.
However, as it was necessary for this court to pass upon this question before proceeding to the consideration of the other questions raised by the record, we shall state our reasons why H.O. Miller and The Cincinnati Gas Electric Company were proper parties.
The first paragraph of the journal entry of the Court of Appeals reads: "This cause came on to be heard on the appeal of the defendants-appellants on questions of law from the Court of Common Pleas, Butler county, Ohio, the docket and journal entries, original papers, the bill of exceptions and the arguments of counsel. Upon consideration whereof the court finds that the trial court erred in allowing H.O. Miller and The Cincinnati Gas Electric Company to be parties herein and therefore, said parties H.O. Miller and The Cincinnati Gas Electric Company are dismissed from this action."
Borrowing from the concurring opinion in the case of City of Lakewood v. Rees, 51 Ohio App. 490, 498, 1. N.E.2d 953: "While concurring in the judgment, we do not wish to be understood as announcing a proposition of law that in no case can a court allow intervention by a taxpayer in such action. A mere paper compliance by the director of law with the demand made by the taxpayer to file suit, is not sufficient compliance. The compliance contemplated by the statute is a substantial compliance, so that the court will have presented to it all the of law and fact in order that a full and complete adjudication may be had.
"In a proper case, the court may determine that a mere sham compliance by the director of law is no compliance with the demand of the taxpayer, in which event the court could allow the application of a taxpayer to intervene."
In the instant case, the taxpayer set up that the petition did not include or set forth correctly all the issues of law and fact involved in the controversy and called to the attention of the city attorney, and that because of his position, the city attorney was unable fully, adequately, and vigorously to present this case.
In the course of the opinion in the instant case, the first branch of the trial court said, in speaking of the application for intervention by the taxpayer, Horace O. Miller: "The petition and amendment thereto fails to include the important questions of fact raised by the request of this taxpayer. This fact alone is significant as being indicative of the attitude of the plaintiff towards the issue.
"Because of the failure of the pleadings to contain these important questions of fact, and we believe it will be extremely difficult if not impossible for the city attorney to vigorously and adversarily present this issue to the court, we find that the taxpayer, Horace O. Miller, should be permitted to intervene in this case."
Later, another branch of the trial court permitted The Cincinnati Gas Electric Company to be made a party. This latter judge, in discussing the matter, said: "The court is entitled to have both sides of any issue presented fairly and fully and without requesting additional briefs, and in demanding this, the integrity of the court is not challenged. It occurs to me that it could be said with just as much force and reason that a lawyer representing both sides of a contested case, in order to assure correct results, must not only be endowed with an abundance of righteousness, but must also possess some celestial attributes not common to ordinary mankind.
"In this case, the solicitor did file the pleadings as requested, but he admits that he assisted opposing counsel during the trial, consulting with him and defendants' witnesses, subpoenaing witnesses for the defendants and testifying on defendants' behalf."
On March 6, 1940, this court decided the case of State, ex rel. Skinner Engine Co., v. Kouri, Dir., 136 Ohio St. 343, 24 N.E.2d 940. Before deciding the case, and after first overruling a motion of the Columbus Southern Ohio Electric Company to be made a party respondent, this court sua sponte vacated its entry and allowed the motion.
Both the city manager and the city attorney of Middletown serve at the pleasure of the city commission. The taxpayer's action sought to defeat the very projects which the city manager and the city commission had determined upon. In the instant case, the city attorney evidently and sincerely believed that this case should be lost. It is not an answer to say that the court might call for additional briefs. In the first place, the preparation of a case is not the function of a court. Even if it were, busy trial courts may overlook matters not called to their attention, and may thus fail to call for additional briefs. Even if the court called for additional briefs, what assurance would there be that all cases in point would be called to their attention? Besides, what cases are in point is a matter of daily dispute in the courts throughout the nation.
Nor is it an answer to say that the trial court might have permitted these taxpayers to have participated amici curiae. As friends of the court, they could not have appealed this case.
Simple justice, as well as the purpose of Section 4314, General Code, requires that the trial courts authority remain unhampered to see that the correct result be found as nearly as may be. Whether a taxpayer may be allowed to intervene and be represented by counsel of his own selection and at his own expense, is a matter which should rest within the sound discretion of the trial court.
Both the bench and bar are familiar with the unsatisfactory results reached and bad precedents established where a case has been presented adversarily in form, but by agreement in substance. Under such conditions there is no party inclined to appeal the case.
What seemed to bother the one judge in the case of City of Lakewood v. Rees, supra, was that allowing a taxpayer to intervene would result in an obligation to make an allowance to the taxpayer's attorney to be taxed against the municipality. The allowance of fees is strictly a matter resting within the discretion of the trial court, and is to be based upon the results accomplished. If a taxpayer's attorney performs a meritorious service for the municipality, he should be paid, otherwise not.
In addition to the inherent power of a court to see that a cause is so conducted as to do justice between the parties, we are of the opinion that the statutes of the state plainly give authority for, and require that, under such circumstances as have been shown in this case, the taxpayer or taxpayers at whose instance the suit was brought on behalf of the corporation under Section 4314, General Code, should be made party or parties as a matter of right. Section 11241, General Code, provides that an action must be prosecuted in the name of the real party in interest. Certainly, where one authorized by Section 4314, General Code, makes demand upon the city solicitor to bring an appropriate action, and that officer fails to institute and prosecute such proceeding in good faith, the taxpayer, as the representative of the real parties in interest, should be permitted to become a party to insure the honest prosecution of the action.
Section 11254, General Code, provides: "All persons having an interest in the subject of the action, and in obtaining the relief demanded, may be joined as plaintiffs except as otherwise provided," while Section 11255, General Code, provides: "Any person may be made a defendant who has or claims an interest in the controversy adverse to the plaintiff, or who is a necessary party to a complete determination or settlement of a question involved therein."
The foregoing statutes are sufficiently broad to authorize the action taken by the trial court in the instant case, and in so doing, the trial court certainly did not abuse its discretion.
In addition to the inherent power of the court and the rights of the parties under the foregoing statutes, there is an additional reason why the dismissal, especially of H.O. Miller, a natural person and domiciled within the municipality, was erroneous. It has long been recognized that a taxpayer in a municipal corporation has a status which, in the absence of a statute to the contrary, enables him to apply to a court of equity to prevent any abuse of corporate powers by the municipality, including unauthorized expenditures of funds or use of property.
As pointed out by Judge Gilmore in Cincinnati St. Rd. Co. v. Smith, 29 Ohio St. 291, 303, and reiterated in substance by Judge McIlvaine in Weir v. Day, 35 Ohio St. 143, 146, and by Judge Spear in Pierce v. Hagans, 79 Ohio St. 9, 16, 86 N.E. 519, 36 L.R.A. (N. S), 1: "The sections [now Sections 4311 to 4314, General Code] do not provide remedies that were previously unknown. Courts of equity had long taken jurisdiction and granted injunctions in such cases when properly presented by interested individuals, whose rights were put in jeopardy by the illegal or unauthorized acts, or threatened acts, of municipal corporations."
Judge Spear, in Pierce v. Hagans, supra, at page 18, quotes the following language of Mr. Justice Field in Crampton v. Zabriskie, 101 U.S. 601, 25 L.Ed., 1070: "Of the right of resident taxpayers to invoke the interposition of a court of equity to prevent an illegal disposition of the moneys of the county or the illegal creation of a debt which they in common with other property holders of the county may otherwise be compelled to pay, there is at this day no serious question."
WILLIAMS, MATTHIAS, HART and BETTMAN, JJ., concur in the foregoing concurring opinion.
I concur in the first and second paragraphs of the syllabus but dissent from the propositions of law as stated in the third and fourth paragraphs of the syllabus of the majority opinion and from the judgment. While a municipality may issue utility revenue mortgage bonds under Section 12 of Article XVIII of the Constitution to be secured by the property acquired or constructed with the proceeds arising from the sale of such bonds, such municipality may not issue such bonds to be secured by other property already owned by it.
Section 12 of Article XVIII of the Constitution authorizing the issue of revenue bonds contains a proviso to the effect "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."
The city of Middletown by the legislation adopted proposes to secure the bonds in question by a mortgage not only on the property proposed to be constructed from the proceeds arising from the sale of the bonds in question, but upon the transmission lines already owned by the municipality. This, under the settled authority of this state, as well as other jurisdictions, creates a liability upon the municipality. Village of Brewster v. Hill, 128 Ohio St. 343, 190 N.E. 766; State, ex rel. Public Institutional Bldg. Authority, v. Griffith, Secy. of State, 135 Ohio St. 604, 22 N.E.2d 200; State, ex rel. Public Institutional Bldg. Authority, v. Neffner, Secy. of State, 137 Ohio St. 390, 30 N.E.2d 705. See, also, Kasch v. Miller, Supt. of Public Works, 104 Ohio St. 281, 135 N.E. 813; State, ex rel. State Bridge Commission, v. Griffith, Secy. of State, 136 Ohio St. 334, 25 N.E.2d 847.
It is claimed, however, that when it is proposed by any municipality to issue revenue bonds to extend any public utility however acquired, the municipality may mortgage the whole utility property including the extension to secure such bonds, even though such bonds are beyond the general limit of bonded indebtedness prescribed lay law. This interpretation is claimed from the language of Section 12 of Article XVIII of the Constitution which provides that: "Any municipality which acquires, constructs or extends any public utility and desire to raise money for such purposes may issue mortgage bonds therefor beyond the general limit of bonded indebtedness prescribed by law; * * * but shall be secured only upon the property and revenues of such public utility * * *." (Italics mine.)
The very purpose of the constitutional provision is to prevent a municipality from financially over-reaching itself and from acquiring or constructing utilities which would increase its financial responsibility beyond the limit fixed for its bonded indebtedness, and which may result in liquidation by which the municipality would lose the whole property including that already owned by it. Such construction should be given the constitutional provision as will preserve its limitations in connection with its grant of privileges.
In other words, the provision should be interpreted to the effect that any municipality which desires to acquire or to construct any public utility, and desires to raise money for such purpose by the issue of revenue bonds, and any municipality which desires to extend any such public utility so originally acquired or constructed with the proceeds of revenue bonds, may issue such revenue bonds for such acquisition, construction or extension beyond the general limit of bonded indebtedness prescribed by law; but that such revenue bonds so issued beyond the general limit of bonded indebtedness prescribed by law shall not impose any liability upon such municipality, and for that reason shall not be secured by property of the municipality other than that acquired or constructed with the proceeds of revenue bonds.
Unless this interpretation is given to the constitutional provision in question, a municipality which has already reached the limit of its bonded indebtedness, as provided by law, may, nevertheless, issue bonds and pledge the presently owned property of any or all of its public utilities to secure the payment of additions without reference to size or cost and without reference to the present bonded indebtedness of the municipality. In my judgment it cannot be maintained that such procedure does "not impose any liability upon such municipality."
Furthermore, I dissent from the holding of the majority members of the court to the effect that the provisions of the Uniform Bond Act have no application to the bond issue proposed by the city of Middletown, especially when such bonds are to be partially secured by property already owned by it.