Realty Co.

Not overruled or negatively treated on appealinfoCoverage
Supreme Court of OhioNov 14, 1934
128 Ohio St. 583 (Ohio 1934)
128 Ohio St. 583192 N.E. 880

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No. 24764

Decided November 14, 1934.

Municipal corporations — Waterworks — Disposition of surplus revenues — Section 3959, General Code — Diversion to construction or maintenance of sewage disposal plant forbidden — Appropriation not validated by city ordinance.

1. The provisions of Section 3959, General Code, prescribing and limiting the use of funds created by water rentals, prevent the diversion thereof to a use for any purpose other than therein enumerated. ( City of Cincinnati v. Roettinger, a Tax-payer, 105 Ohio St. 145, approved and followed.)

2. The appropriation of such waterworks funds to the construction or maintenance of a sewage disposal plant may not be validated by the enactment of a city ordinance providing that "the operation of sewage disposal plants shall be treated and construed as being part of the operation of water purification."

ERROR to the Court of Appeals of Cuyahoga county.

The plaintiff in this action, The Hartwig Realty Company, sought to prevent the application and use of funds received as water rents — income from the sale of water — to pay for the construction, maintenance and operation of the three sewage disposal plants of the city of Cleveland, and to require the restoration of such funds heretofore diverted and applied to such purpose.

The Court of Common Pleas granted the relief sought. The Court of Appeals, upon hearing on appeal, denied the relief sought or any relief whatever. Whereupon, on motion, the case was ordered certified to this court.

Mr. Stanley L. Orr and Mr. Harold H. Gorman, for plaintiff in error.

Mr. Ezra Z. Shapiro, director of law, and Mr. Gordon C. Locke, for defendants in error.

The authority relied upon for the diversion of funds complained of is Section 130 of the Municipal Code of the city of Cleveland, which confers upon the Commissioner of Water the charge and management of all plants of the city for furnishing water to its inhabitants, and for the use of others to whom it may be sold, and then provides:

"The operation of sewage disposal plants shall be treated and construed as being part of the operation of water purification."

Whatever may have been the ulterior motive prompting the enactment of that provision, its ultimate result is to take monies from the funds created by rentals for water paid by water users and to expend them for purposes other than those to which they are expressly limited by statute, as well as by the express terms of the charter of the city — precluding the transfer of "revenues or earnings of any non-tax supported public utility to any other purpose."

The application of funds created by water rentals to the payment of general municipal obligations, or to expenses of constructing and maintaining sewage disposal plants, or any purpose other than constructing, maintaining and operating facilities for the supply of water, would result in levying a tax only upon water users to meet the expenses of government, in violation of the express terms of Section 3959, General Code, which reads as follows:

"After paying the expenses of conducting and managing the water works, any surplus therefrom may be applied to the repairs, enlargement or extension of the works or of the reservoirs, the payment of the interest of any loan made for their construction or for the creation of a sinking fund for the liquidation of the debt. The amount authorized to be levied and assessed for water works purposes shall be applied by the council to the creation of the sinking fund for the payment of the indebtedness incurred for the construction and extension of water works and for no other purpose whatever."

A situation quite similar was presented in the case of City of Cincinnati v. Roettinger, a Taxpayer, 105 Ohio St. 145, 137 N.E. 6, where this court held:

"1. Section 3959, General Code, is constitutional and operates as a valid limitation upon the uses and purposes for which revenues derived from municipally owned waterworks may be applied. By virtue of the provisions of that section, surplus revenues derived from water rents may be applied only to repairs, enlargement or extension of the works, or of the reservoirs, and to the payment of the interest of any loan made for their construction, or for the creation of a sinking fund for the liquidation of the debt."

The mere ipse dixit of the city council that the disposal of sewage and the purification and distribution of water to users are parts of a single process cannot be conclusive upon the question and thus effect a release from the clear inhibition of the statute.

If this evasion be permitted, there is no length to which council may not go to compel water users to pay the expense of carrying on other city functions which may be remotely connected with sewage disposal; council might even extend it to maintenance of other departments of government — all upon the theory that such departments are in some respect connected with the function of supplying pure water to the inhabitants of the city.

Much evidence was adduced in an effort to support the action of the city council, but it must be concluded that though the operation of such disposal plant may possibly reduce the extent of contamination of the source of the city water supply, an attempt to combine the two functions or departments, and thus appropriate a part of the fund created by rentals imposed upon water users, is violative of the clear and express provisions of Section 3959, General Code.

It follows that the judgment of the Court of Appeals is reversed and the cause remanded.

Judgment reversed and cause remanded.