Owing to the importance of the question here involved, *Page 15 I deem it necessary to express my view in a formal way. I think that, under the law and the previous rulings of this court and the council resolution, the money that was received for the light and power plant bought of the city of Woodward, after paying off the bonds that stood against the utility that was sold, should be applied to the liquidation of bonds for other utilities and other public debts, and that if there is a surplus after this is done, it should be applied to general purposes.
The history of this matter appears in some, of the briefs that have been filed on behalf of the various parties, and especially is it given in the record that is before the federal court in case No. 443 (50 F.2d 1087) found here, wherein the Western Power, Light Telephone Company, a corporation, and David Reid were appellants, and the City of Woodward, Okla., a municipal corporation, C.E. Williams, J.E. Young, and J.H. Richardson, commissioners of the city of Woodward, H.M. Renner, city manager of the city of Woodward and Ida M. Warren, city treasurer of the city of Woodward, were appellees, which was filed in the Circuit Court of Appeals of the 10th Circuit on the 24th of March, 1931.
When one examines the litigation that has arisen out of these transactions, and the efforts, as shown in the record here, of one utility company competing with another utility company to buy a light plant that was municipally owned, and remembers the fight that has been waged for over a quarter of a century arising out of light and power plants, it is reminiscent of some of the worst and most far-reaching controversies among the giants who have controlled the business of furnishing light and power to the public.
When the Constitution of the state of Oklahoma was formed, there was the beginning of a recognition by the public of what the results might be, in view of the fact that water power and other powers were being sought after very greatly by those who wanted to transmit power and heat and light. There will be found in the Constitution of Oklahoma a protest against monopoly. There is also found in it provisions for an elected Corporation Commission to handle the rates of public utilities with the power in the Legislature to enlarge the power of that Commission, the granting of franchises being made a local matter. In addition to that, there is a provision for competition by the state and by a municipality, with a view of preventing the monopoly that is denounced in the Constitution. There is special provision for financing public utilities in cities and towns, and the power of taxation is there conferred upon them, for the purpose of paying the expenses of installation and operation, and special provision for taxation to enable the state to go into business. The sections of the Constitution that are peculiarly applicable embrace section 31 of the Bill of Rights (art. 2), as follows:
"Sec. 31. State May Engage in Business. The right of the state to engage in any occupation or business for public purposes shall not be denied nor prohibited, except that the state shall not engage in agriculture for any other than educational and scientific purposes and for the support of its penal, charitable, and educational institutions"
— and section 32, as follows:
"Sec. 32. Perpetuities and Monopolies Prohibited. Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed, nor shall the law of primogeniture or entailments ever be in force in this state."
The sections are general, leaving to the Legislature to prescribe the details of administration. Under the head of Revenue and Taxation, section 9 of art. 10 is a limitation upon the power of the Legislature, which, if unrestrained, could have taxed at will, to impose further taxes, while section 10 of that article provides that for erecting public buildings in counties, cities, or school districts, the Legislature may increase the rate, provided the rate of increase and the purpose for which intended should have been submitted to a vote of the people, and a majority of the qualified voters, voting at such election, vote therefor, with the proviso that even then 5 mills on the dollar was the limit. Section 26 of article 10 is a limitation upon the debt that can be incurred by cities beyond the revenue provided for each year, and under it by getting a three-fifths vote an excess could be incurred, but the limit of that increase is 5 per cent. of the valuation, which would have to be ascertained from the last assessment previous to the incurring of the indebtedness. That section provided for an accompanying levy of taxes to meet it.
Section 27 is the one peculiarly applicable here, and covers public utilities, confined, however, to a town or city, and the power to go in debt for them under it was conditioned that a majority of the property tax-paying voters at a special election give assent and it was limited to the proposition *Page 16 of purchasing or constructing public utilities or for repairing same, and the utilities would have to be owned exclusively by the city. It is confidently believed that this section would forbid the idea of a lien of any kind being fastened upon the plant, either by legislative enactment or judicial construction, and that the only security the municipal bondholders have is the taxing power fastened upon the property of every kind in the city or town, till the bonds are paid, and the pledge by the city authorities and the people to collect the interest annually, and a part of the principal, and preserve the installments collected in a sinking fund to liquidate their demands.
Ordinarily taxation is commensurate with a demand for public purposes, but as a foundation for the curbing of monopoly and to prevent extortion, and to bring about competition, there is a special provision on the subject in the revenue and taxation law, article 10 of the Constitution. Section 14 of that article is as follows:
"Sec. 14. Taxes shall be levied and collected by general laws, and for public purposes only, except that taxes may be levied when necessary to carry into effect section 31 of the Bill of Rights. Except as required by the Enabling Act, the state shall not assume the debt of any county, municipal corporation, or political subdivision of the state, unless such debt shall have been contracted to defend itself in time of war, to repel invasion, or to suppress insurrection."
As set out in the Constitution, there are three kinds of pecuniary exactions provided for. One is judgments, and they may arise from tort or contract, the amount of which no man could foresee. A failure to keep sinking funds till maturity of bonds and their discharge would give rise to judgments. Another class of obligations was current expenses generally provided for annually, and another class of obligations was bonds that were issued for public buildings and extraordinary expenses that could not be paid out of the usual tax levies, and another class of obligations was bonds that were issued for public utilities under section 27. A key to the proposition as to what would become of the money in this particular case is found in section 28, art. 10, which is as follows:
"Sec. 28. Sinking Funds of Towns, Counties, etc. Counties, townships, school districts, cities, and towns shall levy sufficient additional revenue to create a sinking fund to be used, first, for the payment of interest coupons as they fall due; second, for the payment of bonds as they fall due; third, for the payments of such parts of judgments as such municipality may, by law, be required to pay."
That section appears to make one sinking fund, and it has been so decided by this court in the case of In re Tax Levies of City of Woodward, 143 Okla. 204, 288 P. 458. If this be true, it is rather difficult to reconcile that with the idea that in the present case only the bonds that were issued for the light plant should be taken up out of the proceeds of its sale. In that case the authority of the municipal governing body to transfer to the sinking fund any general fund balance, as set forth in the second subdivision of the syllabus, is affirmed, and it is also affirmed in subdivision 3. The syllabus, however, does not cover the caution in the opinion that is given at page 206 of 143 Okla., where the following language is used:
"While not raised as an issue in this case, for the benefit of taxing officials of this state, we desire to call attention to the fact that the excise board made a separate computation for sinking fund 'not water nor light,' 'water and light,' and 'judgments.' We have heretofore said, and now repeat, that this practice is not authorized by the Constitution or statutes of Oklahoma and that under the provisions of section 28, art. 10, of the Constitution, and the governing statutes, the sinking fund is to be computed in one item which will include bonds of all kinds and judgments and that there is no authority at law for the fixing of a rate of levy for sinking fund purposes for 'judgments' separate and apart from 'bonds'."
The Constitution requires that a fund must be provided for the liquidating of all utility bonds when authorized. They are extraordinary and stand to themselves, both in authorization and amount. See Coleman v. Frame, 26 Okla. 193, 109 P. 928. where it is stated that Oklahoma is the only state conferring unlimited power to tax to supply public utilities. The law permits unlimited indebtedness and unlimited taxes for utility purposes, though we all recognize that a great many of these utility improvements will be consumed long before the bonds are paid, and that we will perhaps visit "the iniquities of the fathers, upon the children unto the third and fourth generation." This present generation, with the depression like Egyptian darkness hanging as a pall, is going through the first stages of spending yesterday, the money that is to be earned tomorrow.
One of the cases somewhat bearing is Yarbrough, Mayor, v. Donaldson, *Page 17 67 Okla. 318, 170 P. 1165, which concerned a referendum in a city for the purpose of preventing a sale of the light plant that belonged to a municipality. The court there held that it was not a legislative matter, and that, as the Legislature had permitted the disposition, the referendum law did not apply so as to allow its reference to the people who had the bills to pay. The plant, of course, without operation under a franchise, was of little value. The water in that case has gone over the wheel, but the Legislature evidently recognized that, and though in some cases this had happened, did provide a scheme on the subject, apparently to revive the "spirit of the Constitution."
Another case came along of City National Bank of Ft. Smith, Ark., v. Inc. Town of Kiowa, 104 Okla. 161, 230 P. 894, and at page 165 of 104 Okla., the following language is used:
"The grant of power to municipal authorities made by the people at any election held pursuant to this provision is expressly limited by the provision itself to public utilities 'to be owned exclusively by such city.' If municipal authorities are thus expressly prohibited from selling an interest in such public utility even for the purpose of effectuating competent management and control, it must follow indubitably that the larger power of complete disposition is not to be implied. And the reason for this is obvious. It would open a door for the exploitation of the public through collusive sales of municipally owned public utilities. Not that this result would follow in any particular case, but that it might do so, is sufficient reason for the public policy which forbids it. The incorporated town of Kiowa acquired its water and light plant through a bond issue in conformity with the provisions of section 27, supra. It is therefore concluded that no express or implied power has been vested in municipal authorities in this state to sell or otherwise dispose of a municipal water and light plant, acquired under section 27, art. 10, Const., unless the same has * * * become inadequate and is not adapted to the public uses for which it was originally intended."
The Legislature appears to have taken a hand by the enactment of the revocable permit law in the year 1925, so that the utility companies might apply, and exchange with the sanction of the Corporation Commission, their municipal franchises for a revocable permit. That repealed everything in conflict with it, and was approved March 15, 1925, and became effective without the emergency, the Legislature ending on the 28th of March so that it became operative on the ninetieth day thereafter. The result of this on the Corporation Commission was that they were forced to obey, or resist another department of government on the ground of unconstitutionality. They were "damned if they did and damned if they didn't," if one may be excused for using a common phrase, "forcible though perhaps not elegant."
At Okmulgee appears to have been one of the early cases on the subject, combating the irrevocable permit law. The history of the matter in part is recited in the decision of this court in the case of City of Okmulgee v. Okmulgee Gas Co.,140 Okla. 89, 282, P. 640. It appears from the recital that, on the 24th of November, 1925, the city of Okmulgee started injunction proceedings to get rid of a permit issued under that law, and that on the 25th of April, 1927, the city lost in the lower court, and it was appealed and brought to this court and an opinion was filed November 5, 1929, and rehearing denied December 10, 1929, holding the act unconstitutional.
The full history of it is recited in the case of City of Okmulgee v. Okmulgee Gas Co., 141 Okla. 98, 284 P. 70. That was an appeal from the Corporation Commission itself, and on the 18th of July, 1925, according to the recitals in the opinion, the Corporation Commission overruled the protest of the city of Okmulgee against the granting of this revocable permit, and on the 15th of January, 1926, appeal from the action of the Corporation Commission was lodged in this court, followed by an opinion in this court on January 14, 1930, holding the revocable permit law unconstitutional and void. While the appeal from the Corporation Commission was pending here, the city of Okmulgee brought the injunction proceeding to restrain operation under the permit. The Legislature again took up the matter in chapter 94, Sess. Laws, 1927, p. 155 [O. S. 1931, secs. 6180-6185] by an act that was passed and approved April 7, 1927, at which time this appeal was pending. The law is as follows:
"An Act prohibiting the governing body of any municipal corporation organized and incorporated under the laws of the state of Oklahoma, from selling, leasing, conveying or otherwise disposing of any public utility belonging to such municipal corporation, when the actual cash value of such utility belonging to a city of the first class shall exceed $10,000, and a town or village $5,000, unless such sale, lease, conveyance or other disposition of such utility shall be authorized by a vote of sixty (60%) per cent. of the qualified voters of said municipality, voting at an election called for such purpose, providing for the manner of holding such election and selling such municipal plant when authorized. *Page 18
"Be it Enacted by the People of the State of Oklahoma:
"Public Utilities — Sale — Election.
"Section 1. That no public utility owned by any municipal corporations, organized and incorporated under the laws of the state of Oklahoma, where the cash value of such public utility in a city of the first class exceeds $10,000, or in a town or village where the actual cash value thereof is in excess of $5,000, shall be sold, conveyed, leased, or otherwise disposed of, by the governing body of such municipality, unless such sale, lease, conveyance, or other disposal of such utility shall be authorized by the vote of sixty (60%) per cent. of the qualified voters of such municipality, voting at an election to be held for such purpose.
"Same — Procedure for Sale.
"Sec. 2. The procedure for the sale of such public utility shall be as follows, to wit:
"The governing body of any municipal corporation herein defined, which shall desire to offer for sale or lease any public utility belonging to such municipality, shall by resolution or ordinance authorize the proper executive officers of such municipality to give notice that on a specified day it will receive open bids for the sale or lease of such public utility, by publication in four (4) consecutive issues of a weekly newspaper published in such municipality, or if none be published therein, then in a weekly newspaper of general circulation in the county in which such municipality is situated, the first publication to be at least 30 days before open bids will be received. If the highest and best bid made for the sale or lease of such public utility on said date is satisfactory to the governing body of such municipality, then such governing body shall by ordinance call an election for the submission of the question of the proposed sale or lease of such public utility to such highest and best bidder aforesaid, and at the same time shall, by ordinance, call an election for the purpose of submitting the question of the granting of a franchise to such bidder aforesaid, which said election shall be called for the same day. The sale of such utility to be conditioned upon the franchise being granted to such bidder by vote of the people at the election called for such purpose. Such election shall be held as now provided by law for the granting of franchise.
"Sale — Franchise — Conveyance.
"Sec. 3. If such sale shall be authorized as herein provided, and such franchise shall be granted, the executive officers of such municipality shall by proper legal instruments, convey such utility to said purchaser.
"Sale — Cash Bids.
"Sec. 4. That the sale of any public utility, when authorized as herein provided, shall be for cash to the highest and best responsible bidder as hereinbefore provided, and each, bid shall be accompanied with a certified check payable to the clerk of such municipality, for ten per cent. of the amount bid, which check shall be cashed by the treasurer of such municipality, if the bid to which the same is attached shall be accepted, the proceeds thereof held to secure the city in damages it might sustain upon the failure of the bidder to pay the amount bid for such utility, and the balance of the purchase price shall be payable in cash by such successful bidder upon the execution and delivery of proper legal conveyances and of the property thereby conveyed; such public utility shall not be delivered, nor shall the right to participate in any portion of the income derived therefrom accrue to the purchaser until full payment in cash of the amount of the bid for such utility and such purchaser shall only be entitled to income accruing after the completion of such sale; securities in which the treasurers of cities, towns and villages are authorized by law to invest sinking funds, may be accepted in lieu of cash.
"Same — Owner of Competing Utility.
"Section 5. If the highest and best bidder for such public utility under the procedure herein defined, shall be the owner of a competing utility operating under a valid franchise or permit, it shall be necessary only to submit to the qualified voters, the question of the sale of the municipal utility.
"Lease — Charter Authorization.
"Section 6. That it is further provided that the governing body of any city of the first class, organized and incorporated by special charter adopted at an election held for such purpose, when authorized by such charter, may sell, convey or lease any public utility owned by such municipality operating under special charter without the calling of an election as provided herein."
Acting under this law, the city council of Woodward, under the aldermanic form of government, made the proposal and the people voted upon the franchise and also upon the right to sell. Sixty per cent. of the voters who voted did not vote in the affirmative to sell it. However, the price that was gotten was very alluring, and at page 106 of this record probably the reason for the price is shown. An offer of the assignment of the franchise, granted a Kansas corporation, to an Oklahoma corporation, was submitted in evidence and objected to, and the following occurred.
"Judge Walden: I want to ask a question: About this power company, is this another O.G. E.? Mr. Barry: No, it is a competitor of the O.G. E.. Judge Walden: Is it one of those combine concerns? Mr. Barry: It is the only light plant they own *Page 19 in Oklahoma. Mr. Gibbens: The O.G. E. tried to buy it and they raised it. Judge Walden: Is it a Santa Fe concern? Mr. Gibbens: No, sir; we represent the O.G. E. and they tried to get it. Judge Walden: That has no business in the record. Mr. Barry: We object to the assignment as incompetent, irrelevant and immaterial. Judge Newman: Overruled. Mr. Barry: Exception."
It appears from the record that, just a few days before the election, the council took action and passed a resolution to pass the proceeds of the sale to a fund to retire all the indebtedness of the city. The resolution can be found in the record of appeal to the 10th Circuit, referred to above, at page 23, as exhibit "C," which is as follows:
"Whereas, the city of Woodward has recently entered into a lease contract with Fairbanks, Morse Company, for the leasing of one Fairbanks-Morse engine now in use in the city light plant, and whereas, in said contract the city of Woodward is given an option to purchase said engine according to the terms of said contract;
"And, whereas, an election has been duty called for the purpose of submitting to the qualified electors of the city of Woodward, the question of whether or not the city shall sell to the Western Light Power Corporation, the electric light plant of the city of Woodward at the agreed price of $505,000, it being provided, however, that in the bid of said proposed purchaser that the said sum of $505,000, is to be for the light plant complete, with all liens and incumbrances paid in full, and providing further that the city may exercise its option and purchase said Fairbanks, Morse engine, or that the said purchaser will deduct from said bid of $505,000, the amount necessary to take care of said lease contract, and;
"Whereas, said purchaser has agreed to pay to the city of Woodward, in the event it becomes the purchaser, the consideration of said light plant in cash or bonds, at the option of the city.
"Now, therefore, be it resolved, by the mayor and council of the city of Woodward, Okla., that, in the event the people of the city of Woodward shall determine to sell said light plant on the 14th day of September, 1928, at the election called for that purpose, that the mayor and council of the city of Woodward do require of the said Western Light Power Corporation that they do assume the contract which the city now has with Fairbanks, Morse Company, and that the said Western Light Power Corporation do purchase said engine under the option reserved in favor of said city, taking advantage of all discount available, giving the city of Woodward the benefit of said discount. That the amount necessary to pay for said engine shall be deducted by the said Western Light Power Corporation from the purchase price agreed to be paid to the city of Woodward, and that the balance of said purchase price shall be paid to the city of Woodward, in the outstanding bonds which are the legal obligation against said city in so far as the same are available without paying a premium, and that the balance of said purchase price be paid to the city of Woodward in United States government bonds at par value and that said bonds, and the interest which shall accrue thereon, shall be placed in a separate fund and there held separate and apart from other moneys, and shall be used only for the purpose of retiring the outstanding bonded indebtedness of the city of Woodward, as the same may became payable.
"Passed and adopted this the 10th day of September, A.D., 1928.
"Peter Martinson, Mayor.
"Attest: S.J. Dohrer, City Clerk "(Seal)
"We agree to abide by the terms of the within and foregoing resolution.
"Western Light and Power Corporation.
"By R.H. Jarvis.
"Its Vice President."
The question of the sufficiency of the election became res adjudicata in the case of Thomas v. Reid, 142 Okla. 38,285 P. 92, decided by this court January 21, 1930, affirming the action of the district court of Woodward county, holding that the provision in the act, requiring a 60 per cent. favorable vote, violated the spirit of the Constitution. Sixty per cent. was not secured favorable to the sale, but over 50 per cent. did vote for it.
The principles that are applicable in a case of this kind are fairly well illustrated in the syllabus to Bank v. Kiowa, referred to above, and are laid down very forcefully in Pond's work on Public Utilities (3rd Ed.) chapter 18, entitled "Sale of Property Providing Municipal Public Utilities."
The principles are there expressed in clear terms, and this work appears to be a standard work on the subject. Quotation at length is warranted, though at the expense of brevity:
"435. Municipal Control by Limitation on Alienation. The ease with which municipal corporations may themselves provide municipal public utilities or control them in the hands of private capital depends, in an inverse ratio, upon the power which corporations providing such utilities have to alienate their property. For experience has shown that in almost all cases private corporations *Page 20 stand ready to take over the operation of municipal public utilities where municipal corporations become embarrassed or are found to have made a failure of their operation. Indeed, it has sometimes been charged that influences have been brought to bear to secure an inefficient operation by municipal corporations of such public utilities, with the purpose in view of cultivating among the people a feeling hostile to municipal and favorable to private operation. And obviously the power of municipal and state regulation and control over the privately owned municipal public utility is greatly enhanced by limitations placed on the power of such corporations to sell and convey their property which is useful and necessary in providing its public utility service.
"436. Attitude of Courts on Municipal Control and Ownership. — The position of our courts in regard to the power of municipal corporations to dispose of their municipal public utility plants has therefore an important bearing on the question of the attitude of the courts toward an increase in the sphere of municipal activity as determined by the matter of the ownership or control of municipal public utilities. This control is now generally supplemented, if indeed it is not supplanted, by state public utility commissions, which have taken the place of the control heretofore attempted to be secured by competition or by the municipalities themselves.
"437. Trust property devoted to public use cannot be sold without statutory authority. — The supplying of municipalities and their citizens with such public utilities as gas, water, electric light, transportation and communication for public and private use by the municipal corporation or by private capital is the performance of a public duty, and the property so used is charged with a public trust and is devoted to a public purpose. Such property is dedicated irrevocably to the performance of this trust due the public and for its benefit and that of the inhabitants of the municipality. It is a fundamental principle that the trustee cannot disable itself from performing the trust by disposing of the property or means necessary to carry out the purpose of the trust relation without express authority from the party creating the trust or directing its administration. The power does not inhere in the trustee to defeat the carrying out of the trust by disposing of the trust property. The interests of the beneficiaries under the trust are guarded against any loss on this account and conserved by the courts holding that such property cannot be disposed of by the municipality or other corporation owning it unless under authority conferred specially by statute. The state alone, which attends to the matter of creating these trusts as well as to the selection of the trustees, has the power to provide for their destruction by sale or for their diversion as to trustees by lease or assignment. Having the sole power to create, the state alone has the ability to provide for a change of trustee or a winding-up of the trust entirely; so that in the absence of express legislative authority the courts refuse to imply the right in the municipal or other corporation, after having accepted the trust, to renounce its duties thereunder or to dispose of the trust property and thus defeat the further carrying out of the trust. Such corporation must continue to perform its duties to the public after having once assumed the trust and undertaken to serve the public needs of municipalities and those of its inhabitants.
"438. Duty to Render Service Personal. — When the power to own and operate such plants for supplying public utilities, has been granted to and accepted by any corporation, a franchise is conferred upon it for the purpose of securing some advantage to the public and for the benefit of the inhabitants in their private capacity. Such beneficiaries have the right to complain in the case of its relinquishment. This rule is based on the general principle of trusts as well as upon the rule that quasi-public corporations are formed in order to serve the public. The duty imposed is a personal one and the right to perform it, together with the special privileges pertaining thereto, is granted personally as a franchise, on condition that the grantee continue in personal control of such power and in the performance of its duties. The carrying out of the duties of serving the public under such a franchise is regarded as of special importance and the obligation is recognized as being peculiarly personal. Having selected a particular corporation which is responsible and capable of executing the duties of the trust to the public for which are granted special privileges, amounting in most cases practically to monopolies, the law does not permit it to transfer its rights and the accompanying duties to another party which may or may not be responsible and capable of adequately serving the municipality and its inhabitants.
"439. Alienation of Property Permitted in Public Interest. If at any time it may appear that the interests of the beneficiaries could be best served by some party other than the original grantee, the state which granted the franchise may in its discretion permit such change of grantees, but this must be provided for expressly by the statute. This rule of law is strictly adhered to because it is believed that the interests of the public are thereby best conserved. For observation and experience seem to indicate that the interests of the public are not paramount as to private parties who engage in furnishing these public utilities. The desire for dividends actually seem to predominate over that of serving the best interests of the public except in an increasing *Page 21 number of instances where fortunately the two purposes are regarded as consistent and identical. However, in many cases the motive of immediate profit controls, which fact requires very extensive control to be exercised over the private grantees of such franchises or, in lieu thereof, where there is not sufficient control to insure that the public will be served adequately and at fair cost for the service, it becomes necessary that the public serve itself directly or that it have the control which accompanies ownership, while the actual operation is provided for by a leasing of the plant owned by the city. This matter, however, is reserved for later discussion and an examination of the authorities for the foregoing statements will now be attempted."
Headnotes to some of the subsequent sections are as follows:
"440. Municipal water-works public property like parks.
"441. Municipality trustee for public of its, water and light plant.
"442. Transfer of property by lease must be authorized by statute.
"443. Duty to serve public can not be evaded by alienation.
"444. Municipal ownership conserved for public interest.
"445. Public interest and private gain antagonistic.
"446. Abandoned property may be alienated by municipality.
"447. Pipe lines on failure of gas may be alienated in public interest.
"448. Transfer to municipality favored in interest of public.
"449. Municipal option to purchase provided in franchise.
"450. Legislative authority must be express to permit transfers.
"451. Franchise personal to grantee and not transferable.
"455. Forced sales of such property also prohibited.
"456. Right of alienation expressly given by statute valid."
In view of the decision of this court in Thomas v. Reid, cited above, and in accordance with the recital of the majority opinion, it must follow that the money, the distribution of which is here involved, in this case, is derived from the sale of a utility plant, bought with the proceeds of bonds issued pursuant to section 27, art. 10, of the Constitution. Under that section, it required the vote of a majority of the tax-paying voters to acquire the utility. If that utility, while a going concern, is to be sold, what answer is there to a proposition that it must be authorized by a vote of the taxpayers, under the doctrine laid down in some of the sections in chapter 18 of the work quoted from? If that question is obviated, then the question arises as to what authority there is for the distribution of the funds primarily.
Section 28 of art. 10, of the Constitution, quoted above, contemplates a sinking fund, out of which all bonds as well as all judgments are to be paid, and whether there was a special appropriation of the proceeds made by the city council, when it passed the resolution set out above for the guidance and persuasion of the voters, perhaps is immaterial, as the Constitution is plain as to the sinking fund requirement.
The language of section 27, art. 10, is clear that the body conferring the power to acquire the utility was the tax-paying voters, whether it be for an original acquisition or for repairs. It is further clear that the constitutional provision is "to be owned exclusively by such city," and that once so acquired it was a trust property of the highest order. Under ordinary conditions, the body that was empowered to provide for the acquisition and for the repair was the property tax-paying voters, and the subject of taxation for these utilities was entrusted to the tax-paying voters.
Under the conditions here existing, if any necessity arose for the disposal of the public utility, it was necessary to get legislative consent, which, it appears to the writer, is the general legislative body of the state acting pursuant to constitutional provisions. It prescribed the conditions. The voters had before them the resolution of the council, when they voted on the question as to how the proceeds should be applied, prescribing that the proceeds should go to the fund to retire debts. Good faith with the voters, if they are the ones to pass on it under the statute, requires that the proceeds should be applied accordingly.
The decisions of this court are numerous on the subject of the expenditure of public funds, and on legislative power in the application of constitutional provisions. Applicable here are some decisions with reference to the highway, one being the application of control of the department by this court in the routing of highways, and the expenditure of public moneys, and the other the decision of the court upon the constitutionality of the legislative act on the subject of the removal of a highway commissioner. *Page 22 See Wentz v. Dawson, 149 Okla. 94, 299 P. 493, concurred in by all the members of the court except one who was absent and not participating. See the recent case of Thomas v. Wentz, decided Sept. 23, 1932, 159 Okla. 124, 15 P.2d 65. The first case affirms that a promise to the voters must be kept; the second that the Legislature should be allowed to function unless it violate special prohibitions of the Constitution.
As applied to the present case, the Legislature gave its consent to the sale of the light plant, provided that 60 per cent. of the voters, who voted thereon, voted for it, evidently overlooking the proposition as to what class of voters were required by the Constitution to sanction the acquisition and repair of utility plants publicly owned. In the litigation that has followed this act of the Legislature, as illustrated in the city of Woodward, there is an unparalleled situation, as disclosed by the record. The franchise was granted and the sale was made to a Kansas corporation, which in turn was owned by a Delaware corporation. Apparently, without legislative sanction, the Kansas corporation transferred the property and franchise to an Oklahoma corporation by the same name. The money to pay the city was apparently furnished by a Delaware corporation and apparently secured from a trust company in Illinois, judging from the recitals contained in the suit in the federal court, that was instituted for the purpose of preventing the authorities of the city of Woodward from diverting the funds in this case into the construction of an electric power plant in the city of Woodward. Some of the allegations, found at page 6 of the record in the federal court that is attached to the record here, are as follows:
"8. The Western Light Power Corporation, a Kansas corporation, accepted said conveyances and an assignment of all of said city's contracts and all obligations incumbent upon said city to perform by virtue of its ownership and operation of said electric power plant, distribution system and business connected therewith, and immediately thereafter the Western Light Power Corporation, a Kansas corporation, conveyed to Western Light Power Corporation, an Oklahoma corporation, all real and personal property, contracts, and all other property of every kind or nature received by it from the city of Woodward, Okla., including the business connected therewith, the good will and going concern value of said business; and said Western Light Power Corporation, an Oklahoma corporation, assumed all the obligations of the Western Light Power Corporation, a Kansas corporation, under its contract with the city of Woodward, Okla., and became the beneficiary of all of the covenants and obligations of said city, as provided in its contracts, expressed and implied.
"9. Plaintiff further alleges that it owns all of the common capital stock except directors' qualifying shares of the Western Light Power Corporation, a Kansas corporation, and owns all of the common capital stock except directors' qualifying shares of Western Light Power Corporation, an Oklahoma corporation; and that it advanced all funds and moneys necessary to purchase said electric power plant, distribution system, and business connected therewith. That for the purpose of securing indebtedness due it on account of said advancement of said the Western Light Power Corporation, an Oklahoma corporation, executed and delivered its bonds, due on February 1, 1948, in the sum of $330,500; and for the purpose of securing said bonds, it executed, acknowledged and delivered, through its proper officers, who were then and there duly authorized by proper corporate action so to do, its supplemental trust indenture in favor of Aksel K. Bodholdt, and the Central Trust Company of Illinois, trustees, whereby it conveyed to said trustees, subject to the limitations therein set forth, for the benefit of the holders of said bonds, all of the property hereinbefore described. Said supplemental trust indenture was duly recorded in the office of the county clerk of Woodward county, Okla. Said bonds are outstanding and unpaid and are at this time owned by this plaintiff; and by virtue of said supplemental trust indenture this plaintiff has an equitable interest and ownership in all of said assets hereinbefore described and sold by said city of Woodward; and as a result of said supplemental trust indenture it has a lien upon all of said assets, in addition to said equitable interest and ownership therein. That Western Light Power Corporation, an Oklahoma corporation, has issued and outstanding other bonds which are secured by trust indentures to the same parties upon other property, and it does not have assets over and above such bonded indebtedness sufficient to pay, indemnify, or secure its indebtedness; and in the event any of said security is impaired in any manner this plaintiff will suffer loss in an amount equal to the value of said impairment, and said loss will be irreparable and this plaintiff cannot recover any portion thereof from said Western Light Power Corporation, an Oklahoma corporation."
It is observed also that in the progress of the litigation a charter, changing the form of government and legislating the original town authorities out of office, was hauled from the gubernatorial archives where it *Page 23 had slumbered for the proverbial seven years. The election for its adoption was held the 29th of July, 1921, and the charter was approved by the Governor March 5, 1929.
It appears to me that doing this, to use a common expression, was "hitting below the belt," and that the authorities of the city of Woodward should have been allowed to keep faith with its voters. Having dealt with the corporation and having gotten such a handsome price for its plant, except as a matter of self-defense, the city of Woodward should not again enter the field, but should see that the charges of this Oklahoma corporation are reasonably regulated, and this public service corporation be required to render service. Apparently, the original governing body sought to safeguard and provide for paying debts with proceeds in accordance with the accepted resolution. A survey of the situation, as shown by the history of the entire legislation and litigation, is reminiscent of some of the expressions in one of the plays of the great dramatist of the 16th century, and a popular ballad of the 20th century, and some popular shibboleths, paraphrase of which is represented in the following lines:
"East side, west side, and all around the town,
"North side, south side, Oh! how they shake 'em down!
"They play a jazz and dance, to tune of 'nunc pro tunc,'
"The people's pawn, a child! The boat of hope is sunk."
As it appears to me, it is time to end the long saturnalia of debt creation for others to pay, and that the "hand-writing on the wall," portrayed in the Book of Daniel, is not confined to the dance halls of a mighty king, but is pictured in the cloud, and if the radio does not deceive, is now reflected nightly from the stratosphere.
The proper solution of the difficulty is to apply the funds in this case in accordance with the resolution, made by the city council when the matter was submitted to the voters, to pay the debts as therein agreed, and pass not to the next generation the burden of paying for what the present is consuming.
Note. — See under (1) 19 R. C. L. 779, 780.