City of Grass Valley v. Walkinshaw

SHENK, J.

In this proceeding the petitioner, city of Grass Valley, seeks the writ of mandate to compel the respondent, its auditor, to extend on the city’s property tax rolls, in addition to the tax for general municipal purposes, a special levy *597of 63 cents to discharge the 1950 payments of interest and principal on bonded indebtedness. The controversy is submitted on an agreed statement of the case pursuant to sections 1138-1140 of the Code of Civil Procedure.

In 1921 the petitioner, then a city of the sixth class, adopted a freeholders’ charter (Stats. 1921, p. 1889) and thereby accepted the privilege of autonomous rule offered by sections 6 and 8 of article XI of the state Constitution as amended in 1914.

Section 2(i) of the charter refers to the city’s power to levy and collect ad valorem taxes “subject to the limitations hereinafter imposed.”

Section 2(j) prohibits the contracting of indebtedness in excess of $5,000 except with the consent of two-thirds of the qualified electors voting thereon and requires bonds to be issued therefor. The following proviso appears: “Provided, that in the procedure for the creation and issuance of such bonded indebtedness the general law of the State of California in force at the time such proceedings are taken shall be observed and followed.”

Section 4 of the charter, provides the limitation (referred to in section 2(i)) on the “property tax, to be levied by the City Council upon all property real and personal, within said City at 12 o’clock of the first Monday in March of each year, which may equal but shall never exceed seventy-five (75) cents on every one hundred dollars, assessed valuation of such property.”

The present assessed valuation of property in the city of Grass Valley is $3,437,790. The 75-cent rate, levied thereon, will raise $25,783.42. The whole of this amount is required for general municipal purposes.

The Bond Act of 1901 (Stats. 1901, p. 27 as amended; 2 Deering’s Gen. Laws, Act 5178) authorizes a municipal corporation to incur bonded indebtedness to pay the cost of a municipal improvement where the expenditure would be too great to be paid out of its ordinary annual income and revenue. The act provides the procedure for the creation and issuance of bonds to meet the cost of such improvements. Section 7 empowers the city, at the time of fixing the general tax rate, to levy and collect a sufficient tax to meet the current payments of bond interest and principal. The section states that the “taxes herein required to be levied and collected shall be in addition to all other taxes levied for municipal purposes.

*598■ In 1923, pursuant to section 2(j) of the charter and the authority of the electors, the city followed the provisions of . the 1901 Bond Act in creating and issuing a bonded indebtedness of $100,000 to meet the cost of street improvements. In ■ conformity with the statutory provisions periodic interest and principal payments on the bonds were made by the levy in the years 1924-1948 of a special tax of 55 cents in addition to the 75-eent charter rate.

In June, 1949, the electors of the city duly authorized a •bonded indebtedness of $398,000 to meet the cost of necessary sanitary improvements, including the acquisition of lands and easements, and the construction of a sewage collection, outfall and treatment works system. On July 1, 1949-, the city issued 398 bonds of $1,000 denomination bearing interest of not over 2% per cent, and maturing in annual amounts varying from $10,000 to $18,000 through the year 1980. The city council has levied the 63-eent special tax to meet the interest and principal payments to fall due the first year, but the respondent auditor has refused to extend the special levy on the tax rolls. Contracts have been let for the construction of the improvements. The bonds have been sold but remain undelivered pending the outcome- of the present controversy.

The respondent contends that the 75-cent charter rate is a limitation for all requirements, including the discharge of the bonded indebtedness created pursuant to section 2(j) of the charter and the 1901 Bond Act. He seeks support for his position in the language of sections 2(i) and 4 of the charter providing the 75-cent rate limitation and of section 2(j) incorporating the Bond Act procedure for the creation and issuance of the bonds. He argues that since the language of section 2(j) makes no specific reference to a requirement for the levy of a special tax to meet payments on the bonds, the charter limitation controls and restricts the rate which may be levied for both general and special purposes.

Established law governing the exercise of municipal powers under a home rule char ter. and principles of construction applicable to charter provisions require the rejection of the respondent’s-contentions. He has overlooked the controlling principle that by accepting the privilege of autonomous rule the city has all powers over, municipal affairs, otherwise lawfully exercised, subject only to .the clear.and explicit, limitations and restrictions contained in the charter. The charter operates not as a grant of power,- but as an instrument of limitation and restriction on the exercise of power over all mu*599nicipal affairs which the city is assumed to possess; and the enumeration of powers does not constitute an exclusion or limitation. (West Coast Advertising Co. v. San Francisco, 14 Cal.2d 516, 521-522, 525 [95 P.2d 138] and cases cited; City of Oakland v. Williams, 15 Cal.2d 542, 550 [103 P.2d 168]; San Francisco v. Boyd, 17 Cal.2d 606, 617-618 [110 P.2d 1036]; Kennedy v. Ross, 28 Cal.2d 569, 575 [170 P.2d 904]; Ayres v. City Council of Los Angeles, ante, pp. 31, 37 [207 P.2d 1]. Thus in respect to municipal affairs the city is not subject to general law except as the charter may provide. (Heilbron v. Sumner, 186 Cal. 648, 650 [200 P. 409]; Muehleisen v. Forward, 4 Cal.2d 17, 19 [46 P.2d 969].) As recognized in the West Coast Advertising case, the levy of taxes for city purposes is a municipal affair; the collection, treatment and disposal of city sewage and the making of contracts therefor are likewise municipal affairs (Loop Lumber Co. v. Van Loben Sels, 173 Cal. 228, 232 [159 P. 600]), and neither may be held to be circumscribed except as expressly limited by the charter provisions. All rules of statutory construction as applied to charter provisions (Braun, Bryant & Austin v. McGuire, 201 Cal. 134, 143 [255 P. 808]; Hartford Acc. etc. Co. v. City of Tulare, 30 Cal.2d 832, 835 [186 P.2d 121]) are subordinate to this controlling principle. The former guide—that municipalities have only the powers conferred and those necessarily incident thereto (San Francisco v. Boyle, 195 Cal. 426 [233 P. 965])—is inapplicable. A construction in favor of the exercise of the power and against the existence of any limitation or restriction thereon which is not expressly stated in the charter is clearly indicated. So guided, reason dictates that the full exercise of the power is permitted except as clearly and explicitly curtailed. Thus in construing the city’s charter a restriction on the exercise of municipal power may not be implied.

The question then is whether the exercise of the power which is the subject matter of section 2(j) of the charter is to be deemed limited or controlled by the provisions of sections 2'(i) and 4.

Section 2(i) deals with the general taxing power of the city, which is “subject to the limitations hereinafter imposed.” Section 4 states the limitation, namely, that such tax “may equal but shall never exceed” a 75-cent rate.

Section 2(j) treats of the power to borrow money, and limits contracts of indebtedness to $5,000 except with the *600consent of two-thirds of the electors of the city. Bonds are required to meet the cost of the duly authorized greater indebtedness, the procedure for the creation and issuance thereof to be according to general law. There is in this section no language expressly withholding any existing power to levy taxes to discharge the bonded indebtedness. Nor is there in the tax limitation of section 4 a specific inclusion of an existing power to levy such special tax. As will be seen the power to tax for the purpose of discharging authorized bonded indebtedness is a necessary accompaniment of the power to contract the indebtedness. In the absence of specific allusion to that subject matter elsewhere in the charter, all the restrictions or limitations upon the exercise of the power to contract a bonded indebtedness including the requirement to tax to discharge it must be found in section 2(j). Thus sections 2(i) and 4 on the one hand, and section 2(j) on the other, treat of two distinct powers. The first must be deemed to have reference to the taxing power for general purposes; and the second to the power to tax for the municipal improvements as well as the authority tó contract therefor. Sections 2(i) and 4 may not impose by implication a limitation on the separately treated power to contract an indebtedness in excess of $5,000, which specified amount the framers deemed was the maximum which could be covered by the general tax rate.

Nevertheless the respondent purports to find in the language of section 2( j), adopting the procedure of the general law in creating and issuing the bonds, a limitation on any existing power to levy taxes to discharge an authorized bonded indebtedness. He says that, the reference to procedure in the creation and issuance of the bonds precludes a holding that the method of payment required by section 7 of the Bond Act was adopted. The effect claimed would leave incomplete the provision for the bonded indebtedness. In such case the direct reference to the general law is deemed sufficient to include the complete scheme. (Muehleisen v. Forward, supra, 4 Cal.2d at p. 20.) However, since the power to tax specially to discharge the bonded indebtedness exists independently of the provision in the general law, that power may be exercised unless the language of section 2(j) expressly prohibits it.

The duly conferred authority to create and issue bonds for the construction of the authorized sanitary improvements not only bestowed the power to levy a special tax to discharge *601the bonded indebtedness but made it the duty of the city to exercise the taxing power to that end. It has been recognized that when the municipality has authority to contract an extraordinary debt by the issuance of negotiable securities, the power to levy taxes sufficient to meet the obligation is conclusively deemed to exist unless the law (here the charter) clearly manifests a contrary intention. The power to tax is necessarily an ingredient of the power to contract, since the obligation can be met only through the instrumentality of taxation. The power so to tax is not implied but is express since it is a duty growing out of the authority to contract. The power to do the thing carries with it the authority to use the necessary means to accomplish it, and is not affected by a charter tax limitation. (United States v. New Orleans, 98 U.S. 381, 393-394 [25 L.Ed. 225]; Ralls County Court v. United States, 105 U.S. 733, 735-736 [26 L.Ed. 1220] and cases cited; Quincy v. Jackson, 113 U.S. 332, 337-338 [5 S.Ct. 544, 28 L.Ed. 1001] and cases cited; Dutton v. City of Aurora, 114 Ill. 138 [28 N.E. 461, 462]; City of Austin v. Nalle, 85 Tex. 520 [22 S.W. 668, 673, 960].) No ease presented or discovered denies this result in the absence of restriction expressly designed to withhold the power or place a limitation on its exercise. On the contrary, it has been indicated in this state that the discharge of that duty may not indirectly be repudiated by provision in the charter for a limitation of the tax rate which would render performance of the duty impossible. (Wilkinson v. Lund, 102 Cal.App. 767, 773 [283 P. 385].) The provisions of the charter do not expressly withhold or limit the exercise of the power, and in the absence of a limiting provision the authority to contract the bonded indebtedness includes authority to exercise the taxing power by levying a special tax to discharge it.

If it may be said that the charter provisions seem to be conflicting, it does not follow that they are irreconcilable. Pull force and effect may be given to both provisions when each is seen to have a different and distinct purpose. Assuming ambiguity, a construction which would prevent the city from issuing bonds for necessary public improvements authorized by the electorate woidd be unreasonable. The city adopted a construction favorable to the exercise of the power by the issuance of the 1923 bonds, and its interpretation was a proper one. The fact that the city has acted in conformity with this construction for a period of some 25 years *602is entitled to due weight. (Reuter v. Board of Supervisors, 220 Cal. 314, 323 [30 P.2d 417].) The effect of the contemporaneous construction is that the 75-cent tax limitation of section 4 of the charter was intended to curb extravagance in the exercise of the discretionary power to tax for general municipal purposes but was not intended to prevent the exercise of the taxing power for the purpose of discharging a bonded indebtedness duly authorized by the electorate pursuant to section 2(j) of the charter.

The taxing power sought to be exercised exists. There is no express limitation upon its exercise except that the bonded indebtedness must be duly authorized. The electorate, legislative body, and taxpayers of the city have governed themselves in accord with the existence of the power and without the tax limitation invoked by the respondent. The writ of mandate is appropriate to compel performance of the respondent’s official duty (Code Civ. Proc., § 1085); and the petitioner is entitled to the relief sought.

Let the peremptory writ issue.

Gibson, C. J., Carter, J., Traynor, J., and Spence, J., concurred.