Morris v. City of Oklahoma City

BLACKBIRD, Justice

(dissenting).

I cannot concur in the majority opinion denying the injunction. I regard the Trust Indenture, Ordinance, Lease Agreement and Bond Indenture- involved as parts of a scheme to circumvent the Oklahoma Constitution. Under the latter’s Art. X, sections' 26 and 27, a municipal election must be held before any incorporated city, such as Oklahoma City, can become indebted "in any manner, or for any purpose, to an amount exceeding, in any year" its income and revenue for that year. I believe all would agree that under the proposed plan, of which each of the above constitutes a documentary part, the City, through a Trust, is attempting to do indirectly what it, itself, cannot do directly under our Constitution; and, by such circumvention, the spirit, if not the letter, of that, document’s provisions is violated. Though trite, it is not inappropriate to remember that such a bulwark to democracy and local self-government may be rendered quite as meaningless and ineffectual by circumvention, as by direct violation. When, as under, those portions of *141our Constitution, the authorized debt limit is fixed in terms of revenue, it seems to me that a city exceeds that limit just.as truly by giving up part of its existing revenue and keeping its indebtedness at its existing level, as by keeping its existing, revenue and incurring increased indebtedness; and, in turning over to this proposed “Airport Trust” its present revenue (and that for years to come) from the Will Roger’s airport facilities, Oklahoma City, or rather a segment of its officialdom, is doing just that. In other words, when debt limit is fixed in terms of equality of revenue to indebtedness, ' it makes no difference whether the indebtedness is increased, or the revenue is decreased, the result is the same — the indebtedness becomes greater than the revenue and the taxpayer must foot the bill for the difference. The cited provisions of the Constitution provide that before this occurs, he, the taxpayer, must give his assent to it, but that has not been done in the case of the proposal before us. It is conceded, as plaintiff points out, that: “Except for the plan here contemplated the revenues from the airports would be available for general purposes or for' the ordinary budget of Oklahoma City.”

In the past, this Cotirt has consistently struck down devises to circumvent these provisions of the Constitution, its latest stand being made in Application of City Council of City of Tahlequah, Okl., 285 P.2d 418, which involved bonds proposed to be issued by Tahlequah to pay for a natural gas distribution system — a proposal that would doubtless have been comparatively more essential, and perhaps even more beneficial, to' the future growth and well-being of that city, than the airport expansion proposal involved here, would be to Oklahoma City. There, We followed a long list of cases, involving attempts by other Oklahoma cities to exceed the constitutional debt limit, in steadfastly applying the rule that where the Constitution provides the means and manner of doing that, such means and manner is exclusive, and must be strictly followed.

We should not allow our attention to be diverted from the contravention of these provisions by the fact that,. according to the plan, the proposed bonds will be retired from the income of the Trust which it is hoped will continue at a high-enough level, long enough, to accomplish such retirement. Under the plan, not only is a portion of Oklahoma City’s existing income, together with use of the airport facilities which earn it, taken away from the City for a period of years and handed over to the Trust for the purpose of helping it retire the bonds it will issue, but the City is further obligated to make new expenditures, not met by present annual revenue,- over a' possible period of twenty-seven years, as shown by both the majority opinion and the dissent-' ing opinion of Justice Jackson. I can see no difference, in reality, or on principle, between this “robbing of Peter to pay Paul” and a plan that would contemplate Oklahoma City’s keeping that income, but going into debt directly to make the proposed airport improvements. The only real difference between the two (and the thing that the plan has been devised to obviate) being that, in the latter situation, the matter of issuing the bonds and incurring the indebtedness would have to be voted on by the taxpayers. Nor do I think that, under the previous decisions of .this Court, it makes any difference that the bonds will be retired partially from what will, in name, be Trust revenue (instead of Oklahoma City revenue, as formerly) rather than from municipal taxation. Defendants’ argument aimed at diverting our attention from the proposed contravention of Art. X, sections 26 and 27, by showing that two other sections of Art. X are not violated, is rewarded in the majority opinion by the inclusion of two state agency cases they cite, both Oklahoma Planning And Resources Board cases. One of them, 201 Okl. 178, 203 P.2d 415, is quoted to the effect that sections 24 and 25 apply only to obligations to be paid out of taxes and do not prohibit incurring debts that are payable exclusively from a special fund. As indi*142cated in the dissenting opinion of Justice Jackson, and conclusively demonstrated by numerous cases cited by plaintiff, including the Tahlequah case, supra [285 P.2d 421], this rule does not apply to city cases. In the cited case, we said:

“ * * * Municipalities are limited and restricted by the provisions of Art. X, section 27, * * * which has no application to the state. * * * ”

The reason that state agencies may issue self-liquidating bonds under sections 24 and 25 (when authorized by legislative enactment), while, under sections 26 and 27, municipalities cannot, is lucidly explained in 3 Okla. Law Rev., at page 338, as follows :

“ * * * a political subdivision, such as a municipality, has no residuary power. All power possessed by a municipality is derived from specific grants by the constitution or legislature. Therefore,' a grant of power by the constitution to the municipalities to create a debt is the exclusive means by which the debt may be created. ‘The municipal subdivisions can, in the exercise of their contractual power, do only those things which incur an expenditure of public funds which are expressly authorized by the Constitution and statutes of the state, whereas, the rule governing the sovereign is entirely to the contrary. The sovereign speaks through its legislative body * * * which has no limitations as to expenditures, save and except those which are expressly placed, on its exercise by the Constitution * * * ’ Therefore, the provisions of Sections 23, 24, and 25, Article 10 of the Constitution are merely limitations upon the power of the legislature to create ‘debts’, of the state, and without a direct or indirect violation of these provisions, the'legislature may exercise its prerogative in financing facilities of the state. On the other hand, the provisions of Sections 26 and 27, Article 10 of the Constitution are merely grants of powers to municipalities, and the exclusive means by which the municipalities may carry on financial operations.” (Emphasis ours.)

And, in Zachary v. City of Wagoner, 146 Okl. 268, 292 P. 345, 348, this Court said:

“We are not unmindful of the rule followed in some jurisdictions that the purchase of property does not create an indebtedness if the purchase price is to be paid out of the income therefrom [citing cases] but we cannot follow such holding. In our opinion, this is but another attempt to nullify and evade the wholesome constitutional limitations upon the power of municipalities to create indebtedness and to usurp powers never intended to be granted to municipal officers. The reasoning in support thereof is the ingenious argument by which such attempts have ever been supported. Under the decisions of this court and the Constitution and laws of Oklahoma, the agreement * * * creates an indebtedness no matter from what source the funds are to be derived from which the payment is to be made. Sections 26 and 27, article 10, supra, contain nothing that limits their application to indebtedness to be paid from funds derived from ad valorem tax levy. They are general in their terms and they will be applied by this court to all manner of indebtedness, no matter how created or from what source the indebtedness is to be paid. As well might a municipality contend that an indebtedness was not an indebtedness because it was to be paid from receipts from gross production tax or other sources of income other than ad valor-em taxation. We cannot give our approval to any such theory of the law.” (Emphasis ours.) • ■

Nor do I think the Legislature intended that the Oklahoma Trust Act, Tit. 60 O.S. 1951 § 175.1 et seq., should ever be used (as it is herein proposed to do) to violate *143or circumvent our Constitution. It took the precaution of inserting in said Act the provision, sec. 176, that no funds of the Trust’s beneficiary from sources other than Trust property, or the operation thereof, shall be charged with or expended for the execution of the Trust without action of the beneficiary’s legislative authority. And, under Art. V, sec. 53 of our Constitution not even the city’s legislative authority, the city council, can abate, commute, reduce or forgive tax obligations due the city; so, how is it that it can turn over to a Trust, without compensation or remuneration (if the income of the Trust turns out to be insufficient to more than pay the expenses thereof and the bonded indebtedness) property it has acquired with the proceeds of such tax obligations? In this connection, see Ivester v. State ex rel. Gillum, 183 Okl. 519, 83 P.2d 193, in which we cited, and quoted with approval, City of Louisville v. Louisville Ry. Co., 111 Ky. 1, 63 S.W. 14, 17, 98 Am.St.Rep. 387. The latter case quoted from Agnew v. Brall, 124 Ill. 312, 314, 16 N.E. 230, 231, in part, as follows:

“ ‘They (city council) have no power to squander or give away the funds and property of the incorporation, but all property within their control belonging to the incorporation must be honestly applied to the uses and purposes specified in the act of incorporation. The city council have no power to sell or in any manner dispose of the property of the corporation without consideration * * *.’ ”

There the court goes on to show that what a municipal legislative body cannot do directly, it cannot do indirectly. Of course, in the plan before us, the city does not sell or dispose of any airport facilities but it relinquishes, to the proposed Trust, the income therefrom. As said in State ex rel. Campbell v. Cincinnati Street Ry. Co., 97 Ohio St. 283, 119 N.E. 735, 742:

“ * * * the control of the income is the thing that will give substance and effect to the credit and financial power of those controlling or receiving it. It is the income that gives value to such a property as this. From the nature of the property, its purposes and uses, a pledge of the income is a pledge of the capital.” (Emphasis ours.)

I do not think that, under our Constitution, the city council has the power to give away any part of the city’s revenue in the manner proposed — and it may well be a “give-away”, if the Trust’s future income happens' to fall very far short of the optimistic estimate upon which the plan’s proponents rely so heavily for its approval. That this will be the result only in such event, or contingency, in my opinion, makes no more difference than it would if the City did “not become obligated (to pay off the bonds) until the happening of some contingency * * * ”. See City of Tulsa v. Langley, 196 Okl. 680, 168 P.2d 116, 117. In that case, we held:

“The constitutional limitation on indebtedness established by Section 26 of Article 10 of the Constitution of the State of Oklahoma applies to transactions connected with a municipally owned and operated * * * public utility when the method of operation is such that the funds derived from its operation are directly or indirectly connected with taxation and the transaction involved is not clearly sever-able and self liquidating.” (Emphasis ours.)

In that case, we quoted from Iron Products Investment Co. v. City of Picher, 10 Cir., 83 F.2d 443, 446, in part as follows:’

“ ‘Furthermore, the waterworks system was acquired through general obligation bonds which are a direct burden upon the taxpayers of the City. See Perrine v. Bonaparte, 140 Okl. 165, 282 P. 332, 334. Debts created in excess of the annual income and revenue of the City, although payable solely from revenue of the waterworks, would cast an incidental burden on the taxpayers of the City and would be within the limitation of Section 26, supra. [Citing cases.]’”

*144Defendants (albeit “lcft-handedly”) concede, as they must, that the present .case is different from the cases of Robinson v. Hal Johnson & Co., 206 Okl. 397, 243 P.2d 657, and Board of County Commissioners of Oklahoma County v. Warram, Okl., 285 P.2d 1034, relied on in the majority opinion in its holding that the plan in question is authorized by the Oklahoma Trust Act, in which it plainly appears that none of the funds or income of the Trusts involved had their origin in public funds. Their only answer to this is that: “In some of the cases where leasing of the facility was approved * * * rentals theretofore received by the municipality would pass to the lessee.” Then they further say: “It certainly must be obvious that any airport or other business utility would yield to its owner some revenue, whether large or small, and whether disclosed by the opinions or not.” In view of what I have just said concerning the two Oklahoma cases involved, the' quoted statement can only be considered as recognition by the defendants, themselves, of the weakness of their position, and at the same time, it constitutes a tacit concession of the weakness of the majority opinion’s only footing or foundation. As far as I have been able to ascertain, the only cases defendants cite wherein public funds were turned over to the Trusts involved are from other jurisdictions not subject to application of constitutional provisions that have been construed as have those sections of our Constitution involved here, always been construed by this Court.

In view of the foregoing, I would hold invalid and unconstitutional the plan submitted, and, accordingly, grant the injunction. In ruling contra, this Court is setting a dangerous precedent that may well prove the “opening wedge” in breaking down our Constitution’s protection of taxpayers against the dissipation, divestation or diversion of their municipality’s revenue and the incurring of potentially “back-breaking” or bankrupting municipal indebtedness; for, if that stalwart document can be circumvented in Oklahoma City for the purposes involved here, the same can be done in other state cities for a variety of different purposes, and/or excuses, with the result that the portions of the Constitution herein cited will, in effect, have been amended, repealed or emasculated without the electorate ever having had any direct voice in the matter.

Granting the injunction would not necessarily stand in the way of accomplishing the ends sought by the plan involved here. If those ends are good and economically feasible, Oklahoma City’s voters would probably give their approval to incurring further bonded indebtedness to accomplish them. But, whether they be good or bad, their accomplishment should be regulated by the will of the people, rather than by this Court’s approval of a device to circumvent that will. Where the Constitution provides the manner and means, “such manner and means is exclusive.” Application of City Council of City of Tahlequah, supra.

I therefore respectfully dissent.