Arthur v. City of Petaluma

This is a proceeding in mandate to compel the allowance and payment of a claim of petitioner against the city of Petaluma. The proceeding was commenced in the district court of appeal of the third appellate district, and was ordered transferred to this court because of the inability of the judges of that court to agree upon a judgment.

Petitioner’s claim was for printing done by him for the city during the fiscal year 1910-11, in his newspaper, the “Petaluma Daily Courier,” the contract for city printing for that year having been awarded to him as the lowest bidder for the work. The particular printing was the publication

The claim of the city substantially is that section 18 of article XI of the state Constitution precludes payment of this claim incurred in the fiscal year 1910-11 from any of the revenue resulting from the tax levy by the city council for the fiscal year 1916-17. Whatever might be our view in the absence of previous decisions of this court, we are satisfied that the construction given to this section of our Constitution by a long line of decisions is such as to compel us to sustain this claim of the city.

Section 18, article XI, of the Constitution, so far as here applicable, reads to-day as it did when first adopted in the

The constitutional provision was first considered by this court in San Francisco Gas Co. v. Brickwedel, 62 Cal. 641 , and was given a broad and liberal construction in view of the object it was desired thereby to attain. Under a strict construction it might possibly have been held that its only effect was to make void any indebtedness or liability incurred in excess of the income and revenue provided for the year, without the assent of two-thirds of the electors expressed at an election, leaving such indebtedness or liability as was not in excess of such income and revenue at the time of its creation unaffected by the provision, and a valid claim payable out of the revenue of succeeding years. But the court, through Mr. Justice Boss, said that it meant, not only that an indebtedness incurred contrary to its express provisions was absolutely void, but that “each year’s income and revenue must pay each year’s indebtedness and liability, and that no indebtedness or liability incurred in any one year shall be paid out of the income or revenue of any future year.” It was also said:

“The system previously prevailing in some of the municipalities, of the state by which liabilities and indebtedness were incurred by them far in excess of their income and revenue for the year in which the same were contracted, thus

creating a floating indebtedness which had to be paid out of the income and revenue of future years, and which, in turn, necessitated the carrying forward of other indebtedness, was a fruitful source of municipal extravagance. The evil consequences of that system had been felt by the people at home and witnessed elsewhere. It was to put a stop to all of that, that the constitutional provision in question was adopted. The change was eminently wise. A somewhat similar provision in the old Constitution with respect to state indebtedness saved the people of" the state a vast amount of money. (People v. Johnson, 6 Cal. 503 ; Nougues v. Douglass, 7 Cal. 65 .) We have neither the right nor the disposition, by judicial interpretation, to take away the wholesome restriction upon municipalities thus imposed by the Constitution. Of course, in giving effect to this radical change from the preexisting condition of things, it will not be strange if some shall be found to suffer. But it must be remembered that all are presumed to know the law and that whoever deals with a municipality is bound to know the. extent of its powers. Those who contract with it, or furnish it supplies, do so with reference to the law, and must see that limit is not exceeded. With proper care on their part and on the part of the representatives of the municipality, there is no danger of loss.”

In Shaw v. Statler, 74 Cal. 258 , [ 15 Pac. 833 ], it was held that the statement that “no indebtedness or liability incurred in any one year shall be paid out of the income or revenue of any future year” was a correct statement as to the meaning of the section, “at least in so far as the revenue of any particular year is required for the expenses of that year,” it not being necessary to go further in that case. But in Schwartz v. Wilson, 75 Cal. 502 , [ 17 Pac. 449 ], where it was attempted to pay a claim absolutely valid in all respects incurred in the fiscal year 1883-84 out of revenues for the fiscal year 1884^85, the statement in San Francisco Gas Co. v. Brickwedel, 62 Cal. 641 , was deemed to settle the proper construction of the section and forbid such payment. It has apparently never since been questioned that it is the construction that must be given the section, except for statements in one or two dissenting opinions. It was accepted as correct and followed in McGowan v. Ford, 107 Cal. 177 , [ 40 Pac. 231 ], Smith v. Broderick, 107 Cal. 644 , [ 48 Am. St. Rep. 167 , 40 Pac. 1033 ], Weaver v. San Francisco, 111 Cal. 319 , [ 43 Pac. 972 ],

The fact that petitioner has obtained a judgment against the city for the amount of his claim in an action brought for that purpose does not avoid the application of this constitutional provision. The judgment, of course, conclusively determines the question of the validity of his claim, but it still remains that, by reason of that provision, it cannot be paid out of the revenues of a fiscal year other than the one in which the liability or indebtedness was created. In Smith v. Broderick, 107 Cal. 644 , [ 48 Am. St. Rep. 167 , 40 Pac. 1033 ], the claim had been reduced to a judgment, and it was squarely held, after an exhaustive discussion, that the existence of the judgment did not preclude an investigation for the purpose of ascertaining what the nature of the original cause of action was. In Goldsmith v. San Francisco, 115 Cal. 36 , [ 46 Pac. 816 ], a similar situation existed, and the rule applicable was concisely and correctly stated by Mr. Justice Henshaw for the court as follows: “The reduction of the original claim to a judgment does not increase its dignity so as to authorize plaintiff to demand payment of it from any fund not subject to the primary demand.” (See, also, Higgins v. San Diego, 118 Cal. 524 , [ 45 Pac. 824 , 50 Pac. 670 ].) If there be anything in Johnson v. Supervisors of Sacramento County, 65 Cal. 481 , [ 4 Pac. 463 ], in conflict with this view, it must be deemed overruled by the later cases that we have just cited. If at the time the liability to petitioner was incurred such liability was not in excess of the revenue and income for the fiscal year, he was entitled to his judgment,

The legislative act of March 23, 1901, has been referred to. It purports to require the payment by the treasurer of any county, city, etc., of any final judgment “now existing or that may be obtained hereafter against any county, . . . city,” etc. By it, the county clerk is required to file with the auditor of the city a list of judgments of record in his office against the city at least fifteen days before the day on which the tax levy is to be made, the auditor is required to examine and audit the same and certify the list to the treasurer, and the governing body of the city is required “to include in the tax levy for the next fiscal year a rafe sufficient to pay all final judgments existing against” such city. The proceeding in regard to this claim was apparently in accord with the provisions of this act. But it is obvious that this act cannot be held available to petitioner for the enforcement of his demand against the revenue and income of a fiscal year subsequent to that in which the liability on which his demand is based was incurred. To hold otherwise would be to effect a violation of the constitutional provision. The Constitution is as binding upon the legislature as it is upon a city, and the legislature cannot require or authorize a city to proceed in defiance of its terms.

The conclusions we have stated as to the various points discussed are the necessary result of the settled construction of section 18, article XI, of the Constitution. This construction has now been accepted as settled beyond question for many years. We do not feel at liberty to depart from it. The fact that great hardships result in individual cases from an observance of the rule has been recognized in several of our decisions, but as has been well said, “this fact cannot afford reason for subverting the law or frittering it away.”

It was held in Lewis v. Widber, 99 Cal. 412 , [ 33 Pac. 1128 ], that the constitutional provision refers only “to an indebtedness or liability which one of the municipal bodies mentioned has itself incurred—that is, an indebtedness which the municipality has contracted, or a liability resulting, in whole or in part, from some act or conduct of the municipality,” and that consequently it has no application to the

There is no other point made that requires notice.

The alternative writ of mandate heretofore issued is discharged and the proceeding dismissed.

Shaw, J., Sloss, J., Melvin, J., and Henshaw, J., concurred.