City of Bentonville v. Browne, 108 Ark. 306 (1913)

May 19, 1913 · Arkansas Supreme Court

108 Ark. 306

City of Bentonville v. Browne.

Opinion delivered May 19, 1913.

1. Municipal corporations — mismanagement of funds — waterworks improvement district — remedy.—An owner of property within a waterworks improvement district has the right to sue to prevent the city from wasting or mismanaging or improperly diverting the fund of the improvement district. Sec. 13, art. 16, Const.; Kirby’s Dig., § 5485. (Page 311.)

2. Judgments' — parties—effect.—When a property owner brought suit to compel the city to lay a water main to his property, where the holders of city warrants are not parties to the proceedings, the chancery court has no authority to make an order affecting the validity of the warrants. (Page 311.)

2. Municipal corporations — waterworks improvement district— funds. — The chancery court has authority to order that a city keep separately from the general funds of the city, the funds of a waterworks improvement district, and account for the same. (Page 311.) ■

4. Municipal corporations — public revenue — administration. — • Courts can not administer the affairs of a municipality in the disbursement of public revenue. (Page 312.)

Appeal from Benton Chancery Court; T. H. Humphreys, Chancellor;

reversed.

STATEMENT BY THE COURT.

This appeal is a continuation of the case of Browne v. Bentonville, reported in the 94 Ark., page'80. The waterworks improvement district was formed coextensive within the corporate limits of the city (then town) of Bentonville, August, 1896. Appellee was then, and since continuously has been, the owner of a tract of land, consisting of about four acres, situated within the said improvement district. The city took over the waterworks plant, and has since continuously operated it under the authority conferred by section 5675 of Kirby’s Digest. After the city took over the plant, it kept no separate account of the receipts derived, nor of the expenses incurred, in its operation. All of the city funds, whether derived from the, waterworks plant, or from other sources, were placed to the credit of the city’s general revenue fund, and warrants were drawn against this fund by the city for all municipal purposes.

Appellee instituted a suit, the purpose of which was to compel the city to lay a four-inch water main to his property in order that he might have fire protection. As an incident to this suit, and for the purpose of showing that the city was able to construct this main, he undertook to show that the plant was being operated with great profit to the city, but that the city was using these profits for general municipal purposes. At the time of the installation of the plant, bonds were sold to pay for the cost of this improvement, which constituted a lien upon all the property within the improvement district, and appellee alleged that, in common with all other property owners, Ms property was burdened witb tbis lien, but that he bad derived no benefit from tbe waterworks, and would derive none unless tbe city was required to keep tbe accounts of tbe plant separate from its other funds, and be required to expend tbe net profits in tbe extension of tbe system, until all portions of tbe district bad tbe benefit of tbe improvement. During tbe progress of that trial, much proof was taken upon tbe question of the cost of the plant, and tbe expenses of maintenance and operation, and of its receipts, and finally there was filed by tbe attorneys in tbe case, a stipulation that tbe income derived from tbe waterworks plant for tbe years 1898 to July 1, 1907, inclusive, exceeded tbe expenditures for all purposes in tbe sum of $1,000, and it was further stipulated that tbe income bad equalled the expenditures since tbe last mentioned date. Tbe court found in tbe original case that tbe income of tbe plant bad been placed in tbe general revenue fund, and bad been paid out for ordinary purposes, and that tbe sum of $1,000 bad been received by tbe city in excess of tbe expenditures. Tbe court bad granted a temporary restraining order, which was made permanent, requiring the city to keep tbe funds separate, and to draw upon tbe funds of tbe waterworks plant by special warrants, showing' upon their face for what purpose they were issued; and that only such warrants should be paid out of said fund, as were given for tbe payment of the expense of tbis plant. The city was ordered to pay over to tbe credit of the waterworks fund tbis sum of $1,000 not later than July 1, 1909, and it was also ordered that tbe city furnish appellee witb a two-inch main to bis residence; and that thereafter water be furnished him from tbis main, upon terms similar to that under which it was furnished other residents of tbe district. Both parties appealed from tbis decree, tbe appellee contending that the court should have ordered appellant to lay a four-inch instead of a two-inch main; and tbe city contending that it should not have been required to lay any main. Pending tbe appeal, tbe city constructed tbe two-inch main as directed by tbe decree, but tbis court held that the decree was erroneous in requiring’ the city to do so, hut held that inasmuch as the decree had been complied with, it should he affirmed, and such was the order of the court. The purpose of that suit'manifestly was to compel the city to lay the four-inch main, and the other questions involved were collateral to that, and no other feature of the case was discussed in the opinion of this court.

On the 8th day of December, 1910, appellee was permitted by the court below to file a complaint and motion in that original cause, and the clerk of the court was ordered to issue a citation against the appellants, returnable on the first day of the January term, 1911, of that court, at which time permission was given appellee to maintain this present proceeding, for the alleged purpose of enforcing the terms of this original decree, which had been entered on the 26th day of August, 1908. In this pleading, which appellee calls a complaint and motion, the mayor, aldermen, recorder and treasurer of the city of Bentonville are made parties defendant, and it was alleged that they and their predecessors in office had failed and refused to perform the terms of this original decree, which was made an exhibit to the complaint and motion. It was alleged that these officers had disregarded the directions of this original decree in the following particulars: That they had been ordered to pay over to the credit of the waterworks fund the sum of $1,000, which should not he used except for the operation of that plant; and that thereafter, no warrants should he drawn against this waterworks fund except for the expenses of that plant, but that notwithstanding this order of the court, that they had issued a number of warrants against this water fund, which should only have been issued against the city’s general revenue fund. The evidence appears to establish the fact, as found by the chancellor, that the water plant had earned the sum of $1,000 at the date of the original decree, and had since that time been self-sustaining. But it appears that certain sums of money had been borrowed for the use of the water plant, and that warrants had been issued for the amount of these loans, before the date of the original decree, and were issued against the city’s general revenue fund, which fund, at the time of the issuance of the warrants, comprised all the city’s income, whether derived from the waterworks or other sources.

After this original decree had been rendered, an order was made by the council of the city, calling in all outstanding warrants' issued by the city, under the authority of section 5508, Kirby’s Digest, and at that time certain warrants owned by the First National Bank and the Benton County National Bank, of that city, and one Mrs. Ella Hegley, a resident of that city, were reissued. These warrants had originally been issued against the general revenue fund, but when reissued, the fact was ascertained by the council that they represented a loan that had been made to the water plant, and were accordingly made payable out of the funds of that plant instead of out of the city’s general revenue fund. The city complied with the directions of the original decree by transferring from its general revenue fund the sum of $1,000 to the credit of this water fund, and this money was used in cashing a warrant of Mrs. Hegley for that amount. It does not appear how the city raised this $1,000 in cash, for, at that time, and at all times since, the city has been heavily in debt, with no money in its treasury to the credit of the general revenue fund. The city officials contend that they have in good faith obeyed the provisions of this original decree by keeping separate accounts of the waterworks fund, and that they have issued no warrants against that fund except for loans of money actually made for the use and benefit of this plant; and they deny that the indebtedness, which these last mentioned warrants represent, was taken into consideration in the stipulation that the plant had earned the sum of $1,000.

The court found that appellee was entitled to have the original decree enforced, and that all receipts and expenditures had been taken into account in the stipulation; that a net profit of $1,000 had been earned by the waterworks plant, and found that this original decree bad been violated by paying Mrs. Iiegley this $1,000, wbicb had been transferred from tbe general revenue fund to tbe waterworks fund; and by issuing warrants, payable out of tbe waterworks fund, for debts contracted prior to tbe date of tbe original decree. And tbe court ordered that tbe city authorities should repay to this water fund the said $1,000, and that it should relieve tbe said water fund by depositing to its credit a sum equal to the outstanding warrants so found to have been wrongfully issued, or by calling them in. and cancelling them, and tbe city was given nine months in wbicb to perform tbe decree. This appeal is from that order of tbe court.

E. P. Watson, for appellant.

E. B. Wall, for appellee.

Smith, J.,

(after stating tbe facts). As an owner of property within tbe improvement district, appellee bad tbe right to sue to prevent the city from wasting, or mismanaging, or improperly diverting, tbe funds of tbe improvement district. Russell v. Tate, 52 Ark. 541; Jacksonport v. Watson, 33 Ark. 704; section 13, article 16, of tbe Constitution; section 5485 of Kirby’s Digest. But be bad no right to demand that tbe court order tbe city to construct a water main to bis property, and all other questions involved in tbe original decree were collateral to that one. Browne v. Bentonville, 94 Ark. 80. As to tbe court’s order, directing tbe action to be taken with reference to tbe outstanding warrants, payable out of tbe Avater fund, and in regard to their cancellation, it is sufficient to say that their holders are not parties to this proceeding, and tbe court was therefore without authority to make any order wbicb affects their validity.

We are of tbe opinion that tbe court had tbe authority to direct that these funds be separately kept, and accounted for, and bad tbe authority to make proper orders to enforce that decree, but we think there has been a substantial compliance with its terms, so far as tbe question could be decided Avith tbe parties before tbe court.

It appears that accounts have been separately kept, and that the $1,000 Avas actually paid out of tbe general revenue fund to the credit of the waterworks fund, although we do not think the court had the authority to administer and direct the expenditures of the city’s revenue subsequently collected. The courts can not take upon themselves the burden and responsibility of administering the affairs of the municipalities of the State in the disbursement of their public revenues. The rule in such cases is well stated in the opinion in the former appeal of this case. Browne v. Bentonville, 94 Ark. 80.

The decree of the court is therefore reversed and this supplemental complaint is dismissed.