Appellant, a resident taxpayer and water user of Springer, N. M., sought to enjoin the appellees, the mayor and board of trustees of the town of Springer, from making, executing, and delivering to the Reconstruction Finance Corporation $37,500 revenue bonds for a loan of an equal amount, the bonds to be paid exclusively from net revenues to be derived by the municipality from the operation of its municipally owned waterworks system ; the money to be used in the betterment, replacement, and improvement of the present system.
The proposed bonds are to be issued pursuant to Laws 1933, c. 57. (House Com. Sub. for S. B. § 17.)
The appellees demurred to the complaint, the court sustained the demurrer, entered judgment denying the relief sought, and the case is before this court on appeal.
Considering each proposition of law as presented, we first come to the appellant’s contention that the proposal to issue the bonds is the contracting of a “debt” within the meaning of N. M. Const, art. 9, § 12, and that without submitting the question to a vote of the taxpaying electors, and without a provision to levy a tax upon all taxable property within such town sufficient to pay the interest and to extinguish the principal, is contrary to N. M. Const. art. 9, § 12.
The rule applicable in the instant question is well stated in 19 R. C. L. § 281, p. 985: “It is generally held that a limitation upon municipal indebtedness is not violated by an *386obligation which is payable out of a special fund, if the municipality is not liable to pay the same out of its general funds should the special fund prove insufficient, and the transaction by which the indebtedness is incurred cannot in any event deplete the general resources of the municipality. But the mere fact that a special fund is created for payment is not enough to make the obligation valid. The creditor must look to the fund alone for his recompense; and if the municipality is liable generally, an indebtedness is created within the meaning of the debt limit provisions. * * * When the receipts from a municipal water supply are pledged to meet an indebtedness incurred in establishing the waterworks, and the creditor has no right to look beyond this source for payment, it has been held that there is no indebtedness in the constitutional sense.”
See the following cases: Quill v. Indianapolis, 124 Ind. 292, 23 N. E. 788, 7 L. R. A. 681; City of Laporte v. Gamewell Fire Alarm Tel. Co., 146 Ind. 466, 45 N. E. 588, 35 L. R. A. 686, 58 Am. St. Rep. 359; Kelly v. Minneapolis, 63 Minn. 125, 65 N. W. 115, 30 L. R. A. 281; Vallelly v. Park Commissioners, 16 N. D. 25, 111 N. W. 615, 15 L. R. A. (N. S.) 61.
The idea of a “debt” in the constitutional sense is that an obligation has arisen out of contract, express or implied, which entitles the creditor unconditionally to receive from the debtor a sum of money, which the debtor is under a legal, equitable, or moral duty to pay without regard to any future contingency.
Keeping in mind the rule that there is no “indebtedness” in the constitutional sense unless there is either a legal, equitable, or moral obligation on the part of the town of Springer to pay the bondholders of the proposed issue out of other moneys than the net revenue from the improved waterworks system, we find that section 5 of the act undfer which it is proposed to issue the bonds is as follows: “It is hereby declared that revenue bonds, issued under the provisions of this Act, shall not be considered or held to be general obligations of the municipalities issuing them, shall be collectible only out of the net revenues derived from the operation of the utility whose income is so pledged, and each of the bonds of any issue of revenue bonds so issued under the provisions of this Act shall recite on its face that it is payable and collectible solely from the revenues derived from the operations of the utility, the income of which is so pledged, and that the holders thereof may not look to any general or other fund for the payment of principal and interest of such obligation.”
This section of the legislative act makes it clear that the proposed bonds are not to be considered or held to be general obligations of the municipality, are collectible only out of the net revenues derived from the operation of the utility whose income is pledged for that purpose; the bonds on their face are to recite that the principal and interest are payable and collectible solely from the revenues derived from the operation of the utility, and such recital is notice to the holder that he may not look for his recompense *387to any general or other fund for the payment of principal'or interest. The city incurs no liability payable out of its tax or other revenues on account of the issuance of the revenue bonds, and the act negatives any such liability.
The town of Springer, as such, has no moral, equitable, or legal duty to pay out of any fund except the net revenues of the plant which is a special fund out of which the revenue bonds are to he retired. If the municipal officers discharge the duty devolved upon them by the act, namely, to maintain rates sufficient to raise revenues to pay the interest and principal on these bonds, they have fulfilled their duty. In the event of their failure to do so, an action in mandamus can be brought pursuant to section 6 of said act to compel them to perform their duty; in no event is there any financial liability created which will impose a debt upon the municipality. The debtor pledged the net revenues. The creditor knows exactly where to look for his money, and knows he cannot look elsewhere. The legal nnd equitable obligations are clear and well defined, and the moral obligation in this case does not go beyond the legal or equitable.
In the case of State v. Regents of University of New Mexico, 32 N. M. 428, 258 P. 571, an injunction was sought to restrain the regents of the University of New Mexico from issuing $190,000 worth of building and improvement bonds, the interest and principal of which were to he paid out of the income from University land, without mortgaging the land in any manner. It was contended that the issuance of said bonds was contrary to N. M. Const. art. 9, § 8, in that there was no provision for an annual tax levy sufficient to pay interest and provide a sinking fund, and that the creation of such debt had not been submitted to a vote of the people for approval (identical with the appellant’s contention in this case, though construing a different section of our Constitution). We said: “The Legislature therefore had power to authorize the University to make such use of its income as was deemed best. This is all that is contemplated by chapter 47, Laws 1927, and all that is proposed by the University. It proposes to contract with its bondholders that it will appropriate out of its income sufficient sums of money to pay interest and provide a sinking fund for the retirement of the bonds. It does not propose to mortgage its property in specie. It simply agrees to pay out of its income. How it can be said that this will be an obligation of the state, we cannot understand. This is simply a contract of the University to pay out of a designated fund when received. It is no more an obligation of the state than would be the obligation to pay the salaries of the University faculty.” State v. Regents of University of New Mexico, 32 N. M. 428, at page 430, 258 P. 571, 572.
In purpose and effect nothing more is proposed here. The town of Springer, desiring to extend and improve its municipally owned water system, proposes to issue bonds in the sum of $37,500 with which to make such ex*388tensions, betterments, and repairs, and proposes to pledge the net revenue from such water system to pay the interest and provide a sinking fund to retire said bonds, and to maintain rates sufficient to provide revenues for' such purpose. That is what is authorized by Raws 1933, c. 57. In its effect it .is not a “debt” of the town, simply an agreement to pay out of the net revenues of the waterworks when received, and is no more a “debt” of the municipality within the constitutional sense than would be a debt incurred to pay for the ordinary cost of repairing a water main. 1
The appellant contends that the statute requires the town to establish and collect water rates sufficient to cover the payments to become due, and, failing to collect sufficient to meet the interest and sinking fund requirements, the town would become generally obligated. We see no merit in such theory. The undertaking of the town of Springer is not a guaranty or pledge that the interest or the bonds will be paid, but only a pledge that the town of Springer shall establish a rate that will do so. Section 6 of the act provides that the governing body issuing the bond must establish such rates for services rendered as will create an income sufficient to pay all reasonable expenses of operation, and create a net revenue which shall be sufficient to pay interest coupons when due, and provide out of such net revenues a sinking fund which shall be adequate to discharge said bonds as and when they shall mature, and such rates must be continuously maintained an-til'the bonds are retired, and optional at the end of ten years, and due in not more than twenty years. The fixing of a proper rate and the application of the revenue in the manner directed by law constitutes the legal, equitable, and moral duty of the town board of the municipality, and, failing in that, the bondholder may apply to the court to have such rates established and applied. The charge is upon those who use the water, and not upon the taxpayers, and the taxpayer cannot be called to aid the water user in the retirement of these bonds. The credit of the city is not extended, nor is any money which is derived from taxation or other existing sources of revenue pledged in the payment of the interest or principal upon the bonds, and the city cannot be coerced into applying any of its general revenue.
It is abundantly clear that no indebtedness can possibly result against the town of Springer from the issuance of the revenue bonds, and these bonds are not within the inhibition of the Constitution.
The weight of authority is in accord with this view. Note, 72 A. L. R. 687.
The next question presented by the complaint and demurrer is whether or not the issuance of the contemplated revenue bonds by the town of Springer is in contravention of the provisions of the N. M. Const. art. 9, § 13, which is as follows: “No county, city, town or village shall ever become indebted to an amount in the aggregate, including existing indebtedness, exceeding four per centum on the valúe of the tax*389able property within such county, city, town or village, as shown by the last, preceding assessment for state or county taxes; and all bonds or obligations issued in excess of such amount shall be void; provided, that any city, town or village may contract debts in excess of such limitation for the construction or purchase of a system for supplying water, or of a sewer system, for such city, town or village.”
Whether the term “indebtedness” referred to in this section of the Constitution is the same as the term “debt” in the previous section need not be determined herein, for the apparent reason that the contemplated revenue bonds, if they create an “indebtedness,” within the meaning of N. M. Const. art. 9, § 13, are clearly within the exemption permitting any city, town, or village to contract debts in excess of such limitation for the construction or purchase of a system for supplying water.
N. M. Const. art. 9, § 13, which limits the amount of indebtedness which a city, town, or village may contract, specifically exempts debts contracted for the purpose of the construction or purchase of a system for supplying water from the operation of the 4 per cent, limitation, and there is no limitation imposed upon the amount of indebtedness which may be contracted for such purpose. City of Albuquerque v. Water Supply Co., 24 N. M. 368, at page 377, 174 P. 217, 5 A. L. R. 519; Lanigan v. Gallup, 17 N. M. 627, 131 P. 997.
Whether revenue bonds issued by a municipality for other purposes than supplying water or a sewer system' are such as would he valid or void under N. M. Const, art. 9, § 13, and are within the prohibition, we do not decide in this instance. '
The next issue presented is, that no authority exists to pledge the revenue of the existing plant as well as the net revenues from the proposed improvements to the payment of interest and retirement of the bonds, and that such pledge constitutes a “debt” within the meaning of our Constitution.
We see no merit in this theory. The town, under the law, may pledge the present revenue from the existing plant, and can certainly pledge the future income of the enlarged, or improved plant. It would be a physical impossibility to determine what portion of the proposed revenue is attributable to the improved plant in its entirety, to the improvements alone, or to the present plant.
“The plaintiff, however, conceding that if the town were acquiring a wholly new plant an agreement to pay out of the revenue thereof only and a pledge of the revenue therefrom to pay the purchase price would not be a debt, and that such an agreement and pledge of the revenue of the mere improvements would not be such, insists that an agreement to pay out of the income of property already acquired and a pledge thereof creates a debt within our Constitution, and distinguishes Shields v. Loveland, *390 supra [74 Colo. 27, 218 P. 913], by saying that there was, at the time of the issue of the Loveland bonds, no income from the plant of that city as it then stood.
“We see, however, no difference in substance between a promise or pledge of the future income of property which now has an income and a promise or pledge of the future income of property which now has none. If one would make the sum secured a debt, the other would. In either case the income is produced by property already owned by the city, which seems to be the condition which is condemned by the cases which plaintiff cites on this point.”
The next issue presented by the complaint and demurrer is that the proposal to pledge the net revenues of the improved utility to the payment of the revenue bonds, and that said revenue bonds while outstanding shall have a right of priority of payment from the net revenue over existing general obligation bonds of said town, is violative of the provisions of article 14 of the Constitution of the United States, because the pledge of all net revenues of said utility to the payment of said revenue bonds impairs the rights of holders of existing outstanding water bonds.
We assume that the appellant has reference to the provisions of article 1, § 10, of the Constitution of the United States, being the section prohibiting the enactment of any law impairing the obligation of contracts.
It appears from the record that the present existing and outstanding water bonds are of the series of June 15,1916, issued pursuant to article 11, c. 75 (§§ 3716-3722), 1915 Code, in the total sum of $21,000, with accruing interest, out of an original issue of $32,000, bearing interest at the rate of 5% per cent, per annum, due on June 15, 1946, callable at any time after June 15, 1936, the proceeds of which bond issue were used by the municipality for the acquisition of the present plant
The 1916 bonds are general obligation bonds, issued on the faith and credit of the community, payable out of a levy upon all the taxable property in the community and not in anticipation of any revenue from the waterworks. It would be as reasonable and logical to state that the town of Springer cannot apply the money derived from occupation tax licenses on the purchase of a fire truck or other fire extinguishing equipment, because the surplus of said occupation license revenue after meeting ordinary municipal requirements might be employed to retire existing bonds, and that the holder of existing bonds is entitled to have the same credited to the bond fund rather than permit the same to be applied on the fire truck, and therefore such expenditure of occupation tax revenues for fire fighting equipment is an impairment of the obligation of the rights of the bondholder contrary to article 1, § 10, of the United States Constitution, or of article 2, § 19, of our own Constitution.
The existing 1916 bonds have no present or future lien either upon the waterworks or the revenues therefrom, and the town of Springer has unquestioned power'to pledge the net rev*391enues of the waterworks to retire the proposed bonds as and when issued.
In the event of default in the payment of any of said 1916 bonds now outstanding, either as to principal or interest, the holders thereof would be clearly limited in their remedy to the bond fund created by the tax levy provided by the ordinance under which the bonds were issued, and, in the event of its insufficiency, to a general judgment against the town of Springer for the amount due and a judgment levy as provided by the statutes of this state upon all of the taxable properly within the limits of the town of Springer, the proceeds of which would be used to satisfy said judgment. The bondholders would have no specific lien upon the waterworks or the revenue therefrom even after judgment. They could not impound and’sequester the revenues of __ said water system, nor would they have any right to seize by any known process the municipally owned waterworks. Their remedial rights would be limited to obtaining a judgment, and a mandatory order if need be, requiring the levying of a judgment tax upon all of the taxable property within the town for the purpose of paying said judgment.
The phrase “the faith and credit of the Village of Springer are hereby pledged for the punctual payment of principal and interest of this bond,” contained in the 1916 bonds, has reference to the legal duty of the municipality to levy the tax provided for the payment of the interest and the retirement of the principal of the existing bonds, and did not in any manner contemplate a lien upon the waterworks that were purchased with the money derived from the sale of the 1916 bond issue, or a prior right to the revenue from said waterworks.
The appellant in his complaint contends that Laws 1933, c. 57, is in conflict with 1929 Comp. St. c. 90, art. 26 (Laws 1919, c. 47, as amended by Laws 1925, c. 51), in that the 1933 law requires the net revenue derived from tlie operation of the waterworks to be pledged to the payment of the proposed bonds, whereas chapter 90, art. 26, supra, requires said net revenues, after paying for the maintenance of the utility in good repair and the improvement and extension thereof and the payment of legitimate operating expenses, to be used in the payment of interest due on existing bonds, and that therefore the pledging of the net revenues to the payment of the interest and principal of the proposed bonds deprives the existing bondholders of a right to have the net revenues applied first to the payment of interest on the existing bonds before applying said net revenues as security for a new bond issue, and such action imposes a burden on the taxpayer to meet the interest requirement of the existing bond issue by a tax levy on his property. Appellees contend that chapter 57 repeals by implication 1929 Comp. St. c. 90, art. 26.
Whether the holders of the existing bonds have any vested right in the maintaining of the rates contemplated by article 26, supra, and the application of the revenue in the manner provided thereby, need not be determined *392herein, as the appellant is not a bondholder, and no determination of that question would be binding on a holder of the 1916 bonds.
In 1919 the Legislature adopted a policy of retrenchment in municipal expenditure for the expansion of municipally owned utilities, limiting such expenditures to present earnings, and provided by Laws 1919, c. 137, now 3 929 Comp. St. § 90-1001, that no incorporated city, town, or village be permitted to issue or negotiate any certificate of indebtedness, the payment of which is secured by a pledge of, or lien upon, any pz-operty, or the income or revenue derived therefrom, belonging to such municipality, and that all such certificates or other evidence of indebtedness issued contrary to the provisions thereof shall be void, and by Laws 1919, c. 47, directed the manner in which the revenues from municipally owned utilities must be applied.
Laws 1919, c. 47, made it the duty of the municipality to fix, establish, chai-ge, and collect for the service rendered rents, rates, charges, and prices which will furnish sufficient funds to maintain the public utility in good repair, and sufficient funds to improve and extend the same, and to pay intez-est on the existing bonds, and it became the duty of the municipality from and after March 13, 1921, to not only fix, establish, charge, and collect for the service rendered by the public utility such rents, rates, charges, and prices as will furnish sufficient funds to meet the requirements of the act under the designated provisions of (a) and (b), but also (c), to wit, the creation of a sinking fund provided by the terms of the bonds or the law governing their issue. The Legislature in 1925, by chapter 51 (Comp. St. 1929, § 90-2603), relaxed its strict policy, and amended the law as follows:
“Sec. 3. It shall be the duty of every municipality coming within the provisions of this act to fix, establish, charge and collect for the service rendered by the public utility such rents, rates, charges and prices as will furnish sufficient funds to meet the requirements of this act and to apply such funds in the manner provided by this act and in no other manner; Provided, however, that the raising of sufficient funds, as provided by this act, to create a sinking fund shall be optional with the municipality.”
This law became effective June 16, 1925. Prom March 13, 1921, to June 16, 1925, it was mandatory that municipalities establish rates sufficient to provide for the retirement of the principal of the outstanding bonds, and after June 16, 1925, it was optional with the governing municipal board to either establish the necessary rates to meet the requirements of (c) out of earnings of the plant or permit the creation of the sinking fund to retire the principal by a tax levy on property as provided by the ordinance issuing th'e bonds.
The policy adopted by chapter 57, Laws 1933, is not necessarily a reversal of the policy of the state adopted in 1919, but is a relaxation of the strict policy.
The apparent purpose of the 1933 law is an emergency measure to enable the municipalities of the state, where the present revenues of the utility are insufficient to pay for ex*393tensions or for betterments, and such municipalities have failed to set aside a sufficient sum out of past earnings to. provide for betterments and extensions, and it is immediately urgent to make improvements and extensions, the municipality can make such improvements by the issuance of bonds secured by a pledge of future revenues. ' It will continue to be the duty of municipalities to conform to the provisions of 1929 Comp. St. e. 90, art. 26, in the conduct of municipal water-work systems, except where they issue bonds under chapter 57, in which event article 26, supra, must give way to the 1933 act.
Laws 1919, c. 47, was enacted and designed to preserve municipally owned public utilities from being despoiled by incompetent or corrupt city officials. See Dreyfus v. Socorro, 26 N. M. 127, 189 P. 878. Its purpose and object was to require municipalities to keep in repair water systems constructed for the benefit of the inhabitants of the city, to require the charging of such rates as would enable the municipality to keep such plant in repair and improve and extend the same as and when needed, and to meet the interest and principal on the bonds issued for the construction or purchase of such system, and, upon failure of the municipal authorities to do so, the court may appoint a receiver upon the application of a taxpayer to, carry out its purposes. This statute was designed to prevent the operation of the plant in an incompetent manner and to prevent an improper diversion of the revenues derived from the operation of the utility, and to guide and direct the application of such revenues. It was intended as a business code and rule to prevent extravagance and misapplication of revenues from public utilities and to direct the use of the surplus revenue, after meeting the cost of operation, to relieve the burden of the taxpayer rather than permit such revenues to be expended in new avenues of municipal adventure, and afforded taxpayers a j'udicial remedy for what might otherwise become an intolerable and oppressive political condition with reference to service by a municipally owned public utility. State ex rel. City of Roswell v. State Tax Commission et al., 34 N. M. 303, 280 P. 258. The Legislature has the unquestioned power to change the policy, and did, by the enactment of chapter 57, supra, so that the revenues from the waterworks which prior thereto were required by the statute to be placed in a fund to meet interest payments on existing bonds may be pledged to secure revenue bonds. The appellant, as a taxpayer, had no vested right in Laws 1919, c. 47, which the Legislature could not repeal.
Did the taxpayer or bondholder have any vested right in chapter 47, making it mandatory to maintain sufficient water rates to create a sinking fund which the Legislature could not take away by Laws 1925, e. 51? Apparently not.
If the Legislature first made it mandatory to provide and establish a rate sufficient to meet (a), (b), and (c), and subsequently amended the law leaving (c) optional, cannot it now make (b) likewise optional? We can see no distinction. Clearly chapter 47, Laws 1919, must give way to chapter 57, Laws 1933.
*394The 1933 act does not repeal 1925 Comp. St. c. 90, art. 26, but is supplemental thereto, and a method is provided to enable municipalities which have insufficient funds on hand to make the necessary improvements, and, when immediately necessary. to raise funds for the improvement and extension of the utility thereof, may, in anticipation of future revenue, raise such needed funds by the issuance of revenue bonds, and provide that such bonds so issued will have a lien on the net revenue of said plant without burdening the taxpayer through the issuance of general obligation bonds. We deem such grant of power by the Legislature to the municipality as lawful and not in violation of article 26, supra.
The only .other issue presented by the com • plaint and demurrer requiring our consideration is that the rates to be charged by a municipal corporation owning its water system are under the control of the State Corporation Commission and not under the jurisdiction of the municipal corporation, and therefore the Legislature cannot direct the town of Springer to contract the maintenance of rates in conformity with Laws 1933, c. 57.
We find no authority cited by appellant and no provision of the Constitution or statutes where such power is granted to the Corporation Commission, whereas Laws 1933, c. 57, the- law in question, specifically grants such power to the municipal corporation in this instance, and makes it mandatory upon the town board to fix rates sufficient to meet the interest and the creation of a sinking fund, and is a proper grant of authority by the Legislature to a municipal corporation, and not in contravention of any constitutional powers of the State Corporation Commission.
The appellant concludes his brief with the contention that the issuance of revenue bond’s pursuant to • the legislative act under consideration, and the pledge of rates for a long period of time to retire such bonds, creates a grave situation where cities can incur indebtedness and get money from the government which the cities believe will never have to be repaid, and that with' such frame of mind everyone is seeking to obtain money, which may cause regret on the part of the citizens of the town of Springer in the future, and therefore we should reverse the district court and grant the injunction.
This court is not concerned with the wisdom, of the legislation here under consideration, or the necessity of improving the waterworks of the town of Springer, or of the certainty of the redemption of the bonds to be issued when due. The wisdom and necessity of legislation is a matter for the sound discretion of the Legislature of the state of New Mexico within the bounds of the Constitution, the desirability and necessity of improvements, betterments, and repairs of the Springer waterworks is a matter left to the good sense and conscience of the board of trustees of the town of Springer, and the value of the proposed bond issue as an investment is for the determination and judgment of the Reconstruction Finance Corporation. Personal beliefs, views, ideas, preju*395dices, or philosophies outside of the law cannot influence or guide our ■ final decisions. We are here concerned only with reviewing ihe judgment of the lower court who held that the provisions of the legislative act under consideration are not violative of the state or Federal Constitution, and that the proposed proceedings of the board' of trustees of the town of Springer, pursuant to said act, are legal, and can find no error in the judgment of the district court on the issues presented.
We conclude from the above that the lower court properly sustained the appellee’s demurrer, and the judgment is affirmed, and the cause remanded to the district court, with directions to enforce its judgment. It is so ordered.
HUDSPETH, J., concurs in the result.