160 A.D. 222

Walter S. Lyon, Respondent, v. City of Binghamton, John J. Irving, as Mayor, etc., and Others, Appellants.

Third Department,

January 21, 1914.

Municipal corporations — city of Binghamton — issuance • of bonds to build lighting plant — statutes construed — provision for payment of interest and principal by taxation necessary.

Section 6 of the General Municipal Law, relating- to the creation of a funded debt by municipal corporations for specific objects and providing that an ordinance authorizing such debt “shall provide for raising annually, by tax, a sum sufficient to pay the interest and the principal as the same shall become due," applies to the city of Binghamton. Hence, where a resolution passed by said city authorizing the issue of bonds to raise funds for a lighting plant does not provide for the payment of the principal and interest as required by said statute, it is void and the issuance of the bonds will be restrained by injunction.

The issuance of such bonds is governed not only by section 406 of the charter of the city of Binghamton, but also by section 6 of the General Municipal Law.

Appeal by the defendants, City of Binghamton and others, from an order of a justice of the Supreme Court, entered in the office of the clerk of the county of Broome on the 9th day of October, 1913, granting a temporary injunction restraining the defendants pendente lite from selling the bonds, amounting *223to $158,200, of the city of Binghamton, which it is proposed to issue for the purpose of establishing a municipal electric lighting plant, and from entering into any contract for the construction and equipment of said electric lighting plant.

Cortland A. Wilber [O. U. Kellogg of counsel], for the appellants.

Mangan & Mangan [George B. Curtiss of counsel], for the respondent.

Howard, J.:

Section 6 of the General Municipal Law (Consol. Laws, chap. 24 [Laws of 1909, chap. 29], as amd. by Laws of 1910, chap. 677) provides: “A funded debt shall not be contracted by a municipal corporation, except for a specific object, expressly stated in the ordinance or resolution proposing it; nor unless such ordinance or resolution shall be passed by a two-thirds vote of all the members elected to the board or council adopting it, or submitted to and approved by the electors of the town or county, or taxpayers of the village or city when required by law. * * * Such ordinance or resolution shall provide for raising annually, by tax, a sum sufficient to pay the interest and the principal, as the same shall become due.” This law is general; it applies to all municipalities. It is a provision of great consequence. It acts as a check upon improvidence; a bridle upon extravagance. It must he observed -unless some special law conflicts with it and overrides it or supplants it.

The common council of the city of Binghamton wished to provide for installing and equipping a municipal electric light plant. The common council passed an appropriate ordinance proposing to issue bonds for that purpose. This was an attempt to create a funded debt. (People ex rel. Peene v. Carpenter, 31 App. Div. 603.) But the common council omitted from the resolution the last sentence of section 6 of the General Municipal Law. This omission was fatal to the resolution if section 6 is applicable to the city of Binghamton.

The charter of the city of Binghamton is a special law and was passed subsequently to section 6, for this section of the General Municipal Law, as enacted in 1909, is only a re-enactment of section 5 of chapter 685 of the Laws of 1892 .(Gen. *224Laws, chap. 17). Therefore, if the charter is in conflict with section 6, the charter must prevail. But the two laws do not conflict.

This creation of a municipal- electric light plant is an extraordinary and special project. Section 406 of the charter (Laws of 1907, chap. 751, as amd. hy Laws of 1911, chap. 337) authorizes the common council to “* * * declare that the necessity exists or the public interests demand the expenditure of a greater amount of money for some extraordinary or special purpose than said council shall have raised or deems expedient to raise in the annual tax budget * * *,” and then submit the proposition to a vote of the taxpayers. It was under this section that the common council undertook to act. Section 406 of the charter seems to be incomplete in failing to make the bonds a lien upon the taxable property of • the city and in failing to give the common council “ power to add the necessary amount to the annual tax budget ” “to pay the principal and interest coming due in any year.” It will be noticed that sections 204, 205 and 206, dealing with the ordinary matters of city improvements, are not thus incomplete hut contain a provision similar to the last sentence of section 6 of the General Municipal Law. Why this provision was omitted from section 406 of the charter does not appear, hut whatever the reason may be, it was omitted, and section 6 of the General Municipal Law supplies the defect. Section 6, as has been observed, is a general statute. It applies to all municipalities unless obstructed by some other statute. In this case there is no such obstruction; not only this, hut an omission exists in the charter which creates a niche into which the last sentence of section 6 exactly fits. It thus appears that the charter and section 6 not only do not conflict, but that section 6 supplements the charter. They work in perfect harmony. They make a complete scheme.

The common council in the nascent stages of this attempted bond issue, having utterly ignored this important requirement of the statute, this watchdog of the taxpayers, it follows that the bonds which they have assumed to create are wholly invalid and void.

It is well to note that the omission of the last sentence of *225section 6 from the original ordinance, and hence from the notice to the taxpayers, was not a mere technicality hut a substantial defect in the proceedings. The purpose of section 407 of the charter in requiring the publication of the ordinance together with the notice of election is to apprise the taxpayers fully of the nature of the question which they are about to vote upon. By the ordinance which was presented to them for inspection and consideration the taxpayers were not informed that the burden of paying the interest on this large debt and of paying the debt itself, ultimately, as it came due was being imposed upon them. They might have been led by electioneerers and interested parties to believe that they would never be asked to pay either the interest or the debt. The absence of this provision from the ordinance lent great plausibility to such an argument. And, therefore, the taxpayers were deceived and led into giving formal assent to an innocent-looking proposition, whereas, in fact, they were voting a burden upon their pocketbooks and an incumbrance upon their homes. The insertion of the provision in the subsequent ordinance which ordered the bond issue did not cure the defect; it emphasized the deception.

The order should be affirmed, with costs.

All concurred, except Lyon, J., not voting.

Order affirmed, with costs.

Lyon v. City of Binghamton
160 A.D. 222

Case Details

Name
Lyon v. City of Binghamton
Decision Date
Jan 21, 1914
Citations

160 A.D. 222

Jurisdiction
New York

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