City of National City v. Fritz

CARTER, J.

The controversy in this proceeding involves the interpretation of a statute authorizing the establishment by municipal corporations of capital outlay funds (Stats. 1937, p. 1995, as amended last in 1945; Stats. 1945, p. 1867).

That act provides that the governing body of any city “empowered to levy and collect assessments or taxes may by ordinance provide for the levy and collection of assessments or taxes for the creation and accumulation of a fund for capital outlays. ’ ’ The general limitation on the right to impose taxes applies. “At any time after the creation of such a fund such governing body may transfer to such fund any unincumbered surplus funds remaining on hand in such city,... at the end of any fiscal year.

“Whenever such fund is created in the manner aforesaid it shall remain inviolate for the making of any capital outlays and no moneys shall be disbursed therefrom excepting for such a purpose; . . . .

“The term ‘capital outlays’ shall not he construed to include the construction, acquisition, extensions of, or additions to,

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utilities, other them utilities for the furnishing of water supply.”

(Emphasis added.)

In the instant case the city council passed an ordinance purporting to create a capital outlay fund pursuant to the act. There is a dispute in regard to whether the ordinance in fact achieved that end inasmuch as it did not provide for the levy of taxes or assessments for the creation of the fund. It merely created the fund. But in view of the result reached herein, it is not necessary to resolve that question. From the receipts from sale of real property of the city to the United States, $983,800.29 was ordered deposited in the fund by the city council and it is now there and unencumbered. The council has awarded contracts for the construction of sewers in the city in the sum of $675,287.77 but respondent mayor of the city refuses to sign the contracts, and respondent clerk refuses to transfer said sum to the general fund to meet the payments under those contracts, claiming that moneys in the capital outlay fund cannot be used for sewer purposes under the above quoted act for the reason that a sewer is a utility as used in the last sentence dealing with things for which the fund cannot be used. Petitioners, on the other hand, take the position (among others) that a sewer is not a utility as that term is used in the act. With the latter contention we agree for the following reasons.