A resolution or ordinance by a municipality to authorize an issue of revenue certificates to pay for additions to and improvements of a waterworks system or other improvement named in the act of 1937 (Ga. L. 1937, p. 761), as amended, authorizing the issuance of revenue certificates, must with reasonable definiteness describe and define the improvement to be made and show the estimated cost thereof. A petition to validate such revenue certificates, which has attached to it a resolution merely showing that the certificates were bought to pay the costs of improvements described indefinitely and vaguely as "improving and extending the water-works plant and system" is subject to demurrer because the resolution authorizing the certificates is invalid and unenforceable because of vagueness and indefiniteness.
This case is an action brought by the State against the City of Moultrie to validate an issue of water-revenue certificates. The petition alleged that the City of Moultrie had provided for the issuance of water-revenue certificates in the amount of $100,000 by a resolution adopted by the council on March 27, 1950, a copy of which was attached to the petition for validation. The petition alleged that the certificates were to be issued "for the purpose of paying the cost of improving and extending the water-works plant and system of said city," and set forth other details as to number, denomination, rate of interest and maturity dates and alleged generally that all legal requirements had been performed as provided by legislative act of 1937, No. 513, as amended. The parts of the resolution of the city council, copy of which was attached to the petition, necessary to be shown for consideration of the questions involved, are as follows: "A RESOLUTION authorizing the issuance of $100,000 Water Revenue Certificates of the City of Moultrie for the payment of the cost of improving and extending the water-works system of said city, providing for the payment of said certificates and the sale and delivery thereof, and making certain covenants and agreements with respect to the security and payment of such certificates. WHEREAS pursuant to proceedings heretofore duly adopted and had, and particularly that certain resolution adopted by the Council of the City of Moultrie on February 27, 1948, entitled: A RESOLUTION authorizing the issuance of $250,000 water-revenue certificates of the City of Moultrie for the payment of the cost of improving and extending the water-works system of said city, providing for the payment of said certificates and the sale and delivery thereof, and making certain covenants and agreements with respect to the security and payment of such certificates, and that certain resolution adopted by the Council of the City of Moultrie on April 5, 1949, entitled: A RESOLUTION authorizing the improvement and extension of the water system of the City of Moultrie, in Colquitt County, Georgia, authorizing the issuance of $150,000 water-works certificates, series 1949, of said city for the purpose of paying the cost of making the improvements and extensions to said system; providing for the sale of said certificates and for the payment thereof, and making certain covenants and agreements with respect to the security and payment of such certificates, there have been heretofore issued the water-revenue certificates of the City of Moultrie, Georgia, in the aggregate sung of $400,000 for the purpose of paying the cost of improving and extending the water-works plant and system in said city; and WHEREAS it has now become necessary to make certain additional improvements and extensions to the water-works plant and system in said City of Moultrie and it is therefore desired to authorize the issuance of additional water-revenue certificates in the amount of $100,000, which certificates are to be payable from the revenues of the water system of said city but are to be subordinate in all respects to the above described certificates issued under the provisions of said resolution of February 27, 1948, and of said resolution of April 5, 1949; Now, THEREFORE,
Be It Resolved by the Council of the City of Moultrie, Colquitt County, Georgia, as follows: Section 1. That for the purpose of paying the cost of making improvements and extensions to the water-works plant and system of said city there shall be borrowed upon the credit of the income and revenues of the system the sum of $100,000, and that in evidence thereof there be issued water-revenue certificates of the City of Moultrie, pursuant to the provisions of Paragraph v. of Section VII of Article VII of the Constitution of Georgia, and Act Number 513 of the Laws of the General Assembly of the State of Georgia, 1937, as amended. Whenever the words 'the system' are used in this resolution, they shall be understood to mean the complete water-works plant and system of the City of Moultrie as the system is described and defined in the preamble to the resolution of February 27, 1948, referred to in the preamble thereto. . . . Section 4. That the certificates herein authorized shall not be payable from or charged upon any funds of the City of Moultrie other than the revenues to be derived from the operation of the system as hereinafter provided, nor shall the City of Moultrie ever be subject to any pecuniary liability thereon. No holder or holders of any of the certificates shall ever have the right to compel any exercise of the taxing power of the City of Moultrie to pay any of the certificates, or interest thereon, or to enforce payment thereof against any property of the City of Moultrie, and said certificates shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City of Moultrie, other than the pledged revenues received from the operation of the City of Moultrie, other than the pledged revenues received from the operation of the system. The certificates herein authorized are intended to be subordinate in all respects to the outstanding water-revenue certificates issued pursuant to the resolutions of February 27, 1948, and April 5, 1949, described in the preamble hereto, and nothing in this resolution shall be so construed as in any way to impair any of the contract rights enjoyed by the holders of said outstanding certificates. . . . Section 6. That the system shall continue to be operated in the manner provided by the aforesaid resolution of February 27, 1948, and the certificates herein authorized shall be payable out of the money in the City of Moultrie waterrevenue certificates interest and sinking fund created by said resolution, provided, however, that the money in said fund shall not be used for she payment of principal of or interest on any of the certificates he rein authorized until after there have been made therefrom all payments required to be made by the provisions of the aforesaid resolutions of February 27, 1948, and April 5, 1949, and established therein the reserve required to be established by said resolutions. The monthly payments required to be made into said fund under the provisions of said resolution shall be increased in each month by an amount sufficient to assure the existence of money therein fully adequate to pay principal of and interest on the certificates herein authorized promptly as such principal and interest become due and all of the provisions, covenants and agreements contained in said resolution of February 27, 1948, for the benefit of the holders of the certificates authorized by said resolution, including specifically, in addition to provisions with respect to the certificate fund and payment of the certificates, the provisions of Sections 7, 8, 9, 10, 11, 13, 16 and 17, are hereby reaffirmed, made and renewed for the equal benefit of the holders from time to time of the certificates herein authorized. Monthly payments required to be made into the aforesaid fund for reserve shall be increased proportionately so that there will be accumulated in said fund in addition to the reserve required to be accumulated therein for the benefit of the outstanding certificates, a reserve in an amount equal to the sum of $3500, which sum shall be maintained therein for the sole benefit of the certificates herein authorized and shall be used solely for the payment of principal of or interest on the certificates herein authorized at any time as to which there would otherwise be a default. In addition to the amount herein required to be maintained in the reserve fund for the certificates herein authorized the city agrees to transfer to such reserve fund the amount remaining in the reserve fund created for the benefit of the presently outstanding certificates after said certificates have been retired. Payments to be made into said fund for the benefit of the certificates herein authorized as herein provided shall be made at the same times as payments are made for the benefit of the outstanding certificates and shall be payable from gross revenues, subject
only to the prior payment from such revenues of reasonable maintenance and operating expenses, the payments required to be made into the certificate fund for the benefit of the outstanding certificates, and such payments into the water-works system depreciation fund as may be necessary to maintain such fund in the amount of $100 as provided in the aforesaid resolution of February 27, 1948, it not being intended by the adoption of this resolution to interfere in any way with any contract right which may be vested in the holder of the outstanding certificates to have said depreciation fund maintained in said amount from the revenues of the system prior to the making of any payment from such revenues for the benefit of the certificates herein authorized. Section 7. That the authority to issue additional certificates in the maximum amount of $100,000, retained by said city in Section 7 of the resolution of April 5, 1949, is hereby rescinded, and the City of Moultrie expressly covenants and agrees that it will issue no other certificates or obligations of any kind or nature payable from or enjoying a lien on the revenues of the system or any part thereof prior to or on a parity with the certificates herein authorized. Section 8. That the sale of the certificates herein authorized to Berney Perry & Company, of Birmingham, Alabama, at the price of par and accrued interest to the date of delivery is hereby ratified and confirmed, and when the certificates shall have been prepared and executed, the Treasurer of the City of Moultrie is authorized to deliver said certificates to said purchaser, pursuant to payment, and apply the proceeds of the sale thereof to the purpose for which the certificates are herein authorized." The City of Moultrie filed an answer admitting the allegations of the petition and further answered as follows: "3. For further answer, defendants aver that although they have no reason to question the legality of the certificates here sought to be validated or the regularity of the proceedings authorizing said certificates, they nevertheless request that petitioners be required to make strict proof of the allegations contained in said petition, so that the court may have before it all facts necessary to a proper determination of the cause at issue." Various residents, taxpayers and water users of Moultrie filed interventions and demurrers to the petition for validation. The demurrer is as follows: "1. It is not shown in the said petition, including its exhibits anti references, that any legal reason exists why said water-revenue certificates should be validated. 2. The answer of said city, including its exhibits and references shows no legal reason why said certificates should be validated. 3. Said petition and said answer, both taken together, show no legal reason why said certificates should be validated. 4. It is not shown in the petition, the resolution by the council of said city proposing the issuance of said certificates, a copy of which is attached to the petition, or in the answer filed that the Council of the City of Moultrie fixed the valuation of the existing undertaking, that is, "the water-works plant and system of the City of Moultrie" in legal relation to the issuance of the proposed water-revenue certificates. 5. It is not shown in said petition, resolution or answer, (1) what improvements and extensions to said water-works system are to be made, (2) the nature, kind and location of the alleged improvements and extensions, (3) how they will be used in connection with the original water works system, (4) the cost of same, (5) the value they will add to the original system, nor (6) the services they will render to said city or its water users, or otherwise. 6. It is not shown in said petition, resolution or answer, what the value of the existing undertaking is, that is, the existing water-works system, nor the value of the proposed improvements or extensions, nor the revenue expected from any improvements or extensions, nor whether said expected revenue warrants the extensions and improvements or will be sufficient to pay the obligations incurred by the issuance of the proposed certificates. 7. It is not shown in said petition, resolution or answer that the council in said resolution pledged to the payment of said revenue certificates and the interest thereon such part of the revenue of such undertaking, that is, the undertaking made up of said alleged improvements and extensions, as the cost of the construction of said improvements and extensions bears to said cost plus the value of the existing undertaking, before the improvements and extensions are made." Several amendments were filed to the interventions. The city filed demurrers to the original intervention and amendments. The court overruled the demurrers to the petition to validate the certificates, sustained all of the demurrers
to the intentions and amendments thereto, heard evidence, overruled an oral motion to refuse to validate the certificates and passed an order validating the certificates. Intervenors except to each of the above rulings and judgments.
1. Intervenors' demurrer number four is without merit for the reason shown in division four of this opinion.
2. Demurrers one, two and three will be treated as merged into the fifth. We think that this demurrer should have been sustained. Whether or not the act of 1937 (Ga. L. 1937, p. 761, Code, Ann. Supp., 87-816), requires the State to allege and prove that a reasonably definite and valid resolution was passed by the municipality, when the petition shows on its face what resolution was passed and is used as a basis for the petition, and such resolution is insufficient, the petition is then subject to demurrer by reason of such defect appearing on the face of the petition. The resolution attached to the petition in this case is so general and indefinite as to be wholly invalid and ineffective. It is implicit in the act of 1937, as amended, authorizing the issuance of revenue certificates that they be issued to pay for a definite undertaking, one the whole and reasonable details of which must be contemplated, chosen and planned by the governing body of the municipality. It is not absolutely necessary that an intricate and detailed set of plans be incorporated in the resolution but enough facts concerning the proposed project or improvement must appear to afford a key from which the full picture of the project or improvement may be ascertained, such as, for example, a reference to reasonably specific plans, maps and specifications or their equivalent. The resolution and certificates become a contract between the municipality and certificate purchasers which the latter can enforce by mandamus and the resolution must contain the essential contractual element of definiteness and certainty with reference to the project or improvement to be built or effected. Such a resolution must reasonably show the nature, kind and location and such other facts as will with reasonable fullness and definiteness describe and define the undertaking including the estimated costs thereof. Another reason why these facts should appear in the resolution is that the citizens of the municipality have the right to object to the validation of the certificates on the grounds that the project is unreasonable or unsound, and possibly others. Dade County v. State of Georgia, 75 Ga. App. 330 (43 S. E. 2d, 434). All the resolution in this case shows is that money be borrowed to pay the cost of "making improvements and extensions to the waterworks plant and system of said city." Such a general statement of what is to be done means nothing and while the governing body might have had definite and sound improvements in mind which they intended in good faith to provide, they were not bound by the resolution to adhere to such intentions and could with impunity change their minds and pursue a plan different in design and effect, in perfect good faith, which might be unreasonable and unsound and too costly. In the event such a change of plan should occur, neither certificate holders nor citizens would be afforded an opportunity to assert constitutional rights, as it would be too late for citizens to object after the certificates were validated, and certificate holders could not mandamus the performance of such an indefinite undertaking. Such a resolution must show the estimated cost of the improvement. The very purpose of the act is to pay for planned improvements. The approximate fixing of the costs is as vital a part of the resolution as the authorization of the certificates. They are supplemental and inseparable, and indispensable to the rights of the municipality and its citizens and to the purchasers of the certificates. The act of 1937 (Ga. L. 1937, p. 761, Code, Ann. Supp., 87-804), shows clearly that the resolution must fix the approximate cost. In part it states: "The governing body in determining such cost may include all costs and estimated costs of the issuance of said certificates," etc. That the cost of the main project be also estimated is clear, because the additional named authorized items could not be "included" if they were the only costs contemplated by the act. We are convinced that the act itself sustains our conclusion and that the rights of all parties and the soundness of the values of certificates issued in this State will be better protected if definite and business-like procedure is demanded. While no tax can be levied to pay for such an improvement to be financed by revenue certificates, the
fixing of water and sewerage charges amounts in most ways to the same thing. A water user has as much interest in his water rate as he has in a proposed assessment or tax for an improvement affecting him by additional taxation. As to tax assessment ordinances it seems clear that the ordinance must define and describe the improvement with definiteness. In Mullins v. Everett, 172 Mo. App. 186 (157 S. W. 823), the ordinance was held invalid because the plans and specifications of the project which were referred to in the ordinance were not approved by the city council until after the ordinance was passed. The court said: "But manifestly the specifications must have been considered by the city council and be in existence when the ordinance is passed, else, necessarily, they could not be a part of it. . . .' In Copcutt v. City of Yonkers, 83 Hun. 178 (31 N. Y. Supp. 659), the court said: ". . . the resolution adopted by the common council directing the improvement is fatally defective in failing to specify according to which of the two plans and descriptions then on file in the city clerk's office the street is to be laid out. This defect could not be obviated by the action of the city clerk in thereafter attaching to the resolutions a map not before the common council at the time of their action, nor by the parol evidence of the aldermen as to what map they hail in mind." There are other outside cases supporting this principle which we deem it unnecessary to cite. Unless a reasonable degree of definiteness is required in the ordinance, the door is left wide open for one of two undesirable consequences; one is that a project may be carried out substantially different from the one or more fixed or alternative plans or parts of plans originally contemplated, or the selection of the project may be delegated to an inferior authority contrary to law.
4. Paragraph 7 of the demurrer was properly overruled. This court has already ruled that the formula provided in the act for pledging revenue to secure certificates is optional and not mandatory. Dade County v. State of Georgia, 77 Ga. App. 139 (48 S. E. 2d, 144).
The overruling of the demurrers one, two, three and five rendered all other proceedings nugatory. This court does not deem it necessary to rule on the other questions raised as it cannot anticipate what developments will take place and whether the same questions will arise in another case.
The court erred in overruling intervenors' demurrers as shown in the opinion, and in passing an order validating the certificates.
Judgments reversed. Sutton, C. J., and Worrill, J., concur.