text:
    OGLE et al., Appellants, v. POTTER, Respondent.
    [No. 1249.]
    [Submitted October 9, 1900.
    Decided December 3, 1900.]

      New Trial — Notice—-Grounds—Misconduct of Referee — Appeal — Record.
    1. A motion for a new trial is a statutory remedy, and can only be invoked in the manner, within the time, and upon the grounds provided for in the statutes; and this rule applies indifferently to law and equity cases.
    2. Within 10 days after the decision of a referee, and after judgment entered thereon, defendant filed notice of intention to move for new trial, and afterwards prepared his statement in support thereof, to which plaintiffs submitted amendments, which defendant refused to adopt. The referee had meanwhile absconded without filing a transcript of the evidence, and the statement and amendments were never submitted to him. Four months after the decision defendant, on notice, filed a motion for a new trial, but the notice did not state any ground on which trial would be asked but referred to an affidavit filed with the clerk, which stated that the referee had absconded, and his residence was unknown, and that counsel could not incorporate in his statement the evidence on which the finding was based, or obtain a settlement of it. Held, that under Code of Civil Procedure. Section 1173 requiring the party moving for anew trial to file notice of Intention designating the grounds relied on within 10 days from notice of the decision, the original motion having been abandoned, the motion filed four months after the decision was too late.
    3. The notice designating no grounds for new trial, the motion was insufficient.
    4. The fact that the referee had absconded, and failed to return the transcript of the evidence, was not ground for new trial, not being enumerated as such In section 1171 of the Code of Civil Procedure.
    5. The wrong doing on the part of a referee,which In no wise affects the integrity of the judgment entered in accordance with his report, is not ground for a new trial under Sec. 774 of the Code of Civil Procedure (providing that the court may, in its discretion and upon seasonable application, relieve a party from a judgment, order, or other proceeding taken against him through the mistake, inadvertence, surprise, or excusable neglect) since this section has reference to cases where a party has, for one or more of the reasons mentioned, been prevented from having a proper hearing in the first instance, ana is in default,
    6. On questions relating to the entry of judgment, the supreme court can only look to the record of the lower court, made at the time, and cannot be controlled by statements in the affidavit for new trial, though the order granting a new trial was based thereon.

      Appeal from District Court, Gallatin County¡ F. K. Armstrong, Judge.

    Action by J. F. Ogle and another against William Potter. There was a judgment for plaintiffs, and from an order granting a new trial plaintiffs appeal.
    Reversed.

      Statement of the Case.
    This action was brought to obtain a dissolution of a co-partnership between plaintiffs and defendant, and an adjournment of the co-partnership accounts. After the answer was filed, and on November 14, 1896, the parties stipulated in open court that the cause might be referred to one W. J. Stevenson, to try all the issues involved, and to report findings of fact and law. Under this stipulation an order of reference was made and entered. The referee heard the evidence offered by the parties, and on December 7th reported to the court his findings and conclusions. Thereupon counsel for plaintiffs asked the court to enter judgment in accordance with the report. After argument by counsel this was done, on December 12th. At the same time an order was made directing the referee to file with the clerk within ten days a transcript of the evidence heard at the trial. This order was not obeyed, the referee a short time thereafter absconding from. the state. Within ten days after the decision of the referee defendant’s counsel served and filed with the clerk a notice of intention to move for a new trial, and within 30 days thereafter, under an extension of time allowed for that purpose, prepared his statement in support of the motion, and served the same upon counsel for plaintiffs. In due time counsel for plaintiffs submitted amendments, which counsel for defendant refused to adopt. The statement and the proposed amendments were never submitted to the referee, nor was any other step taken in the case until April 6, 1897, when counsel for defendant, upon notice, filed a motion asking the court to set aside the findings of the referee and to grant a new trial of the cause. Neither the motion nor the notice thereof stated any ground upon which the new trial would be asked, but reference was made in the motion to an affidavit filed with the clerk as stating the grounds which would be urged. This affidavit, after reciting the history of the case from its inception, set forth that the judgment had been entered upon-the findings of the referee upon the condition that he would file with the clerk within 10 days a transcript of the evidence heard by him; that the order of the court in this behalf had not beenobeyed; that the referee had absconded from the state, and his residence was unknown; that it was impossible for counsel to incorporate in his statement on motion for a new trial the evidence upon which the findings were based, but that he was compelled to state it upon his best recollection; that, notwithstanding this had been done, amendments had been proposed; that he was therefore unable to obtain a settlement of the statement so that he could submit to the court the insufficiency of the evidence to support the findings; that plaintiffs had no cause of action against the defendant; and that, unless a new trial was granted, defendant would suffer a gross injustice. On November 3, 1897, this motion was submitted to the court, with plaintiffs’ objections to its consideration. On February 9, 1898, the court overruled plaintiffs’ objections, and entered an order granting defendant a new trial. From this order plaintiffs have appealed.

      Mr. W. I. Holloway, for Appellants.

      Mr. J. I. Staats, for Respondent.
   MR. CHIEF JUSTICE BRANTLY,

after stating the case, delivered the opinion of the Court.

It was held by this Court in Whitbeck v. Montana Central Railway Co., 21 Mont. 102, 52 Pac. 1098, that an appealable order, regularly made, cannot be reviewed or set aside by the court making it, except in the cases provided by statute. In that case judgment had been rendered upon the pleadings in defendants’ favor. Subsequently, and before entry of the judgment, the court, concluding that it was erroneous, set it aside upon its own motion. This action was held to be in excess of jurisdiction, in view of the provisions of the Code of Civil Procedure prescribing a mode for securing a new trial and for a review of the judgment on appeal. The remarks made in the opinion touching the power of the district court over its own judgments are pertinent to this case. The general result reached is that unless the judgment or order in question comes within the rule that the court may within a reasonable time correct mistakes in its proceedings, and annul orders and judgments inadvertently made, it should not be disturbed, except by formal methods prescribed by statute. The order complained of here, not falling within this rule or any other recognized exception, must be justified, if at all, upon one of two grounds, viz.: That the proceeding upon which it is based comes within the provisions of the Code of Civil Procedure authorizing the granting of new trials; or those permitting a party to be relieved of a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or excusable neglect. Counsel argues that it cannot be justified on either ground.

A motion for a new trial is a statutory remedy, and can only be invoked in the manner, within the time, and upon the grounds provided for in the statutes. The moving party must, within 10 days after the verdict or notice of the decision of the court or referee (as the case may be) file with the clerk and serve upon the adverse party his notice of intention, designating the grounds upon which he relies. (Code of Civil Procedure, Section 1173.) In the absence of such a notice, or if the notice fails to set forth one or more of the grounds enumerated in Section 1171, the court has no power to act. The notice is the foundation of the proceeding. (Arnold v. Sinclair, 12 Mont. 248, 29 Pac. 1124.) If the notice has been properly given, the moving party must prepare, file, and serve his affidavits, if he relies upon affidavits, under the requirements of Subdivision 1 of Section 1173. If he relies upon a bill of exceptions, and his bill has not already been settled under the provisions of Section 1154, he must prepare, serve, and have it settled under Subdivision 2 of Section 1173. If the motion is to be made upon a statement, the provisions of Subdivision 3 of that section must be observed. It is only when these various steps have been taken in proper time that the motion can be entertained; and the rule applies indifferently to. law and equity cases, for under our Code the procedure is the same in both.

The notice upon which the proceedings in this case were based failed to comply with the statute, in that it was not given until nearly four months after notice of the decision, and designated no ground upon which a new trial could be granted. Even if the notice had been in time and sufficient in substance, the affidavit contained none of the grounds enumerated in Section 1171, of which alone the court could take notice. The fact that the referee had left the state without obeying the order made on December 12, 1897, though it resulted in inconvenience, or even injustice, to defendant, was no ground for a new trial. The trial had then been concluded, and the judgment entered. Nothing in the behavior of the referee, however inexcusable it may have been, tended to show that the findings and judgment were not entirely proper; nor did it furnish any reason why the plaintiffs should be arbitrarily deprived of their rights already declared. Otherwise, in any case in which a party should be prevented.by unforeseen misfortune from applying for a new trial under the statute, the court might, in its arbitrary discretion, grant him relief, and thus disregard the statutory limitation upon its power. The death of the referee, or the accidental destruction of his notes of the evidence, or any other similar occurrence, would appeal just as strongly to the court as does the situation here presented. The original motion having been abandoned, the right to move thereafter upon any ground was lost, and the order made upon the second motion was unauthorized.

Nor can it be supported on the theory suggested in the second ground. Section 774 of the Code of Civil Procedure provides that the court may, in its discretion and upon seasononable application, relieve a party from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or excusable neglect; but this provision has no application to such a case as is here presented. It has reference to cases where a party has, for one or more of the reasons mentioned, been prevented from having a proper hearing in the first instance, and is in default. Here the defendant had his day in court in the first instance. The hearing was had, and the findings and judgment were regularly made and entered. The facts set forth in the affidavit show no mistake, surprise, nor inadvertence on the part of defendant, but only wrongdoing on the part of the referee, in no wise affecting the integrity of the judgment.

Defendant argues that the affidavit shows without contradiction that the entry of the judgment was conditioned upon a compliance by the referee with the order of December 12, 1897, and that the action of the district court should be affirmed on this ground. Conceding, for the sake of argument that such an entry of judgment was proper, the record does not bear out defendant’s claim. It shows that the entry of the judgment was absolute and unconditioned, and that the order requiring the transcript to be filed was solely at the instance and for the accomodation of defendant. On this point we may only look to the record of the district court made at the time, and cannot be controlled by the statements contained in the affidavit, even though these statements may have furnished the ground upon which the district court based the order under consideration. The order is therefore reversed.

Reversed.


source: Caselaw Access Project

author: MR. JUSTICE PIGOTT

license: Public Domain

text:
    BUTTE CONSOLIDATED MINING CO., Respondent v. FRANK et al., Appellants.
    [No. 1538.]
    ON MOTION TO DISMISS APPEAL.
    [Submitted November 17, 1900.
    Decided December 3, 1900.]

      Mines a/nd Mining — Injunction—Interlocutory Order — Motion to Modify — Appeals—Appealable Order.

      1. As a general rule an appeal does not lie from an order refusing to vacate, dissolve, or modify a former order which is itself appealable; but to this rule there are some exceptions.
    2. There is no statute or law permitting the new trial of a motion, and an appeal may not be prosecuted from an order denying a motion not authorized by law.
    3. An order granting an interlocutory injunction made on due notice and after a full hearing is regular, though it maybe erroneous; and hence is not subject to motion to modify on the same facts.
    4. Plaintiff, the owner of a nonpatented placer claim, obtained an interlocutory injunction restraining defendants from trespassing on its claim, or prosecuting any mining or development work thereon. Defendants asserted in opposition thereto that they had made discovery of a quartz lode within the limits of plaintiff’s claim, that they caused a location notice to be placed at the point of discovery, and began a shaft on the vein. It was an existing fact before the court at the hearing when the injunction was granted that defendants had not completed the location of their lode claim, but the order did not preserve the privilege of moving for a modification should defendants decide to do so, and thereafter defendants’ assignee moved to modify the order so as to permit it. Held, that the motion was based onjtlie same facts on which the previous order was granted, and was, therefore, unauthorized, and hence an order refusing to modify was not appealable.
    5. In cases where there is a substantial conflict in the evidence with respect to the existence of or the title to veins,.and in which orders of injunction are granted, district courts should preserve, in such orders, to the parties enjoined, the privilege of completing the location of mining claims, and the doing of the annual representation work thereon (as the case may be) upon such terms as the circumstances may require for the protection of all the parties.

      Appeal from District Court, Silver Bow County, William Clancy,„ Judge.

    Injunction by the Butte Consolidated Mining Company against Louis Frank and another. From an order refusing to modify an interlocutory injunction, defendants appeal.
    Dismissed.

      Mr. John B. Cla/yberg, Mr. F. E. Corbett, and Mr. Geo. M. Bourguin, for Appellants.

      Messrs. McHatton <& Cotter, and Messrs. Stapleton dc Staple-ton, for Respondent.
   MR. JUSTICE PIGOTT

delivered tbe opinion of the Court.

This is an appeal by the defendants from an order refusing to modify an interlocutory injunction. The plaintiff moves a dismissal of the appeal upon the ground that it is an attempted appeal from an order refusing to modify an appealable order.

The facts pertinent to the pending motion may be thus epitomized: The plaintiff owns the Bordeaux placer, a nonpaten ted mining claim, and sued to obtain an injunction restraining the defendants from trespassing upon and extracting or removing ore or minerals therefrom, or prosecuting any-mining or development work thereon. The defendants assert that on November 6, 1899, they made within the limits of the Bordeaux placer claim discovery of a quartz lode, which they named the Cincinnati, bearing gold, silver, and copper; that they caused a location notice to be placed at the point of discovery, and began to sink a shaft upon the vein. Upon the filing .of the complaint and presentation of an affidavit in its support, an order was made on December 9 th, without notice, that the defendants show cause why an injunction pendente lite, should not issue as prayed, the defendants being meanwhile restrained. Upon the coming in of the answer and accompanying affidavits, the court, upon motion of the defendants, ordered the plaintiff to show cause why the restraining order should not be dissolved. On January 13, 1900, the two orders to show cause were heard upon the pleadings, affidavits, and oral testimony, and on January 20th an order was entered denying the motion of the defendants to dissolve the restraining order, and granting an injunction pending the action, as prayed for by the plaintiff. Thereafter, and on January 29th, one Gemmell filed his verified petition, alleging, in substance, that on January 25, 1900, he purchased the Cincinnati lode claim from the defendants; that when they were enjoined on December 9, 1899, the defendants had not sunk a 10 foot shaft, or its equivalent, nor defined the boundaries, nor filed the declaratory statement required by law, and that, therefore, they had not completed the location of the Cincinnati lode claim; that the time within which the location must be completed would expire with February 4, 1900; and moved that the order of January 20th be so modified as to permit him to complete the location. The petition was heard on February 3, 1900; both Gemmell and the plaintiff appeared; with the exception of the verified petition mentioned, no evidence was given other than that which had been received at the hearing of January 13 on the orders to show cause. The petition was denied, and an order entered refusing to modify the injunction. This is the order from which the present appeal is prosecuted.

The plaintiff contends that the order of February 3d is not appealable, because it is an order refusing to modify a former order which was itself appealable. By virtue of Section 1722 of the Code of Civil Procedure, as amended by House Bill No. 124 of the session of 1899 (Laws of 1899, p. 146), an appeal may be taken to the Supreme Court from an order granting an injunction. The order of January 20th was, therefore, appealable. This section provides also that an appeal may be taken to this Court from an order refusing to dissolve an injunction. Refusal to modify is refusalyw tanto to dissolve. The latter provision must be examined in connection with, and interpreted in subordination to, the rule that an appeal will not lie from an order denying a motion which the law does not authorize to be made, though the order would otherwise be appealable. Was the motion to modify the injunction one which the law permitted the defendants or Gremmell to make? Sections 870 to 881, inclusive, of the Code of Civil Procedure, are devoted to the subject of injunction. In none of these sections is it provided that a temporary injunction order granted with notice may be dissolved or modified by the district court or its judge. Sections 878 and 879 provide that, if an injunction order be granted without notice, the deféndant may move a dissolution or modification thereof, and that the court may dissolve or modify such an injunction order, — the manifest implication of these sections being that, unless authority therefor exist elsewhere in the law, an application for the dissolution or modification of an injunction granted upon notice will not lie, and that an injunction order so granted must stand, so far as the power of the district court is concerned, until the cause in which it was granted is tried. As we have said, these sections are silent touching the dissolution or modifications of injunctions granted with notice, and so the question whether a motion may be made to dissolve or modify an injunction granted with notice is to be determined by applying to the facts of the given case the controlling rules of the unwritten law.

The party against whom an appealable judgment or order has been made, or who is aggrieved thereby, may not appeal from an order refusing to vacate, dissolve or modify it. Such is the general rule, the basis of which is the principle that there must be an end to litigation, and hence some point at which the right or privilege of vacating or changing a decision or of having it reviewed ceases to exist. (Hayne, New Trial & App. Sec. 199, and authorities cited.) Having had his day in court and an opportunity to be heard, the losing-party must directly attack the decision by appeal, if it be appealable, and cannot assail it indirectly by means of a motion. No man ought to be twice vexed by one and the same cause. The reason underlying the general rule seems to be recognized, in part at least, in Section 1742 of the Code of Civil Procedure, which, in effect, prohibits the supreme court from reviewing on appeal from a judgment any decision or order from which an appeal might have been taken; and, while this section makes reference only to appeals from judgments, the principle applies as well to appeals from orders. To the general rule there are exceptions, some of statutory and others of common-law origin. Any special order made after fiual judgment in a civil action is, by Subdivision 2 of Section 1722, supra, declared to be appealable, and therefore, if such an order be made under the authority of Section 774 of the Code of Civil Procedure, refusing to relieve a party from a judgment, order or other proceeding taken or alleged to have been taken against him through his mistake, inadvertence, surprise or excusable neglect, an appeal may be taken therefrom, although the decision which the court refused to vacate was itself appealable. The right to appeal from an order refusing a new trial is also an exception to the rule, for the statutes permit such an appeal notwithstanding the party possesses the privilege of appeal from the judgment. In each of these cases the statute authorizes the appropriate motion to be made though the decision sought to be set aside is itself appealable. When the reason of a rule ceases, so should the rule itself, and therefore orders refusing to set aside or modify appealable orders Avhich Avere granted ex parte and without notice are also among the exceptions, for in such cases there is usually no opportunity for the party against whom the original order was made either to present or preserve his rights at the time, and he must move to vacate or modify it, so that, ‘on appeal from the order denying his motion, there may be a record disclosing the facts in his favor as Avell as those against him. Another exception consists of orders refusing to set aside, in Avhole or in part, appealable decisions irregularly or inadvertently made. Perhaps still another exception comprises orders refusing to dissolve interlocutory injunctions granted Avith notice, Avhere, since the order of injunction Avas granted, there has occurred such a substantial change in the facts as to present a ground Avhich did not exist at the time of the first hearing. This last probable exception Avas adverted to in State ex rel. Hickey et al. v. Second Judicial District Court, 23 Mont. 564, 59 Pac. 917. In each of these cases also authority of laAV exists for the interposition of the proper motion despite the appealable character of the original order or judgment. There are, doubtless, other exceptions to the general rule, Avhich Ayas announced in Beach et al v. Spokane Ranch & Water Co. 21 Mont. 7, 52 Pac. 560, and Avhich is adhered to in the present case.

The defendants argue that the order of January 20th granting the injunction Avas irregular. But Ave hold otherwise. The order Avas made upon due notice, and after a full hearing; though it may have been erroneous, it Avas regularly heard and granted. The defendants insist also that the facts presented in support of the motion to modify differed from those shoAvn on the hearing Avhich resulted in the order sought to be modified. We do not agree Ayith them. The facts presented upon the motion to modify Avere the same as, and none other than, those Avhich existed (and Avere knoAvn to the defendants) at the time the hearing of January 13th Avas had, and when the order was granted on January 20th. We say the facts were the same, for the acquisition by Gemmellon January 25th of whatever title the defendants then had to the Cincinnati lode claim could not properly be considered a reason for modifying the injunction order of January 20th. He became merely the successor to the defendants, and was invested with such rights, and such rights only, as they had; these rights, so far as the order granting the injunction pendente lite, could determine them, had already been adjudicated adversely to the defendants. That the defendants had not completed the location of the Cincinnati lode claim was a fact existing (and before the court) when the order granting the injunction was made. There was no provision in the order of January 20th for preserving to the defendants the privilege of moving for a modification in the event they decided to complete the location of the Cincinnati lode claim. Under these circumstances, Gemmell’s petition was to all intents a motion for the new trial of a motion which had been granted with notice, based upon the same evidence exhibited at the original hearing. There is no statute or law permitting the new trial of a motion (Beach v. Spokane Ranch, & Water Co. supra), and an appeal may not be prosecuted from an order denying a motion not authorized by the law.

Examination of the opinion in Bluebird Min. Co. v. Murray, 9 Mont. 468, 23 Pac. 1022, discloses that it is not in point upon the question presented in the case at bar. In the first place, the question here involved was not there raised or considered; secondly, in the Bluebird Case an injunction pending the litigation was granted in favor of the plaintiff and against the defendants. The defendants applied for an order of inspection, survey, and examination under the statutes. The application was granted, and the plaintiff appealed from the order allowing development work to be performed for the purpose of ascertaining the apex of the vein in controversy. It is to be noted that the first order was in favor of the plaintiff. It was not aggrieved, and there was nothing from which it could appeal, for it had obtained all that it asked for. The second order modified, and thereby dissolved pro tomto, the first order, and hence was an order against the Bluebird Company, and from this order it appealed. In the case now before us the first order was in favor of the plaintiff and against the defendants, and the second order, from which ' this appeal is taken, was also in favor of the plaintiff and against the defendants.

We deem it proper to suggest that in cases where there is a substantial conflict in the evidence with respect to the existence of or the title to veins, and in which orders of injunction are granted, districts courts would seldom commit an abuse of discretion by preserving, in such orders, to the parties enjoined, the privilege of completing the locations of mining claims, and the doing of the annual representation work thereon (as the case may be), upon such terms as the circumstances may require for the protection of all the parties.

The remedy of the defendants is or was by appeal from the order granting the injunction, and not from the subsequent order of February 3d refusing to modify it. The latter order is not one from which an appeal lies. The motion to dismiss is therefore granted.

Dismissed.


text:
    MORRISON, Appellant v. CLARK, et al., Respondents.
    [No. 1246.]
    [Submitted July 6, 1900.
    Decided December 17, 1900.]

      Corporations — Failure To Commence Business — Forfeiture of Charter— Constitutional Provisions— Construction — Estoppel.

      1. Under Rey. St. 1879, Secs. 244, 245, providing that on filing a required certificate the persons signing it shall he a body corporate, and may acquire realty necessary to carry on the operations named in the certificate, the failure of a mining company which has filed such certificate to holdany meetings of its stockholders, and omission to commence business, will not invalidate a conveyance of mining claims to the corporation ; for neither suehfailure nor omission dissolved the corporation, or invalidated the proceedings already taken, under which it became a corporation.
    •2. Const. 1889, art. 15, Section l, providing that all existing charters or grants of special or exclusive privileges under which the grantees shall not have organized or commenced business in good faith at its adoption shall thereafter have no validity, does not affect a mining company incorporated under general laws, though it had omitted to commence business prior to the adoption of such constitution, since such section only annulled private charters or special grants then existing, under which the corporations thereby authorized had not organized.
    3. Semble: In the absence of fraud, accident, and mistake, a grantor, having described his grantee as a corporation in a deed of conveyance, is estopped from denying that it was a corporation at that time.

      Appeal from District Court, Deer Lodge County; Theodore Brantly, Judge.

    Action by Alexander M. R. Morrison against William A. Clark and others. From a judgment in favor of defendants, plaintiff appeals.
    Affirmed.

      Mr. J. JE. Ilealy, for Appellant.

      Messrs. J. L. and M. L. Wines, for Respondents.
   MR. JUSTICE PIGOTT

delivered the opinion of the Court.

The plaintiff has appealed from a judgment entered against him upon his failure to plead further after a demurrer to the complaint had been sustained. Eliminating allegations not material to the case as presented, as well as mere legal conclusions, and confining our inquiry to the points made in this court by counsel for the plaintiff, the questions arise out of the following facts admitted by the demurrer: On July 8, 1886, the plaintiff and one Napton delivered to the Golden Gate Mining Company, a corporation formed under the provisions of Chapter XV of the Fifth Division, General Laws of the Revised Statutes of Montana, 1879, their deed conveying to it certain lode-mining claims owned by them as tenants in common. The certificate of association or articles of incorporation had been duly filed in the proper offices, but neither at the time when the deed was delivered, nor at any time before November 8, 1889, when the constitution of Montana was finally adopted, had a meeting of the stockholders or directors of the Golden Gate Mining Company been held; nor did the company ever commence business, in good faith or otherwise. In 1894 two of the defendants recovered a j udgment against the Golden Gate Mining Company upon a promissory note executed by it, and the property so conveyed by the plaintiff and Napton was afterwards sold under execution to the judgment creditors. The company was not made a party to the action. The plaintiff prays that the deed from him to the company be declared void, and that the judgment and execution sale be set aside, and the defendants decreed to lie without right in or lien upon the property so theretofore granted to the Golden Gate Mining Company.

The contention of the plaintiff is thus stated by his counsel: ‘ ‘The complaint proceeds upon the theory that the corporation went out of existence upon the adoption of the state constitution, the 8th day of November, 1889, and that all subsequent acts mentioned in the complaint were null and void; that the deed from plaintiff became of no force or virtue; that the note given was void; that the sale was void, and that Clark & Bro. have the sheriff’s certificate of sale to property which belongs to the plaintiff, and hold' an adverse claim thereto against him, thereby casting a cloud upon the title of the plaintiff to the property, — that is, conceding, for the sake of the argument, that the facts stated show that the corporation had a de facto existence prior to the adoption of the constitution.” There are, therefore, but two questions to be determined, the first being whether the Golden Gate Mining Company had a legal. existence as a corporation at the time the plaintiff made the grant to it.

It should seem that, in the absence of fraud, accident, and mistake, the plaintiff, having described the Golden Gate Mining Company as a corporation in the deed of conveyance, ought to be estopped from denying that it was a corporation at that time; but, however this may be, Sections 244 and 245 of Chapter XY, supra, provide that when the certificate required by the former section shall have been duly filed the persons who signed and acknowledged it, and their successors, shall be a body politic and corporate in fact and in name, and by the name stated in the certificate shall have succession, and be capable of acquiring by purchase or otherwise, and holding or conveying by deed or otherwise, any real or personal estate whatever which may be necessary to enable it to carry on the operations named in the certificate. Failure to hold any meeting of the stockholders or directors and omission to commence business in no wise prevented the Golden Gate Mining Company from becoming a corporation, nor did either omission, or both of such omissions, operate to dissolve the corporation, or invalidate its acts or proceedings already taken, under which it had become a corporation. By tbe conveyance it became invested with whatever title the plaintiff possessed.

The other question is: Did the Golden Gate Mining Company cease to exist as a corporation on November 8, 1889? Counsel for the plaintiff asserts that the corporation went out of existence upon the adoption of the constitution, and cites Section 1 of Article XY of that instrument to support the assertion. The section ordains that ■' ‘all existing charters, or grants of special or exclusive privileges, under which the corporations or grantees shall not have organized or commenced business in good faith at the time of the adoption of this constitution, shall thereafter have no validity.” Even if this Section was intended to apply to corporations formed under general incorporation acts, we are satisfied, upon the plainest principles, that it did not have the effect, either at law or in equity, of devesting such corporations of title to property, and reinvesting the grantors therewith; whether the section would of its own force have worked the destruction of such corporations, or would have affected only the validity of corporate acts performed after the Constitution was adopted, is a question that need not be considered. By the transfer from the plaintiff the Golden Gate Mining Company acquired the title then in him, and the section quoted does not purport to take away from a corporation falling within its provisions title to property theretofore acquired by it. It is probable, however, that the precise point which the counsel for the plaintiff desires to make is, that the corporation ceased to exist upon the adoption of the Constitution, and that therefore the Golden Gate Mining Company was not and could not have been the party defendant in the action purporting to be against it wherein judgment was entered and a sale made of the property. To this question we direct our attention. We are of the opinion that the section does not refer to corporations formed by virtue of compliance with the general laws providing for their organization. The charter of such a corporation consists of the general laws under which it is formed, coupled with the articles of association or agreement adopted in conformity with them. Prior to 1867, when congress prohibited the legislative assembly of the territory of Montana from granting private charters or special privileges (Section 1889 of the Eevised Statutes of the United States), the assembly had by special laws granted many private charters for corporations, and a multitude of special privileges to natural persons. Some of the charters and grants were for specified periods, while others were not limited as to duration, and were, therefore perpetual. Existing ‘ ‘charters, ’ ’ as the term is used in Section 1, means much the same’as existing “grants of special or exclusive privileges, ’ ’ the former referring more particularly to corporations. Without expressing any views in respect of the effect of the section upon corporations theretofore created and formed, and then in being, by virtue of special charters, or of its effect upon the rights of natural persons to whom had been granted special privileges, we are of the opinion that the section, in so far as its purpose need now be inquired into, was intended to annul all private charters or special grants then existing under which the corporations thereby authorized had not organized — that is, been formed— or commenced business in good faith before the adoption of the constitution. The section has nothing to do with corporations formed under authority of the general laws; such corporations are organized by a compliance with the provisions of general laws permitting corporations to be formed. A compliance with these laws results, of itself, in the organization of the corporations. Such organization has no reference to the internal proceedings of the corporation, such as a meeting of stockholders and the like; it means the formation or birth of the body corporate. On the other, hand, a special or private charter purporting to create a corporation does not necessarily organize it, — in order that the corporation be organized, there must be an acceptance of the charter, and a compliance with whatever the special law may require. The word “organize” as used in Section 1, is not appropriate, and was not employed, to describe what corporations formed under general laws must do before the adoption of the constitution in order to preserve their franchises, for such corporations had already been organized, by virtue of the filing in the proper offices of the certificates required. That Section 1 was not designed to include within its provisions corporations formed and existing under general laws would seem to be countenanced bj* Section 2. of Article XY, which, after prohibiting the legislative assembly from granting, extending, or amending by special law any charter of incorporation, enjoins upon it the duty of providing “by general law for the organization of corporations hereafter to be created. ’ ’ To hold that Section 1 was designed to invalidate, for failure to organize (in the sense of electing directors, and the like) or commence business before the adoption of the Constitution, the charters of corporations formed under the general laws, we must declare that the framers of the Constitution intended to annul the charters of corporations so failing, although such charters were obtained by filing the certificates of incorporation on the day next proceeding the 8th of November, 1889. The section is not to be so interpreted. It follows that the Golden Gate Mining Company, for aught that appears in the complaint, continued to exist as a corporation after the adoption of the Constitution.

The judgment is affirmed.

Affirmed.

Mr. Chief Justice Brantly, haying tried the case in the court below, does not participate in the foregoing decision.


author: MR. JUSTICE WORD,

text:
    STATE ex rel. HELENA WATER WORKS CO., Appellant, v. CITY OF HELENA et al., Respondents.
    [No. 1546.]
    [Submitted June 25, 1900.
    Decided December 17, 1900.]

      Municipal Corporations — Indebtedness— Constitutional Limitation' — ■ Contracts Exceeding— Validity — Appropriation to Pay — Matice of Limit — ■Mandamus.
    1. A city had already exceeded the constitutional limit of indebtedness. A water company furnished it water for fire, sewerage and other municipal purposes under an ordinance providing for the obtaining of water for sucli purposes for a certain period, at a certain price, payable monthly, appropriating out of the city’s yearly revenues sufficient money to pay for it, and ordering the city council for such term to levy annual taxes sufficient to meet the appropriation, under the Political Code of the state authorizing the levy of taxes for general purposes. Sold, that the company could not recover for water so furnished, under Constitution, Art. XIII, Sec. 6, providing that no city shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding 3 per centum of the taxable property therein, since, as the liability of the city would be general and not special thereunder, the contract entered into created, and the amount due for water furnished thereunder constitutes, an indebtedness within the prohibition of the Constitution.
    2. The fact that the city council, in accordance with Political Code, Sec. 4874, providing that the city council must at a certain time pass an annual appropriation ordinance sufficient to defray the expenses or liabilities of the city for the ensuing year, specifying the amount for each object, appropriated a sum to pay for water furnished under such contract, does not make the city liable therefor, since the contract out of which the liability arose is void, and no lawful authority to pay it exists.
    3. Where the liability of a city under a contract is general, and not special, if there is no limit to the amount for which such city can become indebted for a failure on the part of the city to meet its obligations under the contract as they fell due, the other party can recover a general judgment against the city, and have a mandamus for the levy and collection of a tax to pay it.
    4. Where the powers of a city to incur indebtedness are limited, it is the duty of one who makes a contract with such a city, whereby an indebtedness is created, to take notice of the financial condition of the city, and to determine whether the proposed indebtedness exceeds the constitutional limitation, and, not having done so, he cannot recover where the city is already indebted beyond that limit.

      Appeal from District Court, Lewis and Clarfce County; S. II. Mclntire, Judge. *
    Application by the State of Montana, on the relation of the Helena Water Works Company for a writ of mandamus against the city of Helena and the city council of the city of Helena. From a judgment on the pleadings in favor of defendants, plaintiff appeals.
    Affirmed.
    Statement of the Case.
    The appellant, in the district court of Lewis and Clarke county, made an application for a writ of mandamus requiring the city of Helena, and the city council of the city of Helena, to audit, allow and pay certain claims for water furnished to said city during and since the month of May, 1898, under the terms of an ordinance passed by the city council of the city of Helena on the 17th day of August, 1897, and also requiring the city and said city council to appropriate sufficient of the tax levied in the year 1899 to pay the amount due and to become due under said ordinance for water furnished during the fiscal year commencing the first Monday in May, 1900.
    The facts are substantially as follows: On the 16th day of March, 1897, in a suit then pending in the Circuit' Court of the United States in and for the district of Montana, one James H. Mills was appointed receiver of the water plant owned and operated by the Helena Consolidated Water Company, and used for the purpose of supplying the city of Helena and the inhabitants thereof with water. On August 17, 1897, as stated above, the city council of the city of Helena duly passed Ordinance No. 367, entitled “To provide the city of Helena with water for fire, sewerage and other municipal purposes for a period of five -years from August 1st, 1897.” Among other things, said ordinance provided that James H. Mills, as receiver of the Helena Consolidated Water Company, should furnish to the city of Helena, for a period of five years from the 1st day of August, 1897, an ample and sufficient supply of good, pure, wholesome and clear water for fire, sewerage and other municipal purposes. The consideration for the water so furnished was the sum of $1,500 per month, payable on or before the 10th day of each month, for water furnished during the preceding month. Section 11 of said ordinance is as follows:
    ‘ ‘There is hereby appropriated out of the yearly revenues of said city of Helena, for the use and benefit of said receiver, during the full term of five years from and after the first day of August, A. D. 1897, the sum of fifteen hundred dollars per month for the use of water through the present existing hydrants, by said city, for the purpose of fire, sewerage and other municipal purposes; and the further sum of five dollars and eighty-three cents per month pér hydrant for each and every hydrant hereafter ordered to be erected by said city council for the use of water through the same for fire, sewerage and other municipal purposes. And it is hereby made the duty of said city council during the term of five years to levy annual taxes under the provisions of the Political Code of the State of Montana authorizing the levy of taxes for general purposes, sufficient in amount to meet the appropriations hereby made.”
    Said ordinance further provided that within 30 days after the passage thereof said receiver should file with the city clerk an acceptance in writing of all the terms and conditions thereof, and that immediately thereafter said ordinance should become effectual as a contract between the city and said receiver, for the purposes and upon the terms and conditions named therein. It appears from the petition that within said period of 30 days said James H. Mills, as receiver, filed his acceptance in writing of the terms and conditions of said ordinance. It further appears that since the acceptance of said ordinance water has been furnished to the city of Helena in accordance with the terms theieof, and has been used by said city for the purposes mention c d therein. It also appears that nothing has been paid for waier furnished since the 1st day of May, 1898.
    It is alleged in the petition that the said city of Helena levied a tax for general municipal and administrative purposes sufficient in amount to meet and discharge the appropriation made in said ordinance for the fiscal year beginning with the first Monday in May, 1898, together with all other liabilities and expenses of said city for said year; that a like tax was levied by the city council for the fiscal years commencing with the first Monday in May, 1899, and 1900, respectively, in each instance sufficient in amount to pay and discharge the appropriation made by said ordinance for each of said years, together with the other liabilities and expenses of the city. It is alleged that each year since the passage, approval, and acceptance of said ordinance the said city council has appropriated in the annual appropriation ordinance the sum of $18,000 to pay for water furnished under said ordinance. Then follows an allegation that the water plant and system of appellant is the only one in the city of Helena, and that no other person or corporation was, either at the time of the passage or acceptance of said ordinance, or long prior thereto, or is now, in a position to furnish water to said city of Helena for the purposes specified in said ordinance.
    The amended answer to the petition consisted of denials of certain allegations contained therein, certain allegations not now material, and soperate defenses in substance as follows:
    (1) That no bids were ever asked for or received prior to entering into the alleged contract between the said city and said James H. Mills, receiver, predecessor in interest of appellant; that no bids for entering into said alleged contract were ever asked or advertised for as required by the provisions of Article I of Chapter XYI, relating to contracts, of the Revised Ordinances of 1897 of said city of Helena; and that when said contract was entéred into a contract could have been made with responsible parties, who would have agreed within six months thereafter to supply the said city with water for the purposes mentioned in said ordinance, from sources other than those owned or controlled by the appellant.
    (2) That at the time the city entered into said contract, and during all of the year 1897, as shown by the last assessment for state and county taxes, the value of the taxable property in the city of Helena did not exceed the sum of $12,-656,783, and that it has not at any time since exceeded such sum; that at the time said contract was entered into, and at all times since, the aggregate indebtedness of the city was, and still is, largely in excess of the 3 per centum of the value of the taxable property therein, as shown by all the assessments for state and county taxes made during any of the times mentioned in said petition, and was at all of said times, and still is, in excess of the sum of $516,000.
    To the amended answer a replication was filed. Defendant moved for judgment on the pleadings, which motion was by the court sustained. From the judgment entered upon said order, this appeal is taken.

      Messrs. Clayberg cfi Gunn and Mr. II. G. McJntire, for Appellant.

      Mr. Edward Ilorsky, for Respondents.
   MR. JUSTICE WORD,

after stating the case, delivered the opinion of the Court.

The first question we shall consider is: Did the city of Helena, by entering into the contract for a water supply, incur an “indebtedness,” within the meaning of that term as it is used in Section 6 of Article XIII of the Constitution of Montana?

Section 6 of Article XIII of the Constitution is as follows:

“No city, town, township or school district shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding 3 per centum of the value of the taxable property therein, to be ascertained by the last assessment for the state and county taxes previous to the incurring of such indebtedness, and all bonds o°r obligations in excess of such amount given by or on behalf of such city, town, township or school district shall be void; provided, however, that the legislative assembly may extend the limit mentioned in this section, by authorizing municipal corporations to submit the question to a vote of the taxpayers affected thereby, when such increase is necessary to construct a sewerage system or to procure a supply of water for such municipality, which shall own and control said water supply and devote the revenues derived therefrom to the payment of the debt. ’ ’

It is admitted by the pleadings that at the time when the contract between James H. Mills, receiver, and the city of Helena was executed the city of Helena was indebted in a sum in excess of 3 per centum of the assessed valuation of the taxable property in said city, as ascertained by the last assessment prior thereto for state and county taxes.

In the court below counsel for defendants took the position that the city, thus indebted, by entering into said contract, created an indebtedness within the prohibition of the Constitution. In support of this position, the case of Davenport et al. v. Kleinschmidt et al., 6 Mont. 502, 13 Pac. 249, among others, was cited. In view of the fact that the respondents claim that this decision is conclusive of the questions here presented, and inasmuch as the appellant seeks to show that this case has .been overruled, or, at least, should not, in the light of the facts here presented, be held to control the decision upon this appeal, we will examine the case of Davenport et al. v. Kleinschmidt et al., and seek to determine if any of the questions therein decided are the same as those now presented.

The suit of Davenport et al. v. Kleinschmidt et al. was one for a perpetual injunction, brought against the mayor and aldermen of the city of Helena and George F. Woolston, to restrain them from carrying out a certain contract, alleged to be illegal, by laying water mains, or erecting hydrants in the city, or by issuing any warrants for any water supplied to said city under said contract. Passing over those portions of the opinion given up to matters not now material, we come to a question like unto the one now before us. We quote as follows: “But in such a contract as that proposed by the ordinance in controversy actually forbidden by the charter of the city, as is contended by the respondents? Let us examine the charter, for the purpose of pointing out the precise section imposing the restriction. It is therein prescribed ‘that said city shall not be authorized to incur any indebtedness on behalf of said city, for any purpose whatever, to exceed the sum of $20,000.’ Section 17, as amended by the Act of 1883 (page 19, Charter). The allegations of the complaint, which, for the purpose of this case, are for the present taken as true, show the present bonded indebtedness of the city to be $19,-500, and the floating debt, consisting of outstanding warrants, to be $15,000. No distinction is drawn in the charter between bonded debt and floating debt, and, from the figures presented, it clearly appears that the limit has been already reached, and that the city cannot incur any further indebtedness, until some of that outstanding has been discharged, or the limit enlarged by the legislature. Then, if, by entering into the proposed contract, the city council would ‘incur an indebtedness, ’ the same is plainly prohibited by the express terms of the charter.” The Court then goes on to interpret the term ‘ ‘indebtedness’ ’ as used in the city charter, and exhaustively reviews the decisions of Iowa, Illinois and Indiana, wherein the meaning of constitutional provisions practically the same as those of Section 6 of Article XIII of the Constition of Montana is determined, and reaches the conclusion that the contract before the Court involved a liability to pay money on a contingency morally sure to take place, irrespective of any action taken, or option exercised, by the city in the future, and so constituted an indebtedness such as was prohibited by the express terms of the charter. Among other cases cited from and commented on by the Court in reaching this conclusion were,’ Burlington Water Co. v. Woodward, 49 Iowa 59, and Grant v. City of Davenport, 36 Iowa 401. Counsel for appellant contend that these decisions were misinterpreted by the Court in Davenport et al. v. Kleinschmidt et al., and so, when carefully considered, do not support the conclusion drawn therefrom. Let us see if this is so. The Supreme Court of Iowa in Burlington Water Co. v. Woodward, supra, construing a constitutional provision almost identical with our own says: “It is believed the constitution applies not only to a present indebtedness, but also to such as is payable on a contingency at some future day, or which depends on some contingency before a liability is created. But it must appear that such contingency is sure to take place, irrespective of any action taken, or option exercised, by the city in the future. That is, if a present indebtedness is incurred, or obligations assumed, which, without further action on the part of the city, have the effect to create an indebtedness at some future day, such are within the inhibition of the constitution. But if the fact of the indebtedness depends upon some act of the city, or upon its volition, to be exercised or determined at some future date, then no present indebtedness is incurred, and none will be until the period arrives, and the required act or option is exercised, and from that time only can it be said there exists an indebtedness. ’ ’ Commenting on the above, this Court in Davenport et al. v. Kleinschmidt et al. held that case analogous to the one then before it. Such, in our opinion, is true, in view of the conclusions reached; for it is to be noted that the Iowa decisions are in accord with the views expressed in Davenport et al. v. Kleinschmidt et al., to this extent, at least, that a contract for a water supply, entered into by a city which has already exceeded the constitutional limit of indebtedness, and which water supply such city is not able to pay for out of its current revenues, together with its other current expenses, is a contract within the prohibition of the constitution. The Iowa court, however, goes further, and holds “that when the contract made by the municipal corporation pertains to the ordinary expenses, and is, together with other like expenses, within the limit of its current revenues, and such taxes as.it may legally and in good faith intend to levy therefor, such contract does not constitute ‘the incurring of indebtedness’ within the meaning of the constitutional provisions. ” (Grant v. City of Davenport, supra.) But this Court in Davenport et al. v. Kleinschmidt et al. refused to adopt the construction of this constitutional prohibition against incurring indebtedness, though urged upon its attention by counsel, but, on the contrary, approved the construction given by the courts of Illinois and other states to’a constitutional provision practically the same as our own.

It is said that in Davenport et al. v. Kleinschmidt, et al. it did not appear, as it does from the pleadings in the case at bar, that for each year since the making of the contract the city had levied and collected taxes in an amount sufficient to make the payments provided for in said contract, and to meet all the other liabilities and expenses of the city; but the authorities cited and approved by the court passed upon a like contention, and held it to be against the plain meaning of the constitution, and so without merit. Thus, in City of Springfield v. Edwards, 81 Ill. 626, the court say: “Appellant contends that when liabilities are created and appropriations are made which are within the limits of the revenue accruing to meet them, they are not ‘debts,’ within the meaning of the prohibition of the Constitution; and that temporary loans are not, when within the limits of the revenue expected to be realized. The first branch of this position has support in Grant v. City of Davenport, 36 Iowa, 396; Peoples. Pacheco, 27 Cal. 175; Koppikus v. Capitol Commissioners, 16 Cal. 253; State v. McCauley, 15 Cal. 455; State v. Medbery, 7 Ohio St. 522: and State v. Mayor, etc., of City of New Orleans, 28 La. Ann. 358. These cases maintain the doctrine that revenues may be appropriated in anticipation of their receipt, as effectually as when actually in the treasury; that the appropriation of moneys when received meets the services as they are rendered,— thus discharging the liabilities as they arise, or rather anticipating and preventing their existence. In considering what construction shall be given to a constitution or a statute, ive are to resort to the natural signification of the words employed, in the order and grammatical arrangements in which they are placed; and if, when thus regarded, the words embody a definite meaning, which involves no absurdity, and no contradiction between different parts of the instrument, then such meaning is the only one we are at liberty to say was intended to be conveyed. There is no difficulty in ascertaining the natural signification of the words employed in the clause of the constitution under consideration, and to give them that meaning involves no absurdity or contradiction with other clauses of the constitution. The prohibition is against becoming indebted, — that is, voluntarily incurring a legal liability to pay, — ‘in any manner or for any purpose, ’ when a given amount of indebtedness has previously been incurred. It could hardly be probable that any two individuals of average intelligence could understand this language differently. It is clear and precise, and there is no reason to believe the convention did not intend what the words convey. A debt payable in the future is obviously no less a debt than if payable presently; and a debt payable upon a contingency, as upon the happening of some event, such as the rendering of service or the delivery of property, etc., is some kind of a debt, and therefore within the prohibition. If a contract or undertaking contemplates, in any contingency, a liability to pay, when the contingency occurs, the liability is absolute, — the debt exists, — and it differs from a present, unqualified promise to pay only in the manner by which the indebtedness was incurred-. And, since the purpose of the debt is expressly excluded from consideration, it can make no difference whether the debt be for necessary current expenses or for something else. ’ ’ And, as if these propositions did not cover the question, the court went further, and held it unlawful for a city indebted beyond the constitutional limit to incur a liability for current expenses or for anything else, even though it should at the same time make a formal appropriation, within the limits of its revenue, to meet it; that to avail itself of current, but uncollected, revenue for such purpose it must go further, and assign the amount out of a tax actually levied, and without recourse, in such a manner as to ‘ ‘leave upon the city no future obligation, either absolute or contingent, whereby its debt might be increased. ” (Prince v. City of Quincy, 128 Ill. 443, 21 N. E. 768.)

In Law v. People, 87 Ill. 385, the case of City of Springfield v. Edwards, supra, is approved, the propositions above quoted therefrom are affirmed, and it is there declared that the inhibition of the constitution includes “indebtedness” of every kind and character, and in every sense of the term, no matter what the form by which it is evidenced may be, when contracted or issued after the statutory limit is reached.

In Buchanan v. City of Litchfield, 102 U. S. 278, 26 L. Ed. 138, and City of Litchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. 820, 29 L. Ed. 132, the construction placed upon that section of the Illinois constitution before the court in City of Springfield v. Ed/wards, and La/w v. People, supra, is approved. In the latter case, Mr. Justice Miller, speaking for the court, says: “The language of the constitution is that no city, etc. ‘shall be allowed to become indebted in any manner or for any ■parpóse to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of its taxable property. ’ It shall not become indebted. Shall not incur any pecuniary liability. It shall not do this .in any manner. Neither by bonds, nor notes, nor by express or implied promises. Nor shall it be done for any purpose. No matter how urgent, how useful, how unanimous the wish. There stands the existing indebtedness to a given amount in relation to the sources of payment as an impassable obstacle to the creation of any further debt, in any manner, or for any purpose whatever. If this prohibition is worth anything, it is as effectual against the implied as the express promise, and is as binding in a court of chancery as a court of law.” Such was the interpretation by the highest court in the land of this constitutional provision of the state of Illinois when our own Constitution containing a like provision was adopted.

We have carefully examined those sections of our Constitution wherein counsel for appellant claim an interpretation of the term ‘ ‘indebtedness, ’ ’ as used in the constitution, may be found. The sections cited are by their terms applicable to the state alone. By them the limit of state indebtedness is fixed, as is the limit of taxation as well. In the case of cities. etc., the limit of indebtedness is fixed by the constitution, but the limit of taxation is fixed by the Code, and so subject to change. Why cities, etc., were not included within the terms of Section 2, of Article XIII, and Section 12, of Article XII, we need not pausé to inquire, since we find as to them an express provision, the meaning of which is now before us for determination. Nothing is said in the constitution as to the manner in which a city shall meet its current expenses. The inhibition is against a city becoming indebted in any manner or for any purpose to an amount exceeding a certain per cent, of its taxable property.

In view of these holdings, we can conceive of no possible ground for the supposed distinction between an indebtedness for current expenses, payable out of the current revenues, and one for the payment of which no provision has been made, and for which the city is generally liable. (See, also, Fuller v. City of Chicago, 89 Ill. 282; Fuller v. Heath, Id. 296; Howell v. City of Peoria, 90 Ill. 104; Prince v. City of Quincy, 105 Ill. 138; City of Chicago v. McDonald 176 Ill. 404, 52 N. E. 982; City of Helena v. Mills, 36 C. C. A. 1, 94 Fed. 916; Beard v. City of Hopkinsville, 95 Ky. 239, 24 S. W. 872, 23 L. R. A. 402; Spillman v. City of Parkersburg, 35 W. Va. 606, 14 S. E. 279; People ex rel. Seeley v. May, 9 Colo. 404, 12 Pac. 839; Niles Waterworks v. City of Niles, 59 Mich. 311, 26 N. W. 525; Sackett v. City of New Albany, 88 Ind. 473; Ming v. Pratt, 22 Mont. 262, 56 Pac. 279; Jay v. School Dist. 24 Mont. 219, 61 Pac. 250.)

Counsel for appellant next contend that, even if this court is of opinion that the case of Davenport et al. v. Kleinschmidt, et al. supports the proposition that, by entering into the contract now before us, the city incurred an indebtedness such as is prohibited by the constitution, yet that case cannot be looked to as an authority, for the reason that it has been overruled by the case of State ex rel. Great Falls Water Works v. City of Great Falls, 19 Mont. 518, 49 Pac. 15. We do not so read this last case. At the time the contract before the court in the Great Falls case was entered into there existed an act of the legislature conferring upon cities the power to levy and collect a tax, not to exceed five mills on the dollar, for fire and water purposes. The court said: ‘‘This law was in force when Ordinance No. 17 ivas passed, approved, and accepted. We are of the opinion that this law became a part of the contract embodied in said ordinance, and that relator had a right to insist that, in so far as might be necessary to pay what was due it for hydrant rentals in accordance with rates prescribed in the ordinance contract, a special tax, as provided for in that act, should be levied annually; of course, in only such sums as would be needed, and not exceeding the five mill limit. The contract was entered into in contemplation of a special fund being created by the city to meet liabilities incurred thereunder, and the legislature in said act contemplated at the time that cities of the territory should pay for water used by them for sewerage and fire purposes from taxes levied and collected for that specific purpose. The case of Davenport et al. v. Kleinschmidt, et al. supra, does not disapprove the Iowa cases holding that, because a general law provided for payment from a special fund, a liability incurred by a city to supply its inhabitants with water was not a ‘debt, ’ in the sense of the term as employed in the constitution of Iowa, forbidding cities to incur debts in excess of a certain proportion of their assessable property. It was under different conditions of law and fact that the Supreme Court of the Territory of Montana held in Davenport et al. v. Kleinschmidt et al. that the liability incurred by the city of Helena under its ordinance contract was a debt. This appears from a careful reading of the case. ’ ’

The case of Davenport et al. v. Kleinschmidt et al. and the Great Falls case stand for two different and distinct principles. The first is an authority for the proposition that when a municipality has exceeded the constitutional limit of indebtedness a contract for a water supply, under which the city is liable generally, is the incurring of an indebtedness, within the meaning of the constitution, and the Great Falls case is an authority for the proposition that such a contract does not create an indebtedness when the city making the contract is authorized by law to levy a special tax expressly for the payment of such contract liability. Tn a case falling within the first class, the liability of the city is general, and is payable out of all its revenues; thus, in the case at bar, Section 11 of the ordinance makes it the duty of the £ ‘city council during the term of five years to levy annual taxes under the provisions of the Political Code of. the state of Montana authorizing the levy of taxes for general purposes, sufficient in amount to meet the appropriations hereby made,5 ’ which, as appropriated by the same section, is the sum of $1,500 per month for water furnished. In cases falling within the second class, the liability is special, and is limited to the amount of the special tax the levy of which is expressly authorized by law. So it may be said that the Great Falls case approves, rather than overrules, the case of Davenport et al. v. Kleinschmidt et al. (See City of Helena v. Mills, supra ) And it may be here noted that since the decision of the Great'Falls case the special tax for fire and water purposes therein considered has been abrogated by the adoption of the Codes, and the same conditions are no'w presented as existed at the time the case of Davenport et al. v. Kleinschmidt et al. was decided. (City of Helena v. Mills, supra.)

Counsel for appellant contend that the conclusions reached by this Court in Davenport et al. v. Kleinschmidt et al. are in conflict with the decision of the Supreme Court of the United States in City of Walla Walla v. Walla Walla Water Co. 172 U. S. 1, 19 Sup. Ct. 77, 43 L. Ed. 341. With this we cannot agree. In the first place, it appears from a reading of the opinion in the Walla Walla Case that at the time the bill in equity was filed, and the preliminary injunction against the city was granted the city of Walla Walla was not indebted to an amount in excess of the limit of indebtedness fixed in its charter. Commenting on limitations of this character, the court in the Walla Walla case say: “The obvious purpose of limitations of this kind in municipal charters is to prevent the improvident contracting of debts for other than the ordinary current expenses of the municipality. It certainly has no reference to debts incurred for the salaries of municipal officers, members of the fire and police departments, school teachers, or other salaried employes to whom the city necessarily becomes indebted in the ordinary conduct of municipal affairs, and for the discharge of which money is annually raised by taxation. For all purposes necessary to the exercise of their corporate powers, they are at liberty to make contracts regardless of the statutory limitation, provided, at least, that the amount to be raised each year does not exceed the indebtedness allowed by the charter. Among these purposes is the prevention of fires, the purchase of fire engines, the pay of firemen, and the supply of water by the payment of annual rentals therefor. It is true that in the case of Lake Co. v. Rollins, 130 U. S. 662, 9 Sup. Ct. 651, 32 L. Ed. 1060, it was held by this Court that a similar provision in the constitution of Colorado was an absolute limitation upon the power to contract any and all indebtedness, including warrants used for county expenses, such as for witness and jurors’ fees, election costs, charges for board of prisoners, county treasurers’ commissions, etc. But the case is readily distinguishable from the one under consideration. That was a suit against a county upon a large number of warrants for current expenses, the defense being a want of authority on the part of the county commissioners to issue warrants which had been put forth after the limit of indebtedness had been reached and even exceeded. They were held to be void. The case is authority for the proposition that if the annual rentals, payable in this case, with the other expenses, exceeded the limit of indebtedness, the transaction would be void; but as it appears that the limit of indebtedness was $50,000, and the amount of the city debt but $16,000, it is clear that the payment of an annual rental of but $1,500 would be unobjectionable upon this ground. If such annual rentals exceeded the limit of indebtedness, a different question would be presented.”

The Walla Walla Case is an authority for' the proposition ‘that the contract of a municipal corporation for a useful and necessary thing, such as water or light, which is to be paid for annually as furnished, does not create an indebtedness for the aggregate sum of all the yearly payments, since the debt of each year comes into existence only when the annual compensation has been earned, but that, if the amount agreed to be paid in any installment in compliance with such contract transcends the amount of permitted indebtedness, the city is not liable therefor. ’ ’ (City of Helena v. Mills, supra, and cases cited.) With the city already indebted when the contract before us was made, in a sum largely in excess of the constitutional limit, how can it be said that the amount to be raised each year under the contract does not exceed the amount of indebtedness permitted by our Constitution? A fortiori is this true when the water rent and the other expenses of the city for each year are taken together, as they must be, under our understanding of the Constitution.

If, by entering into the contract before us, an indebtedness was not created, what was the purpose of section 11 .of the ordinance, wherein the city bound itself during the term of five years to levy annual taxes under the provisions of the Political Code authorizing the levying of taxes for general purposes to pay for water supplied under the contract? It may well be said that this obligation in itself implies the existence of a debt in favor of appellant and against the city.

It follows, from the view we have taken of the propositions before us, that the question asked in the beginning of this opinion must be answered in the affirmative.

2. The next question presented for our consideration is this: Does the amount now due'and unpaid for water furnished to the city under the contract before us constitute an “indebtedness” within the meaning of the term as used in that section of the Constitution above considered? This question is virtually answered by the conclusion we have already reached. Holding, as we do, that the contract itself is void, any obligation flowing from it is void also. This view accords with that portion of Section 6 of Article XIII,, supra, wherein it is declared “that all bonds or obligations in excess of such amount (the limit of indebtedness) given by or on behalf of such city,” etc., “shall be void.” Nor can it make any difference, in our opinion, that the city council, in accordance with the provisions of Section 4874 of the Political Code or otherwise, appropriated §18,000 or other sum to pay for water furnished under said contract for a given year. The contract out of which these liabilities arose being void, it nec-, essarily follows that no lawful authority to pay them exists. As we have indicated, the liability of the city under the contract before us, if any existed, would be general, not special, and, were there no limit to the amount for which the city could become indebted, for a failure on the part of the city to meet its obligations for water rent as they fell due, the appellant could recover a general judgment against the city, and have a mandamus for the levy and collection of a tax to pay it.

Counsel for appellant say that the logical result of holding that the Constitution prohibits a contract for current expenses which a city can meet out of its current revenues together with its other current expenses is that the city government must end, — that the city cannot pay one dollar out of its treasury for the necessities to sustain corporate life. Were it true that such dire results would flow from giving force to the plain terms of the Constitution, it were better so than that this Court should, by a loose construction of that instrument, endanger those sacred rights which by its terms are guarantied to all the people. (Palmer v. City of Helena, 19 Mont. 68, 47 Pac. 209.) But that no such results need follow from the construction we give to this provision of our Constitution is made plain by a consideration of the course pursued in those states where a like interpretation of a similar constitutional provision is adhered to. “The effect of this constitutional inhibition is to require cities indebted to the limit fixed by the constitution to carry on their corporate operations, while so indebted, upon the cash or pay as you go plan, and not upon credit, to any extent or for any purpose. ’ ’ (Prince v. City of Quincy, 128 Ill. 443, 21 N. E. 768.) A way in which, under such circumstances, the operations of a city may be carried on is pointed out in City of Springfield v. Edwards, supra; and in commenting .thereon in Law v. People, supra, the court say: “The theory is that a corporation which has reached the constitutional limit of its power to create indebtedness may, when a tax is levied, but not collected, draw against the fund thus levied and provided, although not in the treasury, and thus appropriate and virtually assign, the amount specified in the warrant on the treasury to the person to whom it is issued and delivered, and that amount, being assigned or set apart to him, when collected, he has the right to receive, and it becomes the duty of the officers to collect and pay it to him; and, failing- in their duty, he would have an action against them for its recovery. But, with a corporation thus situated, the legal effect of the issuing and receiving of the warrant is that the person receiving an assignment or appropriation of so much of the specific tax already levied, and against which the warrant is drawn, by receiving it discharges the coiporation from all liability on account of the services or articles for which it is drawn, and agrees to look to the tax thus levied and appropriated, and to the officers, for his pay, and he thereby discharges the corporation from any and every kind of liability therefor. In such a case the warrant is given and received in full satisfaction for the services rendered or the material furnished. ’ ’ (See Lake Co. v. Rollins, and People ex rel. Seeley v. May, supra.

From the view we take of the question considered, it follows that the answer to the second question must also be in the affirmative. This makes it unnecessary for us to . pass upon the other questions presented on this appeal.'

It may be the decision of this case will work a hardship upon those whose money has been the means of supplying the city with water for the time disclosed by the pleadings. In this regard, ‘ fit is only necessary to say that the settled principles of law cannot, with safety to the public, be disregarded in order to remedy the hardships of special cases. ’ ’ (Buchanan v. City of Litchfield, supra; Sanford v. Gates, Townsend & Co., 21 Mont. 277, 290, 53 Pac. 719; Lake Co. v. Rollins, supra.) And in this connection it is to be observed that, where the powers of a city to incur indebtedness are limited, it becomes the duty of one who contracts with such a city, whereby an indebtedness is created, to take notice of the financial condition of the city, and to determine whether the proposed indebtedness is in excess of the constitutional limitation. (French v. City of Burlington, 12 Iowa, 617; Buchanan v. City of Litchfield, supra.)

The importance of this case, because of the questions and amount involved, and the rights necessarily to be determined, has led us to give it- most careful consideration, and, after so doing, we are of opinion that the judgment of the court below should be affirmed; and it is so ordered.

Affirmed.