The Supreme Court Rules on City Debt
A landmark decision clarifies that Seattle is not liable for 'grade scrip' debts, protecting the city treasury but leaving contractors in a precarious position.
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The state supreme court has rendered a significant decision regarding warrants issued for street improvement projects, commonly known as 'grade scrip.' The court ruled that the city is not liable for the cost of improvements assessed to local districts, and that contractors must look solely to the special assessment funds for payment. The suit was brought by M. C. Foyle against the city for $11,000 in warrants for the grading of South 12th Street. The court determined that the city's debt limits at the time of the contract prevented it from being held liable, and that the warrants were not negotiable instruments but rather certificates of participation in a specific fund.
“Constitutions and acts of the legislature would be of as little preventative force as cobwebs in a cyclone.”
This decision addressed the legal mechanics of how Seattle grew its infrastructure in the 1890s. The tension between city liability, private contractor risk, and taxpayer-funded improvements remains a fundamental struggle in Seattle's municipal governance today.
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