101 Ky. 432 | Ky. Ct. App. | 1897
delivered the opinion of the court.
This proceeding is brought by tliu appellee, Zimmerman, in the Jefferson Circuit Court, Law and Equity division, to -enjoin the issuance by the appellants of bonds of the city of Louisville to the amount of $388,000. It appears by the pleadings that the city has outstanding and due July 1, 1897, "bonds to the amount of $199,000, and also due August 1,1897, bonds to the amount of $S9,000, all bearing six per cent, interest, and it is proposed to issue the $5SS,000 in bonds to bear four per cent, interest, due and payable forty years after date, in gold coin of the United States, at its present standard of weight and fineness, for the purpose' of paying off the bonds due as stated; in other words, the appellants
Section 157 of the Constitution provides1: * * * “No county, city, town, taxing district or other municipality shall be authorized or permitted to become indebted, in any manner or for any purpose, to an amount exceeding in any year the income and revenue provided for such year without the assent of two-thirds of the voters thereof, voting at an election to be held for that purpose; and any indebtedness con*436 tracted in violation of this section shall bei void; nor shall such contract be enforeible by the person with whom made;, nor ¡shall such municipality ever be authorized to assume the same.”
Section 158 provides: * * * “Nothing herein shall prevent the issue of renewal bonds, or bonds to fund the floating indebtedness of any city, town, county, taxing district or other municipality.”
Section 159 provides: “Whenever any county, city, town, taxing district or other municipality is authorized to contract an indebtedness, it shall be required, at the same time, to provide for the collection of an annual tax sufficient to pay the interest on said indebtedness and to create a sinking fund for the payment of the principal thereof, within not more than forty years from the time of contracting the same.”
It appears that the city council of Louisville, in the ordinance passed relating to these bonds, literally complied with the provisions of section 159 of the Constitution, and, notwithstanding this, it is contended, and the court below so-held, upon the authority of Holzhauer v. City of Newport, 94 Ky., 396, that section 159 of the'Constitution is not self-executing, and that as the charter of the city of Louisville, as passed by the legislature did not make provision specifically, as this section of the Constitution provided, that the city counoil was without authority to pass the ordinance-they did, and that the same is void and of no effect.
In the case of Holzhauer v. City of Newport, 94 Ky., on p. 406, near the bottom, it will be observed that the court, by Judge Hazelrigg, says: “'This construction necessarily determines the question at issue, and we do not think that.
This decision as to section 159 of the Constitution is obiter dictum, as the opinion expressly says, and is held to be not bindingondhiscourt. Thequestiontherebeforethecourt was the effect of a conflict between certain acts of the legislature passed in 1890, and before the Constitution was adopted, and section 159 of the Constitution, and the court concluded that by provision of the Constitution itself acts permitting the creation of indebtedness, that were in force at the time of the adoption of the Constitution, were not affected by this section 159. But that it was addressed to the general assembly that would meet after its adoption, and could and did only affect future legislation. The court did not undertake to say, nor does it say, that the terms and limitations of section 159 should be bodily incorporated in future acts, but that its provision should apply to future legislation. At the time the case of Holzhauer v. City of Newport, was decided by this court, the acts of the legislature granting the new charters to cities of the first, second and third classes had not become laws, not even adopted by the legislature, and, consequently, the provisions of such acts were in no wise before the court and were not passed upon in that ease.
If the general assembly, in passing the acts chartering the different cities and towns in the State, had have underta
It appears that the bonds which appellee seeks to enjoin the issuance and delivery of, and which the court below did enjoin, were dated and bore interest from April 1, 1897, and the bonds to be retired were due and payable July 1, 1897, and August 1, 1897.
Appellee contends that if these bonds are permitted to be executed, sold and delivered, that, from their date, April 1, 1897, rill the other bonds are due July 1, 1897, and August. 1, 1897, for three months, there will be an interest bearing debt against the city, on this account, of over a million dollars, that is to say, to the amount of one set of these bonds, more than is right and more than the city council had the right or power to contract under the circumstances, and that for this time this excess is in fact a new indebtedness, and, being without warrant or authority of law, is void. We are of opinion that this objection is well taken, and that the city council did not have authority to issue bonds bearing date and bearing interest from April 1, 1897, to refund, by exchange direct or by sale of the new bonds and payment of the old bonds, that were not due till July 1,1897, and August
Again it is contended by appellee that by the sale of the (bonds as made there was a premium of nearly forty thousand dollars realized more than was necessary to pay off the bonds intended to be retired, and that to the amount of this premium there was an excess of bonds issued and sold, and that that excess should be enjoined, as without warrant or authority of law. This objection we think well taken.
The oity council has no right in any event to issue exceeding- five hundred and eighty-eight thousand dollars in bonds to refund that sum outstanding, and if the commissioners !of the sinking fund determine, as they have the right to do, that it is best to sell the new bonds and pay off the old ones, then they have the right to only sell bonds sufficient to raise five hundred and eighty-eight thousand dollars ($588,000).. For if they w-ere permitted to sell more bonds than was necessary to pay this indebtedness, then to the extent of this premium it would in effect be the creation of a new indebtedness to that extent; which is not permitted under the law authorizing a refunding of the indebtedness.
Wherefore, being of opinion that the bonds sold bore interest from too early a date, i. e., from April 1, 3897, instead, of July 3, 1897, and August 1, 1897, respectively, as to amounts, and inore were issued and sold than was necessary to meet the indebtedness to be refunded, we hold the judg