151 Minn. 206 | Minn. | 1922
In 1920 the village of Buhl levied a tax of $350,000 for general municipal purposes. On April 21, 1921, chapter 417 of the Laws of 1921 took effect. By section 1, cities and villages were limited to $100 per cápita of population in levying taxes for municipal purposes in the year 1921 and in each year thereafter. The population of the village is 2,007, On June 6 the village council adopted the following resolution:
“Resolved that the village treasurer be instructed to call and pay all village warrants in all departments issued for debts incurred since April 21, 1921, and that all funds coming into the hands of the treasurer for current year be held in separate funds for the purpose of meeting the current expenses of the village in the several departments.”
On April 21 the village had an indebtedness of about $600,000 in excess of moneys in the hands of the treasurer. Such indebtedness was evidenced by village warrants which had been presented to the treasurer for payment, but not paid for want of funds and in-
Section 1300, G. S. 1913, provides that village orders drawn on the treasurer and presented to him, but not paid for want of funds, shall be so marked, shall be paid in the order of their presentation, and shall bear interest at the rate of 6 per cent from the date of such presentation. If these provisions are applicable, the warrants held by plaintiffs should be paid before those issued after April 21. Counsel for appellants assert that section 1300 has no application because the village was organized under chapter 145, p. 148, Laws of 1885, has never become subject to subsequent legislation relating to villages, and is therefore governed exclusively by chapter 145, which contains no such provisions as are found in section 1300. Counsel for respondents answer, first, that chapter 145 is a general law subject to amendments general in their nature, such as are now embodied in section 1300, and, second, that even in the absence of statutory directions municipal warrants must be paid either in the order of their issuance or presentation.
The contention is that the indebtedness of the village incurred prior to April 21, 1921, is to be paid out of the proceeds of the special tax levy or levies authorized by section'3 and that taxes levied in 1920 should be used so far as necessary to pay current expenses for 1921. It is urged that the legislature intended to put the business of villages on. a cash basis after April 21, and to put a stop to the former practice of issuing warrants when there were no funds from which they could be paid, tacitly agreeing with the payees that the warrants should be discounted at some bank. On this phase of the case, the arguments have taken a wide range. We shall not attempt to cover all the ground traversed.
We have examined the numerous cases cited by appellants holding that the current revenues of a municipality should be devoted to the payment of current expenses. Most of them deal with the right to priority of warrants issued to pay such expenses over judgments and other like demands. It is generally held that payment of such demands out of current revenues will be postponed until current expenses have been paid therefrom. Some of the cases discuss the right of general creditors to question the character or necessity of expenditures, which, if made, will cause payment of their claims to be deferred. So far as we have discovered, it has never been held that under a statute such as ours a village may arbitrarily postpone the payment of outstanding warrants and give priority to later warrants. Stress is laid on the alleged irreparable injury to tbe citizens of Buhl if its officers are not allowed to devote the proceeds of the 1920 tax levy to the maintenance of the fire, police, water and light departments, and the “comparative hardship” rule is invoked in support of the plea for a reversal. Granting that there may be hardship, it was nevertheless a matter lying very largely
We discover nothing in section 3 evincing a design to exempt the proceeds of the tax levy of 1920 from the payment of outstanding village warrants. The section provides that the cash in the village treasury and the amount of the taxes levied prior to 1921 are to be added and the sum total substracted from the existing indebtedness, and only the remainder may be raised by the special levy which is authorized. This negatives the claim that it was not the intention that the proceeds of the 1920 levy should be used to pay village Avarrants as directed by section 1300.-
Viewed from a practical standpoint, the situation of the village is no different than it would have been if the 1921 statute had not been enacted. In the absence of the statute it would be bound to devote the proceeds of the tax levy to the payment of outstanding Avarrants, and this would necessitate the issuance and sale of warrants to meet current expenses. The desire to reform bad financial methods cannot be translated into action all of a sudden. So long as section 1300 remains in force, the old way of doing business cannot be wholly abandoned until after the village’s load of debt has been removed.
The banks are creditors of the village. When it issued the warrants they hold, it did not specify when or how they should be paid, but the statute did, and of course it is beyond the power of the village council to override the statute. It is within the power of the legislature to prescribe the order of payment of municipal Avarrants, and a statutory provision in force when they are issued creates a contract for precedence with the warrant holders which cannot be impaired by subsequent legislation. E. H. Rollins & Sons v. Board of Commrs. 199 Fed. 71, 117 C. C. A. 583; Phillips v. Reed, 109 Iowa, 188, 80 N. W. 347; People v. Austin, 11 Colo. 134, 17 Pac. 485;
Order affirmed.