49 So. 417 | Ala. | 1909
The court of county commissioners of Limestone county, under the power and authority conferred upon them by section 133 of the Code of 1907, having first determined that it was necessary that a new courthouse for that county should be erected, on the 19th day of November, 1908, in the regular way, entered into a contract with the Falls City Construction Company, a corporation, of New Jersey, for the erection of the same. According to the resolution adopted by the court, the contract price agreed upon and fixed was not to exceed the principal sum of $59,000, and the interest thereon at the rate of 6 1-2 per centum per annum, payable semiannually.
The court adopted the following, among other resolutions: “Be it further resolved by the court that there shall be levied, and there is hereby levied a special county court house tax of one-fourth of one per centum on all taxable property of said county, upon the assessment
The contract with the company is fully set out in the resolutions of the court and adopted by the court. Article 19 of the contract, or so much of it as is necessary for present purposes, is in this language:
“It is further stipulated and agreed that for the consideration herein set forth, to discharge the obligation to the contractor by said county, said court and said county hereby sells, assigns, transfers, sets over and confirms to the said Falls City Construction Company, all of the special county courthouse tax levy and all of the proceeds derived from the levy and collected of the special courthouse tax and levy thereof of one-fourth of one per centum on all the taxable property of said county for and during the years hereinafter mentioned as provided by sections 128 and 145, both inclusive, of the Code of 1907, and out of which tax levy said contractor or its assigns shall be and are entitled to receive the following proceeds with interest from February 1, 1909, at the rate of six and one-half per centum per annum, payable semiannually, that is to say: Said contractor shall receive, to wit:
*549 Out of said tax levy for the year 1908--------$2,000 00
Out of said tax levy for the year 1909-------- 6,500 00
Out of said tax levy for the year 1910-------- 7,000 00
Out of said tax levy for the year 1911-------- 7,500 00
Out of said tax levy for the year 1912________ 8,000 00
Out of said tax levy for the year 1913________ 8,500 00
Out of said tax levy for the year 1914________ 9,000 00
Out of said tax levy for the year 1915________ 9,500 00
Out of said tax levy for the year 1916________ 1,000 00
“The foregoing principal installments except the one for $2,000, shall bear interest at the rate of six and one-half per centum per annum from February 1, 1909, payable semiannually, until each of said installments accrue, and provided further that said foregoing described interest added to the foregoing principal installments accrue and make the regular total installments of the amounts the contractor is entitled to receive from said tax fund which are as follows,” etc.
The itemized amounts' are then set out, making: Total principal, $59,000; interest, $15,989; grand total, $74,989. The contract continues in this language: “And said county and this court agrees to levy said special courthouse building tax of one-fourth of one per centum per annum during the years 1909, 1910, 1911, 1912, 1913, 1914, 1915, 1916, and 1917, for the purpose of creating the proceeds and revenue above set forth and further agrees to evidence said sum' and installments above set out by the issuance of valid and lawful warrants drawn on said fund for the principal and interest thereon, and said warrants shall be of the denomination of five hundred dollars each and have coupon warrants annexed to them, representing the interest. It is agreed that no debt is hereby created or incurred by said county, but instead thereof a transfer and assignment of the
A taxpayer filed the present bill, and by it seeks to have the assessment of the tax and the contract declared void, the judge of probate enjoined from issuing the warrants called for in the contract, and the parties restrained from tearing down the old courthouse. A temporary injunction was granted. The defendants attacked the equity of the bill by demurrer, and moved to dissolve the injunction. On the hearing the demurrer was sustained and the injunction dissolved. From the decree the complainant appealed, assigning the same for error.
The theory of the bill is that the contract creates a debt against the county, which, added to the debt of the county in existence at the time the contract was entered into, exceeds the debt limit prescribed by section 224 •of the constitution of 1901. That section, so far as the same is applicable here, is in this language: “No county shall become indebted in an amount including present indebtedness, greater than 3 1-2 per centum of the assessed value of the property therein,” etc. The averments of the bill show that the assessed value of the property in the county, for the year 1908, was $4,228,-'319, and that the indebtedness of the county was $135,-000. Three and one-half per centum on the valuation would give $147,991.16, and the difference between this amount and the indebtedness would be $12,991.16. Thus it is shown, by the averments of the bill, that, if the amount the contractor is to receive for the courthouse should be determined to be a debt, the limit prescribed by the Constitution has been exceeded, and the contract,
Section 224 is peculiar to the Constitution of 1901; that is to say, such a provision never existed in the organic law of the state prior to the adoption of that Constitution. Hence there is no decision by our own court for our guidance in the construction of such constitutional provision. Many of the states of the Union, however, have similar provisions in their organic law. Gray, in his work on Limitations of the Taxing Power and Public Indebtedness, writing in respect to such provisions, says: “In the decision of questions arising under these constitutional debt limits, considerations of policy have no place. While it is true that all questions of policy are for the legislature or the people, there are many questions of construction in which the courts allow policy to have some weight, at least Avhen they feel so inclined. But these provisions limiting indebtedness are purely arbitrary, and when the people adopt them all questions of policy are deemed settled. They are to be construed neither liberally nor with excessive strictness, but solely in accordance with their plain meaning. If the people have adopted a mistaken policy in their Constitution, the only remedy is an amendment of that instrument.” The intention or purpose in incorporating such a provision in the Constitution is obvious. It was to curb the improvident creation of debts by counties, and thus protect the taxpayers against excessive and unnecessary burdens. It may well be that another reason (one suggested by appellee’s counsel) also influenced the framers of the Constitution, namely, that the
Upon its face section 224 would seem to afford no room for construction. Its language is clear and explicit and self-construing. But it is thought that the question at issue becomes a complicated one when viewed in the light of section 215 of the Constitution, and it is therefore appropriate at this point to bring that section into view. It provides: “No county in this state shall be authorized to levy a greater rate of taxation in any one year on the value of the taxable property therein than one-half of one per centum: * * * provided, that to pay any debt or liability now existing against any county, incurred for the erection, construction, or maintenance of the necessary public buildings or bridges, or that may hereafter be created for the erection of necessary public buildings, bridges or roads, (a) any county may levy and collect such special taxes, not to exceed one-fourth of one per centum, as may have been or may hereafter be authorized by law, which taxes so levied and collected shall be applied exclusively to the purposes for which the same were so levied and collected.” It is under this section that the levy of the taxes mentioned in the contract was and is contracted to be made, and the revenues to be derived from such levy are those which the resolution adopted by the court and the contract purport to sell and assign to the construction company, in payment of the courthouse, completed and furnished. Construing the two sections of the Constitution together, it is obvious that section 215 is without any field of operation in a county the indebtedness of
The vital question in the case then is: Would this contract create an indebtedness?
It is frankly admitted in brief of one of appellees’ counsel that the contract here involved “is bottomed upon, and patterned after, the holdings of the Supremo Court of Illinois,’’ as set forth in the case of Springfield v. Edwards, 84 Ill. 626, and Law v. People, 87 Ill. 400. Further, that the endeavor of the respondents has been to meet the phases which might arise should it be held that section 215 is not exempt from the limitation imposed by section 224. This is an important, though perhaps an unnecessary, admission; for few could read the contract without being impressed with the conviction that the parties thereto must have been sensible of the difficulties which the Constitution interposed in tkeir way, and that the phraseology of the contract was ingeniously framed for the purpose of avoiding the restrictions imposed by the organic law; but, in considering the contract, we must not forget that we are dealing with substance, not with form. It is the thing done, or sought to be accomplished, which must determine the question of the power of the country to levy the tax and malee the contract. This depends upon the true construction and effect of the whole contract, in connection with the constitutional limitations, and not upon the form or mere phraseology of some of the parts of the contract.
In regard to the Illinois cases, the Constitution of that state contained this provision: “No county, city, * * * * * or other municipal corporation, shall be al
Answering the contention, the court said: “The first branch of this position has support in Grant v. City, etc., 36 Iowa, 396, People v. Pacheco, 27 Cal. 175, Kop
The other case from the Illinois court (Law v. People, 87 Ill. 385), cited and relied upon by appellees, merely reiterates and emphasizes the expression contained in the case above quoted from.
Assuming that the expressions or rulings found in those cases are exempt from the principle of obiter dicta, and without for the present turning to other authorities let us for a moment examine by their light the resolutions and contract in judgment. The resolutions purport to levy a tax of one-fourth of 1 per centum, for a series of nine.years, to raise the money wherewith to pay the price agreed upon, for the courthouse, not to exceed the principal sum of $59,000, with interest thereon at the rate of 6 1-2 per centum, payable semiannually. The principal sum is divided into nine annual installments. The resolutions also purport to sell, transfer, and assign to the construction company all of the special county courthouse tax levy and all the proceeds derived therefrom, for and during the years mentioned; out of which the contract stipulates the contractor is to receive the annual installments of the principal and interests from February 1, 1909. Warrants were to be issued, for the several installments, in the denomina
We do' not think it can be said with, any show of reason that the resolutions and contract in question square with the rulings of the Illinois court. In the first place, no warrants have been issued or accepted, either for principal or for interest; but granting, for the sake of the argument, issuance and acceptance of warrants, how, may we ask, can there be interest without a debt? “Interest” necessarily involves the idea of a debt, a continuing liability, as its foundation. It is defined by Webster to be: “Premium paid for.the use of money, usually reckoned as a percentage; as, interest at five per cent, per annum on ten thousand dollars.” — Internad Diet. So this view of the case repels the idea that the transaction would be a closed one, even if the warrants had been issued, delivered, and accepted. This position is reinforced by the stipulations that the resolutions levying- the tax shall not be limited or repealed “so long as any of said warrants and the interest thereupon shall remain outstanding.” If the warrants were considered a full discharge of the obligation to the county, why should interest have been considered at all? Why should it have been stipulated for? Or if, according to the contention of the appellees, “in the moment the debt was created it became satisfied by payment, by the appropriation of the taxes,” why should there have been a stipulation for interest running through, a series of years? And why should the contract stipulate that the warrants
Furthermore evincing that the contracting parties realized the probable invalidity of the tax levy made for a series of years subsequent to the year 1909, the contract stipulates that the county and court agree to levy “said special courthouse building tax of one-fourth of 1 per centum per annum, during the years 1909, 1910, 1911, 1912,1913,1914,1915,1916, and 1917, for the purpose of creating the proceeds,” etc. Thus it seems clear that the contract creates an obligation on the part of the county to make the levy in the future for the benefit of the company. In this respect it is obvious that, according to the decision in the case of City of Springfield v. Hdtoa/rds, supra, the existence of a present debt is necessarily implied, in favor of the company and against the county.— State v. City of Helena, 24 Mont. 521, 63 Pac. 99, 55 L. R. A. 337, 343, 81 Am. St. Rep. 453; City of Ottumwa v. City, etc., 119 Fed. 315, 56 C. C. A. 219, 59 L. R. A. 604; Coulson v. City of Portland, 6 Fed. Cas. 629, 636.
But it is urged that no debt is created because the stipulation in the contract is explicit to the effect that “no-debt is hereby created or incurred by said county but instead thereof a transfer and assignment of the proceeds of said special tax levy to the amounts herein stated for the foregoing named years are made to said contractor as the consideration and payment for the erection, completion and furnishing of said courthouse building.” The case of Swanson v. Ottumwa, 118 Iowa, 161, 91 N. W. 1048, 59 L. R. A. 620, is cited and relied upon as supporting this contention; and it must be conceded that it does so. Not only is this true, but it is quite apparent, from a comparison of the resolutions and the contract there involved with those dealt with in this
But, however this may have been, we are not bound to follow either of these courts, and are at liberty to place upon our own Constitution that construction which to us may seem rational. We do not here recite the facts of those cases; but it will be readily seen, upon
“To say that a sum of money due or owing by A. to B. is not a debt, because A. has promised to appropriate or has appropriated, a portion of his future income to its payment, is a proposition in legal metaphysics” that seems incomprehensible. It does seem plain that the fact that the commissioners’ court provide for the levy and collection of taxes to pay the warrants and the interest coupons is a recognition of the fact that their issuance will create a debt against the county. It would be a use
If this is not a sound conclusion — if the sum contracted to he paid for the courthouse, completed and furnished, is not a. debt, because there is a levy of taxes, running through a series of years, to be annually collected from all the taxable property in the county, “till the sum to be paid is paid therefrom,” and because the contract provides nonliability, and that the warrants shall be paid only from such taxes so specially levied — then it must be in the power of the court of county commissioners, by mere “jugglery with words,” to evade the plain mandate of the Constitution. If that court, by the method adopted, nan levy, for a series of nine years, a tax to raise money wherewith tO' pay for a courthouse why could it not, at the same -time and at the same session, similarly levy a tax, to begin at the end of the nine years and to run through á series of years, to raise money wherewith to pay for a poorhouse; and then levy a tax, to begin at the expiration of the poorhouse tax series, and to run through still another series of years,
We cannot assent to the reasoning by which the conclusion is reached that the contract in question does not create a debt. “By means of such artificial reasoning and unlooked for construction of popular and plain terms and phrases, Constitutions might be stripped of' every prohibition upon the legislative power of taxation and creating indebtedness, which the wisdom or fears, of the people might place on them.” Our conclusion is that, Avliatever may be the decisions of the courts of other jurisdictions, the contract in question creates an indebtedness. — Coulson v. Portland, 6 Fed. Cas. 629, 636; Ottumwa v. City, etc., 119 Fed. 315, 56 C. C. A. 219,. 59 L. R. A. 604; Beard v. Hopkinsville, 95 Ky. 239, 24 S. W. 872, 23 L. R. A. 402, 44 Am. St. Rep. 222; Prince v. City of Quincy, 128 Ill. 443, 21 N. E. 768; State v. Helena, 24 Mont. 521, 63 Pac. 99, 55 L. R. A. 336, 81 Am. St. Rep. 453; Ditchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. 820, 29 L. Ed. 132; Windsor v. Des Moines, 110 Iowa, 175, 81 N. W. 476, 80 Am. St. Rep. 280.
We are also of the opinion, and so hold, that the amount to be considered, in -determining whether the debt exceeds the limitation, is the aggregate amount of the contract. — Culbertson v. City of Fulton, 127 Ill. 30, 18 N. E. 781; Beard v. Hopkinsville, supra; Salem Water Co. v. Salem, 5 Or. 30; Prince v. City of Quincy, supra; Earles v. Wells, 94 Wis. 285, 68 N. W. 964, 59 Am. St. Rep. 886. Adding the $59,000, Avhich the contract provides shall be paid for the courthouse, to the present indebtedness carries the total indebtedness of the county greatly beyond the constitutional limitation, and, from the considerations which have been adverted to, it logically follows that the contract is obnoxious to the-Constitution, and is void.
It follows that the decree of the chancellor must be reversed, and a decree will be here rendered, overruling ■the demurrer and the motion to dissolve the injunction.
Reversed and rendered.