222 S.W.2d 834 | Ky. Ct. App. | 1949
Affirming.
This is a suit by appellants, four citizens and taxpayers of Clay county, suing on behalf of themselves and all other taxpayers in the county against the county judge and all the magistrates in the county, constituting the fiscal court of Clay county. The county clerk and county treasurer were also made defendants in the original petition and by amended petition the circuit clerk, the county attorney, the sureties on the bonds of the above officers and J.D. White, a member of the County Budget Commission, were made defendants. This appeal involves another chapter in the tangled financial affairs of Clay county, various phases of which have many times been before this court and before the Federal Court of the Eastern District of Kentucky.
The pleadings are long and involved and attached thereto as exhibits are large portions of the record in a Federal court case and previous State court cases. The proof in the case is not extensive, but filed therewith as *790 exhibits are a vast number of old county warrants, proof of claims, copies of bonds, parts of old court records and other items concerning the past financial history of Clay county, many of which have no bearing on the specific case here involved and have the effect only of burdening and complicating the record and adding to the cost of this appeal.
To set out the extensive pleadings in any detail would extend this opinion to an undue length. From them and from the proof and the entire record, we gather that there have been outstanding warrants issued by Clay county, some as far back as 1932, which were issued in payment for salaries of officials, services rendered and supplies furnished to the county and for other indebtedness owing by the county which it was unable to pay out of its current revenues. These warrants have floated around over the county, being transferred from the original parties, to whom issued, to others, and they to others, no doubt at a considerable discount in many cases. In other words, there has probably been some speculation in these warrants, part of it no doubt, as indicated by the pleadings and proof, by officials of the county. As a result of previous litigation heretofore referred to, some in State and some in Federal courts, most of the large outstanding indebtedness of Clay county has been refunded into a large bond issue with a cheaper rate of interest than the indebtedness formerly bore. It is contemplated that this refunded bond debt will be ultimately retired by additional taxes raised in the manner authorized by this court in the case of Griffin v. Clay County,
To summarize, it appears from the welter of pleadings and exhibits that appellants are seeking to recover on behalf of the county from members of the fiscal court and various county officials and the sureties on their bonds the amounts paid out of Special Fund No. 300-F-3, including double the amount paid Jim Langdon, and an additional sum, not paid out of that fund, to B.P. House, it being contended that all said sums were paid out illegally.
Upon submission of the case on the pleadings, exhibits *792 and proof, the lower court, by written opinion filed in the record, concluded that the appellants had not shown themselves entitled to the relief sought or any part thereof or any relief whatever, and entered a judgment dismissing appellants' petition and it is from that judgment that this appeal is prosecuted.
The first question to be determined is the general validity of the old outstanding warrants, that is the twenty warrants paid out of Special Fund No. 300-F-3, including the warrants of Jim Langdon and J.D. White. Special consideration will be given later in this opinion to the question raised as to the right of the county to recover the money paid out on these two claims under allegations that they were acquired by Langdon and White in violation of certain statutes. We consider here only the issue raised by the pleadings and proof as to the validity in general of all the warrants, appellants contending that all the warrants have been declared invalid in one of the suits hereinafter referred to, appellees contending that they were held to be valid by one or the other of these very same suits. This presents a clean-cut issue. Little proof was taken on that question and we must rely largely on the exhibits. Among these exhibits is a large part of the record in the case of Woodmen of the World v. Clay County, D.C. E. D. Ky.,
This brings us to our second point in issue which is: Are the warrants here involved barred by limitations? Some of the warrants were issued and have been outstanding since 1932 and 1933 and many have been transferred and assigned by their original owners or subsequent holders. It appears to be appellants' contention that these warrants are negotiable instruments placed on the footing of a bill of exchange and are therefore subject to the five year statute of limitations, as set out in KRS
We take up next the three specific cases set out in the pleadings in which Jim Langdon, circuit clerk, was paid out of this special fund $1175.75; J.D. White, member of the County Budget Commission, was paid $973.05, and B.P. House was paid $789.74.
The amount paid Langdon is made up of five old warrants that had originally been issued to other people, *795
some as far back as 1932 and 1933, and had been transferred to him by endorsements on the back of the warrants. This is the basis for appellants' claim that he bought up and speculated in these warrants in violation of KRS
The amount paid J.D. White out of this special fund was for an old warrant which had been issued to James Sizemore in 1933, and had been transferred to White by endorsement on the back thereof. White was a member of the County Budget Commission when this claim was allowed in 1948, and appellants say its payment to him by the fiscal court violates KRS
As to payment of the B.P. House warrant by the *796 cancellation of a delinquent tax bill, little need be said. There was no proof on this question and since appellants make only a passing reference to it in their brief and give no reasons why the transaction was illegal, we will consider appellants' contention, as set up in the pleadings, as abandoned. They show no reason why a contract under which the fiscal court cancelled a delinquent tax bill owing the county in payment of a debt which the county owed the taxpayer for property acquired from him, is a misappropriation of public funds. It might have been irregular or illegal, but we cannot assume it on the mere statement in the pleadings.
Another point raised by appellants is that the second amended petition was not controverted by answer. The first paragraph of this amended petition simply added the names of six people to the fourteen who had already been named in the first amended petition as having been paid various sums out of Special Fund No. 300-F-3 by the fiscal court. Then as a second paragraph it proceeds to copy as part thereof almost the entire record of the Federal court case of Woodmen of the World and other cases consolidated with it, totaling fifty-nine pages. It would have been most difficult to have filed an answer to this second paragraph, which should have been filed as a mere exhibit. The case proceeded and proof was taken as though all issues had been made up, and there is filed in the record a stipulation of counsel that all the warrants referred to in the second amended petition had been issued to various parties, that the amounts owing to claimants were paid out of the special fund and that all warrants involved should be filed and considered as evidence. Under all these circumstances we think the failure to controvert the allegations of the second amended petition was waived and no harm resulted from any failure to controvert.
This covers all the direct points in issue on which a decision can be made. In the lengthy pleadings and in his brief, attorney for appellants by direct accusation, insinuation and innuendoes indicates that, to paraphrase Hamlet, there is something rotten in Clay County. That there is, or has been, something rotten in its financial affairs for a long time can be read by all men who read the court records that have come before this court and *797 the Federal courts. Local politics, bad assessment practices and the failure of officials to raise sufficient revenue to meet current expenditures and to keep expenses within the revenues, all have contributed to the chaotic condition of the fiscal affairs of the county and given it a bad reputation among the people interested in such matters.
One of the attorneys for the appellees, who has had much experience with county fiscal affairs through his former connection with the State Revenue Department, says in his brief that Clay county is now in better condition financially and more nearly solvent than it has been since 1922; that this is the first fiscal year that the county has not been obliged to borrow against anticipated revenues and the first year it has had an available surplus for approximately thirty years. Let us hope that this is true. If the cleaning up of long outstanding warrants by a special fund, such as is shown in this record, will contribute to this bettered condition of the county's fiscal affairs, it will be a consummation devoutly to be wished.
Since the judgment of the lower court is in conformity with the views herein expressed, it is affirmed.
Judgment affirmed.