42 Iowa 498 | Iowa | 1876
I. The city council of Council Bluffs levied a tax of sixteen mills on the dollar for the year 1871. The purposes of the tax were as follows:
“ For general city purposes, four mills.
“ For paying interest or principal of fire bonds, two mills.
“ For road purposes, three mills.
“For paying interest and principal on $60,000 loan, two mills.
“For paying interest and principal on bonds issued to Council Bluffs & St. Joseph Railroad Company, and bonds issued to Union Pacific Railroad Company, three mills.
“ For paying bonds of 1871, one mill.” •
The taxes levied for “ general city purposes ” and for “ road purposes ” have been paid by plaintiffs, and ai*e not ki question in this action.
The city was indebted upon certain bonds which, in considering the validity of the tax levied for their payment, may be divided into two classes as follows:
1. Those issued for the payment of a subscription to the capital stock of the Council Bluffs & St. Joseph Railroad Company.
■ 2. Those issued in aid of the construction of the Union Pacific Railroad, the amount being expended within the city in payment for the right of way, etc.; and others for the purchase of a fire engine and other purposes, including the objects of the indebtedness specified above as the “ $60,000 loan ” and the “ bonds of 1871.”
The validity of the taxes in question may be considered in reference to this classification of their respective purposes, as we shall find different rules of law determine the legality of
II. Our attention is first called to the tax levied to discharge the principal and interest of the bonds issued in payment of stock subscribed to the Council Bluffs and St. Joseph Eailroad Company. The facts connected with the indebtedness of the city upon the bonds may be briefly stated. They were issued on and after May 19th, I860, in pursuance of a vote by the people had December 10, 1859, under an ordinance of the city adopted November 14, 1859, which provides for the subscription to the capital stock of the railroad company just mentioned, upon a vote of the electors of the city. No question need be considered touching the regularity of the ordinance, or of the election held thereunder. We will first inquire into the validity of these bonds — whether they were issued by the city in the exercise of lawful authority. The statute of the State involved in the question must be first stated.
Section 15 of the amended charter of the city of Council Bluffs is in the following language:
“ The said city shall have power to subscribe to the capital stock of any railroad company, and pay the same with the bonds of the city; and shall be empowered and required to levy and collect all the necessary taxes to pay the principal and interest of said bonds: Provided, such subscription shall be authorized by a majority vote of the legal voters of said citj', cast at an election ordered for that purpose.” Acts Sixth General Assembly, chapter 102.
The bonds in question, leaving out of view the question of their constitutionality, are valid if they are unaffected by subsequent legislation. Our next inquiry must be directed to this point.
Chapter 84, Acts Eighth General Assembly (Eevision, chapter 55, Art. 8, page 228), is in these words:
“1. No county, incorporated city, or town, in this State shall, in their corporate capacity, or by their officers, directly or indirectly, subscribe for stock or become interested as a*502 partner, shareholder or otherwise, in any banking institution, whether the same be a bank of issue, deposit or exchange, nor in any plank road, turnpike or railroad, or any other work of internal improvement, nor shall they be allowed to issue any bonds, bills of credit, scrip or other evidences of indebtedness for any such purpose — all such evidences of indebtedness for such purposes being hereby declared absolutely void.” * * * *
“ 2. All bonds, or other evidences of debt hereafter issued by any corporation to any railroad company as capital stock shall be null and void, and no assignment of the same shall give them validity.
“3. All laws contravening the provisions of this act be and the same are hereby repealed.” The act took effect May 2, 1860.
On the other hand, in our opinion, the presumption must be exercised that the subscription and the issuing of the first bonds paid thereon were simultaneous. The cit_y become bound to pay for the stock upon subscription in such installments as the terms of the contract provided. We are required to presume the- payment was made when the liability was incurred, and neither before nor afterwards.
We do not pass upon the question made in the case involving the want of power in the legislature, under the constitution of the State, to confer authority upon the city to contact indebtedness of the character of the bonds in question. This constitutional question we find it unnecessary to determine, or to inquire whether it has been determined by prior decisions of this court.
IY. We come now to the consideration of the taxes levied for the payment of the bonds, included in the second class as we have above presented them. We are not required to enter into an examination of the validity of these obligations, but simply to determine whether the city is authorized to levy the taxes sought to be enjoined for their payment.
The bonds were issued to the U. P. R. Co., in • 1871. The “fire bonds” were issued in 1868; those for the “$60,000 loan ” in 1866, and the other bonds in 1871. The amended charter of the city before referred to, section 16, provides that, “the city council shall have'power and authority to levy and collect taxes upon all taxable property, real, personal and mixed, within the city, subject to taxation for county purposes, including money at interest or on deposit, not exceeding five mills on the dollar, in any one year.” Section 18 further empowers the city as follows: “.If at any time it shall be deemed necessary to increase the rates of taxation provided for in the preceding section, the city council shall call a meeting of the taxable inhabitants of said city, by giving -two weeks’ notice thereof in the newspapers published in said city, and by post
It will be remembered that this amended charter was enacted in 1857, and it is important to remark that the indebtedness, for which the bonds now under consideration were issued, was contracted subsequently thereto.
It is our opinion that the city does not possess authority to levy taxes in excess of the restriction prescribed in the amended charter.
The foregoing discussion leads us to the conclusion that the taxes complained of in plaintiff’s petition are illegal and ought not, therefore, to be collected. The decree of the District Court is, therefore,
Aeeirmed.