In re Opinions of the Justices, 21.

• Decision Date: 04 January 1933
• Docket Number: 21.
• Parties: IN RE OPINIONS OF THE JUSTICES.
• Court: Alabama Supreme Court

145 So. 481

226 Ala. 18

IN RE OPINIONS OF THE JUSTICES.

No. 21.

Supreme Court of Alabama

January 4, 1933

Response of the Justices of the Supreme Court to question propounded by the Governor, under section 10290 of the Code 1923.

Question answered.

Bonds issued by municipalities under statute authorizing issuance of bonds for construction of waterworks system payable solely from revenue thereof held not to violate constitutional debt limitation (Act Nov. 8, 1932 [Ex.Sess.] No. 265; Const.1901, § 225).

"Jan. 2, 1933.

"To the Justices of the Supreme Court of Alabama:

"Gentlemen Under section 10290 of the Code of Alabama, I request your opinion on the following important question:

"On November 8, 1932, an Act was approved, 'Further to provide for the purchase, construction and improvement of waterworks systems in cities, villages and incorporated towns in the State of Alabama, and to provide for the issuance of revenue bonds payable solely out of the revenues derived therefrom, and to provide for the operation of such systems in case of deficiencies in revenue.'

"Will you please advise:

"First. Whether or not the said Act is constitutional.

"Second. Whether or not bonds issued by municipalities under said Act will constitute a debt within the provisions of law providing for debt limits or prohibit cities or towns to become indebted beyond a certain amount.

"This opinion is requested because several cities and towns are applying to the Reconstruction Finance Corporation for loans under the provisions of the Act and these questions have been raised.

"I am enclosing a copy of the Act for your convenience.

"Yours very truly,

"B. M. Miller, Governor."

An Act Further to provide for the purchase, construction and improvement of waterworks systems in cities, villages and incorporated towns in the State of Alabama, and to provide for the issuance of revenue bonds payable solely out of the revenues derived therefrom, and to provide for the operation of such systems in case of deficiencies in revenue.

Be It Enacted by the Legislature of Alabama:

Section 1. That any city, village or incorporated town in the State of Alabama, may purchase or construct a waterworks system or construct betterments and improvements to its waterworks system as in this act provided.

Section 2. This Act shall be construed as cumulative authority for the purchase or construction of a waterworks system or for the construction of betterments and improvements thereto, and shall not be construed to repeal any existing laws with respect thereof. The term "waterworks" as used in this Act shall be construed to mean and include a waterworks system in its entirety or any integral part thereof, including mains, hydrants, meters, valves, standpipes, storage tanks, pumping tanks, intakes, wells, impounding reservoirs or purification plants. The term "municipality" as used in this Act shall be construed to mean any city, village or incorporated town in the State of Alabama. The term "legislative body" as used in this act shall be construed to mean the corporate authority of the municipality.

Section 3. Whenever the legislative body of any municipality shall determine to purchase or construct a waterworks system under the provisions of this statute, it shall cause an estimate to be made of the cost thereof, and shall, by ordinance, provide for the issuance of Revenue Bonds under the provisions of this statute, which ordinance shall set forth a brief description of the contemplated improvement, the estimated cost thereof, the amount, rate of interest, time and place of payment and other details in connection with the issuance of the bonds. Such bonds shall bear interest at not more than six per cent (6%) per annum, payable semiannually, and shall be payable at such times and place not exceeding thirty (30) years from their date as shall be prescribed in the ordinance providing for their issuance. Such ordinance shall also declare that a statutory mortgage lien shall exist upon the property so to be acquired or constructed, fix the minimum rate or rates for water to be collected prior to the payment of all of said bonds, and shall pledge the revenues derived from the waterworks system for the purpose of paying such bonds and interest thereon, which pledge shall definitely fix and determine the amount of revenues which shall be necessary to be set apart and applied to the payment of the principal of and interest on the bonds and the proportion of the balance of such revenues and income which are to be set asidea as a proper and adequate depreciation account, and the remainder shall be set aside for the reasonable and proper operation thereof. The rates to be charged for the services from such waterworks shall be sufficient to provide for the payment of interest upon all bonds and to create a sinking fund to pay the principal thereof as and when the same become due, and to provide for the operation and maintenance of the system, and to provide an adequate depreciation fund.

Section 4. After such ordinance shall have been adopted same shall be published once in a newspaper published in such municipality, or if there be no newspaper so published, then such ordinance shall be posted in at least three public places therein, with a notice to all persons concerned stating that said ordinance has been adopted, and that the municipality contemplates the issuance of the bonds described in the ordinance, and that any person interested may appear before the governing body, upon a certain date which shall not be less than ten (10) days subsequent to the publication or posting of such ordinance and notice, and present protests. At such hearing all objections and suggestions shall be heard and the legislative body shall take such action as it shall deem proper in the premises.

Section 5. Bonds herein provided for shall be issued in such amounts as may be necessary to provide sufficient funds to pay all costs of construction or acquisition, including engineering, legal and other expenses, together with interest to a date six months subsequent to the estimated date of completion. Bonds issued under the provisions of this act are hereby declared to be negotiable instruments, and same shall be executed by the presiding officer and clerk of the municipality and be sealed with the corporate seal of the municipality, and in case any of the officers whose signatures appear on the bonds or coupons shall cease to be such officers before the delivery of such bonds, such signatures shall nevertheless be valid and sufficient for all purposes the same as if they had remained in office until such delivery. Said bonds may be sold at not less than ninety cents on the dollar and the proceeds derived therefrom shall be used exclusively for the purposes for which said bonds are issued, and same may be sold at one time or in parcels as funds are needed.

Section 6. Bonds issued under the provisions of this statute shall be payable solely from the revenues derived from such waterworks system, and such bonds shall not in any event constitute an indebtedness of such municipality within the meaning of the constitutional provisions or limitations, and it shall be plainly stated on the face of each bond...