Lamar Water & Electric Light Co. v. City of Lamar

• Decision Date: 30 March 1895
• Citation: 31 S.W. 756,128 Mo. 188
• Court: Missouri Supreme Court
• Parties: LAMAR WATER & ELECTRIC LIGHT CO. v. CITY OF LAMAR.

31 S.W. 756

128 Mo. 188

LAMAR WATER & ELECTRIC LIGHT CO. v. CITY OF LAMAR.

Supreme Court of Missouri.

March 30, 1895.

MUNICIPAL CORPORATIONS — LIMITATION OF TAXATION AND INDEBTEDNESS.

1. Const. art. 10, § 11, provides that in cities and towns of a certain population the annual rate of taxation for city and town purposes shall not exceed 50 cents per $100; that, for the purpose of erecting public buildings, such rate may be increased, on approval of two-thirds of the voters; and that said restrictions as to rates shall apply to all taxes, both general and special. Section 12 provides that no city or town shall become indebted in any year for more than the income and revenue provided for that year, without the consent of two-thirds of its voters, provided that a city or town incurring any indebtedness requiring such assent of the voters shall, before or at the time of doing so, provide for the collection of an annual tax sufficient to pay the interest thereon as it falls due, and to constitute a sinking fund for payment of the principal within 20 years. Held, that the limitation of section 11 was on taxation for current expenses, and section 12 authorized a tax in addition to the 50 cents per $100 allowed by section 11. Brace, C. J., and Macfarlane and Burgess, JJ., dissenting. 26 S. W. 1025, reversed. State v. Town of Columbia (Mo. Sup.) 20 S. W. 90, overruled.

2. Under Const. art. 10, § 12, providing that a city shall not incur an indebtedness exceeding 5 per cent. of the valuation of its property, where it contracts to pay a certain amount each year, for a number of years, for supplies to be furnished each year, the amount to come due thereunder in future years is not part of its indebtedness.

3. The words, "income and revenue provided for such year," in Const. art. 10. § 12, providing that no city shall become indebted in any one year for a greater amount, without the assent of two-thirds of the voters, mean income derived from any source, and not that derived from taxation alone.

In banc. Action by the Lamar Water & Electric Light Company against the city of Lamar. A judgment for defendant was affirmed by the supreme court in division 1 (26 S. W. 1025), and the case is now heard in banc. Reversed.

BARCLAY, J.

It becomes necessary for the court in banc to decide for the first time whether the limitations to taxation imposed by section 11 of article 10 of the Missouri constitution apply to a tax levied under section 12 of that article, in a city of the fourth class, for the purpose of supplying the city with water. It will not be needful to recite the facts out of which the case arose. They have been already given in the opinion filed while the cause was in the First division (26 S. W. 1025), which will be published in the official report of the case.

1. The annual tax was held void in that opinion because adjudged by the court to be in excess of the rate permitted by section 11. That ruling presents the first point for determination. Its importance is great, and the effect of any action upon it will be far-reaching. The whole court must attempt to solve the same problem which was discussed before the first division in the Columbia Case (1892) 111 Mo. 365, 20 S. W. 90, and later, before the court in banc, in State v. Seibert (1893) 116 Mo. 415, 22 S. W. 732. But in the latter case it was found that a decision could be reached without meeting the difficulties which now confront us. We have given the subject patient consideration. The writer has become convinced that an endeavor to practically apply the rule announced in the Columbia Case will produce results which cannot have been intended by the constitution, or by its authors. Hence he has felt obliged to recede from the position which his concurrence in the Columbia judgment indicated. In that case (111 Mo. 374-376, 20 S. W. 90) the provisions of sections 11 and 12 of article 10 are copied at length. So they need not be repeated here. The real difficulty in the way of that construction is developed by an attempt to keep those sections in harmony, when so construed. Each of the sections is entitled to receive the same respect and obedience. Neither can be wiped out for the sake of enforcing a supposed wiser policy embodied in the other. Our duty is only to construe the law, and all parts of the constitution are of equal moment, and are equally binding upon us, as upon all other citizens of the state. Before attempting to define our views as to the bearing of these sections on each other, let us, as briefly as possible, examine the practical consequences of attempting to maintain the construction put upon them in the Columbia litigation. In endeavoring to arrive at the probable intention of a public enactment, whether it be organic, or of lesser rank, it is always permissible to consider the consequences of any construction proposed to be given to it. Such consequences have a most important bearing in aid of the interpretation of any law, for it is not to be supposed that any unjust or unreasonable results were intended to flow from the law. Hence a construction which permits such results will not be accepted by judicial interpreters, where the language is susceptible of a more beneficial reading. Ruth. Inst. (2 Am. Ed.) p. 414. The inevitable implication in the ruling in the Columbia Case is that the provisions of section 12 for the levy of an annual tax (in the instances therein permitted) are intended to be operative within the limitations of section 11, and not otherwise. It is not, and could not be, denied that a tax may be imposed under section 12. The terms of that section are too clear on that subject to admit of question. The only doubt, or point of controversy, is whether the true intent of the constitution should be held to sanction such a tax in excess of the rate prescribed in section 11, or whether that tax must be levied within the range of rates stated in section 11. In seeking to discern the intent of these provisions, let us begin by examining the workings of the legal machinery along the lines defined in the Columbia suit. Section 11 prescribes a limitation of the maximum annual tax rate (as to cities of the size of Lamar) at 50 cents on the $100 valuation of taxable property. So that the imposition of an annual tax under section 12, if only capable of enforcement within the restrictions of section 11, might be held, under the Columbia ruling, to produce either one of two possible results. These we shall, for convenience of treatment, designate as "alternatives a and b." We will then consider each of them separately:

(a) The annual tax levied under section 12 might be held to be a fixed charge upon the local revenue raised by the annual levy of 50 cents on the $100. So that the fund available for ordinary governmental purposes would be reduced accordingly, and would then be merely what remained after applying the tax under section 12 to its designated purpose. If that theory prevailed, an annual tax of that sort, to the limit of 50 cents on the $100, could be imposed by vote in some cities, without going beyond the 5 per centum of taxable value, leaving nothing for the usual and necessary expenses of the local government. And a corresponding reduction of annual revenue, available for the ordinary wants of the city, would follow any and every vote of indebtedness under section 12. In other words, taxes might be levied under the latter section to meet, for example, a valid bonded indebtedness, to such an amount as to render the remainder of the annual rate (allowed by section 11) wholly inadequate to the needs of the city government. The same thing could occur in a similar way in a county, under these sections. Yet these municipalities are agencies of the state government, and their maintenance is needed for the performance of many other functions besides the payment of debts. The serious question which arises upon this view of the rule in the Columbia Case is whether it is a reasonable construction of these constitutional provisions to hold that the people of these localities are authorized, by a vote under section 12, to divert to some special object, for a period of 20 years, all, or such part as they please, of the general revenue raised under the rates in section 11, and imperatively needed for the support of the local autonomy. Yet that consequence would be possible under the ruling that an annual tax under section 12 is a specific charge against the general revenue, within the limitations of section 11. If that view, however, seems unreasonable, let us turn to the other alternative.

(b) The second alternative, under the Columbia ruling, would be to hold that, as section 11 plainly contemplates the imposition of the taxes mentioned therein to meet the vital needs of government, the annual revenue must first be devoted to those needs, leaving any residue that might remain from the prescribed annual levy to be applied to the purpose designated by any tax levied by authority of section 12. Of course, such a holding would reduce the supposed annual tax under section 12 to the consistency of a shadow. There would be nothing of substance in it. The local authorities could at any time, by a slight enlargement of the ordinary allowances for the support of their government, cut down to zero the residuum of the annual rates of section 11. Even if they always acted in entire good faith, the probability of increasing demands upon the local revenue during the changes of conditions in a period of 20 years would render any dependence upon a surplus from the annual rate highly illusory. Certainly no bonded indebtedness, in these days, could be founded on such a shifting sand of credit as a tax would be under section 12, so construed. What creditor could be found who would loan funds to a municipality on such a basis? That construction of the organic law would practically eliminate the grant of power to incur an indebtedness, except...