Chester County v. White Bros.

• Decision Date: 14 February 1905
• Citation: 50 S.E. 28,70 S.C. 433
• Parties: CHESTER COUNTY v. WHITE BROS. et al.
• Court: South Carolina Supreme Court

50 S.E. 28

70 S.C. 433

CHESTER COUNTY v. WHITE BROS. et al.

Supreme Court of South Carolina

February 14, 1905

Appeal from Common Pleas Circuit Court of Chester County.

Controversy without action, by Chester County against White Bros. and the Winnsboro Bank. Judgment for defendants, and plaintiff appeals. Reversed.

The agreed statement of facts is as follows:

"The parties above named, for the purpose of submitting to the court, without action, a matter of controversy between them, under section 374 of the Code of Civil Procedure of 1902, of this state, hereby agree to the following statement of facts:

(1) The plaintiff, Chester county, is a corporation under the laws of this state, and the defendants John G. White and Thomas H. White are copartners, under the firm name of White Bros., doing business as bankers in the city of Chester, in the county of Chester, in the state aforesaid, and are taxpayers in said city and county, and the defendant the Winnsboro Bank is a corporation duly incorporated under the laws of this state, and doing a banking business in the town of Winnsboro, in the county of Fairfield, and state aforesaid, and is a taxpayer in said town of Winnsboro and county of Fairfield.

(2) The said county of Chester, by an act of the General Assembly of South Carolina, approved March 14th, 1874 (see volume 15, St. at Large, pp. 668, 669), was authorized to issue, and did issue, in aid of the Cheraw & Chester Railroad Company, coupon bonds to the amount of $75,000, and, in accordance with the provisions of said act, said county received an amount of the preferred stock of said railroad company equal to the amount of said bonds, but the said preferred stock never yielded said county one cent in the way of interest, dividend, or otherwise, and that the existence of said company was long since terminated by a foreclosure sale on behalf of the company's bondholders, and said county will never derive one cent from said preferred stock.

(3) The General Assembly of the state of South Carolina, by an act approved the 18th day of February, A. D. 1904, enacted in the first section thereof as follows: 'That for the purpose of refunding the present bonded indebtedness of the county of Chester upon bonds issued in subscription for preferred stock of the Cheraw & Chester Railroad Company under the authority of an act of the General Assembly approved 14th March, 1874, and being No. 581, of vol. 15, of the Statutes at Large of South Carolina, pp. 668 and 669 which bonds fall due on 1st of February, 1905, the county board of commissioners of the county of Chester be, and hereby are, authorized and empowered to issue and sell interest-bearing coupon bonds of said county, payable to bearer, in such denominations as they may deem best, for the said sum of $75,000, and bearing interest at a rate not exceeding four and one-half per cent. per annum, payable annually on the first day of February of each and every year, to bear date the first day of February, A. D. 1905, to be made payable twenty-five years from the date thereof, with the right to redeem and retire the same, or any part thereof, after fifteen years, and to be made payable in any legal tender of the United States; and said bonds shall be exempt from all state, county and municipal taxes.'

(4) The county board of commissioners of said county of Chester, by section 3 of the said act of the General Assembly, were authorized to 'negotiate and sell said bonds for cash and for not less than par,' and, with a view thereto, published in various newspapers the following advertisement inviting sealed proposals: 'Chester County, S. C., Bonds for Sale. Sealed proposals will be received by the county board of commissioners of Chester County, at Chester, S. C., until 12 o'clock, noon, December 5th, 1904, for the purchase of seventy-five thousand dollars ($75,000) four and one-half per cent. coupon bonds, of the denomination of $500.00 or $1,000.00 each, of Chester County, dated February 1st, 1905, and due twenty-five years from date, with option of prior payment after fifteen years from date, and issued for the purpose of refunding a like amount of outstanding bonds due February 1st, 1905, and issued in aid of the Cheraw and Chester Railroad Company. These bonds will be exempt from all State, county and municipal taxes, and are the only debt upon the county. They are authorized by an act of the General Assembly of South Carolina, approved February 18th, 1904 (24 St. at Large, p. 607), and a sinking fund for their payment is provided for by said act. No bid for less than par will be considered, and each bid must be accompanied by a certified check for $1,000, payable to the order or Jno. O. Darby, county supervisor, which will be forfeited in case of failure of purchaser to comply with his bid. Said bonds will be delivered on January 31st, 1905. The right to reject any and all bids is reserved. Address all bids to John O. Darby, county supervisor, Chester, S. C., and endorse plainly on envelope the words, "Bid for County Bonds." For further information, if desired, apply to R. B. Caldwell, county attorney, Chester S.C. By order of the county board of commissioners. John O. Darby, County Supervisor.'

(5) The defendants John G. White and Thomas H. White, as copartners under the firm name of White Bros., acting in behalf of themselves and their codefendant the Winnsboro Bank, in response to the terms of the aforesaid advertisement, made a sealed bid for said bonds as follows: 'Mr. John O. Darby, supervisor Chester Co., Chester, S. C.--Dear Sir: We bid one hundred and four dollars and twenty-six cents ($104.26) per hundred, for the entire issue of bonds you advertise, the validity of same, of course, subject to approval of a reputable attorney. Check for $1,000 is herewith enclosed, as terms of bid require. Yours truly, White Brothers.'

(6) Said sealed bid was accompanied by a certified check on the Winnsboro Bank, of Winnsboro, S. C., for one thousand dollars, payable to the order of John O. Darby, as county supervisor of said county of Chester, which check was signed by T. K. Elliott, president of the defendant the Winnsboro Bank.

(7) On opening the sealed proposals, made by sundry parties, on the 5th day of December, A. D. 1904, the aforesaid bid made by White Bros. was accepted by the board of county commissioners of Chester county.

(8) The aforesaid offer or sealed proposal made by White Bros. was based entirely upon faith of the validity of the exemption of said bonds from all state, county, and municipal taxes, and if the aforesaid act of the General Assembly had not contained the provision that 'said bonds shall be exempt from all state, county and municipal taxes,' and if the advertisement calling for sealed proposals had not contained, as a part of the proposed terms, that "these bonds will be exempt from all state, county and municipal taxes,' the aforesaid bid would not have been made by these defendants.

(9) The provision of said act exempting said bonds from all state, county, and municipal taxes benefits said county of Chester, in that it enables the said county board of commissioners of said county to sell said bonds at a higher premium and to float them at a lower rate of interest than they could do if said bonds were not so exempt from said taxes.

(10) None of the admissions herein contained are in any wise to affect either party, or to be regarded as made, except for the purpose of this submission of this controversy.

(11) The defendants contend and are advised that the aforesaid act of the General Assembly of this state, in so far as it purports to enact that 'said bonds shall be exempt from all state, county and municipal taxes,' is in violation of the Constitution of this state, and therefore invalid; while the plaintiff contends that said provision of said act is not in violation of the Constitution, and is valid.

The questions submitted to the court upon this case are as follows:

(1) Is the provision in said act of the General Assembly, which provides that 'said bonds shall be exempt from all state, county and municipal taxes,' valid or invalid, under the Constitution of this state?

(2) Whether or not the said bonds will be exempt from all state, county, and municipal taxes, as the property of these defendants, or either of them, as taxpayers in Chester county and in Fairfield county, or as the property of any taxpayer in this state who may be the legal owner thereof.

If the court shall hold and adjudge that the aforesaid provision of said act is invalid, and that said bonds cannot be exempted from all State, county, and municipal taxes under the Constitution of this state, then judgment is to be rendered for the defendants, and it shall be adjudged that the aforesaid certified check for $1,000 be delivered up to the defendant the Winnsboro Bank, and canceled; but if the court shall hold that the aforesaid provision of said act is valid, and that by said act the said bonds will be exempt from all state, county, and municipal taxes in any county of this state, then judgment is to be rendered for the plaintiff."

Signed by parties, and then sworn to.

The following is the circuit decree:

"This is a submission under section 374, Code Civ. Proc 1902. It involves the exemption from taxation of bonds of the plaintiff issued under the act of 18th February, 1904 (24 St. at Large, p. 608), and bid off by, but not yet delivered to, the defendants. If the bonds be exempt from taxation, judgment shall be for the plaintiff; if they be liable to taxation, then judgment shall be for the defendants, together with a return of a check for $1,000, heretofore deposited with the plaintiff by the defendants.

The act declares, 'and said bonds shall be exempt from all state,

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