Barnwell v. Matthews

• Decision Date: 22 June 1925
• Docket Number: 11786.
• Parties: BARNWELL v. MATTHEWS ET AL.
• Court: South Carolina Supreme Court

128 S.E. 712

132 S.C. 314

BARNWELL v. MATTHEWS ET AL.

No. 11786.

Supreme Court of South Carolina

June 22, 1925

Appeal from Common Pleas Circuit Court of Florence County; S.W. G Shipp, Judge.

Suit by F. H. Barnwell against E. M. Matthews and others. Decree for defendants, and plaintiff appeals. Affirmed.

The decree below was as follows:

The plaintiff, as a resident and taxpayer of Florence county, is seeking in this action to enjoin the defendants from borrowing the sum of $225,000 under the authority of an act of the General Assembly of South Carolina, approved April 1 1925, for the purpose of building three roads described in the act, and from issuing notes of the county as security therefor.

The gravamen of the complaint is that such issue of notes constitute a bonded debt of the county, and that if issued such bonded debt will be greatly in excess of the 8 per cent limitation prescribed by section 5 of article 10 of the Constitution.

In their answer, the defendants admit the material allegations of fact in the complaint, and, while denying that the amount of additional bonds the county can legally issue before reaching the constitutional limit is not correctly set forth, admits that if treated as bonds the entire issue of notes would make the county's bonded debt considerably exceed such limit. By way of additional and affirmative defense, the defendants then proceed to set out in detail the facts relating to the issuance of such notes. The gist of their contention is that the act of the Legislature of South Carolina of March 21, 1924 (33 Stat 1193), commonly known as the "Pay-as-You-Go Act," made provision for the construction and maintenance by the state of South Carolina of "a state-wide connected system * * * of dependable types of public roads," that by the express terms of this act the state highway commission was authorized to permit any county to build any of the roads of such system and to be reimbursed therefor under a proper contract with the commission; that the act of April 1, 1925, in furtherance of this plan for the building of such state-wide system of roads, merely made provision for the county to construct three of such roads, for which it is to be reimbursed by the state; that the notes authorized for this purpose are not primary obligations of the county, but are being issued for construction work for which the state under the express terms of the "Pay-as-You-Go Act" is directly responsible, are secured by the reimbursement contracts with the highway commission, and the tolls derived from the toll bridges of which the county is part owner, and that liability for the payment of such notes can fall on the taxpayer only in the event of the failure to meet them from these other sources; and finally that bonds for a considerable amount can be still issued by the county, and that the difference between such amount and the total of $225,000 authorized by the act can be issued in notes that can be retired by funds available from securities pledged without recourse to any other source of revenue. From all of this, the conclusion is drawn that the notes are not bonds, but contingent obligations of the county, and therefore will constitute no part of its bonded debt. In the affirmative defense, the position is further taken that the Act of April 1, 1925, must be construed in connection with the "Pay-as-You-Go Act," and under such construction, treating the proposed notes as bonds, it is competent for the county, through the defendants as its duly constituted authorities, to issue such part of the notes as will not raise the total bonded debt of the county beyond the constitutional limit.

To this affirmative defense the plaintiff demurred on the ground of insufficiency, in that (1) the proposed issue of notes will be under the seal of the county and will extend over a period of six years, and as such are bonds of the county, and being such are void, as to issue the entire amount would greatly exceed the constitutional limit; and (2) the act, properly construed, does not authorize the issuance of only such part of such bonds as will not exceed the limit.

The matter therefore comes before me on the issues thus made up by these pleadings.

As I see it, the real issue in the case is whether the notes whose issuance is sought to be enjoined represent a bonded debt in the constitutional sense. To declare that the notes authorized by the act of April 1, 1925, are bonds is, in effect, to declare that act unconstitutional as being in conflict with section 5 of article 10 of the Constitution.

But a case of this kind is no exception to the rule that acts of the Legislature are not to be lightly set aside on constitutional grounds, and that before such can be done, the illegality of the act assailed must clearly and indubitably appear. Fripp v. Coburn, 101 S.C. 312, 85 S.E. 774; Poulnot v. Cantwell, 129 S.C. 171, 123 S.E. 651.

It is well settled that the Legislature has the power to authorize a county to incur debts and to issue securities therefor, the only limitation being that the bonded debt shall not exceed 8 per cent. of the assessed value of the taxable property. Carrison v. Kershaw County, 83 S.C. 88, 64 S.E. 1018; Burriss v. Brock, 95 S.C. 104, 79 S.E. 193; Lillard v. Melton, 103 S.C. 10, 87 S.E. 421.

Under the principles of these cases, the obligations incurred by the county may assume the form either of notes or of bonds as the Legislature may designate. In the instant case, the Legislature...