Brown v. Gay-Padgett Hardware Co.

• Decision Date: 25 July 1914
• Docket Number: 768
• Citation: 188 Ala. 423,66 So. 161
• Parties: BROWN, County Treasurer, v. GAY-PADGETT HARDWARE CO.
• Court: Alabama Supreme Court

66 So. 161

188 Ala. 423

BROWN, County Treasurer, v. GAY-PADGETT HARDWARE CO.

No. 768

Supreme Court of Alabama

July 25, 1914

Appeal from Circuit Court, Jackson County; W.W. Haralson, Judge.

Motion by the Gay-Padgett Hardware Company for summary judgment against Dallas Brown, as county treasurer, for refusing to pay certain claims which had been allowed by the commissioners' court of Jackson county, and for which warrants had been drawn against the general or special funds of the county. From a judgment granting the motion, the treasurer appealed. Affirmed.

See also, 65 So. 333.

Motion was filed under section 5938, Code of 1907. The claims were as follows: $36 for tools and road material; $19 for work on the county bridge; $25 for a fee due the sheriff under sections 7383 to 7385, Code of 1907; $38 due for a filing case purchased for the use of the probate office; and $89 due the keeper of the poorhouse for a quarter's salary under a contract. The record shows that there were unappropriated funds in the treasury at the time of demand and at the date of the trial sufficient for the payment of these various items.

John F Proctor, of Scottsboro, for appellant.

Bouldin & Wimberly, of Scottsboro, for appellee.

SOMERVILLE J.

In the case of Gunter v. Hackworth, 62 So. 101, we held that the indebtedness of Jackson county exceeds the limitation fixed by section 224 of the Constitution, and that the county could not incur any further indebtedness, even for the rebuilding of the county courthouse, which had been destroyed by fire. Speaking in general terms, it was there said, per Sayre, J., that:

"The prohibition against indebtedness is generally construed to apply to indebtedness in all forms, however incurred, or for whatever purpose. Such has been the ruling of this court. Hagan v. Commissioners, etc., 160 Ala. 544, 49 So. 417, 37 L.R.A. (N.S.) 1027."

In Hagan's Case, supra, it was said, per Denson, J., that:

"The obvious intent of section 224 is to restrain counties from obtaining money either upon the general credit of the county, or by pledge or transfer of its revenue or assets, thereby creating a debt and imposing additional burdens upon the citizens, which, whether directly or indirectly, involve increased taxation."

The questions presented by this appeal require a more specific consideration of the terms "indebted" and "indebtedness" as used in section 224 of the Constitution.

It is clear that, if they are to be understood in their broadest signification, the effect of section 224 would be, not only to inhibit further indebtedness when the prescribed limit is reached, but also to practically forestall all municipal action; for certainly neither a county nor a city government could proceed for a single day in the exercise and discharge of its municipal powers and duties without incurring, for some period of time, debts, or liabilities. It becomes apparent at a glance that the makers of the Constitution could not, in reason and common sense, have intended any such result.

Such limitations as ours are common throughout the United States and the questions here under consideration have been often before the courts. In an elaborate review of the authorities the learned editor of the Lawyers' Reports Annotated thus states the consensus of judicial opinion:

"The clear and unmistakable purpose of the framers of the organic law, in inserting this provision, was effectually to protect persons residing in municipalities from the abuse of their credit, and the consequent oppression of burdensome, if not ruinous, taxation. The mischief to be prevented was the creation of an excessive debt for local improvements or public works, or the loaning of municipal credit, so payable that the burden should not fall upon those who contracted the obligations, or on their revenues, but on posterity." Note to Hagan v. Commissioners' Court, 37 L.R.A. (N.S.) 1061 .

In short, the indebtedness intended is the obligation to pay more money than can be supplied by current funds, or by current revenues provided by lawful taxation for the fiscal year. And the requirement is that, whenever a county has reached the constitutional limitation, it must at once adopt the financial policy of paying as it goes.

The Supreme Court of Georgia has dealt very sensibly with the situation arising out of similar limitations in that state. Says the court, per Evans, P.J.:

"This differentiation between the debts which come within the operation of the constitutional provision and liabilities for legitimate current expenses to be paid out of the taxes, which can be properly levied during the year in which the liability was incurred is neither artificial nor arbitrary. This constitutional provision must be construed in the light of the history of the law on the subject in this state, and the long-established public policy of regulating the governmental affairs of a county. From the earliest times it has been the declared policy of this state that each year shall be a fiscal unit, and that current expenses should be met by a levy of taxes of the same year that the expenses were incurred. *** In the meantime it is necessary that the governing officers of the county should discharge the duties imposed by law *** and [provide] for other necessary current expenses of running the affairs of the county. There was no authority of law for the county to borrow money with which to meet these expenses. The alternative, therefore, was presented that, as each year's expenses had to be paid out of the taxes of that year, the county must either incur a liability for these current expenses or there must be a complete cessation of public activities and governmental functions until the taxes were collected. There is no provision in the Constitution of 1877 designed to meet this contingency;

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