City of Austin v. Cahill

CourtSupreme Court of Texas
Citation88 S.W. 542
PartiesCITY OF AUSTIN et al. v. CAHILL.
Decision Date22 June 1905
88 S.W. 542
Supreme Court of Texas.
June 22, 1905.

Page 543

Certified Questions from Court of Civil Appeals of Third Supreme Judicial District.

Mandamus proceedings by James G. Cahill against the city of Austin and others. The Court of Civil Appeals reversed a judgment awarding the writ, and, pending a motion for rehearing, questions were certified to the Supreme Court. Questions answered.

Allen & Hart, for appellants. Gardner Ruggles, for appellee.


This was a mandamus proceeding, brought in the district court by James G. Cahill, to enforce payment by the city of Austin, through mandate against its proper officers, of alleged indebtedness, partly reduced to judgment, claimed to be due him for interest accrued on certain water and light bonds issued by the city. Judgment went in his favor, but it was reversed by the Court of Civil Appeals. 88 S. W. 536, 12 Tex. Ct. Rep. 285. The case, as it comes here on questions certified pending a motion for rehearing, is substantially as follows:

Austin, when the present Constitution of Texas took effect, was a city of more than 10,000 inhabitants, existing by special charter (Sp. Laws 13th Leg. p. 215, c. 65), which was amended by act approved April 17, 1883 (Sp. Laws 18th Leg. p. 36), and by a substitutional act passed in 1891 (Sp. Laws 22d Leg. p. 101, c. 22). Subsequently, besides intermediate amendments not necessary to notice, the charter was further amended by another substitutional act approved April 13, 1901 (Sp. Laws 27th Leg. p. 60), which was itself amended by two additional acts, one approved September 18, 1901, and the other September 21, 1901, the latter being the refunding act mentioned below. 1st Called Sess. 27th Leg. pp. 8, 12. In order to provide itself with an adequate supply of water and light, being thereunto duly authorized, the city issued, and between October 15, 1890, and January 30, 1895, sold and delivered, 1,400 bonds of $1,000 each, aggregating $1,400,000, dated August 1, 1890, payable to bearer on July 1, 1930, but redeemable at the city's option at any time after June 30, 1910. These bonds bore interest at the rate of 5 per cent. per annum, payable quarterly on the 1st days of January, April, July, and October of each year, as evidenced by the interest coupons thereto attached. The proceeds of the bonds were applied to providing the city with water and light by a system of obtaining power from damming the Colorado river. The ordinance authorizing the holding of an election looking to the issuance of said bonds was dated April 1, 1890, and was ratified by the necessary two-thirds vote of the taxpayers of the city at an election held May 5, 1890. It was provided

Page 544

by the ordinance under which the bonds were issued and sold that there should be levied and collected for the year 1890, and for each year thereafter while said bonds remained outstanding, a tax of $1.11½ on the $100 worth of taxable property in said city, for the payment of interest on said bonds, and to provide the 2 per cent. sinking fund for their redemption, and that the net income arising from receipts of said water and light system, or so much thereof as was necessary, should be applied, and such receipts were pledged, to the payment of said bonds, interest, and sinking fund, the rates of which system it was further provided should be so regulated as to produce sufficient revenue to pay current expenses, interest, and sinking fund. The appellee, Cahill, became the owner of 15 of said bonds, with interest coupons attached, upon which the interest appears to have been paid up to and including the installment falling due April 1, 1900, but no interest accrued thereon since that date has been paid. The system for water and light, put in operation as above stated, was destroyed in April, 1900, but this was replaced by a steam plant that was put in operation by June 1, 1901, the city being meantime without a system for water and light. The refunding act authorized the city to compromise and scale its bonded indebtedness, or any part thereof, by issuance in even exchange therefor, of refunding bonds bearing date July 1, 1901, payable July 31, 1931, with interest for the first 5 years at 3 per cent. per annum, for the next 10 years at 4 per cent. per annum, and after July 1, 1916, at the rate of 5 per cent. per annum to maturity, the interest to become payable semiannually on the 1st days of January and July in each year. These bonds were made redeemable by the city at its option on the date of any interest payment. The refunding act also provided for the levy of a tax of $1.16 2/3 on the $100 valuation, or such part as might be necessary, to pay the interest and a 2 per cent. sinking fund on such refunding bonds. The city's council, by ordinance passed November 5, 1901, provided for the issuance of the refunding bonds, to be exchanged for the city's outstanding indebtedness to the extent that the owners might be willing to accept the same in substitution. The city had, when its water and light bonds were issued, an outstanding indebtedness of $125,000, of which the sum of $72,500 was indebtedness legally made and undertaken before the present Constitution of Texas became operative. This indebtedness bore interest at 6 per cent. per annum, except the part of $72,500, which bore interest at 10 per cent. per annum until April 1, 1895, when it was reduced to 6 per cent. Subsequently the city incurred other indebtedness, consisting of $200,000 in a new series of water and light bonds, bearing 6 per cent. per annum interest, issued July 1, 1895, and consisting of $45,000 of high school bonds, bearing interest at 5 per cent. per annum, issued August 1, 1899, but $10,000 in amount of the first-named issue were retired September 21, 1901, leaving a balance unpaid of that issue of $190,000. The owners of the original issue of water and light bonds to the amount of $935,000 accepted refunding bonds in exchange, and the further amount of $143,000 thereof had previously been retired and canceled, leaving in amount $322,000 of the original water and light bonds, including appellee's, the owners of which have in no manner consented to the refundment. The owners of the other bonded indebtedness herein mentioned, including that existing when the water and light bonds were issued, have accepted refunding bonds, except the amount of $13,500, being part of the indebtedness existing when the present Constitution of Texas took effect. Thus there are outstanding of the refunding bonds $1,281,500 in amount, and of the original issue of water and light bonds $322,000 in amount, and of the old indebtedness $13,500 in amount, making a total of $1,617,000. The total tax levied by the city on the $100 value was, for the year 1900, $1.41 1/3, consisting of 70 cents for general purposes, 33 1/3 cents for schools, and 8 cents for interest on bonds issued prior to May 1, 1890; and, for the year 1901, $2.50, consisting of $1 for general purposes, 33 1/3 cents for schools, and $1.16 2/3 for interest and sinking fund on bonds; and, for the year 1902, $1.73 1/3, consisting of $1 for general purposes, 33 1/3 cents for schools, and 40 cents for interest and sinking fund on bonds; and, for the year 1903, $2.33 1/3, consisting of $1 for general purposes, 33 1/3 cents for schools, and $1 for interest and sinking fund on bonds. The taxable values of the property subject to taxation by the city for these years are not shown in the state of facts certified here, as the only mention of them is by reference to the appellee's petition, which is not embraced in the certificate. The only bond tax levied since the year 1900 was to provide interest and a sinking fund for the refunding bonds, the interest on which bonds had been regularly paid. To the credit of this fund arising from the levy therefor is the sum of $53,523.19, being the balance remaining after payment of the installment of interest due July 1, 1904, on the refunding bonds. There is also to the credit of this fund, arising in like manner, the sum of $26,406.43 1/10, uncollected taxes for the years 1901 to 1903, inclusive. No net receipts from the water and light system have been applied to the payment of unpaid interest or sinking fund on the unrefunded bond debt. Since June 1, 1901, there have been no net receipts except about $25,000 in amount a year, all of which has been applied by the city in the extension, repair, and improvement of its present system. The appellee recovered judgments, bearing date March 5 and April 19, 1902, for the installments of interest on his bonds which fell

Page 545

due on and between the dates of July 1, 1900, and October 1, 1901, being for the sum of $1,196.06¾, and he had judgment in the instant action for the interest which accrued on and between the date of January 1, 1902, and April 1, 1904, being for the sum of $2,026.90. Upon the prior judgments there were nulla bona returns on executions duly issued. The city has no property out of which the judgments would be satisfied on execution, and it had refused to pay the appellee's demands, upon which said prior judgments were recovered, before suit brought therefor, notwithstanding demand of it for payment by appellee. There was no formal demand for the relief sought by the petition for mandamus before suit therefor was brought, but the petitioner's attorney had been told on several occasions by the city's mayor, its finance committee, and its attorney that the city would not pay him anything more or make any other or further arrangement with him than had already been made with holders of bonds that had been refunded into 3 per cent. bonds. The appellee claimed that the holders of the unrefunded bonds, of whom he was one, were entitled to the money in the treasury, and uncollected taxes mentioned herein, to the exclusion of the other bondholders. The appellee's suit was brought on August 25, 1903, and service...

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