City of Austin v. Cahill

• Court: Texas Court of Appeals
• Writing for the Court: Rice
• Citation: City of Austin v. Cahill, 88 S.W. 536, 12 Tex. Ct. Rep. 285 (Tex. App. 1905)
• Decision Date: 05 March 1905
• Parties: CITY OF AUSTIN et al. v. CAHILL.

88 S.W. 536

CITY OF AUSTIN et al. v. CAHILL.

Court of Civil Appeals of Texas.

March 5, 1905.

Appeal from District Court, Travis County; L. W. Moore, Special Judge.

Mandamus proceedings by James G. Cahill against the city of Austin and others. From a judgment awarding the writ, defendants appeal. Reversed.

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

RICE, Special Judge.

It appears from the record in this case that in the year 1890 the city of Austin was without an adequate water and light supply, and had no available funds therefor, and, being desirous of constructing a system of waterworks and supplying the city with light, and having already outstanding bonds in the sum of $125,000, whereby it was forbidden the issuance of additional bonds unless by consent of the taxpayers or special act of the Legislature, it being a city of more than 10,000 inhabitants, governed by a special charter granted by the Legislature, its city council on the 1st day of April, 1890, passed an ordinance authorizing the holding of an election to obtain the consent of the taxpaying voters of said city to the extension of its bonded indebtedness to the amount of $1,400,000. An election was held on the 5th day of May, 1890, resulting in favor of the issuance of said bonds by a two-thirds vote of the taxpayers. That in pursuance of said election, the city of Austin, between the 15th of October, 1890, and the 30th day of January, 1895, executed and issued 1,400 bonds, known as "Water and Light Bonds," each for the sum of $1,000, of date August 1, 1890, payable to bearer on July 1, 1930 (redeemable, however, at the city's option at any time after June 30, 1910), bearing 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 ordinance authorizing the issuance of said bonds provided 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 the 2 per cent. sinking fund for their redemption; also that the net income or so much thereof as was necessary, arising from the receipts of said system of water and light plants which were erected with the proceeds of said bonds, should be applied and was pledged to the payment of said bonds, interest, and sinking fund, the rates of which were to be so regulated as to provide sufficient revenue therefrom to pay current expenses, interest, and sinking funds. That all of said bonds were thereafter sold by the city, and appellee became the owner by purchase of 15 of said bonds, together with their interest coupons, and that with the proceeds thereof a system of waterworks and an electric light plant were constructed and put into operation, but that they were destroyed in April, 1900, and were replaced in 1901 by another system, much of the old material being used in its construction, but no net receipts, if any, therefrom had ever been applied to the payment of appellee's interest on his said bonds. By an act of the Legislature of the state of Texas amending the charter of the city of Austin, approved September 20, 1901, authority was given said city to compromise and scale its existing debts or bonds by the issuance, in exchange for its outstanding bonds, of new or refunding bonds, bearing date July 1, 1901, payable July 31, 1931, to bear interest for the first 5 years at 3 per cent., for the next 10 years at 4 per cent., and after July 1, 1916, at the rate of 5 per cent. to maturity, interest payable semiannually on the 1st days of January and July of each year, and redeemable by the city, at its option, at the date of any interest payment. The said city council of said city, by proper ordinance, on the 5th day of November, 1901, provided for the issuance of such refunding bonds, and for their exchange for such outstanding bonds as the owners thereof should be willing to take in lieu thereof. $143,000 of said water and light bonds of the same issue as appellee's had been paid off and retired, leaving $1,257,000 of said issue, of which $935,000 were refunded at 3 per cent. by the consent of said bondholders, leaving $322,000, including appellee's $15,000, which were not refunded, still bearing interest at the rate of 5 per cent., but appellee and the holders of said $322,000 did not consent to said refunding. There were other outstanding bonds of said city of Austin at said time which were likewise refunded by consent of the owners. No part of the interest on appellee's bonds has been paid since April 1, 1900, and no adequate provision for the sinking fund having been made therefor, and the city having refused payment thereof upon demand, appellee brought suit in the district court of Travis county against said city of Austin on October 22, 1901, on the coupons maturing July and October, 1900, and January, April, July, and October, 1901, and thereafter, on March 5, 1902, recovered judgment for $1,196.67, with interest; and again on March 26, 1902, another suit was brought by him in said district court on the interest coupons maturing January 1, 1902, and judgment likewise recovered thereon. Said city appealed from both of said judgments, and they were affirmed by the Court of Civil Appeals, and writs of error denied by the Supreme Court in each case. The city of Austin refused to pay said judgments or any part thereof, except court costs, and execution was duly issued thereon and returned by the sheriff "No property found," it further appearing that said city had no property subject thereto. Appellee demanded that the officers of said city levy a tax for the payment of interest on his bonds, which was likewise refused. Thereafter, appellee brought this suit against the city of Austin, and its mayor and board of aldermen, constituting its city council, its secretary, tax collector, and treasurer, by petition filed in the district court of Travis county, Tex., on August 25, 1903, but trial was had on appellee's second amended original petition filed in said cause on the 5th day of May, 1904, wherein appellee pleaded all of the facts above recited, and sought to enforce by mandamus against said city the collection of said judgments theretofore obtained by appellee against said city for the interest upon certain water and light bonds, as well as to enforce the collection of certain other sums alleged to be due upon the bonds of said city since the recovery of said judgments, and asking that said city be required to appropriate to the payment of his said judgments, exclusive of all other bonds, all or so much as might be necessary of the amount then on hand in the treasury of said city in said interest and sinking fund, amounting to $72,738.96, arising from the collection of certain taxes levied by said city for the payment of interest and sinking fund, as well as for the appropriation of all amounts levied by said city on account of said taxes for the years 1900, 1901, 1902, and 1903, but which were then uncollected, and further asking that in the event that such amount then on hand and the amounts thereafter collected from said taxes should be found insufficient to pay appellee's debt, then to levy additional taxes for the years 1900, 1902, 1903, and 1904, and likewise to compel said city, during the time appellee's bonds should be outstanding, to annually levy sufficient taxes for the payment of the interest on his said bonds and the creation of a sinking fund of 2 per cent. for their redemption. Appellants answered by general demurrer, special exceptions, and general denial, which demurrer and special exceptions were overruled. The case was tried by the court without the intervention of a jury, and judgment was rendered in favor of appellee for the amounts prayed for, and granting a peremptory writ of mandamus requiring appellants to immediately pass an ordinance appropriating to the payment of appellee's claim, pro rata with the claim of the holders of $13,500, April 1, 1895, 6 per cent bonds, and of the holders of the remainder of the $322,000 5 per cent. bonds whose interest was unpaid, to the exclusion of all other bondholders of the city of Austin, the sum of $53,523.19, that being the amount on hand in the city treasury of the city of Austin, on the date of the rendition of the judgment of interest and sinking fund, of the refunding bonds alone; further, that appellants levy an additional tax for the year 1903 upon all property of the city taxable by law, of one-sixth of 1 per cent. of the taxable values of all property in said city that was assessed for the year 1903, for the purpose of paying the interest and establishing a sinking fund upon appellee's bonds, pro rata with those above mentioned; and, further, that appellants duly pass for the year 1904, and each year thereafter so long as any of appellee's bonds or coupons remain outstanding and unpaid, an ordinance annually levying for each year a tax sufficient to pay off and fully discharge appellee's interest on said bonds, and to establish a sinking fund therefor, pro rata with all the bonds of the city now outstanding, but the prayer for the levy of additional taxes for the year 1900 and 1902 was refused.

By their fifth assignment of error appellants contend that the court erred in overruling defendants' special exceptions to plaintiff's second amended original petition contained in paragraphs 6 and 7 of defendants' first amended original answer to said petition, because it appears from said petition that plaintiff was seeking to establish a preference over certain other bondholders and creditors of the city, not made parties to this suit, to money alleged to be on hand belonging generally to such parties and plaintiff, and further seeks to establish a preference as against others not made parties...