City of Columbus v. Woonsocket Institution of Savings

• Decision Date: 25 February 1902
• Docket Number: 1,055.
• Citation: 114 F. 162
• Parties: CITY OF COLUMBUS v. WOONSOCKET INSTITUTION OF SAVINGS.
• Court: U.S. Court of Appeals — Fifth Circuit

114 F. 162

CITY OF COLUMBUS v. WOONSOCKET INSTITUTION OF SAVINGS.

No. 1,055.

United States Court of Appeals, Fifth Circuit.

February 25, 1902

This is a suit against the city of Columbus, a municipal corporation of the county of Colorado, state of Texas, to recover on municipal bonds issued by said corporation in the year 1883 for the purpose of erecting waterworks. The issue was $25,000 in coupon bonds, of $500 each, bearing interest at 8 per cent. per annum, payable semiannually; one-half falling due in 15 years; the other half, in 25 years. Interest was paid on the whole issue up to December 8, 1893, after which the city neglected and refused to pay. The present suit is to recover interest on the whole issue in default, and the one-half of the principal now due. In the circuit court trial by jury was waived, and the case submitted to the court, which made a finding of facts, and thereon rendered judgment for the full amount of the interest due, and one half the principal; reserving the right of the bondholders to hereafter recover principal and interest on the other half of the issue. The city of Columbus sues out this writ of error contending in this court, as in the court below, that the city of Columbus had no power to issue the bonds sued upon and that the said bonds were void, having been issued in violation of the constitution of the state of Texas in force at the time of their issuance.

M. E Kleberg, for plaintiff in error.

J. W. Terry, Rudolph Hatfield, and C. C. Everett, for defendant in error.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

PARDEE Circuit Judge (after stating the facts as above).

From the facts as found by the trial judge, it appears that the city of Columbus, a municipal corporation in Colorado county, state of Texas, was in the year 1883 a city of less than 10,000, and about 3,000, inhabitants, with taxable property within its limits of the assessed value of $600,000, upon which was levied a tax of one-fourth of 1 per cent., and for that year there was levied and collected as occupation taxes the sum of $1,350, and as poll taxes the sum of $150, and during the same year the revenues of the city, collected and received in the shape of fines, amounted to $225; making a total revenue for the year 1883 of the said city of $3,225. It further appears that the current expenses of the city for the year for salaries and fees of its marshal and collector, per diem, of the council, etc., did not exceed the sum of $1,100, which would leave as net revenues for the year 1883 the sum of $2,115. On the 8th day of June of that year the city council of said city adopted an ordinance providing for the issuance by the city of coupon bonds to the amount of $25,000, to provide means for the erection of waterworks, and on June 15th following the said city council adopted an ordinance levying an ad valorem tax as follows:

'There shall be levied and collected, an annual ad valorem city tax of 1/4 of 1 per centum of the cash value thereof, estimated in lawful money of the United States, on all the movable property, and all the real property situated and owned in this city, on the first day of January of each and every year, except so much thereof as may be exempted by the constitution and laws of the state of Texas, and by ordinances of this city.'

On July 30, 1883, the city council of said city, by ordinance duly passed, repealed the aforementioned ordinance of June 8th, and at the same time passed a new ordinance whereby the said city of Columbus created a debt for the purpose of providing waterworks for the said city in the sum of $25,000, and authorized to be issued, to represent the same, coupon bonds for the said amount, bearing 8 per cent. interest per annum from the 8th day of June, 1883, payable semiannually,-- one half to fall due in 15 years, and the other half to fall due in 25 years, from June 8, 1883. At that time the constitution of the state contained provisions as follows:

'Sec. 9. The state tax on property, exclusive of the tax necessary to pay the public debt, shall never exceed fifty cents on the one hundred dollars valuation, and no county, city or town shall levy more than one-half of said state tax, except for the payment of debts already incurred, and for the erection of public buildings, not to exceed fifty cents on the one hundred dollars in any one year, and except as in this constitution is otherwise provided. ' Article 8.

'Sec. 4. Cities and towns having a population of ten thousand inhabitants or less, may be chartered alone by general law. They may levy, assess and collect an annual tax to defray the current expenses of their local government, but such tax shall never exceed, for any one year, one-fourth of one per cent., and shall be collectible only in current money. And all license and occupation tax levied, and all fines, forfeitures, penalties and other dues accruing to cities and towns, shall be collectible only in current money. ' Article 11.

'Sec. 5. Cities having more than ten thousand inhabitants may have their charters granted or amended by special act of the legislature, and may levy, assess and collect such taxes as may be authorized by law, but no tax for any purpose shall every be lawful, for any one year, which shall exceed two and one-half per cent. of the taxable property of such city; and no debt shall ever be created by any city, unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent. thereon. ' Article 11.

'Sec. 7. * * * But no debt for any purpose shall ever be incurred in any manner by any city or county, unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least two per cent. as a sinking fund. * * * ' Article 11.

Statutory provisions of the state in 1883 granting and regulating the powers of cities and towns suggested as pertinent to the questions in hand, and as shown by Rev. St. 1879, were as follows:

'Art. 370. The city council shall have the management and control of the finances and other property, real, personal and mixed, belonging to the corporation.

'Art. 371. The city council shall have power to appropriate money, and provide for the payment of debts and expenses of the city.

'Art. 372. To provide by ordinance special funds for special purposes, and to make the same disbursable only for the purpose for which the fund was created; and any officer of the city misappropriating said special fund shall be deemed guilty of malfeasance in office, and shall, on complaint of any one interested in said funds misappropriated, be removed from office, and be incapable thereafter to hold any office in said city.'

'Art. 374. To provide, or cause to be provided, the city with water, to make, regulate and establish public wells, pumps and cisterns, hydrants and reservoirs, in the streets or elsewhere within said city, or beyond the limits thereof, for the extinguishment of fires and the convenience of the inhabitants, and to prevent the unnecessary waste of water.'

'Art. 419. To pass all necessary ordinances to provide for funding the whole or any part of the existing debt of the city or of any future debt, by canceling the evidences thereof, and issuing to the holders or creditors notes, bonds or treasury warrants, with or without coupons, bearing interest at any annual rate not to exceed ten per cent. The council shall also provide by ordinance for issuing the bonds of the city in such sums as may be agreed upon for railroad subsidies heretofore voted, or that may be hereafter voted in accordance with the laws of this state.

'Art. 420. To appropriate so much of the revenues of the city, emanating from whatever source, for the purpose of retiring and discharging the accrued indebtedness of the city, and for the purpose of improving the public markets and streets, erecting and conducting city hospitals, city hall, water works, and so forth, as they may from time to time deem expedient; and in furtherance of these objects they shall have power to borrow money upon the credit of the city, and issue coupon bonds of the city therefor in such sum or sums as they may deem expedient to bear interest not exceeding ten per cent. per annum, payable semi-annually at such place as may be fixed by city ordinance: provided, that the aggregate amount of bonds issued by the city council shall, at no time, exceed six per cent. of the value of the property within said city subject to ad valorem tax.'

'Art. 428. The city council shall have power to levy and collect an annual poll tax, not to exceed one dollar, of every male inhabitant of said city over the age of twenty-one years (idiots and lunatics excepted), who is a resident thereof at the time of such annual assessment.

'Art. 429. The city council shall have power to levy and collect taxes commonly known as licenses, upon trades, professions, callings and other business carried on; and upon carriages, hacks, coaches, buggies, drays, carts, wagons and other vehicles used in said city, when the same are for public use; and each and every person and firm engaging in the following trades, professions, callings and business, among others, shall be liable to pay such license tax; but this enumeration shall not be construed to deprive the city council of the right and power to levy and collect other license taxes, and from other persons and firms, under the general authority herein granted.' At the same time that the ordinance authorizing the issuance of the bonds aforesaid was passed, the city council also passed an ordinance wherein it was provided:

'That all taxes for

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