City of Cross Plains v. Radford

• Decision Date: 01 June 1934
• Docket Number: No. 1314.,1314.
• Parties: CITY OF CROSS PLAINS v. RADFORD et al.
• Court: Texas Court of Appeals

73 S.W.2d 1093

CITY OF CROSS PLAINS v. RADFORD et al.

No. 1314.

Court of Civil Appeals of Texas. Eastland.

June 1, 1934.

Rehearing Denied June 29, 1934.

Appeal from District Court, Taylor County; W. R. Chapman, Judge.

Suit by the City of Cross Plains against J. M. Radford and another, in which the defendants brought a cross-action. From the decree, plaintiff appeals.

Reversed and rendered.

Scarborough & Ely, of Abilene, for appellant.

W. P. Dumas, of Dallas, Smith & Eplen, of Abilene, and S. W. Marshall, of Dallas, for appellees.

FUNDERBURK, Justice.

Cross Plains, a city incorporated under the general laws, having a population of less than 5,000 inhabitants, and owning a water system and a sewer system, contracted with the Municipal Engineering Company for the construction of improvements to said water and sewer systems. In part payment therefor, $67,000 worth of revenue bonds were issued and delivered to the contractor. The contract was made, and bonds issued and sold under the purported authority of R. S. 1925, arts. 1111, 1112, and 1113, as amended by chapter 194, p. 276, General Laws of 1927. Each of the bonds contained the recitation that: "The holder hereof shall never have the right to demand payment of this obligation out of any funds raised, or to be raised, by taxation." The net revenues of both the water and sewer systems were appropriated for the payment of the bonds. For further security thereof, a mortgage with power of sale was given covering the water system and the sewer system. The action of said city in thus incumbering the water and sewer systems and pledging and incumbering the revenues thereof was not authorized by any election. Most, if not all, of the improvements were made upon the water system. The record does not clearly show that none were made upon the sewer system. The improvements were constructed in compliance with the contract.

The city of Cross Plains brought this suit against J. M. Radford and Republic National Bank & Trust Company, the owners and holders of said bonds, to cancel same. The defendants, by their several cross-actions, established that they were the owners and holders in due course of all said bonds (each holding several parts of the entire issue), acquired before any maturities thereof were past due, and before any matured payments had been dishonored, and taken in good faith for value without any actual notice of any infirmities in the bonds, or any defect in the title of the party from whom purchased, "save and except such as arises from the face of the bonds, and such as may be charged as a matter of law from the bonds." One of the grounds upon which cancellation was sought, besides want of authority to create the obligations and incumber the water and sewer systems, was alleged fraud on the part of the engineering company. The improvements were averred to be worthless for the purposes intended, and, in effect, so found by the court.

The trial court denied the plaintiff any recovery, and upon the cross-actions adjudged the bonds to be valid obligations according to the provisions thereof. The plaintiff city has appealed.

Appellant, in its brief, makes two contentions, which, upon the submission of the case, were conceded to have been determined contrary thereto by the recent decisions of the Supreme Court in City of Dayton v. Allred, 68 S.W.(2d) 172, and McCann v. Akard, 68 S.W.(2d) 1033. By the first of said propositions, it was asserted that the bonds represented debts and were void under sections 5 and 7 of article 11 of the Constitution, which prohibits the creation of a debt, for any purpose, unless provision is made at the time of creating the same to assess and collect annually a sufficient sum by way of taxation to pay the interest and create a sinking fund of at least 2 per cent. By the other proposition, it is asserted that the mortgaging of said utility systems was void, because contrary to section 9 of article 11 of the Constitution, which exempts from forced sale the property of cities and towns owned and held only for public purposes and devoted exclusively to the use and benefit of the public. The questions involved in these propositions appear to have been determined in City of Dayton v. Allred, supra, and, upon the authority thereof, the propositions are overruled without further comment.

Appellant's third proposition is as follows: "The act of 1927, insofar as the phrase `or for extensions,' as used in the second section of the act is void for the reason that its purpose was not disclosed by the caption." The title to said chapter 194, General Laws, 1927, reads as follows: "An Act to amend Articles 1111, 1112, and 1113 of the Revised Statutes of Texas, pertaining to the encumbrance of lighting and water systems and income thereof by cities and towns to secure payment of funds for the purchase or improvement thereof, including therein the power to encumber sewer systems and the income thereof for said purposes, and declaring an emergency."

By reference to R. S. 1925, arts. 1111, 1112, and 1113, as existing before said amendment, it is apparent that the subject-matter thereof was well described in said title to the amendatory act in the following words: "Pertaining to the encumbrance of lighting and water systems and income thereof by cities and towns to secure payment of funds for the purchase or improvement thereof." It thus appears that said title identified the statutes intended to be amended first by naming the articles of the Revised Statutes, and, secondly, by stating the subject-matter thereof. After thus identifying the statutes intended to be amended, the title reads: "Including therein the power to encumber sewer systems and the income thereof for said purposes, and declaring an emergency." The title did not stop with naming the articles to be amended, and stating their subject-matter with a general declaration that they were to be amended, but in the last-quoted provision stated the nature of the amendment which it was proposed to make. Article 1111, before said amendment, empowered cities and towns operating thereunder to mortgage and incumber their light system, or water system, either or both, and the franchise and income thereof, and everything pertaining thereto, acquired, or to be acquired, to secure the payment of funds for certain purposes. Eight purposes were enumerated as follows: (1) To purchase same; or (2) to purchase additional water power; (3) riparian rights; or (4) to build; (5) improve; (6) enlarge; (7) extend; or (8) repair such system, or either of them. By provision of article 1112, if the amount of a proposed incumbrance exceeded $5,000, it was required that same be authorized by a majority vote of the qualified voters of the cities or towns, with one exception, which was if the incumbrance was to secure the payment of "purchase money" no election was required. Said article named two exceptions, but one, "to refund any existing indebtedness," was manifestly not included in the eight enumerated purposes, and therefore, could not be, strictly speaking, an exception.

Considering these provisions of the statutes before amendment, what was the subject of House Bill, No. 613 (said chapter 194, General Laws of 1927, p. 276)? Whatever the subject was, it was required by section 35 of article 3 of the State Constitution to be expressed in the title of the act. From a reading of the title it is obvious that it complies perfectly with the constitutional requirement that a bill contain no more than one subject. That subject was plainly the extension of the provisions of R. S. 1925, arts. 1111, 1112, and 1113, so as to include sewer systems, and the income thereof. The title carried notice to members of the Legislature, and to citizens generally, that the sole purpose of the amendatory act was to restate the existing provisions of articles 1111, 1112, and 1113, then applicable only to light and water systems, and the income thereof, so as to include with them, sewer systems, and the income thereof. By thus definitely specifying the change proposed to be made in the law, the title, by implication, negatived the purpose to make any other change. The title, therefore, carried no notice of a purpose to add any other exception to the theretofore existing requirement that where the incumbrance was to exceed $5,000 it must be authorized by a majority vote of the qualified voters. As said before, the only exceptions then existing were (1) for "purchase money," and (2) "to refund any existing indebtedness." Not only did the title carry no notice of a purpose to add a further exception, but by implication it gave notice that there was no purpose to add any other exception. In the body of the amendatory act, article 1112 purports to add a third exception, namely, "for extensions." The former exception read: "Except for purchase money, or to refund any existing indebtedness." R. S. 1925, art. 1112. By the amendment, the exceptions were stated as follows: "Except for purchase money, or for extensions, or to refund any existing indebtedness." Chapter 194, General Laws, 1927, p. 276. We cannot escape the conclusion that said amendment of 1927, in so far as it purports to authorize the incumbering of the water and the sewer systems, for more than $5,000, to secure payment for extensions to either or both systems without being authorized by an election, is rendered void by said constitutional provision. Hamilton v. St. Louis, F. F. & T. Ry. Co., 115 Tex. 455, 283 S. W. 475; Arnold v. Leonard, 114 Tex. 535, 273 S. W. 799, 803; Adams v. San Angelo Water Works Co., 86 Tex. 485, 25 S. W. 605, 606; Ward Cattle & Pasture Co. v. Carpenter, 109 Tex. 103, 200 S. W. 521; Rodgers v. Tobias (Tex. Civ. App.) 225 S. W. 804; Tadlock v. Eccles, 20 Tex. 782, 73 Am. Dec. 213; Eastland County v. Ford (Tex. Civ. App.) 23 S.W....