City of Georgetown v. Elliott, No. 4267.

CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)
Writing for the CourtPARKER, NORTHCOTT, and SOPER, Circuit
Citation95 F.2d 774
PartiesCITY OF GEORGETOWN v. ELLIOTT et al.
Docket NumberNo. 4267.
Decision Date05 April 1938

95 F.2d 774 (1938)

CITY OF GEORGETOWN
v.
ELLIOTT et al.

No. 4267.

Circuit Court of Appeals, Fourth Circuit.

April 5, 1938.


Capers G. Barr, of Georgetown, S. C., and Robert McC. Figg, Jr., of Charleston, S. C., for appellant.

E. W. Mullins, of Columbia, S. C. (Nelson, Mullins & Grier, of Columbia, S. C., on the brief), for appellees.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal from a judgment for plaintiffs on a note for $8,000 issued by the City of Georgetown, S. C. The complaint alleges that the note was duly issued by the city and that the bank of which plaintiffs are receivers purchased it for value and in good faith before maturity and became a holder thereof in due course. The note, which is set forth in full in the complaint and contains a general promise to pay on the part of the city, is dated September 15, 1931, and recites that it was issued for money borrowed for corporate purposes in anticipation of municipal taxes for the current year, pursuant to section 7 of article 8 of the Constitution of South Carolina and section 4554 of the Code of Laws of South Carolina of 1922 (Civil Code). There is no allegation of collection of taxes for 1931 by the city or of their availability for the payment of the note; and both by demurrer and answer the point was made that it was not a general obligation of the city, but was payable only out of taxes for that year. Only one question is presented by the appeal, viz., whether such a note creates a valid indebtedness on the part of the city for which a general judgment may be rendered, in the absence of allegation and proof that taxes available for its payment have been collected from the levy of the year in which it was issued. We think that this question must be answered in the affirmative.

If the statute under which the note was issued be considered without reference to constitutional restrictions, there can be no question but that it authorizes the creation of a general obligation on the part of the city by the issuance of tax anticipation notes. The pertinent part of that statute, Civ.Code S.C. 1922, § 4554, is as follows: "That in the anticipation of the collection of taxes in any fiscal year said City or Town Council, whether such city or town be chartered

95 F.2d 775
by special Act of the General Assembly or under the general law, may from time to time, as occasion may require, borrow money for corporate purposes on its note or notes, and pledge the taxes levied, or to be levied, in said year for corporate purposes, for the payment of such note or notes and the discount or interest thereon, and such note or notes it is hereby authorized to discount generally, if desired, without responsibility to the person or corporation advancing money on said security, to see to the application of the funds realized thereon."

And we do not think that any different conclusion is required when the limitations of the State Constitution are taken into account. Article 8, § 7, of that instrument, which is the one relied on, after limiting the bonded debt of municipalities to 8 per cent. of the assessed value of their taxable property and requiring an election as a prerequisite to the creation of such debt, contains the following proviso: "Provided, That this Section shall not be construed to prevent the issuing of certificates of indebtedness in anticipation of the collection of taxes for amounts actually contained or to be contained in the taxes for the year when such certificates are issued and payable out of such taxes."

The city would have us construe this proviso as forbidding the issuance of any sort of obligation in anticipation of taxes except nonnegotiable certificates payable only out of tax collections for the year. This would be to read into the proviso language which it does not contain and to establish a limitation on municipal borrowing in anticipation of tax collections which, in our opinion, would be utterly unreasonable and which would result in making it practically impossible for municipalities in South Carolina to borrow money for carrying on the most necessary municipal activities pending the collection of their taxes. As was well said by the late Judge Ernest F. Cochran in Citizens & Southern National Bank of Savannah v. The City of...

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3 practice notes
  • City of Florence v. Anderson, No. 4228.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • April 5, 1938
    ...question which we have just decided contrary to the contention of the city in the case of City of Georgetown v. Elliott et al., 4 Cir., 95 F. 2d 774; and in accordance with our decision there we hold that the notes, which are in form negotiable municipal obligations, were authorized as such......
  • Wakem v. Inhabitants of Town of van Buren
    • United States
    • Supreme Judicial Court of Maine (US)
    • October 24, 1940
    ...become invalid if not so paid, and we cannot read such a provision into the constitution. See City of Georgetown v. Elliott et al, 4 Cir., 95 F.2d 774. Moreover, to do so would be to seriously impair, if not utterly defeat the purpose of the proviso. A right to borrow money is of no practic......
  • Davenport v. City of Rock Hill, No. 23868
    • United States
    • United States State Supreme Court of South Carolina
    • May 3, 1993
    ...not to constitute debt within the meaning of the constitutional limitation provisions then relevant in City of Georgetown v. Elliott, 95 F.2d 774 (4th Cir.1938), Page 454 and Haddon v. Cheatham, 161 S.C. 384, 159 S.E. 843 (1931). See also S.C.Att'y Gen.Op. of Dec. 18 1992, O.S.-5017. In Cad......
3 cases
  • City of Florence v. Anderson, No. 4228.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • April 5, 1938
    ...question which we have just decided contrary to the contention of the city in the case of City of Georgetown v. Elliott et al., 4 Cir., 95 F. 2d 774; and in accordance with our decision there we hold that the notes, which are in form negotiable municipal obligations, were authorized as such......
  • Wakem v. Inhabitants of Town of van Buren
    • United States
    • Supreme Judicial Court of Maine (US)
    • October 24, 1940
    ...become invalid if not so paid, and we cannot read such a provision into the constitution. See City of Georgetown v. Elliott et al, 4 Cir., 95 F.2d 774. Moreover, to do so would be to seriously impair, if not utterly defeat the purpose of the proviso. A right to borrow money is of no practic......
  • Davenport v. City of Rock Hill, No. 23868
    • United States
    • United States State Supreme Court of South Carolina
    • May 3, 1993
    ...not to constitute debt within the meaning of the constitutional limitation provisions then relevant in City of Georgetown v. Elliott, 95 F.2d 774 (4th Cir.1938), Page 454 and Haddon v. Cheatham, 161 S.C. 384, 159 S.E. 843 (1931). See also S.C.Att'y Gen.Op. of Dec. 18 1992, O.S.-5017. In Cad......

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