City of Marion v. Haynes

• Decision Date: 04 March 1914
• Citation: 164 S.W. 79,157 Ky. 687
• Parties: CITY OF MARION v. HAYNES.
• Court: Kentucky Court of Appeals

164 S.W. 79

157 Ky. 687

CITY OF MARION v. HAYNES.

Court of Appeals of Kentucky.

March 4, 1914

Appeal from Circuit Court, Crittenden County.

Suit by Robert F. Haynes and others against the City of Marion. From a judgment for plaintiffs, defendant appeals. Affirmed.

J. A Moore, of Marion, for appellant.

A. C. &amp V. Y. Moore, of Marion, for appellee.

MILLER J.

This action was brought by Robert F. Haynes and other taxpayers of the city of Marion, a city of the fifth class, to enjoin the city and its officers from issuing bonds to the amount of $25,000 for the purpose of erecting municipal waterworks, and bonds to the amount of $20,000 for the construction of a system of sewers for said city. All the preliminary steps required by law were complied with, and under two ordinances passed September 9, 1913, the questions of issuing the two sets of bonds were submitted to a vote of the people of the municipality. The election showed that 208 votes were cast in favor of the waterworks proposition, and 100 votes against it; while, on the sewer proposition, 211 voters voted for it and 100 voted against it. So it will be seen that, of those voting upon the propositions, more than two-thirds voted for each proposition. By an ordinance duly passed, a tax of 62 cents upon each $100 of the assessed value of the property in said city was levied for the purpose of paying the interest upon said bonds, and creating a sinking fund which would discharge them within 20 years. A demurrer to the petition was overruled, and, the defendant having declined to further plead, the injunction was granted. From that judgment, the city appeals.

The plaintiff's first ground for an injunction is that there were 405 qualified voters in the town of Marion, two-thirds thereof being 270, and that, as each of said propositions received much less than 270 votes, neither received the necessary two-thirds vote required by section 157 of the Constitution.

This question, however, is no longer an open one in this jurisdiction, since it was expressly decided, in Montgomery County Fiscal Court v. Trimble, 104 Ky. 629, 47 S.W. 773, 20 Ky. Law Rep. 827, 42 L. R. A. 738, and in Board of Education v. City of Winchester, 120 Ky. 591, 87 S.W. 768, 27 Ky. Law Rep. 994 (overruling Belknap v. City of Louisville, 99 Ky. 474, 36 S.W. 1118, 18 Ky. Law Rep. 313, 34 L. R. A. 256, 59 Am. St. Rep. 478), that the assent of two-thirds of those voting upon the question submitted was a sufficient approval.

In the next place it is alleged in the petition, and must be treated as true upon the demurrer, that the present tax for maintaining the municipal government, exclusive of the school tax, is 60 cents on each $100 of taxable property, and that to add thereto the 62 cents authorized by the ordinance for the purpose of paying the interest and principal of the proposed bonds would raise the tax rate to $1.22 per hundred, which is in excess of the rate authorized by sections 157 and 158 of the Constitution.

The briefs advise us that the chancellor rested his decision upon the sole ground that section 157 of the Constitution fixed an arbitrary maximum tax limit of 75 cents on each $100 of taxable property in cities of less than 10,000 population. Appellant stoutly denies that this case is to be controlled solely by section 157, but by section 158 as well, and that, when sections 157 and 158 are read together, and applied to the facts of this case, the action of appellant is fully warranted by those sections.

Sections 157 and 158 of the Constitution read as follows:

"157. The tax rate of cities, towns, counties, taxing districts and other municipalities, for other than school purposes, shall not, at any time, exceed the following rates upon the value of the taxable property therein, viz.: For all towns or cities having a population of fifteen thousand or more, one dollar and fifty cents on the hundred dollars; for all towns or cities having less than fifteen thousand and not less than ten thousand, one dollar on the hundred dollars; for all towns or cities having less than ten thousand, seventy-five cents on the hundred dollars; and for counties and taxing districts, fifty cents on the hundred dollars; unless it should be necessary to enable such city, town, county, or taxing district to pay the interest on, and provide a sinking fund for the extinction of indebtedness contracted before the adoption of this Constitution. No county, city, town, taxing district, or other municipality shall be authorized or permitted to become indebted, in any manner or for any purpose, to an amount exceeding, in any year, the income and revenue provided for such year, without the assent of two-thirds of the voters thereof, voting at an election to be held for that purpose; and any indebtedness contracted in violation of this section shall be void. Nor shall such contract be enforceable by the person with whom made; nor shall such municipality ever be authorized to assume the same.

"158. The respective cities, towns, counties, taxing districts and municipalities shall not be authorized or permitted to incur indebtedness to an amount, including existing indebtedness, in the aggregate exceeding the following named maximum percentages on the value of the taxable property therein, to be estimated by the assessment next before the last assessment previous to the incurring of the indebtedness, viz.: Cities of the first and second classes, and of the third class having a population exceeding fifteen thousand, ten per centum; cities of the third class having a population of less than fifteen thousand, and cities and towns of the fourth class, five per centum; cities and towns of the fifth and sixth classes, three per centum; and counties, taxing districts and other municipalities, two per centum: Provided, any city, town, county, taxing district or other municipality may contract an indebtedness in excess of such limitations when the same has been authorized under laws in force prior to the adoption of this Constitution, or when necessary for the completion of and payment for a public improvement undertaken and not completed and paid for at the time of the adoption of this Constitution: And provided further, if, at the time of the adoption of this Constitution, the aggregate indebtedness, bonded or floating, of any city, town, county, taxing district or other municipality including that which it has been or may be authorized to contract as herein provided, shall exceed the limit herein prescribed, then no such city or town shall be authorized or permitted to increase its indebtedness in an amount exceeding two per centum, and no such county, taxing district or other municipality, in an amount exceeding one per centum, in the aggregate upon the value of the taxable property therein, to be ascertained as herein provided, until the aggregate of its indebtedness shall have been reduced below the limit herein fixed, and thereafter it shall not exceed the limit, unless in case of emergency, the public health or safety should so require. Nothing herein shall prevent the issue of renewal bonds, or bonds to fund the floating indebtedness of any city, town, county, taxing district or other municipality."

Marion is a city of the fifth class, and under section 3637, subsec. 3, of the Kentucky Statutes, it is given power "to levy and collect annually an ad valorem tax, not exceeding seventy-five cents on each one hundred dollars of the assessed value of all real and personal property within such city, except as hereinafter provided: Provided, that any time the city council shall deem it necessary to incur any indebtedness, the payment of which cannot be met by the levy authorized by law, they shall give notice of an election by the qualified electors of the town, to be held to determine whether such indebtedness shall be incurred." The remaining portion of the statute prescribes the method of holding the election, and requires the levying of the tax necessary to pay the debt and interest, which was strictly followed in this case.

It is further shown that the value of the taxable property in the city of Marion, as estimated by the last assessment, is $743,500, 3 per cent. thereon being $22,305, and, while the city is not now in debt in any sum, the bonds, if issued, would create an indebtedness of $45,000, which is in excess of the 3 per cent. maximum limit fixed by section 158 of the Constitution, above quoted.

The question of the meaning and effect of sections 157 and 158 of the Constitution was before the court in Knipper v. City of Covington, 109 Ky. 192, 58 S.W. 498, 22 Ky. Law. Rep. 676, where the city attempted, without the approving vote of the people to incur an indebtedness exceeding its income and revenue for the year, upon the ground that the public health or safety required it. And, although the question now before us as to what would constitute an emergency under section 158 was not there presented, because the indebtedness in the Knipper Case had not been authorized by a vote of the people, nevertheless the power of the city to incur such an indebtedness was discussed, and the limitations upon the power clearly pointed out.

After pointing out that section 157 provides a barrier against any indebtedness, for any purpose, beyond the revenues of the year without a vote of the people, and that section 158 imposes an additional limitation on indebtedness in the aggregate, the court said: "Each section provides a limitation on the power to create indebtedness. Neither of them is a grant of power. No such grant was then necessary for the power to create indebtedness was theretofore not specifically limited. When an emergency arises such as is named in section 158, then certain limits fixed in that sec...