City of Spartanburg v. Leonard

• Court: South Carolina Supreme Court
• Writing for the Court: STABLER, Chief Justice.
• Citation: City of Spartanburg v. Leonard, 180 S.C. 491, 186 S.E. 395 (S.C. 1936)
• Decision Date: 10 June 1936
• Docket Number: 14310.
• Parties: CITY OF SPARTANBURG v. LEONARD.

186 S.E. 395

180 S.C. 491

CITY OF SPARTANBURG v. LEONARD.

No. 14310.

Supreme Court of South Carolina

June 10, 1936

Appeal from Common Pleas Circuit Court of Spartanburg County; J Henry Johnson, Judge.

Controversy without action between the City of Spartanburg and L. K Leonard. Decree for the City, and Leonard appeals.

Affirmed.

The decree of Judge Johnson is as follows:

This controversy without action is submitted, pursuant to section 668 of the Code (1932), to the court of common pleas for its determination and judgment. It presents the question of the right of the city of Spartanburg to redeem an outstanding issue of $230,000 of 4 per cent. waterworks bonds, issued September 1, 1908, and maturing September 1, 1948. A subordinate question for determination is the sufficiency of the notice of redemption which the city of Spartanburg proposes to give to the bondholders.

After a favorable election, as required by the Constitution, these bonds were issued pursuant to a general statute (sections 2021 and 2022, vol. 1, Civ.Code 1902) and a special act of 1908 (Act Feb. 26, 1908, No. 603, 25 Statutes at Large, p 1346). The bonds contain a recital that they were issued under both the general statute and the special act.

The general statute provides that bonds issued thereunder "shall * * * run for such length of time * * * as the said municipal authorities shall prescribe." Section 2022. The special act recites in the preamble that the city council of the city of Spartanburg desires to issue waterworks bonds, payable forty years after date, "with the privilege of redemption after twenty years from their date"; while in the body of the special act it is provided that bonds issued thereunder shall be payable forty years from their date, "with the privilege of redemption twenty years from their date." Prior to the issue of the bonds, the city council by ordinance fixed the form of the bonds, and therein prescribed that they should be payable on the 1st day of September, 1948, "with the privilege of redemption on or after the first day of September, 1928." Public advertisement of the sale of the bonds, widely published by the city council prior to their sale, stated that the bonds were payable forty years after their date, "with the privilege of redemption after twenty years from their date." The bonds themselves state that that they are payable on the 1st day of September, 1948, "with the privilege of redemption on or after the first day of September, 1928."

The interest is payable semiannually through Central Hanover Bank & Trust Company of New York (formerly Hanover National Bank), and funds are forwarded by the city of Spartanburg semiannually to that bank to meet interest requirements. By the terms of the bonds, both principal and interest are payable through that bank.

The city of Spartanburg now desires to refund at a lower rate of interest the indebtedness represented by the outstanding bonds, and to that end now seeks to call them for redemption. The defendant is the owner and holder of two bonds of the said issue. There are numerous other bondholders, whose names are unknown to the plaintiff, as the bonds are not registered, and interest is paid to the bondholders through the New York bank. It is assumed that all bondholders deny the right of the city of Spartanburg to redeem the bonds at the present time.

The position taken by the defendant is that, since the special act of 1908 provides that the bonds issued thereunder shall carry the privilege of redemption "twenty years from their date," and since they were not redeemed September 1, 1928, their maturity date is irrevocably carried forward to September 1, 1948. The city of Spartanburg takes the position that the bonds are redeemable at any time after September 1, 1928.

The special act of 1908, properly construed, authorizes an issue of bonds, redeemable "on or after September 1, 1928." The paramount consideration and the controlling factor in determining the meaning of any statute is the intent of the Legislature in passing it. In ascertaining the intent of the Legislature, the court is not to be governed by the apparent meaning of words found in one clause, sentence, or part of the act, but by a consideration of the whole act, read in the light of conditions and circumstances as they appeared to the Legislature, and the purpose sought to be accomplished. Fulghum v. Bleakley, 177 S.C. 286, 181 S.E. 30. Reference to the preamble of the 1908 act discloses that the city of Spartanburg had recently voted to acquire a waterworks system for the city, and that the City of Spartanburg desired to issue bonds "with the privilege of redemption after twenty years from their date," with which to pay for the waterworks system. While it is true that the preamble is not a part of the effective portion of the statute, nevertheless the preamble may supply the guide to the meaning of the act. 25 R.C.L. 1030; Bynum v. Clark, 3 McCord, 298, 15 Am.Dec. 633; Garrick v. Florida Central Railroad Co., 53 S.C. 448, 31 S.E. 334, 69 Am.St.Rep. 874.

By reference to the preamble, which is aptly described by the Supreme Court of the United States in Coosaw Mining Company v. State of South Carolina, 144 U.S. 550, 12 S.Ct. 689, 692, 36 L.Ed. 537, as "a key to open the understanding of a statute," and by considering the circumstances as they appeared to the Legislature at the time the 1908 act was passed, it becomes quite apparent that the purpose of the Legislature was to effectuate the plan which had been formulated by the city of Spartanburg to buy a waterworks system and to pay for the system with an issue of forty-year bonds, redeemable at any time after twenty years from their date. This purpose, so lucidly expressed in the preamble, floods with light whatever places in the statute might otherwise be dark. The conclusion is inescapable that the Legislature intended to provide in the 1908 act that the bonds might be redeemed at any time after twenty years from their date, and that the omission of the word "after" in the body of the act was inadvertently made. The supplying of a word unintentionally omitted in a statute, in order to give effect to the purpose of the Legislature, is entirely legitimate. 25 R.C. L. 975; Continental Oil Co. v. Santa Fe, 25 N.M. 94, 177 P. 742, 3 A.L.R. 404; Commonwealth v. Herald Publishing Company, 128 Ky. 424, 108 S.W. 892, 16 Ann. Cas. 761; Abernethy v. Board of Commissioners, 169 N.C. 631, 86 S.E. 577; Abernathy v. Mitchell, 113 Ga. 127, 38 S.E. 303; Jones v. Mail & Exp. Publishing Company, 80 Hun, 368, 30 N.Y.S. 335.

Another well-established rule of statutory construction comes to the aid of the city of Spartanburg in this situation. It is that the construction given to a statute by those charged with the duty of executing it is always entitled to the most respectful consideration and ought not to be overruled without cogent reasons. Read Phosphate Company v. South Carolina Tax Commission, 169 S.C. 314, 168 S.E. 722. In the case of these bonds, it is entirely clear that the city council of the city of Spartanburg, its officials charged with the duty of executing the 1908 act, construed that act as authorizing an issue of bonds redeemable at any time after twenty years from their date. Such was the council's plan of finance, as indicated by the preamble of the act, and such was the council's construction of the act after its passage. Prior to the issue of the bonds, the council prescribed their form: "With the privilege of redemption on or after the first day of September, 1928." Then the bonds themselves were issued by the city council with the privilege of redemption "on or after the first day of September, 1928." Before the bonds were offered for sale, the city council widely advertised them "with the privilege of redemption twenty years after their date." Applying the rules of statutory construction above set forth, the act of 1908 should be construed as authorizing bonds redeemable "after" twenty years from their date.

If it should be conceded that the act of 1908 does not authorize an issue of bonds redeemable "on or after" twenty years from their date, nevertheless the bonds in question were regularly issued under the general act embodied in the 1902 Code (sections 2021 and 2022, vol. 1). The bonds themselves state that they were issued under the general statute and under the...