Cohen v. City of Houston

• Citation: 176 S.W. 809
• Decision Date: 03 April 1915
• Docket Number: (No. 6934.)
• Parties: COHEN et al. v. CITY OF HOUSTON et al.
• Court: Court of Appeals of Texas

Page 809

176 S.W. 809

COHEN et al. v. CITY OF HOUSTON et al.

(No. 6934.)

Court of Civil Appeals of Texas. Galveston.

April 3, 1915.

Rehearing Denied April 29, 1915.

Appeal from District Court, Harris County; John A. Read, Judge.

Action by H. F. Cohen and others against the City of Houston and others. From an order of the district court refusing to grant a temporary injunction, plaintiffs appeal. Affirmed.

Wilson, Dabney & King, of Houston, for appellants. J. C. Hutcheson, Jr., and Winston McMahon, both of Houston, for appellees.

McMEANS, J.

This is an appeal from an order of the district court of Harris county refusing to grant a temporary injunction upon the application of the plaintiffs, who are appellants here.

Plaintiffs sought a temporary injunction to restrain the city of Houston from holding an election to determine whether several issues of bonds aggregating in amount $5,450,000 should be issued and from doing any other acts toward the issuance or sale of such bonds, or the collection of taxes on account of same, upon the following grounds:

(a) That the city of Houston did not have available taxable values in sufficient amount out of which it could make provision at the time of issuing of said bonds to levy a tax sufficient to pay the interest thereon, and to create a sinking fund of at least 2 per cent. per annum as required by law to redeem the same at maturity.

(b) That the city of Houston had outstanding bonds in the aggregate sum of $9,855,000, and that at the time of issuing same provision had been lawfully made for a levy of a tax sufficient to pay the interest on said bonds each year, and to create a sinking fund of at least 2 per cent., as provided by law, for each year throughout the period of same; that of the amount collected on account of the sinking fund of said outstanding bonds, only a minor portion thereof had been preserved, but that the larger portion of the amount collected as such sinking fund, to wit, $1,500,000, had been misapplied by the city of Houston to other purposes; that the city of Houston acted in the assessment, collection, and preservation of said sinking fund as a trustee, and in the execution of its trust it had no right to issue the $5,450,000 of new bonds unless and until the city had first replaced in the sinking fund the amount which it had misapplied.

(c) That it was not contemplated or intended by the city of Houston to make immediate public improvements of the magnitude as submitted to the people in said bond election, but it was the intention and purpose of the city and its officers to issue said bonds in installments through a period of five years, according as the said improvements might, in the opinion of the city officials, be needed, and the increased available taxable values in the city should warrant.

(d) That the present officials of the city of Houston had removed $200,000 in cash from the sinking fund and used same in the building of public improvements, and had placed in the sinking fund in lieu thereof the bonds of the city in the sum of $200,000, issued for public improvements, and which had never been sold in the market of the city of Houston, and which bonds mature at a date later than the bonds secured by the sinking fund which were removed; and that the city should be enjoined from the issuance of the new bonds until this $200,000 had been replaced in the sinking fund in money.

(e) That on the 15th day of October, 1913, the city of Houston had undertaken to amend its charter, and to thereby extend its limits more than a mile in several directions, and including a resident population of some 5,000 people, without giving the persons in the territory thus made a part of the city by amendment a right to vote thereon; that the inclusion of said territory into the city was illegal and void, and there was no authority in the city to hold the election in said territory for the purpose of authorizing the issuance of bonds, and that the city should be enjoined from issuing said bonds against said territory, or from collecting any city taxes off of property in said territory, or exercising any other right of government therein.

When the petition for injunction was presented to the court, the court indorsed thereon an order for notice to be issued to defendants to appear at the time and place stated in the order, to show cause why the injunction should not be granted as prayed. The defendants on the date set for the hearing filed its answer, presenting its defenses, first presenting a demurrer to so much of the petition as sought to enjoin the holding of the election, which was sustained. Afterwards, and before the hearing was had on the merits, the election was held and the proposition to issue the bonds was carried.

On November 2, 1914, a hearing on the merits was had upon the petition and answer, and affidavits and copies of documents, and thereafter the court entered judgment sustaining all of defendants' contentions as to the right to issue the bonds, and denying plaintiffs any of the relief prayed, except that the defendants were commanded and enjoined:

"(1) That they do not hereafter invest the sinking fund of any bond issue of the city of Houston, in bonds maturing later than the bonds secured by such sinking fund.

"(2) That they proceed at once to prepare and keep proper books with separate and distinct accounts thereon, showing at all times the condition of the sinking fund of each specific bond issue, and showing all amounts paid out of the sinking fund of each specific bond issue, and all amounts added thereto from time to time.

"(3) That defendants and each of them be commanded and enjoined that hereafter the levy of the sinking fund taxes made in the annual levy of each year shall be made in such manner as to show specifically the portion or amount of the levy that is made for each outstanding bond issue for the city of Houston."

From the judgment of the court refusing to enjoin the issuance of the bonds, the plaintiffs have appealed.

On the trial the following facts were established by the evidence and admission of the parties:

(a) The city of Houston is incorporated under and by virtue of a special act of the Legislature of Texas adopted in 1905. The boundaries of the city, as established by the act, are described as "four miles square, to be run with the cardinal points of the compass, of which the center of the court-house square of Harris county, in the city of Houston shall be the center," except where such boundaries would conflict with the boundaries of the incorporated town of Houston Heights. The city, within the boundaries thus established, contains a population of near 100,000 persons and taxable values of $103,000,000.

On October 15, 1913, at an election held among the qualified voters resident within the boundaries of the city, as established by the special act, the proposition was adopted to extend the boundaries of the city so as to include additional territory, having a population of some 5,000 persons and taxable values of about $6,000,000. At this election the qualified voters residing within the additional territory did not vote. Thereafter the city, seeking to avail itself of what is popularly known as the "Home Rule Amendment" to the Constitution of Texas, adopted November 6, 1912, and of the enabling act adopted by the Legislature, approved April 7, 1913, amended its charter, and by this amendment the boundaries of the city were so defined as to include said additional territory, and the city since has exercised the functions of government over the territory described in its charter as amended. At the time of the adoption of this amendment the city had a bonded indebtedness of $9,855,000.

The plaintiffs are 16 in number. Some of them reside and own taxable property in the added territory, others live within the original boundaries of the city, and own property situated in the added territory subject to taxation, and still others are nonresidents of Harris county, but own property in the added territory subject to taxation. None of them was shown to be an owner or holder of any of the bonds of the city.

(b) The city of Houston by ordinances duly passed on September 21, 1914, called an election to be held on October 28, 1914, at which none but qualified voters and taxpayers residing within the boundaries of the city, as extended, should be allowed to vote, to pass upon the question of whether or not the city should be authorized to issue bonds for five separate purposes, viz.: (1) in the sum of $3,000,000, to be paid serially in one to forty years after issuance, the proceeds of said bonds, when sold, to be used for the purpose "of making permanent city improvements, to wit, wharves, docks, and slips, and other appliances and structures for facilitating or accommodating commerce or navigation on Buffalo Bayou Ship Channel"; (2) in the sum of $1,000,000, etc., the proceeds of same, when sold to be used for the purpose of making permanent city improvements, viz., drainage and sewerage in the city; (3) in the sum of $1,000,000, etc., the proceeds of same, when sold, to be used in making permanent city improvements, to wit, sanitary sewerage, disposal plants, with the necessary sanitary sewers and connections, and all other structures and appliances incident to a complete sanitary sewerage system in the city; (4) in the sum of $250,000, etc., the proceeds of same, when sold, to be used for the purpose of making permanent city improvements, viz., the perfecting of the public park system of the city, by providing the necessary enlargements and additions thereto, together with all public driveways, walks and other structures and appliances necessary to the public use and enjoyment thereof; and (5) in the sum of $200,000, etc., the proceeds of same, when sold, to be used for the purpose of making permanent city improvements, to wit, to build permanent public school buildings in said city. No...