Commissioners of the Sinking Fund of City of Louisville v. Zimmerman

• Decision Date: 15 June 1897
• Citation: 101 Ky. 432
• Parties: Commissioners of the Sinking Fund of City of Louisville v. Zimmerman.
• Court: Kentucky Court of Appeals

101 Ky. 432

Commissioners of the Sinking Fund of City of Louisville v. Zimmerman.

Court of Appeals of Kentucky.

June 15, 1897.

APPEAL FROM JEFFERSON CIRCUIT COURT. LAW AND EQUITY DIVISION.

H. S. BARKER FOR APPELLANT.

D. W. SANDERS FOR APPELLEE.

MASON BROWN BARRET OF COUNSEL ON SAME SIDE.

JUDGE WHITE DELIVERED THE OPINION OF THE COURT.

This proceeding is brought by the appellee, Zimmerman, in the Jefferson Circuit Court, Law and Equity division, to enjoin the issuance by the appellants of bonds of the city of Louisville to the amount of $588,000. It appears by the pleadings that the city has outstanding and due July 1, 1897, bonds to the amount of $499,000, and also due August 1, 1897, bonds to the amount of $89,000, all bearing six per cent. interest, and it is proposed to issue the $588,000 in bonds to bear four per cent. interest, due and payable forty years after date, in gold coin of the United States, at its present standard of weight and fineness, for the purpose of paying off the bonds due as stated; in other words, the appellants propose to refund the debts due July 1, 1897, and August 1, 1897, by the issuance of bonds, payable in gold at a lower rate of interest than the present debts draw, the bonds due and payable in forty years, dated and bearing interest from April 1, 1897. The appellee is a taxpayer of the city of Louisville, and asks that appellants be enjoined from issuing said bonds for the reasons, as he alleges, they are without authority so to do; because prohibited by sections 157, 158 and 159 of the State Constitution; because there is no authority of law for their issuance; because if permitted to be issued, there would for the time, from their issual and date, viz., April 1, 1897, till the maturity of the other bonds, to-wit, July 1, 1897, and August 1, 1897, be a larger indebtedness for the city of Louisville than it is permitted by law to incur, without a vote of its citizens empowering said indebtedness, and because that by the bid received on said bonds, and which was accepted by the commissioners of the sinking fund, there was and is a premium of nearly $40,000 that will be realized on the sale of said 588 bonds of the denomination of $1,000 each. It is admitted that all the action and proceedings of the city council is regular and in due form, and if warranted under the acts of the legislature governing cities of the first class and the Constitution of the State, that then the judgment is erroneous.

Section 157 of the Constitution provides: * * * "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 enforcible by the person with whom made; nor shall such municipality ever be authorized to assume the same."

Section 158 provides: * * * "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."

Section 159 provides: "Whenever any county, city, town, taxing district or other municipality is authorized to contract an indebtedness, it shall be required, at the same time, to provide for the collection of an annual tax sufficient to pay the interest on said indebtedness and to create a sinking fund for the payment of the principal thereof, within not more than forty years from the time of contracting the same."

It appears that the city council of Louisville, in the ordinance passed relating to these bonds, literally complied with the provisions of section 159 of the Constitution, and, notwithstanding this, it is contended, and the court below so held, upon the authority of Holzhauer v. City of Newport, 94 Ky., 396, that section 159 of the Constitution is not self-executing, and that as the charter of the city of Louisville, as passed by the legislature did not make provision specifically, as this section of the Constitution provided, that the city council was without authority to pass the ordinance they did, and that the same is void and of no effect.

In the case of Holzhauer v. City of Newport, 94 Ky., on p. 406, near the bottom, it will be observed that the court, by Judge Hazelrigg, says: "This construction necessarily determines the question at issue, and we do not think that section 159 affects the case." Thereby expressly saying that it was unnecessary to determine what section 159 does mean and its effect. Then he undertakes to determine the meaning of section 159, and concludes: "The general assembly, by general laws yet to be enacted, must see to the imposition of these limitations and restrictions. Future legislation is necessarily implied from the very language of the provision."

This decision as to section 159 of the Constitution is obiter dictum, as the opinion expressly says, and is held to be not...