Hagan v. Commissioners' Court of Limestone County

• Decision Date: 06 April 1909
• Parties: HAGAN v. COMMISSIONERS' COURT OF LIMESTONE COUNTY ET AL.
• Court: Alabama Supreme Court

49 So. 417

160 Ala. 544

HAGAN v. COMMISSIONERS' COURT OF LIMESTONE COUNTY ET AL.

Supreme Court of Alabama

April 6, 1909

Rehearing Denied May 11, 1909.

Appeal from Chancery Court, Limestone County; W. H. Simpson Chancellor.

Suit by W. H. Hagan against the Court of County Commissioners of Limestone County and others to enjoin the assessment of a tax and the issuance of tax warrants, and for other relief. From a decree dissolving a temporary injunction, complainant appeals. Reversed, and motion to dissolve the injunction denied.

Sanders & Thach, for appellant.

G. W L. Smith and W. R. Walker, for appellees.

DENSON J.

The court of county commissioners of Limestone county, under the power and authority conferred upon them by section 133 of the Code of 1907, having first determined that it was necessary that a new courthouse for that county should be erected, on the 19th day of November, 1908, in the regular way, entered into a contract with the Falls City Construction Company, a corporation, of New Jersey, for the erection of the same. According to the resolution adopted by the court, the contract price agreed upon and fixed was not to exceed the principal sum of $59,000, and the interest thereon at the rate of 6 1/2 per centum per annum, payable semiannually.

The court adopted the following, among other resolutions "Be it further resolved by the court that there shall be levied, and there is hereby levied a special county courthouse tax of one-fourth of one per centum on all taxable property of said county, upon the assessment last made for state taxes, for the years 1909, 1910, 1911, 1912, 1913, 1914, 1915, 1916, and 1917, in payment of the said sum, not to exceed the principal sum of $59,000.00 and the interest thereon as represented by the county courthouse warrants provided for in the contract made with said company herein set out, for the erection, completion, and furnishing of said building, and which tax levy and this resolution ordering the same shall constitute and is a continuing contract between said county and said company, their successors and assigns, and shall not be in any way limited or repealed so long as any of said county courthouse warrants (which may be agreed upon) and the interest thereupon shall remain outstanding."

The contract with the company is fully set out in the resolutions of the court and adopted by the court. Article 19 of the contract, or so much of it as is necessary for present purposes, is in this language:

"It is further stipulated and agreed that the consideration herein set forth, to discharge the obligation to the contractor by said county, said court and said county hereby sells, assigns, transfers, sets over and confirms to the said Falls City Construction Company, all of the special county courthouse tax levy and all of the proceeds derived from the levy and collected of the special courthouse tax and levy thereof of one-fourth of one per centum on all the taxable property of said county for and during the years hereinafter mentioned as provided by sections 128 and 145, both inclusive, of the Code of 1907, and out of which tax levy said contractor or its assigns shall be and are entitled to receive the following proceeds with interest from February 1, 1909, at the rate of six and one-half per centum per annum, payable semiannually, that is to say: Said contractor shall receive, to wit:

Out of said tax levy for the year 1908 .. $2,000 00

Out of said tax levy for the year 1909 .. $6,500 00

Out of said tax levy for the year 1910 .. $7,000 00

Out of said tax levy for the year 1911 .. $7,500 00

Out of said tax levy for the year 1912 .. $8,000 00

Out of said tax levy for the year 1913 .. $8,500 00

Out of said tax levy for the year 1914 .. $9,000 00

Out of said tax levy for the year 1915 .. $9,500 00

Out of said tax levy for the year 1916 .. $1,000 00

"The foregoing principal installments except the one for $2,000, shall bear interest at the rate of six and one-half per centum per annum from February 1, 1909, payable semiannually, until each of said installments accrue, and provided further that said foregoing described interest added to the foregoing principal installments create and make the regular total installments of the amounts the contractor is entitled to receive from said tax fund which are as follows," etc.

The itemized amounts are then set out, making: Total principal, $59,000; interest, $15,989; grand total, $74,989. The contract continues in this language: "And said county and this court agrees to levy said special courthouse building tax of one-fourth of one per centum per annum during the years 1909, 1910, 1911, 1912, 1913, 1914, 1915, 1916, and 1917, for the purpose of creating the proceeds and revenue above set forth and further agrees to evidence said sum and installments above set out by the issuance of valid and lawful warrants drawn on said fund for the principal and interest thereon, and said warrants shall be of the denomination of five hundred dollars each and have coupon warrants annexed to them representing the interest. It is agreed that no debt is hereby created or incurred by said county, but instead thereof a transfer and assignment of the proceeds of said special tax levy to the amounts herein stated for the foregoing named years are made to said contractor as the consideration and payment for the erection, completion and furnishing of said courthouse building."

A taxpayer filed the present bill, and by it seeks to have the assessment of the tax and the contract declared void, the judge of probate enjoined from issuing the warrants called for in the contract, and the parties restrained from tearing down the old courthouse. A temporary injunction was granted. The defendants attacked the equity of the bill by demurrer, and moved to dissolve the injunction. On the hearing the demurrer was sustained and the injunction dissolved. From the decree the complainant appealed, assigning the same for error.

The theory of the bill is that the contract creates a debt against the county, which, added to the debt of the county in existence at the time the contract was entered into, exceeds the debt limit prescribed by section 224 of the Constitution of 1901. That section, so far as the same is applicable here, is in this language: "No county shall become indebted in an amount including present indebtedness, greater than 3 1/2 per centum of the assessed value of the property therein," etc. The averments of the bill show that the assessed value of the property in the county, for the year 1908, was $4,228,319, and that the indebtedness of the county was $135,000. Three and one-half per centum on the valuation would give $147,991.16, and the difference between this amount and the indebtedness would be $12,991.16. Thus it is shown, by the averments of the bill, that, if the amount the contractor is to receive for the courthouse should be determined to be a debt, the limit prescribed by the Constitution has been exceeded, and the contract, together with the levy of taxes to meet its requirement as to consideration, should be held void, unless the effect of section 215 of the Constitution of 1901--on account of the purposes for which the levy and contract were made--is to exempt them from the inhibition contained in section 224.

Section 224 is peculiar to the Constitution of 1901; that is to say, such a provision never existed in the organic law of the state prior to the adoption of that Constitution. Hence there is no decision by our own court for our guidance in the construction of such constitutional provision. Many of the states of the Union, however, have similar provisions in their organic law. Gray, in his work on Limitations of the Taxing Power and Public Indebtedness, writing in respect to such provisions, says: "In the decision of questions arising under these constitutional debt limits, considerations of policy have no place. While it is true that all questions of policy are for the Legislature or the people, there are many questions of construction in which the courts allow policy to have some weight, at least when they feel so inclined. But these provisions limiting indebtedness are purely arbitrary, and when the people adopt them all questions of policy are deemed settled. They are to be construed neither liberally nor with excessive strictness, but solely in accordance with their plain meaning. If the people have adopted a mistaken policy in their Constitution, the only remedy is an amendment of that instrument." The intention or purpose in incorporating such a provision in the Constitution is obvious. It was to curb the improvident creation of debts by counties, and thus protect the taxpayers against excessive and unnecessary burdens. It may well be that another reason (one suggested by appellees' counsel) also influenced the framers of the Constitution, namely, that the credit of the counties might be strengthened, and the counties thereby possibly enabled to secure reductions in the rates of interest to be paid on their obligations; but, however this may have been, it is reasonable and proper, in considering the question in hand, that the first mentioned purpose should be borne in mind.

Upon its face section 224 would seem to afford no room for construction. Its language is clear and explicit and self-construing. But it is thought that the question at issue becomes a complicated one when viewed in the light of section 215 of the Constitution, and it is therefore appropriate at this point to bring that section into view. It provides "No county in this state shall be authorized to levy a greater rate of taxation in any one year on the value of the taxable property therein than one-half of one per centum; * * *...