Hotchkiss v. Marion

• Decision Date: 18 April 1892
• Citation: 29 P. 821,12 Mont. 218
• Parties: HOTCHKISS v. MARION et al.
• Court: Montana Supreme Court

29 P. 821

12 Mont. 218

HOTCHKISS v. MARION et al.

Supreme Court of Montana

April 18, 1892

Appeal from district court, Missoula county; CHARLES S. MARSHALL Judge.

Suit by L. C. Hotchkiss against J. E. Marion and others to restrain the issue of county bonds. There was a demurrer to the complaint, which was sustained, and plaintiff appeals. Affirmed.

McConnell Clayberg & Gunn, for appellant.

Henri J. Haskell, Atty. Gen., and F. C. Webster, Co. Atty., for respondents.

BLAKE C.J.

The complaint alleges that the board of county commissioners of Missoula county, of this state, made, September 11, 1891, the following order: "It is therefore ordered by said county commissioners that coupon bonds to the amount of $150,000 be issued on the credit of said county for the purpose of redeeming outstanding county warrants to that amount.

Such bonds shall be of the denomination of $1,000 each, and shall bear date January 1, 1892, and shall be redeemable and payable in twenty years after the date thereof, and shall bear interest at the rate of six per cent. per annum, and such interest shall be represented by interest coupons payable semiannually on the 1st days of January and July of each year; and each bond, and all coupons attached thereto, shall be signed by the chairman of the board of county commissioners, and the treasurer of said county, and each bond shall also be sealed and countersigned by the clerk of said county, and each coupon shall be signed by the said clerk. Each bond issued shall be registered by said county treasurer in a book provided for the purpose, which shall show the number and amount of each bond and to whom issued. The said county clerk is hereby ordered to give notice for said county commissioners, by advertisement in the official newspaper published in said county, and also in one or more newspapers published in the city of New York, state of New York, for a period of not less than thirty days prior to the time said bonds are to be sold for sealed proposals, which shall state the amount of such bonds for sale; and the parties offering the highest price therefor shall be entitled to receive the amount of such bonds which he or they may offer to buy, but no bonds shall be sold for any price less than the par value thereof. The 7th day of December, 1891, at 10 o'clock A. M., is fixed as the day for receiving said proposals and selling said bonds. Each bidder to submit a certified check for the sum of $2,500, as an evidence of good faith in bidding." Said board made, December 8, 1891, this order: "The clerk was ordered to advertise for bids for the sale of Missoula county bonds to the amount of $150,000 in the official newspaper of the county, and also in one or more newspapers published in the city of New York. Said bonds are to be issued for the purpose of redeeming outstanding county warrants to that amount. Bonds to be redeemable and payable twenty years after the date thereof, and shall bear interest at the rate of six per cent., payable semiannually on the 1st days of July and January, to be issued in denominations of not less than $1,000, and to be sold at not less than par value. Sealed bids will be received up to January 25, 1892, at 2 P. M. Each bid must be accompanied by a certified check for $2,500, which amount to be forfeited in case of the refusal of the successful bidder to take bonds." It is also alleged that the date of the sale of the bonds was changed to the 23d day of February, 1892. The county clerk caused the proper advertisement for the bids to be published. and E. H. Rollins & Sons were declared to be the purchasers of the bonds. The floating indebtedness of the county at this time was about $172,171.32, which was evidenced by county warrants. The plaintiff avers that the board did not submit the question of the issuance of the bonds to the qualified electors of the county, and that its action is without legal authority and void. It is further alleged that the board of commissioners will, unless restrained by the court, issue the bonds to the purchasers, and proceed to levy and collect taxes for the purpose of paying the interest thereon, and provide a sinking fund for the payment of the principal. The court below, upon the reading and filing of the complaint, granted a temporary restraining order, and enjoined the county commissioners, county clerk, and county treasurer from selling, transferring, or issuing the bonds, or performing any acts in relation to the same. Afterwards the demurrer to the complaint, upon the ground that the facts therein stated did not constitute a cause of action, was sustained by the court, and the injunction was dissolved. The plaintiff declined to amend his pleading, and judgment was entered for the defendants.

One inquiry is presented for our consideration: Do the constitution and laws of the state require the board of commissioners of Missoula county to submit to the voters the question of the issuance of said bonds? We will review the financial legislation of the territory affecting counties, in order that the matters which have been discussed by counsel may be clearly understood. The fourth legislative assembly, by an act approved November 22, 1867, authorized the county commissioners of the several counties of the territory to fund the debts thereof by the issuance of bonds in lieu of the outstanding orders. St. 4th Sess. p. 234. It is recorded in our history that these statutory provisions were repeatedly executed, and bonded indebtedness in a large amount was incurred by counties, and discharged. The financial condition of the territory improved with her growth, and many special laws were passed to secure the same object, by reason of the high rate of interest which was fixed in the first statute. We refer to some of these enactments to show that they contained similar provisions: Lewis and Clarke county: St. 7th Sess. p. 640; 12th Sess. p. 95; 13th Sess. p. 138. Missoula county: St. 11th Sess. p. 91; 12th Sess. p. 88; 13th Sess. p. 127. Jefferson county: St. 11th Sess. p. 96; 13th Sess. p. 132. By an act approved March 6, 1883, the legislative assembly enlarged the powers of the county commissioners in issuing bonds to redeem the outstanding indebtedness of their respective counties. St. 13th Sess. p. 92. It was substantially a codification of the general requirements of the special laws, and was passed to avoid the necessity for this legislation, which arose at every session. Some of the sections of this act were amended in the year

1887, and no further modification has been made by the legislative assembly. It is admitted that the board of county commissioners of Missoula county has complied in all respects with the law as it appears in the Compiled Statutes. From the year 1867 to the present time the authority of a board of county commissioners to issue bonds to redeem the outstanding warrants, orders, and bonds of a county, has been frequently exercised without any statutory requirement to submit the question to the electors. Comp. St. div. 5, § 808. There has been, however, a marked distinction upon this subject concerning the issuance of bonds by the county commissioners to erect public buildings or contract a loan. The first legislative assembly of the territory, by an act approved February 9, 1865, gave the boards of county commissioners the power to borrow money upon the credit of the county "for the erection of county buildings, or to meet the principal expenses of the county in case of a deficit in the county revenue." St. 1st Sess. p. 501, § 14. But a board could not borrow money for these purposes "without having first submitted the question of such loan to a vote of the electors of the county." St. 1st Sess. p. 502, § 15. This language remained without any change until the admission of the territory into the Union. Comp. St. div. 5, §§ 756, 795.

Let us compare this legislation, which was familiar to the members of the constitutional convention, with the provisions of our constitution: "Private property shall not be taken or sold for the corporate debts of public corporations, but the legislative assembly may provide by law for the funding thereof, and shall provide by law for the payment thereof including all funded debts and obligations, by assessment and taxation of all private property, not exempt from taxation, within the limits of the territory over which such corporations, respectively, have authority." Article 12, § 8. "No county shall incur any indebtedness or liability for any single purpose to an amount exceeding ten thousand dollars ($10,000) without the approval of the majority of the electors thereof voting at an election to be provided by law." Article 13, § 5. The constitution, in these plain terms, has empowered the legislative assembly to provide by law for the funding of "all funded debts and obligations" of a county. The legislative assembly of the state, by an act approved March 4,...