In re Town of Afton
| Decision Date | 10 November 1914 |
| Docket Number | 6710. |
| Parties | IN RE TOWN OF AFTON. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
Section 1, c. 117, Sess. Laws 1910, is in conflict with section 26 art. 10, of the Constitution, and is void.
The officials of the town of Afton issued warrants to take up an indebtedness in an amount approximating $8,000, created in excess of the revenue and income provided for the payment of current expenses of said town for the years in which said warrants were issued. Held, that said indebtedness was created in violation of section 26, art. 10, of the Constitution, and the same is a nullity and constitutes no liability against such municipality.
Said warrants, having been issued in violation of section 26, art 10, Const., are a nullity, and the court is powerless to validate same.
The warrants issued as evidence of said indebtedness, being utterly void for want of power to create said indebtedness were not subject to ratification, and could not be made valid by a vote of three-fifths of the legal voters of said municipality, nor by a decree of the court, since the power to authorize originally is a condition precedent to the power to ratify subsequently.
One who deals with a municipality does so with notice of the limitations on it or its agents' powers. All are presumed to know the law, and those who contract with a municipality or furnish it supplies do so with such knowledge; and, if they go beyond the limitations imposed, they do so at their peril.
It is plain that the intention of section 26, art. 10, of the Constitution, is to require municipalities to carry on their corporate operations upon a cash basis. The revenues and income provided for each year must pay the expenditures of such year; and any debt or contract sought to be created in excess of such revenues and income provided creates no liability against such municipality, unless it be authorized by a vote of three-fifths of the legal voters before or at the time of creating same, and comes within the limitations therein expressed.
Error from District Court, Ottawa County; Preston S. Davis, Judge.
Application of the Town of Afton, Ottawa County, to determine existence character, and amount of its outstanding indebtedness, and to issue bonds to fund the same. From an adverse judgment, the Town brings error. Affirmed.
Chas. A. Loomis, of Kansas City, Mo., for plaintiff in error.
This proceeding in error is prosecuted from a judgment of the district court of Ottawa county, refusing to approve certain alleged indebtedness and warrants issued as evidence thereof, created by the town of Afton, and in refusing to validate said outstanding warrants by decree of said court. On the 19th day of January, 1914, the town of Afton, through its officers, filed its amended petition in the district court, wherein it is alleged in substance that on said date said town had an outstanding indebtedness aggregating $7,950.60, evidenced by certain warrants issued in excess of the annual revenue and income of said town in payment of services and material furnished said town; that said town received the benefit of same; that the amount paid for such services and material was fair and reasonable; that said indebtedness was ratified and approved by said town at an election held for that purpose on the 15th day of April, 1913, under and by virtue of section 26, art. 10, of the Constitution, and an act of the Legislature, approved March 28, 1910, entitled "An act providing for the validation of certain outstanding warrants in incorporated towns and cities, etc."; that said town has no funds with which to pay said outstanding warrants; that by an ordinance, passed by the president and board of trustees of said town on the 21st day of April, 1913, the negotiable coupons of said town, in an amount aggregating $8,000, were authorized and directed to be issued upon the approval by the court and a judgment validating said indebtedness. Ordinance No. 19, referred to in said petition, authorized the calling of a special election, and states that the purpose of same is to issue bonds in the sum of $8,000, to pay the indebtedness of said town, which was evidenced by warrants issued in excess of the annual revenue and income provided. An itemized statement of said warrants appears in the record, running from March, 1910, which shows that they were issued to pay the current expenses of said town for the years 1910 and 1911. A copy of the official ballot, as disclosed by the record, shows that the purpose of said bond issue was to pay an indebtedness evidenced by warrants issued in excess of the annual revenue and income provided by the proper authorities for paying the running expenses of said town. Ordinance No. 120 of said town, providing for the issuance of said negotiable coupon bonds, also shows that the purpose is to pay an indebtedness of said town, evidenced by said warrants issued in excess of the income and revenues provided.
Upon a hearing of said matter by the court, the relief prayed was denied, upon the ground and for the reason that said indebtedness was created in excess of the revenue and income of said town, and the warrants issued as evidence thereof were issued in payment of services and material furnished said town for the fiscal year in which said material and services were so furnished; that said indebtedness was incurred without the assent of three-fifths of the voters of said town first having been obtained; that said indebtedness was therefore void and of no force and effect, as the debt was created in violation of sections 26 and 27 of article 10 of the Constitution, and the court had no jurisdiction to grant the relief sought. The court further held that chapter 117, Sess. Laws 1910, was in conflict with section 26, art. 10, of the Constitution, and was void.
The petitioner has filed its petition in error in this court, with original case-made attached. The only errors assigned, which need to be considered, are: (1) That the decision of the court is contrary to law. (2) That the decision of the court is contrary to the law and the evidence. This record presents two propositions for our consideration: (1) Is the act of the Legislature, contained in chapter 117, Sess. Laws 1910, in conflict with section 26, art. 10, of the Constitution? (2) Is the indebtedness and the warrants issued as evidence thereof, sought to be refunded by this proceeding, void, for the reason that the same was an attempt to create a debt contrary to section 26, art. 10, Const., and contrary to section 9, c. 80, Sess. Laws 1910-11?
Section 26, art. 10, Const., provides:
"No county, city, town, township, school district, or other political corporation, or subdivision of the state, shall be allowed 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 three-fifths of the voters thereof, voting at an election, to be held for that purpose, nor in cases requiring such assent, shall any indebtedness be allowed to be incurred to an amount including existing indebtedness, in the aggregate exceeding five per centum of the valuation of the taxable property therein to be ascertained from the last assessment for state and county purposes previous to the incurring of such indebtedness: Provided, that any county, city, town, township, school district, or other political corporation, or subdivision of the state, incurring any indebtedness, requiring the assent of the voters as aforesaid, shall, before or at the time of doing so, provide for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof within twenty-five years from the time of contracting the same."
It cannot be questioned that the alleged indebtedness evidenced by the warrants sought to be refunded by this proceeding was...
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