Isbell v. Shelby County

• Decision Date: 16 April 1938
• Docket Number: 7 Div. 510.
• Citation: 235 Ala. 571,180 So. 567
• Parties: ISBELL v. SHELBY COUNTY ET AL.
• Court: Alabama Supreme Court

180 So. 567

235 Ala. 571

ISBELL v. SHELBY COUNTY ET AL.

7 Div. 510.

Supreme Court of Alabama

April 16, 1938

Appeal from Circuit Court, Shelby County; W. W. Wallace, Judge.

Bill by Barney Isbell against Shelby County, the Board of Revenue and the Treasurer of said County, to enjoin issuance of proposed warrants, and cross-bill by respondents for a declaratory judgment. From a decree favorable to the respondents, the complainant appeals.

Affirmed as corrected.

BROWN J., dissenting.

Barney Isbell, of Columbiana, pro se.

Wm Alfred Rose and Bradley, Baldwin, All & White, all of Birmingham, amici curiæ.

L. H. Ellis, of Columbiana, for appellees.

GARDNER Justice.

In Lyon v. Shelby County, 177 So. 306, this court considered and approved substantially the same plan proposed by the county, as here presented, for financing its proportion (approximately one-third) of the cost of construction of one of the county's highways under what is commonly known as the "three way project."

Some additional considerations are advanced in this renewed attack upon the plan which require brief treatment. It is proposed to finance the county's pro rata of expense out of that portion (one-half of one-third) of the gasoline tax allotment provided for by Schedule 156.11 of the Revenue Act of 1935, Gen.Acts 1935, pp. 441, 512, § 348, wherein there is a provision for an agreement of co-operation between the counties and the State Highway Department as to these funds to be used in the construction and maintenance of public roads and bridges, evidently intended to facilitate the work and aid the counties in the matter of road construction, which originally was primarily a county obligation.

The statute provides that the county has the authority to "direct the State Tax Commission to pay over to the State Highway Department such part of said funds as may be agreed upon by the * * * county, and the Governor." Taking advantage of this statutory provision, the original agreement contemplated the payment to, or upon the order of, the State Highway Department of $2,500 per month out of this allotment of the gasoline tax. But it was found that, if the work was to be expedited and the road completed in a reasonable time, it was necessary that the county make available its agreed contribution in cash. Thereupon the county agreed with the Highway Department upon the plan here proposed, that is, the issuance of interest-bearing warrants payable out of this particular fund, from sale of which the county's cash contribution to the Highway Department for construction of the road may be obtained. The State Highway Department and the county have agreed, and the Governor has approved.

The warrants to be issued are not to be a charge on the general credit of the county, and so expressly disclose on their face, but are payable solely from the funds which form a part of the proceeds of a state excise tax, allocated by statute to the counties for the construction and maintenance of roads and highways. They in no manner affect the general revenues of the county, nor the proceeds of any levy by the county for special county purposes under the Constitution. The proposed warrants, therefore, do not fall within any constitutional prohibition (In re Opinion of the Justices, 230 Ala. 673, 163 So. 105; Lyon v. Shelby County, supra; Herbert v. Perry, Ala.Sup., 177 So. 561), and the question for consideration rests upon the matter of statutory construction.

The plan is not one to borrow money. The county has now allocated to it these funds for a definite purpose, the construction and maintenance of public roads. It has the expectancy of a continuation of such allocation, and that of consequence the fund will continue. And the county has the unquestioned right to contract with the State Highway Department for the construction of this public road at the agreed price and to issue, in payment therefor to said Highway Department, its interest-bearing warrants. Littlejohn v. Littlejohn, 195 Ala. 614, 71 So. 448; Board of Revenue v. Merrill, 193 Ala. 521, 68 So. 971; Talley v. Commissioners' Court, 175 Ala. 644, 39 So. 167; Lyon v. Shelby County, supra.

And under such a contract further auditing by the county would not be essential. Talley v. Commissioners' Court, supra.

Looking through form to substance, it is difficult to see wherein the plan here proposed differs materially from that just mentioned. In the one the warrants are issued to the contractor, and in the other the warrants, though of a nonnegotiable character, are sold by the contractor or at his suggestion, and the proceeds used to pay him in cash, and the purchaser rather than the contractor is delayed in payment of the cash. The purchaser is compensated for the delay by way of interest on the warrants, just as would be the contractor had the warrants been issued direct to him. These instruments are not warrants of the county in the true sense, but are merely evidences of transfer and pledge of a definite fund to their payment. Their issuance amounts in effect to a sale by the county of the anticipated revenue to be derived from the gasoline tax allocated by the state to the county for these purposes. There is no county obligation to pay, and the funds received from a sale of these instruments, denominated warrants, are in no sense a borrowing of money.

The authorities cited, therefore, relative to the authority of municipal organizations to borrow money (Allen v. Intendant, etc., of La Fayette, 89 Ala. 641, 8 So. 30, 9 L.R.A. 497; Simpson v. Lauderdale County, 56 Ala. 64; McQuillin's Law of Municipal Corporations, 2d Ed. § 2318; Mayor, etc., of Nashville v. Ray, 86 U.S. 468, 19 Wall. 468, 22 L.Ed. 164) are without application.

The question of interest bears a relation to the cash and credit price of an article sold. The warrants, by reason of their deferred status, are worth less than par, and the contractor or purchaser may state his price in terms of a necessary discount, and the fact that such discount may represent a given rate of interest does not make such a transaction a loan of money.

It is suggested that the proposed plan is variant from that provided in Schedule 156.11, supra, in that here the funds allocated to the county are paid by the State Tax Commission to the county treasurer, while the language of the act indicates a plan whereby the funds never reach the county but are paid over by the commission directly to the State Highway Department. But this is a difference in form only and not of substance, an administrative feature with which the act was not concerned, except in a general way.

But the argument overlooks the purpose of the act, and the character of authority possessed by the governing body of the county. The Highway Department and the county have agreed that the funds be sent to the county treasurer and then paid out. There is nothing in the act indicating any restriction whatever of the general power of the county over the matter of road construction. The general statute, section 1347, Code 1923, stands wholly unaffected, and must be considered in this connection. By that statute the governing county body is given unlimited jurisdiction and powers as to the construction and maintenance of public roads and bridges, and may make and enter into such contracts as may be necessary, or as may be deemed necessary or advisable by such courts or boards for such purpose, provided the payment of the contract price does not extend beyond ten years. The lawmakers could have given power in no more comprehensive terms than they employed in this statute, and the courts have no right to ignore it, or refuse to recognize its significance.

There is here no charge of fraud or unfair dealings, but good faith is acknowledged, and the time limit of the statute is observed. It is clear enough, therefore, that under the broad language of this statute,...