Keeney v. The County Court Of Kanawha County

• Decision Date: 12 June 1934
• Docket Number: (CC 510)
• Citation: 115 W.Va. 243
• Court: West Virginia Supreme Court
• Parties: Theo Keeney v. The County Court of KanawhaCounty

115 W.Va. 243

Theo Keeney

v. The County Court of KanawhaCounty

(CC 510)

Supreme Court of Appeals of West Virginia.

Submitted June 5, 1934.

Decided June 12, 1934.

Counties

The issuance by a county court of refunding bonds to retire existing road bonds of a magisterial district under article 2 of chapter 13 of the Code, does not create a new indebtedness, and levies to provide debt service for the new (refunding) bonds may be laid to the same extent and with like effect as they could have been laid for the original bonds.

Certified from Circuit Court, Kanawha County.

Suit by Theo Keeney against the County Court of Kanawha County. A demurrer to the bill of complaint was sustained, and ruling certified for review.

Affirmed.

Brown, Jackson & Knight, for plaintiff. Dale G. Casto, for defendant.

Kenna, Judge:

Theo Keeney filed his bill of complaint in the circuit court of Kanawha County seeking to enjoin the county court of Kanawha County from issuing a series of refunding bonds in the aggregate amount of $516,000.00 to take the place of the same total outstanding road bonds of Cabin Creek District. The bill of complaint alleges that the original issue of $550,000.00 was regularly approved at an election on August 15, 1929; that pursuant to that approval, on September 1, 1929, the bonds were issued and on September 21, 1929, were sold to the Sinking Fund Commission at par and accrued interest; that on April 10, 1934, the indebtedness represented by the bonds had been reduced to $516,000.00, and on that day, the county court of Kanawha County entered its order providing for the refunding operation. The order of the county court is set out in the bill of complaint and from it, it appears that the purpose of the refunding operation is to reduce the interest rate, which was five and one-half per cent on the old bonds, to five and one-quarter per cent, which is the rate provided for the new. The bill alleges that it is the purpose of the county court to meet the sinking fund and interest charges of the new bonds by an unlimited ad valorem tax upon the properties in Cabin Creek District and that if this be done, or permitted, the result will be that the property of the taxpayers of that district will be subjected to unlawful, unconstitutional, unjust and inequitable amounts of taxes. The bill, therefore, prays to enjoin the issuance of the refunding bonds.

The defendant county court appeared and interposed a demurrer in writing to the bill of complaint, assigning (1) that neither the proposed issuance of bonds nor the laying of unlimited levies to pay the sinking fund and interest charges thereof is repugnant to the constitution of West Virginia, and (2) that the proposed refunding bonds do not create a new debt nor change the status in respect to taxation of the indebtedness of Cabin Creek District.

The circuit court sustained the demurrer to the bill of complaint, and certified to this court the single question of whether or not the refunding operation creates a new debt of the magisterial district, so that the levies for sinking fund and interest charges would have to be brought within the limited levies prescribed by law, or whether the refunding operation simply changes the form of the old debt, and, for the purposes of debt service, leaves it in its status quo ante the refunding operation, so that its debt service requirements can be levied in excess of the limitations, in the event such levies prove to be necessary in order to prevent the impairment of the contractual obligation pre-existing the adoption of the tax limitation amendment.

We...