Lasater v. Lopez

• Decision Date: 10 December 1919
• Docket Number: (No. 3215.)
• Parties: LASATER et al. v. LOPEZ, County Treasurer, et al.
• Court: Texas Supreme Court

217 S.W. 373

LASATER et al. v. LOPEZ, County Treasurer, et al.

(No. 3215.)

Supreme Court of Texas.

December 10, 1919.

Error to Court of Civil Appeals of Fourth Supreme Judicial District.

Suit by Ed. C. Lasater and others against Alonzo Lopez, County Treasurer, and others. Judgment for defendants was affirmed by the Court of Civil Appeals (202 S. W. 1039), and plaintiffs bring error. Judgments of the district court and of the Court of Civil Appeals affirmed.

John C. North, of Corpus Christi, Geo. D. Anderson, of Beaumont, and Terrell & Terrell, of San Antonio, for plaintiffs in error.

W. B. Teagarden and Hicks, Hicks, Dickson & Bobbitt, all of San Antonio, and L. Broeter, of Alice, for defendants in error.

W. M. Harris, of Dallas, for interveners.

PHILLIPS, C. J.

The purpose of the suit, instituted by Ed. C. Lasater and other tax payers of Duval County against Alonzo Lopez, County Treasurer, the County Judge, the County Commissioners and Marshall White, was to have declared invalid a series of interest bearing county warrants aggregating $25,000 and maturing in annual installments throughout a period of 16½ years, issued without the authorization of a vote of the property tax payers to White for the construction of public roads in the county under a contract entered into by the Commissioners' Court in the year 1915.

The contract and the warrants were assailed upon various grounds. The several issues of fact, including those of conspiracy and fraud, and whether the warrants were issued by the Commissioners' Court in an attempt to evade the laws governing the issuance of county bonds for public road improvements, were determined by the jury in favor of the defendants. The judgment of the District Court sustaining the warrants, was affirmed by the honorable Court of Civil Appeals.

There is but one question presented here that is, as to the authority of the Commissioners' Court to issue the warrants. This involves the subordinate question of whether the instruments issued were warrants or bonds.

The general question is of public interest in its bearing upon the powers of the Commissioners' Courts. Because of its importance, we granted the writ of error to afford full argument upon it.

The plaintiffs in error urge two propositions: 1. That under existing laws the Commissioners' Court could not validly issue warrants as a means of evidencing the county's debt for the building of the roads and appropriating its revenues for the payment of the debt. 2. That the instruments issued were not warrants, but bonds.

The county was without funds to pay for the construction of the roads, or any considerable part of the expense. As provision for the payment of the warrants, the Commissioners' Court levied an annual tax extending for the period of their maturity and until they should be fully paid. The tax levied did not exceed the amount that could be lawfully assessed for road purposes. The taxable values of the county were more than sufficient to provide the amount of the warrants and interest under the tax imposed.

The case, as it stands in this court, is therefore one where a Commissioners' Court, in the execution of a duty enjoined upon it by law—the construction of public roads in the county, determined in good faith upon the issuance of county warrants, instead of bonds, as a plan of payment; and intending that the instruments should have the effect of warrants, issued them as such, in full observance of the constitutional requirement in respect to lawful provisions for their payment.

Before public securities so issued are invalidated by the judgment of a court, it ought to be plain that their issuance was in violation of law.

The powers of the Commissioners' Courts in relation to the building of county roads, except as to the limits of taxation for the purpose, are governed wholly by the statutes. This follows from the command of the Constitution, Article 11, section 2, that the laying out, construction and repairing of such roads shall be provided for by general laws. It is not necessary to review at length the entire legislation which deals with these powers, but some features of the legislative history of the subject are of importance in considering the question presented for decision.

In the original act organizing the County Courts, the Act of 1846, they were given the power to "lay out and establish, change and discontinue public roads and highways"; erect court houses, jails and other necessary public buildings; and to allow and settle all county accounts and direct their payment. The Commissioners' Courts, created by the Constitution of 1876, succeeded to this power. It was conferred upon them by the Act of July 22, 1876, and, as respects county roads, is now expressed in Article 2241 in the identical language of the original act of 1846.

The first act under the present Constitution which authorized the use of county bonds for the construction of public improvements, was the Act of February 11, 1881. It related only to bonds for the building of court houses in counties not having a court house at the county seat. It was amended by the Act of the Special Session of 1884 so as to include bonds for the construction of jails, and authorize bonds for the erection of court houses generally; and further, in respect to the maturity of the bonds, by the Act of March 27, 1885. In the Revised Statutes of 1895, these acts were substantially embodied as Articles 877 to 881 inclusive.

The issuance of county bonds in relation to the public roads was first authorized by the Act of April 28, 1903,—an amendment of Article 877.

Until 1899 the issuance of county bonds for the purposes authorized by law was within the discretion of the Commissioners' Courts, limited only by the constitutional provisions in respect to the tax levied for their payment. By the Acts of April 12 and May 26, 1899, which were substantially identical, this power was qualified. Those acts provided that the power should not be exercised except as previously authorized at an election by the vote of the qualified property tax payers of the county.

The Act of April 28, 1903, in conferring upon the Commissioners' Courts the authority to issue bonds for public road purposes, imposed this same limitation. It declared that such bonds, or county bonds for the construction of court houses, jails or bridges also therein authorized, should not be issued unless voted as required by the Act of May 26, 1899.

The Act of April 28, 1903, was amended by the Act of March 23, 1911, so as to include the establishment of poor houses and farms in the county as a purpose for which county bonds might be issued as provided in the original act.

The Acts of April 12 and May 26, 1899, constitute Articles 605 to 609 inclusive in the Revised Statutes of 1911. The Act of April 28, 1903, as amended, is Article 610.

As a means of providing county roads and these other public improvements under the authority granted and in performance of the duty enjoined by these several acts, the Commissioners' Courts, under differing limitations, have always possessed the power of taxation. This power was conferred in broad and general terms by the original act under which they were organized. Following the amendment in 1883 of section 9 of Article 8 of the Constitution, they were invested with the general power—exercisable independently of any authorization from the tax payers of the county—to lay a tax of not exceeding fifteen cents on the hundred dollars valuation for road and bridge purposes, and not exceeding twenty-five cents on the same valuation for the erection of public buildings and other permanent improvements. The present statute granting this authority is Article 2242.

Without special authority, a court charged with the administration of the business affairs of a county is without the power to issue negotiable securities, depriving the county of true defenses against the original creditor. It is not a power to be implied. It does not exist unless expressly conferred by law. Such is the established doctrine in this State, and has been from an early time. It was affirmed on the original appeal of San Patricio County v. McClane, 44 Tex. 392, and reiterated in Robertson v. Breedlove, 61 Tex. 316.

County warrants, such as it has been the custom of Commissioners' Courts throughout different periods of the State's history to issue in payment for public improvements, whether interest bearing or not, have not the character of negotiable instruments. This is the universal rule. It was so announced as to interest bearing warrants issued for the erection of a court house and jail, on both the first appeal of San Patricio County v. McClane and in the later consideration of that case in 58 Tex. 243. Such instruments are not intended to have the qualities of commercial paper and do not possess them. County warrants serve, in general, as but a convenient mode for conducting the authorized business of the county. It would be disastrous to counties and municipalities to accord to instruments of such nature that attribute of negotiable bills which protects an innocent holder for value from defenses of which he has no notice.

Authorized county bonds, on the other hand, have a different character. They are, essentially, negotiable securities. The statute —Article 625—which makes the certificate of approval of the Attorney General and their due registration prima facie evidence of their validity, is in aid of their negotiability.

As has been observed, the use of bonds for...