Prickett v. City of Marceline

• Decision Date: 21 January 1895
• Citation: 65 F. 469
• Parties: PRICKETT v. CITY OF MARCELINE.
• Court: U.S. District Court — Western District of Missouri

65 F. 469

PRICKETT v. CITY OF MARCELINE.

United States Circuit Court, W.D. Missouri, Western Division.

January 21, 1895

Suit on municipal bonds. The city of Marceline was incorporated as a city of the fourth class under the Missouri statutes in March, 1888. At that time it was but a village with few people, and its territory was little more than farming lands. Its board of council levied no taxes for city purposes that year. The Santa Fe Railroad was located through this town and established there a division. Extensive coal fields adjacent to the city were soon opened up and developed. These things collected there quite a number of railroad operatives and miners, until in 1890 the census showed a population of this character of about 1,900. Its council, in June, 1890 submitted to the voters of the city the proposition to authorize the issue of bonds to the amount of $6,000, in denominations of $500 each, for the purpose of constructing therein a plant for lighting the city with electricity. The proposition was voted, and on the 2d day of July, 1890, the bonds were issued, running for 20 years, with the right of earlier redemption, and with semiannual coupons of interest attached, payable January 1st and July 1st of each year. The bonds provided on their face that in case of default in payment of any of the interest coupons, at the election of the holder of the bonds, the principal and remaining coupons should become due and payable. The interest was paid by the city for two years, when the city declined to make further payment. The plaintiff, as holder of four of said bonds aggregating the sum of $2,000 of principal, with attached coupons, and of other coupons detached from other bonds brings this action to recover thereon. The defendant answers, admitting the issue of the bonds, but pleads that the same are invalid, for the reason that the then indebtedness of the city, together with the said bonds so attempted to be issued, in the aggregate, exceed 5 per cent. of the value of the taxable property within the said city of Marceline, ascertained by the assessment next before the last assessment of property of said city for state and county purposes previous to the attempt to incur said indebtedness, said indebtedness not being for the erection of a courthouse or jail. A jury being waived, the case is submitted to the court on the proofs. The evidence in the case shows that the assessed value of the property within said city, under the assessment of 1888, which was next before the last assessment of property in said city for state and county purposes, did not exceed $80,000.

H. A. & A. C. Clover, for plaintiff.

Harry K. West and Lathrop, Morrow, Fox & Moore, for defendant.

PHILIPS District Judge (after stating the facts).

It is important at the threshold of this discussion that the preliminary question should be disposed of as to what particular assessment must be referred to in ascertaining the valuation of the taxable property within the city, within the meaning of the state constitution, admitting the creation of an indebtedness of $6,000, demanded by the issue of these bonds. The state constitution (article 10, Sec. 12) is as follows:

'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 two-thirds 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 on the value of the taxable property therein, to be ascertained by the assessment next before the last assessment for state and county purposes, previous to the incurring of such indebtedness; provided, that with such assent, any county may be allowed to become indebted to a larger amount for the erection of a courthouse or a jail. And provided further, 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 fails due, and also to constitute a sinking fund for payment of the principal thereof, within twenty years from the time of contracting the same.'

The value of the taxable property is 'to be ascertained by the assessment next before the last assessment for state and county purposes, previous to the incurring of such indebtedness. ' The petition avers that the bonds were 'made and issued * * * on or about the 2d day of July, 1890,' and the bonds on their face show that they were executed on said day; and, in fact, they are by their terms made to bear interest from that date, and the petition discloses the fact that the holders of the bonds collected and received interest thereon from the 1st of July, 1890.

The contention of complainant's counsel that the debt did not attach until the 6th day of August, 1890,-- the date when the state auditor indorsed his certificate of registration on the bond,-- is, in my opinion, not tenable. The statute (section 847, Rev.St.Mo. 1889) provides that:

'Before any bond hereafter issued by any county, city, town, village or school district, for any purpose whatever, shall obtain validity, or be negotiated, such bond shall first be presented to the state auditor who shall register the same,' etc.

The purpose of this statute was to invalidate and obstruct the negotiation of any such bonds unless so registered. But, when registered, the bond 'issued by any county, city,' etc., unquestionably relates back to the date of the issue, and becomes operative therefrom. The indebtedness, therefore, was created of date July 2d, 1890.

When was the last assessment prior to July, 1890, 'for state and county purposes'? It is confounding the marked distinction between the act of extending the assessment for taxation by the city officers for city purposes, to suggest that the latter constitutes an 'assessment,' within the meaning of the constitution. The assessment of property for state and county purposes is conducted alone by and intrusted to the county assessor, the state and county boards of equalization. While property held on June 1st of each year is liable for taxes for the ensuing year (section 7569, Rev.St.Mo.), the assessor of the county is required, 'between the first day of June and January, * * * to take a list of the taxable personal property in his county, town or district, and assess the value thereof, as provided (section 7531, Id.). And by section 7552 it is provided that:

'Real estate shall be assessed at the assessment which shall commence on the first day of June, 1881, and shall only be required to be assessed every two years thereafter. Each assessment of real estate so made shall be the basis of taxation on the same for the two years next succeeding.'

The state constitution (article 10, Sec. 18) provides that:

'There shall be a state board of equalization consisting of the governor, state auditor, state treasurer, secretary of state and attorney general. The duty of said board shall be to adjust and equalize the valuation of real and personal property among the several counties in the state, and it shall perform such other duties as are or may be prescribed by law.'

This provision of the constitution if self-enforcing, without the aid of legislative enactment. Hannibal & St. J.R. Co. v State Board of Equalization, 64 Mo. 294. The county assessor is required to make out and return to the county court, on or before the 20th day of January in every year, a copy of the assessor's book; and the clerk of the county court is required to make out, on or before the 20th day of February, an abstract of the assessment book, etc., and forward the same to the state auditor, to be laid before the state board of equalization. Rev.St.Mo. Sec. 7571. The state board of equalization meets at the capitol of the state on the last Wednesday of February, 1884, and every two years thereafter, when the state auditor is required to lay before it the abstracts of all taxable property in the state returned to him by the county clerks; whereupon said board proceeds to equalize the valuation of the taxable property among the respective counties by adding 'to the valuation of the property, real and personal, in each county, which they believe is valued below its true value in money, such per centum in each case as will raise it to its true value. Second, they shall deduct from the valuation of the property, real or personal, of each county, which they believe to be valued above its real value in money, such per centum as will reduce the same in each case to its true value. ' Id. Secs. 7513, 7514. After the state board has completed its labors, the state auditor is required to transmit to each county clerk 'the per centum added to or deducted from the valuation of the property of his county, specifying the percentage added to or deducted from the real property and the personal property, respectively, and also the value of the real and personal property of his county as equalized by said board; and the said clerk shall furnish one copy thereof to the assessor, and one copy to be laid before the annual county board of equalization. ' And the state auditor is required to...