Reed v. City of Cedar Rapids

• Decision Date: 14 November 1907
• Citation: 113 N.W. 773,136 Iowa 191
• Parties: NANCY REED, Appellant, v. THE CITY OF CEDAR RAPIDS ET AL., Appellees
• Court: Iowa Supreme Court

113 N.W. 773

136 Iowa 191

NANCY REED, Appellant, v. THE CITY OF CEDAR RAPIDS ET AL., Appellees

Supreme Court of Iowa, Des Moines

November 14, 1907

Appeal from Cedar Rapids Superior Court.--HON. JAMES H. ROTHROCK Judge.

SUIT in equity to enjoin defendants from issuing, delivering and selling a bond issue of the said city to the amount of $ 125,000. The trial court dismissed the petition and plaintiff appeals. Reversed and remanded.

Reversed and remanded.

John A Reed, for appellant.

Jas. W. Good and H. E. Spangler, for appellee.

OPINION

DEEMER, J.

Pursuant to vote of the electors of the defendant city of Cedar Rapids, which is a special charter city, and to resolutions and orders of the city council, the defendant has issued $ 125,000 in negotiable bonds for the purpose of building a city hall, and through its treasurer is offering the same for sale upon sealed proposals. This action is to restrain the sale and delivery of the bonds, and the questions presented are succinctly stated by appellant's counsel in these words: "(1) Does section 54 of the city charter authorize the city to borrow money for the purpose of building a city hall and to issue bonds therefor? (2) Has the city authority to issue negotiable bonds or bonds in the form specified by Ordinance No. 763? (3) Does chapter 49 of the Acts of the Thirty-first General Assembly apply to cities acting under special charter, and limit the indebtedness of special charter cities to 1 1/4 per centum of the actual value of the taxable property within the city?"

The value of the taxable property within the city is $ 19,885,085, and its indebtedness at the time the bonds in question were issued, while not agreed to by the parties to this litigation, may for the purposes of the case be treated as $ 700,000. Chapter 49, Acts 31st General Assembly, provides, in substance, that no municipal corporation shall be allowed to become indebted to an amount exceeding in the aggregate the amount of 1 1/4 per centum of the actual value of the taxable property within such corporation; the amount of such taxable property to be ascertained by the last State and county tax list previous to the incurring of such indebtedness. If this act applies to special charter cities, then the bond issue in question is in excess of the amount for which the defendant city may become indebted. By section 933 of the Code, it is provided, in substance, that no laws relating to the powers, duties, liabilities, or obligations of cities or towns shall in any manner affect or be construed to affect cities while acting under special charters, unless the same have special reference to or are made applicable to such cities. Chapter 49, Acts 31st General Assembly, repealed chapter 43, Acts 30th General Assembly, which amended section 1306b of the Code Supplement of 1902, and this expressly included special charter cities. But the act in question makes no reference to such cities, and this omission is of great significance in arriving at the legislative intent and purpose. It is clear, we think, that chapter 49, 31st General Assembly, has no reference to special charter cities, and that the only limitation upon the amount of indebtedness which they may incur is the constitutional one of 5 per centum upon the taxable value, which in special charter cities is the actual value. See article 11, section 3, Constitution, and Halsey v. Belle Plaine, 128 Iowa 467, 104 N.W. 494. This being true, the bonds were not in excess of either statutory or constitutional limitation.

II. By section 54 of the charter of defendant city, it is provided: "The said city council is hereby authorized to borrow money for any object or purpose in their discretion, and to pledge the faith of the city for the payment thereof, provided the question of borrowing is first submitted to the legal and qualified voters of the city, a notice of the length of time, as in city elections, being first given, stating the manner and object of the loan, and if a majority decide in favor of said loan, then the said council shall by ordinance establish a sinking fund to provide the means to pay any indebtedness created by virtue of the authority granted in this section." As all the preliminary and requisite steps provided for in this section were taken, it is manifest that the city had express power to borrow money, and, as a necessary incident thereto, it could issue proper evidences of such loan to the person or persons making it.

III. The remaining question is: Had it authority to issue, sell and negotiate long-time negotiable bonds?...