Riddell v. Boone County

• Decision Date: 28 January 1919
• Parties: RIDDELL v. BOONE COUNTY ET AL.
• Court: Kentucky Court of Appeals

208 S.W. 323

183 Ky. 77

RIDDELL v. BOONE COUNTY ET AL.

Court of Appeals of Kentucky.

January 28, 1919

Appeal from Circuit Court, Boone County.

Action by N.E. Riddell as county attorney and as a taxpayer, etc against Boone County and another, to enjoin an exchange of county bonds. From a dismissal of the petition on general demurrer, complainant appeals. Reversed.

N. E Riddell, of Burlington, for appellant.

P. E Cason, of Burlington, for appellees.

SAMPSON J.

In 1916 Boone county voted a bond issue of $200,000 for the construction and reconstruction of its roads and bridges. The bonds were directed to be issued in denominations of $500 each, and to draw 4 per cent. interest from their date payable semiannually on the 1st day of July and January of each year. The fiscal court authorized a sale of the bonds serially, and bonds No. 1 to and including bond No. 187 were sold for par, accrued interest, and a small premium. Thereafter, and on April 2, 1918, the fiscal court having discovered that the whole bond issue of $200,000 could not be sold upon a 4 per cent. interest basis, as was authorized, the court entered the following order:

"Since the $200,000 of the county road bonds were to draw 4 per cent. interest, the court found immediately thereafter that the bonds could not be sold at par for the time same were to become due, and the court authorized the sale of said bonds with the understanding that if the rate of interest should be increased at any time the owners of the bonds that had been issued heretofore could, by the holders thereof, be exchanged for the bonds drawing the greater rate of interest, and the court hereby authorizes and directs that the said bonds be reissued drawing 5 per cent. interest from July 1, 1918, and that the holders of the present issue be permitted to exchange the 4 per cent. bonds owned by them for the 5 per cent. bonds of the new issue, and that the remainder of the said bonds be sold as the court may direct, and the committee heretofore appointed will not sell any of said bonds of the first issue, except enough to pay the claims against the bond fund, and these bonds to be sold at par and accrued interest and the purchasers to have the right to exchange those bonds for those of the new issue. The new issue to be in denominations of $500, numbered and due as follows with interest payable semiannually: [Bond numbers, when due, and the amount]."

At the time this order was entered $93,500 worth of bonds had been sold and delivered and were then held by the purchasers. To enjoin the county and fiscal court from exchanging the 5 per cent. bonds for the old 4 per cent. bonds held by the purchasers, the county attorney, Riddell, as a taxpayer and in his official capacity, instituted this action in the Boone circuit court, setting forth all the facts, including a history of the proceedings in the fiscal court, and copies of the orders made by that court, and prayed an injunction, restraining the county and the court from making the exchange of the bonds. A general demurrer was filed to the petition and sustained by the court, and the petition was dismissed. The county attorney prosecutes this appeal.

The only question is: Did the county, through its fiscal court have authority and legal power to order an exchange of the 5 per cent. bonds for the outstanding 4 per cent. bonds? Could the fiscal court, without consideration, change the contract between the county and the bondholders by increasing the rate of interest upon the bonds? The fiscal court, like municipalities, can speak only through its...