Schneck v. The City of Jeffersonville

• Decision Date: 20 December 1898
• Docket Number: 18,367
• Citation: 52 N.E. 212,152 Ind. 204
• Parties: Schneck v. The City of Jeffersonville et al
• Court: Indiana Supreme Court

52 N.E. 212

152 Ind. 204

Schneck v. The City of Jeffersonville et al

No. 18,367

Supreme Court of Indiana

December 20, 1898

Rehearing Denied Feb. 21, 1899.

From the Clark Circuit Court.

Affirmed.

O. H Montgomery, Merrill Moores, J. K. Marsh and C. P. Ferguson & Son, for appellant.

George H. Voigt, M. Z. Stannard and W. A. Ketcham, for appellees.

Jordan J. Hackney, J.

OPINION

Jordan, J.

Appellant is a resident of this State, and the owner, as alleged, of valuable real property situated in the city of Jeffersonville, Clark county, Indiana, and a taxpayer, of said city. On March 30, 1897, in his own behalf, and, as averred in the complaint, in the behalf of other numerous taxpayers of that city, he instituted this action to obtain an injunction enjoining the city and the members of its common council, and others of its officials, from issuing and selling certain bonds of the city in order to refund an indebtedness of the city of Jeffersonville, evidenced by outstanding bonds previously issued and negotiated by the proper authorities.

Each of the defendants separately demurred to the complaint on the ground that the facts therein alleged were not sufficient to constitute a cause of action. These demurrers were sustained, and the lower court thereby denied the right of appellant, under the facts, to the relief demanded, and this decision is challenged by appellant, under his assignment of errors, and presents the questions involved by the facts set forth in the complaint. The latter discloses the following facts: The city of Jeffersonville is duly incorporated as a city under the general laws of this State relating to the incorporation of cities; and prior to August, 1876, it incurred an indebtedness amounting to $ 87,000, which was created by the city, and in part arose out of the expenses and costs incident to the removal of the county seat of Clark county from Charlestown, and locating the same in the said city of Jeffersonville, and in part was incurred and created by the city in the purchase of real estate within its limits for a court-house and jail, and the construction thereon of these public buildings, rendered necessary by the change or removal of the seat of justice to its new site.

On August 8, 1876, this indebtedness existed in the character of notes, accounts, and city warrants, no part thereof at that time having been funded. On the date last mentioned the common council adopted an ordinance whereby the funding of said indebtedness of $ 87,000 was authorized, and negotiable bonds of the city to that amount were directed, under the ordinance, to be issued and negotiated for the purpose of raising money to pay off said indebtedness as it then existed. Accordingly, on August 9, 1876, in pursuance of said ordinance, the city, through its proper officials, issued its negotiable bonds, maturing in twenty years from said date, bearing interest at seven and three-tenths per cent. per annum, and sold them to raise funds for the purpose directed by said ordinance.

On April 21, 1896, in order to refund, at a lower rate of interest, these bonds, which were then still outstanding and about to mature, the common council, under the provisions of the act of the legislature approved March 2, 1895, (Acts 1895, p. 87) passed an ordinance which is set out in full in the complaint. This latter ordinance recites the facts in regard to the issuing and sale by the city in August, 1876, of the bonds in question, and further states that these bonds were issued and sold for the purpose of raising money to pay off certain obligations of the city, which indebtedness it had incurred for public improvements in said city prior to the amendment of the State's Constitution on March 14, 1881, which prohibits any political or municipal incorporation in this State from becoming indebted in any manner or for any purpose to an amount in the aggregate exceeding two per cent. of the value of the taxable property within such corporation. It is further recited in this ordinance that these bonds were a just and legal indebtedness of the city and that their validity had never been called in question. The ordinance also states that the rate of interest which the bonds bear is excessive, and, as they will become due and payable on August 9, 1896, it is provided and ordained therein that, in order to refund the bonds at a lower rate of interest, and extend the time of payment, the proper city authorities are authorized to issue other bonds to a like amount of those outstanding, to bear date of August 9, 1896, drawing five per cent. interest, etc.

The complaint proceeds to aver that the city, in pursuance of this last mentioned ordinance, unless enjoined, will issue and sell these refunding bonds, as provided by the ordinance, in order to raise money to pay off and redeem the bonds issued in 1876, and it is further alleged that on April 21, 1896, the city of Jeffersonville was, and continuously since that date has been, indebted in excess of two per cent. of the valuation of the taxable property therein. The further charge is made by the pleading that the city had no right or authority to issue the bonds which it is attempting now to refund, and that it has no right or power to refund the same as it is now proposing to do. It is charged in the complaint that the power or authority of the city to issue and negotiate the bonds in question, under the facts, as it originally did, and its right to refund them, as it is proposing to do, were denied by this court in the case of Myers v. City of Jeffersonville, 145 Ind. 431, 44 N.E. 452.

The complaint then alleges that, after the decision in the latter case, the legislature enacted a statute, approved March 2, 1897, which is entitled: "An act to legalize certain bonds issued by the city of Jeffersonville, and to permit said bonds to be refunded, and declaring an emergency." This statute, which professes to legalize and validate in all respects the bonds in controversy, is set out in the complaint, and the latter then proceeds to assail the validity of this law: (1) That the legislature did not possess the power, under the circumstances, to legalize the bonds in dispute, and to authorize the refunding thereof; (2) that the act, by legalizing the bonds, creates a new debt and thereby renders the city's indebtedness in excess of two per cent. of its taxable property, in violation of the said amendment to the Constitution of March 14, 1881; (3) that this statute is special and local and for this reason is violative of the Constitution. The complaint closes with a prayer that the city and its officers be perpetually enjoined from refunding the bonds, etc. After the cause had been appealed to this court, Michael Ronan, a holder of one of the bonds, applied for and was granted leave by this court to intervene as a party appellee pro interesse suo, and through his counsel he has filed a brief in support of the decision of the lower court.

The questions presented and so ably argued, pro and con, by counsel for the respective parties, may be said to be embraced within two propositions. (1) The validity of the bonds, under the authority, if any, which the city had to issue the same for the purpose which it did; (2) the validity of the curative statute of 1897, and its effect upon the bonds in controversy as an indebtedness of the city of Jeffersonville.

In the case of Myers v. City of Jeffersonville, 145 Ind. 431, 44 N.E. 452, being the same case mentioned in the complaint--the validity of the bonds now in dispute, and the right of the city to refund them, were involved. Their validity, under the facts then existing, and the right of the city to refund them, was, by the unanimous decision of this court in that case, denied, and the judgment of the lower court, sustaining the legality of the bonds, and denying the prayer of the complaint for a writ of injunction to prevent the city from refunding them, was reversed. None of the holders of the bonds were made parties to that action, and it seemingly was a friendly suit, instituted and prosecuted in order that the opinion of this court might be obtained relative to the legal status at that time of the bonds in controversy.

At the next session of the legislature following that decision, the statute legalizing the validity of these bonds was passed. See Acts, 1897, p. 108. This court, in Myers v. City of Jeffersonville, 145 Ind. 431, 44 N.E. 452, in the course of its opinion, speaking in reference to the validity of these bonds, said: "Counsel for the appellees cite us to no express authority from the legislature, for the issue of bonds for the purpose of defraying the expense of litigation incident to the removal of a county seat, and the cost of a lot and a court-house and jail for a county, made necessary by such removal. Nor have we been able to find any such express authority."

It is insisted by the learned counsel for Ronan, the intervener that it was within the province of the legislature in 1876, and prior thereto, under the Constitution of this State, by appropriate legislation, to have authorized the city of Jeffersonville, through its common council, to render financial aid or incur the indebtedness which it did, under the circumstances, in the removal of the county seat from Charlestown, and its location in the said city of Jeffersonville. Or, in other words, that the legislature might have authorized the common council of the latter city, previous to August 8, 1876, to exercise the power which it assumed to exercise under the ordinance of that date in issuing the bonds for the purpose in question. In support of this insistence, we are referred to the holding of this court in the appeal of the Board, etc., v. State, ex rel., 147 Ind. 476, ...