Shelby County, Tex. v. Provident Sav. Bank & Trust Co.

• Decision Date: 07 January 1932
• Docket Number: No. 5980.,5980.
• Citation: 54 F.2d 602
• Parties: SHELBY COUNTY, TEX., et al. v. PROVIDENT SAV. BANK & TRUST CO.
• Court: U.S. Court of Appeals — Fifth Circuit

54 F.2d 602 (1932)

SHELBY COUNTY, TEX., et al. v. PROVIDENT SAV. BANK & TRUST CO.^*

No. 5980.

Circuit Court of Appeals, Fifth Circuit.

January 7, 1932.

Oliver J. Todd, of Beaumont, Tex., and J. M. Sanders, of Center, Tex., for appellants.

W. M. Harris, of Dallas, Tex., W. H. Graham, of Houston, Tex., and W. P. Dumas, of Dallas, Tex., for appellee.

Before BRYAN, SIBLEY, and WALKER, Circuit Judges.

WALKER, Circuit Judge.

On motion of the plaintiff (appellee here), this cause was transferred from the equity to the law side of the court, and, by amendment of the pleading which was filed by the plaintiff when the suit was brought, it became an action at law on past-due interest coupons detached from instruments which purported to be bonds of the appellant Shelby county, Tex. Those instruments showed on their face that the issue thereof purported to be under the provisions of an Act of the Texas Legislature approved March 16, 1925 (Loc. & Sp. Laws Tex. 1925, c. 174), amending a special road law for Shelby county (Loc. & Sp. Laws Tex. 1913, c. 2). That act provided for the commissioners' court of Shelby county funding into described bonds of Shelby county all indebtedness lawfully incurred for road and bridge purposes prior to March 1, 1925, whether the same be current, funding, or simple contract debts, and contained the provisions: "Provided that the aggregate amount of said bonds herein authorized shall not exceed the limitations provided by General Law; and provided further that it shall not be necessary to submit the issuance of said refunding bonds to a vote of the property tax-payers of said county." It appeared that two series of bonds purported to be issued under that act, the coupons sued on being detached from the bonds of the second or later series; that the order under which the bonds of the first series, in the amount of $64,459.92, were issued, provided for levying annually a tax of 5 6/10 cents on each $100 valuation of taxable property in said county to pay the interest on the bonds of that series and to create a sinking fund sufficient to discharge those bonds at maturity; and that the order under which the bonds of the second series, in the amount of $255,765, were issued provided for levying annually a tax of 23 cents on each $100 valuation of taxable property in said county to pay the interest on the bonds of that series and to create a sinking fund sufficient to discharge those bonds at maturity. The validity of the coupons sued on was challenged on the grounds, among others: (1) That the issue of those bonds without the issuance thereof being submitted to a vote of the property taxpayers of said county was violative of the provisions of section 52, article 3, of the Constitution of Texas (amended in 1904) with reference to counties, under legislative provision, issuing bonds for purposes specified in that provision "upon a vote of a two-thirds majority of the resident property taxpayers voting thereon who are qualified electors of such district or territory to be affected thereby"; and (2) that the issue of the bonds of which those coupons were part was violative of the provision of the above-mentioned act "that the aggregate amount of said bonds herein authorized shall not exceed the limitations provided by General Law." The court overruled the objections to the instruments sued on, and charged the jury to find for the plaintiff for the amount of the interest coupons sued on, with interest on that amount. There was judgment on the verdict rendered pursuant to that instruction to the jury.

The contention that the coupons sued on were invalid, because the issue of the bonds of which they were a part was not authorized by a vote of a two-thirds majority of the resident taxpayers of Shelby county who were qualified electors of that county, was based on the following provision of the Constitution of Texas (section 52, art. 3), which by amendment of that Constitution became a part of it in 1904:

"The legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the state, to lend its credit or to grant public money or thing of vatue (value) in aid of, or to, any individual, association or corporation whatsoever, or to become a stockholder in such corporation, association or company; provided, however, that under legislative provision any county, any political subdivision of a county, any number of adjoining counties, or any political subdivision of the state, or any defined district now or hereafter to be described and defined within the state of Texas, and which may or may not include towns, villages or municipal corporations, upon a vote of a two-thirds majority of the resident property taxpayers voting thereon who are qualified electors of such district or territory to be affected thereby, in addition to all other debts, may issue bonds or otherwise lend its credit in any amount not to exceed one-fourth of the assessed valuation of the real property of such district or territory, except that the total bonded indebtedness of any city or town shall never exceed the limits imposed by other provisions of this constitution, and levy and collect such taxes to pay the interest thereon and provide a sinking fund for the redemption thereof, as the Legislature may authorize, and in such manner as it may authorize the same, for the following purposes to-wit:

"(a) The improvement of rivers, creeks and streams to prevent overflows, and to permit of navigation thereof, or irrigation thereof, or in aid of such purposes.

"(b) The construction and maintenance of pools, lakes, reservoirs, dams, canals and waterways for the purposes of irrigation, drainage or navigation, or in aid thereof.

"(c) The construction, maintenance and operation of macadamized, graveled or paved roads and turnpikes, or in aid thereof."

At the time of the adoption of the above set out amendment, the Constitution of Texas contained other provisions, including section 9 of article 8 and section 2 of article 11, specifying things to be provided for by law, which had been held by the Supreme Court of Texas to authorize the Legislature to grant to counties the power to issue bonds for any of the purposes mentioned in such other sections. The language of the amendment in question does not indicate a purpose to repeal or affect, in addition to the section thereby amended, other provisions of the instrument of which it became a part. The language of that amendment does indicate a purpose to confer on the Legislature a power not previously possessed by it. It specifies the purposes for which the exercise of that power is authorized, prescribes conditions on which, not only a county, but defined districts embracing more or less than a county, may be authorized to issue bonds or otherwise lend their credit, and prescribes limitations on the amount of indebtedness which may be so authorized. That provision, as its language imports, and as it has been construed by the Supreme Court of Texas, in cases some of which arose soon after its enactment and others long after that date, does not create a limitation on the power of the Legislature to authorize a county to issue bonds, not for purposes enumerated in that provision, but for purposes for which, under other sections of the Texas Constitution, the Legislature may provide by law. Mitchell County v. Bank, 91 Tex. 361, 43 S. W. 880; Lasater v. Lopez, 110 Tex. 179, 217 S. W. 373; Collingsworth County v. Allred (Tex. Sup.) 40 S.W.(2d) 13; Henderson County v. Allred (Tex. Sup.) 40 S.W.(2d) 17. The bonds now in question, not having been authorized or issued for a purpose specified in...