Smathers v. Commissioners of Madison County

• Citation: 34 S.E. 554,125 N.C. 480
• Parties: SMATHERS v. COMMISSIONERS OF MADISON COUNTY.
• Decision Date: 19 December 1899
• Court: United States State Supreme Court of North Carolina

34 S.E. 554

125 N.C. 480

SMATHERS v. COMMISSIONERS OF MADISON COUNTY.

Supreme Court of North Carolina

December 19, 1899

Appeal from superior court, Transylvania county; Coble, Judge.

Action by George H. Smathers, receiver, against the commissioners of Madison county. From the judgment, both parties appeal. Affirmed.

Faircloth C.J., dissenting.

Geo. H Smathers, in pro. per.

J. M Gudger, Jr., for defendants.

MONTGOMERY J.

This action was brought to recover of the defendants certain amounts of money due to the plaintiff, Smathers, receiver of the Western Carolina Bank, as interest on certain bonds issued by the commissioners of Madison county, and to compel by mandamus the commissioners to levy a special tax to pay the interest, as well as to create a sinking fund to pay the principal of the bonds when they shall become due. It is not a controversy submitted without action under section 567 of the Code, but, after the pleadings were filed, the plaintiff and defendants agreed upon the facts, and submitted the same to the court for its judgment. The facts are substantially as follows: The county of Madison was indebted to various persons, the consideration of the indebtedness being the necessary expenses of the county already incurred, and, being unable to pay the same, and at the same time to conduct the ordinary business affairs of the county, with its resources obtainable through the taxes levied up to the full constitutional limitation, procured, through its board of commissioners, the enactment of a law by the general assembly on the 7th of March, 1887 (Pub. Laws 1887, c. 398), authorizing the commissioners to issue coupon bonds, and to sell the same to pay the outstanding indebtedness of the county incurred for necessary expenses, and to levy a special tax to meet the interest on the bonds, and also to create a sinking fund to pay the bonds at maturity. The commissioners issued bonds for that purpose, under the act, to the amount of $21,000, in denominations of $1,000 and $500 each, payable in 20 years, and bearing interest at 6 per cent., and payable on the 1st days of December and June of each year. The bonds were not sold for cash by the treasurer of the county, as was required by the act, but they were, at their face value, exchanged for the outstanding indebtedness of the county, as provided for under the act; no interest being charged on either side from the date of the issue to the exchange of the same for the county indebtedness. The proper authorities of the county have levied a special tax each year, including 1896, to meet the interest on the bonds, and for the years 1897 and 1898 to create the sinking fund, besides; and the interest due to the plaintiff bank up to and including the interest for the 1st of December, 1895, has been paid, and nothing since has been paid, except $495 in the year 1897, and the balance of the interest due, as stated in the complaint, is due and unpaid. The commissioners have declined to order any part of the fund arising from the special tax levy of 1898 to be paid to the plaintiff as interest on the bonds which he holds, or to create a sinking fund for the payment of the bonds; and they declined on the first Monday in June, 1899, to levy any tax for the purposes required by the act, on the ground that the act authorizing the issue of the bonds, and the levying of the special tax therein provided for, was not passed by the general assembly in accordance with the requirements of article 2, § 14, of the constitution of the state. The commissioners of the county at their annual meetings on the first Mondays of June, 1898 and 1899, levied a tax for general county purposes up to the constitutional limitation, and the whole was necessary to meet the current expenses of the county. The plaintiff bank was not the original purchaser of the bonds now held by the plaintiff, Smathers, its receiver, but bought them in open market in 1889, and paid 90 cents on the dollar for them, and the bank had no actual notice of any irregularity in the issue and sale of the bonds. From the senate and house journals of the session of 1887 it appears that the yeas on the second reading of the bill were entered on the house journal, but it was not stated that there were no nays, and that in the senate the first and second readings of the bill took place on the same day.

Upon the facts the judgment of the court was asked as follows (in the language of the counsel of both the plaintiff and the defendant): "(1) As to the validity of the said bonds. (2) As to the validity and constitutionality of the tax levy provided for in the said act of 1887. (3) If said bonds are valid, then are the Western Carolina Bank and Geo. H. Smathers, receiver thereof, or either of them, entitled to a writ of mandamus from the court to compel the board of commissioners of said county of Madison to meet in extra session, and levy the special tax provided for in the said act of 1887, to meet the interest on said bonds, and create a sinking fund, provided for in said act, for the year commencing June 1, 1899; and, if said board cannot by law be required to meet in extra session to levy said special tax on that date, then can said board of commissioners be required to meet on the first Monday in June, 1900, to levy said special tax, as well, also, as the tax to be levied on that date, to meet the interest on said bonds, and create the sinking fund, as provided for in said act of 1887, for the year commencing the 1st day of June, 1900? (4) As to what judgment, if any, the plaintiffs are entitled to against the defendant board of commissioners for the interest due to plaintiffs on said bonds so held by Geo. H. Smathers, receiver aforesaid. But the judgment of the court is not asked as to any other question raised by the pleadings."

The court rendered a judgment in the following words: "And the court being of opinion that the said bonds are valid having been made and exchanged for claims of indebtedness created for the necessary expenses of the county, and the said special tax levy attempted to be authorized by the said act of 1887 is invalid and unconstitutional, since the said act was not passed according to the requirement of article 2, § 14, of the constitution of North Carolina, as appears from the facts above set out, it is therefore considered and adjudged that the plaintiffs do recover judgment against the defendant board of commissioners of said county for the balance of the interest accrued and due for the years 1896, 1897, and 1898, and up to June 20, 1899, the beginning of this...