Smith v. City of Vicksburg

• Decision Date: 18 April 1905
• Court: Mississippi Supreme Court
• Parties: MURRAY F. SMITH v. CITY OF VICKSBURG

38 So. 301

86 Miss. 577

MURRAY F. SMITH v. CITY OF VICKSBURG

Supreme Court of Mississippi

April 18, 1905

FROM the chancery court of Warren county, HON. WILLIAM P. S VENTRESS, Chancellor.

Smith the appellant, was complainant, and the city of Vicksburg the appellee, was defendant in the court below. From a decree in defendant's favor, the complainant appealed to the supreme court. The facts are stated in the opinion of the court.

Decree reversed and remanded.

Smith Hirsh & Landau, for appellant.

Section 1 of the amendment is a copy verbatim et literatim of Code 1892, § 3014; therefore the same rules of construction apply both to sec. 1 of the amendment and sec. 3014 of the code. Under these sections the municipality is authorized to issue bonds or other obligations for certain purposes, not exceeding seven per cent of the assessed value of its taxable property, unless authorized by two-thirds of the, qualified electors, and in no case shall the amount issued exceed ten per centum of the assessed values, but the limit on the amount shall not apply to "bonds or other obligations issued . . . to raise funds to liquidate any indebtedness when this chapter (amendment) becomes operative."

This provision was inserted in the code because of the fact that the legislature must have known that at the time of the adoption of the code there were municipalities whose bonded indebtedness equaled seven per cent of the assessed value of their assessable property, and at the same time owed other debts in excess of said seven per cent for which provision had to be made. In other words, the code was simply to take effect in the future, and the municipalities then existing would have had the right to provide for the payment of all debts then existing by issuing obligations or bonds, even if the aggregate exceeded said seven per cent. There was no intention on the part of the legislature to authorize repudiation in any form. It wanted the debts to be paid, and in many instances the only feasible way to arrange the payment of a debt is to convert it into a bonded obligation. The municipalities were given the right to provide for the payment of their floating indebtedness by exchanging for pressing cash obligations notes or bonds, payable out of future revenues; provided, however, that the notes or bonds were only given for existing indebtedness, although said notes or bonds added to the funded debt would exceed seven per cent of the assessment. We submit that the statutes cannot be interpreted in any other way if effect is to be given to the words in the concluding part of sec. 3014, which we have quoted. If our view is correct, then the city of Vicksburg, on November 4, 1902, when the amendment was adopted, was empowered to issue bonds or obligations in excess of its funded debts to raise funds to liquidate the $ 100,000.00 debt then existing, but we fear it is without power to issue bonds for indebtedness contracted since that time. The complainant is a taxpayer, and desires to have the city's credit restored, and is, therefore, perfectly willing to have the $ 100,000 worth of bonds issued if their validity cannot be assailed, so that they can be floated at par. He feels that he and the city would be benefited if this arrangement can be affected, but, of course, with the understanding that the bonds are valid and are not to be disposed of for less than par, and therefore the validity of the bonds should be determined before they are offered for sale. Should the bonds be negotiated without previous adjudication, and should be hereafter held invalid, the defendant might be subjected to a charge that its obligations have been repudiated, and its credit thereafter would necessarily be impaired.

Wishing to remove all doubts relative to the power of defendant, the complainant institutes this suit, and respectfully requests that a speedy hearing be granted.

Dabney & McCabe, for appellee.

That the amendment is legal and valid there seems to be no room for contention. The constitution authorized the legislature to pass a law authorizing the city to amend its own charter by an ordinance. The city did amend its charter by such ordinance, whereby it became authorized to issue any amount of bonds that might be necessary to take up and pay off the outstanding indebtedness then existing.

No one would doubt if the city of Vicksburg had been incorporated under ch. 93 of the code of 1892 it would have the right to issue bonds under that section. If, then, the city would have the right if created under that chapter to issue the proposed bonds--subject, of course, to the provisions of sec 3014--there is no doubt but that its charter could be so amended as to give that right, because the right to amend is coequal with the right to create, and the law which authorizes the creation of a municipality, with certain powers, authorizes an amendment of the charter for the purpose of giving it those same powers. If the city had volunteered to come under the municipal chapter, it would have had the right to issue these bonds under sec. 3014.

The only other question for the consideration of the court is whether or not the debt now existing existed at the time the amendment was made. We entertain no doubt that the amendment covered it if it existed at that time, and that the board is authorized to issue bonds to pay the debt off. That it is the same debt we do not think there is any doubt. The bill alleges, and the answer admits, what is undoubtedly a fact that at the time the amendment was adopted the city owed $ 100,000 of floating debt, which had...