State, ex rel. City of Dexter v. Gordon

• Decision Date: 28 June 1913
• Parties: THE STATE ex rel. CITY OF DEXTER v. JOHN P. GORDON, State Auditor
• Court: Missouri Supreme Court

158 S.W. 683

251 Mo. 303

THE STATE ex rel. CITY OF DEXTER v. JOHN P. GORDON, State Auditor

Supreme Court of Missouri

June 28, 1913

Writ denied.

Thomas N. Dysart for relator.

(1) An assessment cannot be considered completed until it has passed the State Board of Equalization. Prickett v Marceline, 65 F. 469; Lake County v. Standley, 24 Colo. 1; McLean v. Valley County, 74 F. 389. (2) The limit of indebtedness is determined by the assessed valuation in force at the time bonds are issued and not by the time they are voted. 1 Dillon on Municipal Corporations (5 Ed.), sec. 207; Corning v. Mead County, 102 F 57; Prickett v. Marceline, 65 Fed 469; Dudley v Lake County, 80 F. 677; Electric Co. v. Newton, 42 F. 723. It will be noted in connection with a review of the above cases that neither our Constitution nor our statute prohibits voting or authorizing bonds in excess of constitutional limitation; they merely prohibit their issue the words used being "nor shall any indebtedness be allowed to be incurred." (3) The vote of the electors did not create an existing indebtedness. The debt is not incurred until the bonds are issued. Electric Co. v. Newton, 42 F. 723.

John T. Barker, Attorney-General, and Ernest A. Green, Assistant Attorney-General, for respondent.

(1) An assessment cannot be considered as complete until it has passed the State Board of Equalization. Therefore, the assessment based on ownership as of June 1, 1911, not being equalized, at the time the bond issues were voted, August 5, 1912, was not an assessment within the meaning of the Constitution. Secs. 12 and 12a, art. 10, Constitution; Sec. 9544, R.S. 1909; Sec. 11411, R.S. 1909; Prickett v. Marceline, 65 F. 469; Lake County v. Standley, 24 Colo. 1; McLean v. Valley County, 74 F. 389. (2) The limit of indebtedness under sections 12 and 12a of article 10 of the Constitution is determined by the assessment next before the last at the time the bonds are voted by the people, and not at the time the bonds are actually issued. Therefore, both bond issues are invalid in this case, and the bonds are not entitled to registration. Secs. 12 and 12a, art. 10, Constitution; Sec. 9544, R.S. 1909; Prickett v. Marceline, 65 F. 474; State v. Babcock, 24 Neb. 640; Railroad v. Wilber, 63 Neb. 627; Evans v. McFarland, 186 Mo. 726.

WALKER, J. Lamm, C. J., Woodson and Brown, JJ., concur; Bond, J., dissents in opinion filed, in which Graves and Faris, JJ., concur.

OPINION

In Banc.

Mandamus.

WALKER J.

This is a proceeding by mandamus instituted by the relator, a city of the fourth class, against the respondent, the State Auditor, to compel the latter to register certain bonds.

The respondent refused to register the bonds, and relator applied for and was granted an alternative writ of mandamus in this court, to which the respondent made return, alleging among other things that said bonds were illegally issued, a more detailed statement of said return being hereinafter set out.

The facts as disclosed by the petition are as follows:

On the 16th day of July, 1912, said city enacted an ordinance directing a special election to be held on the 5th day of August, 1912, for the purpose of voting on two propositions: (1) to issue $ 25,000 in bonds to provide funds to construct a public sewer system; (2) to issue $ 28,000 in bonds to provide funds to construct a system of waterworks; said election was held at the time appointed; the two propositions were voted on separately, and more than two-thirds of the votes cast on each were in favor of same; the returns of said election were canvassed and the result was properly declared; on the 7th day of October, 1912, the board of aldermen, by an ordinance duly enacted, authorized the issuance of said bonds; ordinances were also enacted providing for the levy of taxes to pay the principal and interest on said bond issues.

The assessed valuation of the taxable property within said city, based on the ownership as of June 1, 1909, amounted to $ 483,466; the assessed valuation of the taxable property therein based on the ownership as of June 1, 1910, amounted to $ 557,786. Said bonds were presented to the Auditor for registration on the 7th day of October, 1912. In determining the per centum which the total amount of said bonds bore to the taxable property of said city, the board of aldermen was governed by the assessed valuation based on the taxable ownership of property therein as of June 1, 1910.

On the day of the special election for voting upon the issuance of said bonds, to-wit, the 5th day of August, 1912, the State Board of Equalization was still in session performing the duties prescribed by section 11411, Revised Statutes 1909, that is, the equalization of the values of real and personal property among the several counties of the State, as for June 1, 1911, for the purpose of taxation, and said State board did not complete its duties until the 1st day of September, 1912. It is admitted that the requirements of the law in regard to the presentation of said bonds to the Auditor for registration, and the tendering of the proper fee for same have been complied with.

Respondent's return to the alternative writ of mandamus issued herein was to this effect: (1) that said writ did not set forth facts sufficient to entitle relator to relief; (2) that it appeared on the face of said writ that on the date of the election therein referred to, the State Board of Equalization was in session engaged in the performance of its statutory duties of equalizing the valuation of real and personal property among the several counties of the State, and had not at that time equalized the assessment based on the ownership of said property as of June 1, 1911; that under the Constitution of this State, sections 12 and 12a of article 10, relator could not become indebted to an amount exceeding ten per centum of the valuation of its taxable property based on the ownership of same as of July 1, 1909, on which date the assessed value of the taxable property of relator amounted to $ 488,466; that the total amount of the indebtedness of said relator, including the aggregate amount of said bonds presented for registration, was $ 54,500.

The only question for consideration is whether the total valuation of the property of said city has been based on the proper year in determining whether the per centum which said bonds bear to same is within the limits of the Constitution.

A review of the provisions of the State Constitution relative to the matter under consideration is necessary to determine whether the peremptory writ should be issued or the proceeding dismissed.

Sections 12 and 12a of article 10 of the Constitution prohibit any subdivision of the State, therein named, from incurring any indebtedness in any year in excess of the income and revenue for such year, unless at least two-thirds of the voters of such subdivision assent to such indebtedness, which in no event can exceed ten per centum of the total assessed value of the taxable property of such subdivision at the assessment of same next before the last assessment made by the State Board of Equalization, previous to the incurring of such indebtedness. That these sections are mandatory is evident from the purpose of their adoption, which was to definitely limit the power to incur indebtedness and to base same on an assessment sufficiently remote that the advantages, real or speculative, derived from the incurring of such indebtedness, may in no way influence the assessment of the property of such subdivision. Being mandatory these sections should be strictly construed, and each step required to be taken literally followed. In 2 Lewis's Sutherland on Statutory Construction (2 Ed.), sec. 627, p. 1135, the rule deduced from many cases is that to render a mandatory law available its directions should be strictly complied with. Unless this is done, the proceedings thereunder are void. This rule is applicable to constitutions as well as statutes. A deviation therefrom would tend to defeat the purpose of the framers of the Constitution. Selfish interests prompted by a desire to increase indebtedness might, if a next previous assessment were taken as a basis, put influences at work to so increase the assessment as to accomplish their purpose. [State ex rel. v. Cornwell, 40 S.C. 26, 18 S.E. 184.] This is impossible if the constitutional mandate is obeyed. The Constitution, in this regard, is a prohibition, and, therefore, self-enforcing, as has been declared by this court in Hannibal & St. Joseph Railroad v. Board of Equalization, 64 Mo. 294, and State ex rel. v. Van Every, 75 Mo. 530.

To summarize, it follows that to create a valid indebtedness certain prerequisites are necessary: First, the constituted authority of the subdivision of the State must ascertain the total value of the taxable property of same at the assessment next before the assessment previous to the incurring of the indebtedness; and, second, if it be found that such indebtedness will not exceed ten per centum of the assessed valuation of the property of such subdivision, based on the assessment required to be taken to determine such per centum, then a proposition must be submitted to the voters to enable them to approve or reject such proposition; if approved by the required majority, bonds may be issued which before negotiation are to be registered by the State Auditor.

The "assessments" designated in the Constitution as necessary to be considered in determining the per centum of indebtedness, mean the two successive, antecedent, completed assessments made by the State Board of Equalization previous to the incurring of the indebtedness. [Culbertson v Fulton, 127 Ill. 30, 37, 18 N.E. 781; Wilkinson v. Van Orman, 70 Iowa 230, ...