State v. Weinrich
| Decision Date | 30 December 1921 |
| Parties | STATE ex rel. CITY OF SEDALIA et al. v. WEINRICH, City Treasurer. |
| Court | Missouri Supreme Court |
Montgomery & Rucker and Wilkerson & Barnett, all of Sedalia, for petitioners.
Leonard W. Rodekohr, of Sedalia, for respondent.
Mandamus. The city water company of Sedalia obtained judgment against the city of Sedalia for $14,816.52 on account of unpaid water rentals. The judgment was affirmed in this court (City Water Co. v. City of Sedalia, 231 S. W. 942) in June, 1921. There was no money in the city treasury available to pay the judgment. Acting under section 8317 et seq., R. S. 1919, the city council passed and the mayor signed an ordinance providing for payment by an issue of judgment-funding coupon bonds for $14,500. Bids therefor were duly received, and the relator Guaranty Trust Company was the highest bidder. Respondent was and is the city treasurer. He refused to countersign the bonds as required by the statute, and this proceeding was begun to compel him to do so. Respondent concedes that the tax levy for the year is materially less than the constitutional limit. This remains true when the three-fourths of one cent on each $100 of the city assessment, the levy for the payment of the bonds in question, is included.
I. Respondent's first contention is that the bonds in question will constitute a new indebtedness, and therefore cannot lawfully be issued without the consent of the voters at an election held for that purpose. Section 12, art. 10, Const. The judgment against the city is conclusive of the validity of the indebtedness upon which it is founded. Relators insist the bonds proposed to be issued will constitute a mere refunding of an existing valid indebtedness, and that their issuance will result simply in changing the form thereof, and will neither change nor add to the city's indebtedness in a manner obnoxious to the Constitution. In State ex rel. Clark County v. Heckmann, 280 Mo. 686, 218 S. W. 318, it was held that the issuance and sale of county bonds for the purpose of raising money which was subsequently to be used to discharge an existing indebtedness created a new debt. This upon the theory that a liability on the bonds came into existence upon their sale and delivery, and that the liability upon the old debt continued to exist until the proceeds from the bonds were thereafter actually applied to extinguish it. It is made clear in that opinion that it was not intended to decide that a refunding of a debt by a process which extinguished it at the time or before the refunding bonds became actual obligations of a municipality would create a new debt in any sense. That a city might make a new contract in renewal of a prior valid obligation had already been decided by this court. State ex rel. v. Neosho, 203 Mo. loc. cit. 96, 101 S. W. 99. In the briefs in this case and those which accompany the opinion in the Clark County Case, as well as in the majority and dissenting opinions in that case, may be found collections of the decisions which show that the great weight of authority is to the effect that the refunding of a valid debt in such manner that the payment and extinguishment precedes or is simultaneous with the coming into existence of the refunded debt as an obligation does not create a new indebtedness or add to the previous one, but merely changes its form. This is true whether the refunding bonds are exchanged for the evidences of the old debt or are sold and the proceeds actually used to extinguish the old at the time and in the manner stated. It seems to us that sound reason also supports this view.
II. The authority of the city to refund is given by the following sections of the statute:
Unquestionably these sections authorize a course in harmony with the rule just stated, and not out of harmony with that laid down in the Clark...
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