United States v. Caplinger

• Decision Date: 12 April 1927
• Docket Number: No. 7502.,7502.
• Citation: 18 F.2d 898
• Parties: UNITED STATES ex rel. HARRIMAN NAT. BANK v. CAPLINGER, County Judge.
• Court: U.S. Court of Appeals — Eighth Circuit

18 F.2d 898 (1927)

UNITED STATES ex rel. HARRIMAN NAT. BANK v. CAPLINGER, County Judge.^*

No. 7502.

Circuit Court of Appeals, Eighth Circuit.

April 12, 1927.

S. L. White and Abner McGehee, both of Little Rock, Ark., for plaintiff in error.

M. P. Watkins, of Harrisburg, Ark., and Charles D. Frierson, of Jonesboro, Ark., for defendant in error.

Reed, Dougherty, Hoyt & Washburn, of New York City (Robert R. Reed, of New York City, of counsel), amici curiæ.

Before LEWIS and KENYON, Circuit Judges.

LEWIS, Circuit Judge.

This is a proceeding in mandamus. The petition for the writ alleges that relator, Harriman National Bank of New York, recovered a judgment for $25,000 against Poinsett County, Arkansas, on warrants issued by the County prior to the adoption of Amendment No. 11 to the Arkansas Constitution; that Caplinger is the Judge of the county court of that County and that court in June, 1925, determined of record and published the amount of the county indebtedness as of the time of the adoption of said amendment; that in April, 1926, relator petitioned said county court and Caplinger as judge thereof to issue interest-bearing bonds of said county in an amount sufficient to pay said judgment and either sell said bonds for that purpose or deliver them to relator in satisfaction of said judgment; that the county has no funds with which to pay said judgment and will have none unless said amendment and the statute passed pursuant thereto are complied with by the county; that on the issuance of said bonds said county is authorized to make a special annual tax levy, not exceeding three mills, on taxable property within the county for the purpose of raising a fund applicable to the payment of its bonded indebtedness only, as in said amendment and statute provided; that otherwise the maximum tax levy is five mills for county purposes which is all needed for current county expenditures and will continue to be so needed and applied and no part of relator's judgment can be paid therefrom; that unless said bonds are issued and said special levy is made for their payment relator's judgment will remain wholly unpaid; that said county court and the judge thereof have wholly failed to comply with said amendment and statute and with relator's petition therefor and the writ was prayed for commanding the county court and the judge thereof to enter an order for the issuance of bonds or a certificate of indebtedness to relator in payment of its judgment bearing the legal rate of interest or that said bonds be sold and the proceeds applied in payment of the judgment, in compliance with said amendment and statute. They are copied in full in the margin below.¹

A demurrer to the petition was sustained on the ground that Amendment No. 11 and the statute did not make it mandatory on the county court and the judge thereof to refund the county's indebtedness, but left it optional — that it was a matter wholly within the discretion of the county judge. We think the point not well taken, and that the court erred in sustaining the demurrer. The record does not disclose the reason for the court's action in this case; but it seems apparent, in fact it is agreed, that its action in the prior case of United States ex rel. v. Paschall, County Judge of Lincoln County, a like case, was followed. Two reasons were given for denying the writ in that case (see United States ex rel. v. Paschall D. C. 9 F.2d 109), the basis for one of which does not exist in this case — that is, the total amount of the indebtedness of Lincoln County outstanding at the time of the adoption of Amendment No. 11 had not been declared of record by the county court, as had been done in this case; so, as to the soundness of that reason, we need not and do not express an opinion. The other reason there assigned for denying the writ, was the court's conclusion that a refunding of the county's indebtedness was not made mandatory by the amendment or the statute, and that each county was left free to exercise its discretion whether it would or would not avail itself of the extended power and privilege. Both amendment and statute say that counties "may issue" interest bearing bonds for the purpose of paying or funding their indebtedness, and these terms were accepted in their literal sense, as merely permissive. As to the amendment, there would be no occasion to hold otherwise if we regard only those words; for it was a grant of power that did not previously exist. The conditions under which the power should be exercised might well be left to the legislature. But the first section of the amendment is strongly persuasive that the people in adopting it intended that the power should be exercised by counties heavily in debt, as is Poinsett County. Its purpose was to put such counties on a sound financial basis, to establish their credit, provide ways and means to pay their indebtedness and to prevent further contracting debts for which no revenue could be provided. Under the Constitution taxpayers in the county could pay their county taxes with discredited warrants. There is no priority in payment of warrants when it came to tendering them for county taxes, hence, as alleged, there was no way in which holders of warrants who were non-taxpayers in Poinsett County could ever realize any thing. It was the undoubted purpose of the amendment to have such counties as this pay their indebtedness in the method provided and to put a stop to further repudiation. So much for the amendment, but let us take it as a mere grant of power, reasonable conditions for the exercise of which should be left to the legislative branch, notwithstanding the Supreme Court of the State has held the amendment self-executing. Cumnock v. City of Little Rock, 168 Ark. 777, 271 S. W. 466; Lucas v. Reynolds, 168 Ark. 1084, 272 S. W. 653; Matheny v. Independence County, 169 Ark. 925, 277 S. W. 22. Dillon on Municipal Corporations (5th Ed.) § 246, says, it is always a question of legislative intention, and, therefore, of construction to determine whether a duty imposed by law is imperative or discretionary. United States ex rel. Siegel v. Thoman, 156 U. S. 353, 359, 15 S. Ct. 378, 39 L. Ed. 450. The statute prescribes the procedure to be taken by the county court, that the bonds to be issued shall be negotiable coupon bonds payable serially through a period of not exceeding forty years and shall bear interest not exceeding six per cent. per annum, and that a tax not exceeding three mills on the dollar shall be levied to meet the maturities of the bonds with interest. The revenue so to be raised shall be used only in payment of said indebtedness, it must be preserved as a separate fund for that purpose and its diversion is made a felony. These and other provisions of the statute fully supplied the county courts with the means of executing the power conferred by the amendment. Under the amendment and statute, if carried out, benefits would accrue to the county's creditors; and plainly it was so intended. Not only so, but the legislature found that it would be beneficial to the public to refund the indebtedness. The title of the act is: "An act to facilitate the funding of the debts of counties, cities and incorporated towns," and its last section recites that many counties, cities and towns are so heavily indebted that they cannot obtain the necessary funds to carry on their ordinary functions; police and fire protection, safeguard the public health, maintain public buildings, roads and bridges and provide for police officers in maintainance of the public peace. This, it was found, created an emergency, and because thereof the Act was put into immediate effect on its passage. A municipality, like an individual who has no intention of paying his debts, becomes reckless in issuing its obligations and then finds it has no credit. That is what the Legislature found in this Act, and it directed the only way out, which when followed will be beneficial not only to the public, but to the county's creditors also. Reverting to the section, supra, in Dillon, it is said: "The words that a corporation or officer may act in a certain way, or that it shall be lawful to act in a certain way, may be imperative. On this subject some of the cases declare the doctrine that what public corporations or officers are empowered to do for others, and that which is beneficial to them or to the public to have done, the law holds they ought to do, especially if the law specifically or adequately supplies them with the means of executing the power. The power in such case is conferred for the benefit of others or of the public; and the intent of the Legislature, which is the test in such cases, ordinarily seems, under such circumstances to be to impose a positive and absolute duty. But under other circumstances, where the act to be done does not affect third persons, and is not clearly beneficial to them or the public, and the means for its performance are not supplied, the words, may do an act, or it is lawful to do it, do not mean must, but rather indicate an intent in the Legislature to confer a discretionary power."

In Rock Island County v. United States ex rel., 4 Wall. 435, 18 L. Ed. 419, an Illinois statute was up for consideration. It provided that "the board of supervisors under township organization, in such counties as may be owing debts which their current revenue, under existing laws, is not sufficient to pay, may, if deemed advisable, levy a special tax," etc. There the relator, a judgment creditor, sued out the writ of mandamus to compel the board to make the levy as the means of paying his judgment. The board appealed, and contended that the words, may, if deemed advisable, imposed on it only a discretionary duty which they were to discharge, or not, as the judgment of the board might dictate, and that judgment could not be coerced and enforced by the writ. But the Supreme Court after reviewing the authorities answered the...