United States v. Paschall

• Decision Date: 02 December 1925
• Docket Number: No. 6659.,6659.
• Citation: 9 F.2d 109
• Parties: UNITED STATES ex rel. STAYTON v. PASCHALL, County Judge.
• Court: U.S. District Court — Eastern District of Arkansas

9 F.2d 109 (1925)

UNITED STATES ex rel. STAYTON v. PASCHALL, County Judge.

No. 6659.

District Court, E. D. Arkansas, W. D.

December 2, 1925.

Buzbee, Pugh & Harrison, of Little Rock, Ark., for relator.

E. W. Brockman, of Pine Bluff, Ark., for respondent.

TRIEBER, District Judge.

The allegations in the amended and substituted petition so far as necessary to a determination of the issues involved are:

That on December 24, 1923, the relator was awarded by a decree of this court a judgment against the county of Lincoln the sum of $90,500; that subsequent thereto this court issued a mandamus, directed to the proper officers of that county, commanding them to increase the assessment for taxation of all property in said county for the taxes of 1923 to the true value of the property in money, and to continue to assess the property of said county for taxation at such value until $16,393.84 of said judgment should be paid; that said officers complied with said order, but that, notwithstanding said assessment of said property, no part of said judgment has been paid; that the maximum levy of taxes which could be levied on the property of said county under the Constitution of the state as then existing, for the payment of relator's judgment and other indebtedness and current expenses of the county, was five mills on the dollar, and said amount was levied; that under the system of taxation under the Constitution then in force there is no prospect for relator to collect the amount due on said judgment, nor any part thereof; that said judgment does not bear interest under the laws of the state, and relator is without hope of being able to collect the money adjudged to him, or any part thereof, unless granted the relief sought by this action. It then sets out Amendment No. 11 to the Constitution of the state, adopted October 6, 1924, which, so far as necessary, is as follows:

"Section 1. That section 4 of article 12 of the Constitution of the state of Arkansas be amended by adding thereto the following:

"`The fiscal affairs of counties, cities and incorporated towns shall be conducted on a sound financial basis, and no county court or levying board or agent of any county shall make or authorize any contract or make any allowance for any purpose whatsoever in excess of the revenue from all sources for the fiscal year in which said contract or allowance is made; nor shall any county judge, county clerk, or any other county officer, sign or issue any scrip, warrant or make any allowance in excess of the revenue from all sources for the current fiscal year; nor shall any city council, board of aldermen, board of public affairs, or commissioners, of any city of the first or second class, or any incorporated town enter into any contract or make any allowance for any purpose whatsoever or authorize the issuance of any contract or warrants, scrip or other evidences of indebtedness in excess of the revenue for such city or town for the current fiscal year; nor shall any mayor, city clerk, or recorder, or any other officer or officers however designated of any city of the first or second class or incorporated town sign or issue any scrip, warrant or other certificate of indebtedness in excess of the revenue from all sources for the current fiscal year.

"`Provided, however, to secure funds to pay indebtedness outstanding at the time of the adoption of this amendment, counties, cities and incorporated towns may issue interest-bearing certificates of indebtedness or bonds with interest coupons for the payment of which a county or city tax in addition to that now authorized, not exceeding three mills, may be levied for the time as provided by law until such indebtedness is paid.

"`Where the annual report of any city or county in the state of Arkansas shows that scrip, warrants or other certificates of indebtedness had been issued in excess of the total revenue for that year, the officer or officers of the county or city or incorporated town who authorized, signed or issued such scrip, warrants or other certificates of indebtedness shall be deemed guilty of a misdemeanor and upon conviction thereof, shall be fined in any sum not less than five hundred dollars nor more than ten thousand dollars, and shall be removed from office.'" Acts 1925, p. 1086.

That an enabling act to put this amendment into effect was passed by the General Assembly of the state of Arkansas, approved March 23, 1925, which, so far as necessary is as follows:

"Section 1. The county court of any county or the city or town council of any city or incorporated town may issue bonds for the purpose of funding the indebtedness of such county, city or town outstanding at the time of the adoption of Amendment No. 11 to the Constitution of the state of Arkansas, appearing on pages 797 to 799, inclusive, of the General Acts of the General Assembly of the state of Arkansas of the year 1923.

"Before the issue of any county or city bonds under this act, the county court shall by order entered upon its records, declare the total amount of such indebtedness or the city or town council shall, by ordinance, declare the total amount of such indebtedness. Such order of the county court shall be published immediately for one insertion in some newspaper published in the county, and such ordinances of the city or town council shall be immediately published in some newspaper issued in such city or town, if there be one, and if not, in some newspaper published in the county; and any property owner who is dissatisfied may, by suit in the chancery court of the county brought within thirty days after the publication of such order or ordinance have a review of the correctness of the finding made in such order or ordinance; but if no such suit is brought within thirty days, such finding shall be conclusive of the total amount of such indebtedness, and not open to further attack, and if said suit is brought the adjudication shall settle the question and appeal therefrom must be taken and perfected within thirty days. If any officer of such county, city or town shall willfully make any false statement as to the amount of its indebtedness, he shall forfeit his office and be ineligible to hold any other office of profit or trust in this state.

"Section 2. Such bonds shall be negotiable coupon bonds payable serially through a period of not exceeding forty years, and bearing a rate of interest not exceeding six per cent. per annum, the schedule of maturities to be so arranged that the total amount of principal and interest each year shall be substantially the same; but none of such bonds shall mature before September 1, 1926.

"Section 3. Such bonds shall not be sold for less than par, except that bonds may be sold at six per cent. with the privilege of conversion into bonds bearing lower rate on such terms that the county, city or town shall receive thereon and pay therefor substantially the same amount of money as on six per cent. bonds at par, and the proceeds thereof shall be used only in the payment of indebtedness of such county, city or town existing at the time of the adoption of said 11th Amendment to the Constitution. If any officer of any county, city or town shall use any part of the proceeds of such bonds for any other purpose he shall be deemed guilty of a felony and shall be imprisoned in the penitentiary for not less then one year.

"Section 4. Before or after the issue of said bonds the quorum court of such county or the city or town council of such city or town shall levy a tax, which, on the existing assessed value of the property of such county, city or town will suffice to retire said bonds as they mature, with five per cent. added for unforeseen contingencies: provided that said tax shall not exceed three mills on the dollar of such assessed value. If said tax proves insufficient to meet the maturities of the bonds with interest, it shall be the duty of the quorum court of such county or the city or town council to increase such levy of taxes, but not beyond three mills upon the dollar of the then assessed valuation; and if by reason of the increase in the assessed value of the property of such county, city or town a lower rate of tax will prove sufficient to meet the bonds and coupons as they mature, the amount of the tax may be lowered accordingly; but no tax shall be levied which will produce less than the sum required to meet the maturities of the bonds with five per cent. added for unforeseen contingencies, nor shall any tax in excess of three mills on the assessed value existing at the time of such levy ever be levied in any year. The money derived from such taxes shall be preserved as a separate fund for the redemption of such bonds and any officer of such county, city or town or any other person who uses any of such money for any other purpose shall be deemed guilty of a felony and imprisoned for a period not less than one year." Acts 1925, p. 608.

That the revenues of the county are not sufficient, under present laws, to enable the county to pay the whole or any substantial part of relator's judgment out of the revenue for any year, and that it cannot issue to relator warrants for the payment of any substantial part of the judgment without violation of Amendment No. 11 to the Constitution; that relator demanded of respondent to take steps to have such bonds issued, and a tax to pay the interest and bonds as they matured levied, which was refused.

The prayer is for a mandamus, commanding the respondent to issue bonds authorized and required by said amendment and the enabling act hereinbefore set out, and for all proper relief.

The respondent filed a response, to which the relator demurred. The judgment is on warrants of the county issued under the provisions of sections 1992, 1999 and 2000, Crawford & Moses' Digest of Arkansas Statutes.

As the demurrer to the response relates back to the first defective pleading, including the petition, it is...