Wade v. Travis County, Tex

• Decision Date: 15 May 1899
• Docket Number: No. 267,267
• Citation: 174 U.S. 499,19 S.Ct. 715,43 L.Ed. 1060
• Parties: WADE v. TRAVIS COUNTY, TEX
• Court: U.S. Supreme Court

174 U.S. 499

19 S.Ct. 715

43 L.Ed. 1060

WADE

v TRAVIS COUNTY, TEX.

No. 267.

May 15, 1899.

This was an action brought in the circuit court for the Western district of Texas by the plaintiff, Wade, who is a citizen of the state of Illinois, against the county of Travis, to recover upon certain interest coupous detached from 47 bonds issued by the defendant for the purpose of building an iron bridge across the Colorado river.

The petitioner set forth: That in July, 1888, the defendant, being authorized so to do, entered into a contract with the King Iron Bridge Manufacturing Company of Cleveland, Ohio, for the construction of a bridge for public use over the Colorado river, the company agreeing to complete the same by November 15, 1888, in consideration of which the defendant agreed to pay the sum of $47,000 in 6 per cent. bonds, payable in 20 years after date.

That, prior to the making of such contract, to wit, February 23, 1888, the defendant, acting through its commissioners' court, levied for the year 1888 and subsequent years, until otherwise ordered, an annual ad valorem tax of 20 cents for general purposes, and an annual ad valorem tax of 15 cents for road and bridge purposes, on each $100 worth of taxable property in such county. That on February 13, 1889, the commissioners' court of the county levied for the year 1889 an ad valorem tax of 15 cents on each $100 worth of property for road and bridge purposes, and an ad valorem tax of 5 cents to create a sinking fund for bridge bonds, and to pay the interest on such bonds. That the defendant delivered to the bridge company, upon its contract for erecting the bridge, 5 bonds on December 6, 1888, 10 bonds on December 22, 1888, 10 bonds on February 12, 1889, and the remaining 22 of such bonds on July 3, 1889, such bonds being signed by the county judge, countersigned by the county clerk, and registered by the county treasurer. That the several levies in question had not been appropriated for any other purpose by the county, or, at least, a sufficient portion of them remained unappropriated to pay the interest and sinking fund upon such bonds, and that it was the intention of the commissioners' court to use these levies with a view of providing an annual fund sufficient to pay the interest, and to provide the sinking fund required by law. The petition further averred that plaintiff purchased the coupons for a good and valuable consideration in open market, and that he is the legal owner and holder of the same; that on January 16, 1896, he presented such coupons to the county treasurer, and demanded payment thereof, which was refused.

The county demurred to the petition upon six different grounds, the first and material one of which was that the petition failed to allege that 'at the time the debt was created for which the bonds were issued, upon the coupons of which this suit is brought, any provision was made for the interest, and at least 2 per cent. sinking fund upon such bonds.'

The circuit court was of opinion that, at the date of the execution of the contract for erecting the bridge, the commissioners' court should have made a distinct and specific provision for the interest upon such bonds and for a sinking fund, and thereupon sustained the demurrer, and dismissed the cause. 72 Fed. 985.

The plaintiff appealed to the circuit court of appeals, which affirmed the judgment of the circuit court. 52 U. S. App. 395, 26 C. C. A. 589, and 81 Fed. 742. Upon plaintiff's petition a writ of certiorari was subsequently allowed by this court.

Joseph Paxton Blair and Frank W. Hackett, for petitioner.

Clarence H. Miller, for respondent.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.

This case involves the validity of certain bonds issued by the county of Travis in payment to the King Iron Bridge Manufacturing Company for the construction of a bridge over the Colorado river, and, incidentally, the weight to be given to alleged conflicting decisions of the supreme court of Texas as to the validity of such bonds.

As bearing upon this question, the following sections of article 11 of the constitution of Texas, upon the subject of 'Municipal Corporations,' are pertinent:

'Sec. 2. The construction of jails, court houses and bridges, and the establishment of county poor houses and farms, and the laying out, construction and repairing of county roads, shall be provided for by general laws.'

'Sec. 7. All counties and cities bordering on the coast of the Gulf of Mexico are hereby authorized, upon a vote of two-thirds of the taxpayers therein, (to be ascertained as may be provided by law,) to levy and collect such tax for construction of sea walls, breakwaters or sanitary purposes, as may be authorized by law, and may create a debt for such works and issue bonds in evidence thereof. But no debt for any purpose shall eve be incurred in any manner by any city or county unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and to provide at least two per cent. as a sinking fund; and the condemnation of the right of way for the erection of such works shall be fully provided for.'

In apparent compliance with the sections above quoted, the legislature in 1887 enacted the following law (chapter 141, § 1):

'Section 1. That the county commissioners' court of the several counties of this state are hereby authorized and empowered to issue bonds of said county, with interest coupons attached, in such amounts as may be necessary, for the purpose of buying or constructing bridges for public uses within such county, said bonds to run not exceeding twenty years, and bearing interest at any rate not to exceed eight per cent. per annum.

'Sec. 2. The commissioners' court shall levy an annual ad valorem tax, not to exceed fifteen cents on the one hundred dollars valuation, sufficient to pay the interest on and create a sinking fund for the redemption of said bonds. The sinking fund herein provided for shall not be less than four per cent. on the full sum for which the bonds are issued.'

It is admitted that no provision was made on July 3, 1888, 'at the time of creating' the debt, for levying and collecting a sufficient tax to pay the interest thereon and 2 per cent. for a sinking fund, as required by the second clause of section 7, if said clause be applicable to a debt incurred for building bridges. It was alleged in the petition, however, that in the February preceding the commissioners' court ordered an ad valorem tax of 20 cents for general purposes, and an annual ad valorem tax of 15 cents for road and bridge purposes; and it also appeared that in the following February (1889) it ordered an annual ad valorem tax of 25 cents for general purposes, 15 cents for road and bridge purposes, court house and jail tax of 5 cents, and an ad valorem- -tax of 5 cents to create a sinking fund for bridge bonds to pay the interest on said bonds.

Plaintiff insisted in the court below that the language of the last clause of section 7, requiring a provision to be made for the levying and collection of a tax to pay the interest and to provide a sinking fund, must be read in connection with the preceding clause of the section, and, taking the two together, that the last clause must be held to apply only to counties bordering on the Gulf of Mexico. Both the circuit court and the court of appeals, however, held that the last clause contained a separate and independent provision, and was applicable to the contract made by the county for the building of this bridge, and that, the petition of the plaintiff failing to show compliance with it, the contract was void, and the bonds issued without authority of law. Both courts relied upon the construction given by the supreme court of Texas in numerous cases to this section of the constitution.

It is important in this connection to note that the opinion of the circuit court was pronounced on March 13, 1896, and that of the court of appeals on June 16, 1897. Since that time it is asserted that the supreme court of Texas has taken a somewhat different view of the law, and an examination of these several decisions becomes important. In the earliest of them (City of Terrell v. Dessaint [1888] 71 Tex. 770, 9 S. W. 593), which was an action on a promissory note given by the city in payment for material for waterworks supplies, it was squarely held that the last clause of section 7, above quoted, must be held to apply to all cities alike, and that the clause contained no word or words which restricted its application to the cities previously mentioned in the same section. 'The language is general and unqualified,' said the court, 'and we find nothing in the context to indicate that the framers of the constitution did not mean precisely what is said; that is, that no city shall create any debt without providing, by taxati n, for the payment of the sinking fund and interest.' It was also held that a debt of $1,500 for materials to extend its waterworks was within the clause in question, and that, as the current expenses proper of the city exceeded its resources for general purposes, and no appropriation was made for the payment of this debt, there could be no recovery.

In Bassett v. City of El Paso (1895) 88 Tex. 168, 30 S. W. 893, it was held that the language and purpose of the constitution were satisfied by an order for the annual collection by taxation of a 'sufficient sum to pay the interest thereon and create a sinking fund,' etc., although it did not fix the rate or per cent. of taxation for each year by which the sum was to be collected, but left the fixing of such rate for each successive year to the commissioners' court or the city council. It was contended that the ordinance, which provided for the issue of waterworks bonds, was void, because it did not levy a tax, but delegated to the assessing and collecting...