Case 82 — Action by John Self and Othebs against the City of Catlettsburg and Others, fob an Injunction to Prevent the City from Taxing their Property for Street Improvement.—

May 27.

#### City of Catlettsburg and Others v. Self and Others.

APPEAL FROM BOYD CIRCUIT COURT.

Judgment for Plaintiffs and Defendants Appeal.

Reversed.

Municipal Corporations — Street Improvements — Local Assessments — .Issuance of Bonds — Validity—Refunding Bonds.

Held: 1. A street improvement made by paving a street -with fire-clay brick in place of a macadamized noiad laid sonreí thirty years .previous, was ata. original construction, and properly assessed under Kentucky Statutes, section 357:2, providing that an original construction, of any street shall he made at the exclusive cost of the owners of abutting lots, and not a irecon*670struetion, the cost of which, under the provisions of section 3565, is to be borne exclusively by rt'he city.

2. The issuance of bonds by a city in payment for street improvements, the cost of which was assessed by ¡the! council against abutting property owners, the assessment when collected to liquidate ¡the bonds, did not create a debt withiib. ithie meaning of Const., section 157, prohibiting cities from incurring indebtedness exceeding the income and revenue provided flor any year, without .the conselnt of Itwo-thirds of thia voters.

3, The fact, if true* that bonds executed by a city, which property owners are called upon to pay by assessment levied against their property, are void, is not prejudicial to the rights of such property owners, where the bonds were) issued in refundment of valid bonds for the payment of which those samla property owners are liable.

THOMAS R. BROWN, attorney eor appellants.

PLAINTIFF’S CONTENTION.

The plaintiffs do not question in itheir pleadings bnt admit, in their argument, the validity of the provisions! in icharter of cities [of the fourth class for malting local assessments against abutting property to pay the costs of paving the. streets upon which they abut, and only claim that the assessments in the ■case at bar are void for two following reasons:

1. They contend that the city of Catlettsburg, to carry on the work of and make said improvements, raised the monlsy required for that purpose, by giving ’its band far itjhe [amount of the costs of said improvement advanced hy the persone holding said bonds, and that said bonds .are city indebtedness, and ■prohibited and made void by section 157 of the Constitution of Kentucky, and that the .assessments in question; are made to ¡pay said alleged void bonds, and being made to pay a void indebtedness, are themselves likewise necessarily void.

2. The plaintiffs claim .that the paving in question is in fact reconstruction and not original construction, and that .there is mo authority given cities of the fourth class to have reconstruction done at the expense of the abutting .property, and hence their property is not subject to any assessments ¡to pay any part of the coats of said improvement.

DEFENDANT’S RESPONSE.

The city makes response as follows, to the Contention of the plaintiffs:

1. The bonds in view of the statute® regulating such matters and the ordinances providing their issual and payment;, ‘haying *671provided legitimate means for their .payment notwithstanding any, impression from consideration of tha face of the bond's •separately, are to be considered in light of the statute and .ordinances providing their -issue ais a part of same anid being-so considered, are specialties or local assessment bonds and not city indebtedness bonds, and therefore not a prohibited indebtedness on the part .of the -city under section 157 of ¡the Constitution.

2. The city also submits that if iti he conceded that thei bonds are void on grounds of being evidence of cfty .indebtedness, that that is a matter that concerns the holders of ithei bonds and the cily as a municipality, they being ¡the obligation of .the city only, and that the assessments!, collection of which is sought, are matters of liability only of the abutting propery to the city, basted alone upon the ■ benefits to the property from the improvement and not upon ¡the bonds, and', that the plaintiffs are not parties to or liable upon said bonds and are solely concerned with the assessments!, and that having nolthing to do with the bonds, the assessments being valid, flor' they themselves are unquestioned and owing -to the city, ¡the ciltv had a right to dispose of same as it saw proper, ¡so it did not change or increase their liability and hence pledged and undertook to collect and place amount of same into its “paving fund,” and pay therefrom, “to holders oil the bonds, till the amount advanced by them, to carry costs of said improvement wals paiid.”

In other words that the city made the improvements and under the law had a right by assessments, to require the abut'ting property to compensate it for the benefits from the improvements to the property, by paying the costs of said improvement, and said assessments- being thus a liability to the city alone, it had the right under the statute, to collect and apply isams in payment for costs of .making said improvement, and that no person who owes a just and valid debt, can escape liability therefor on the plea that 'the' person to whom it is .owing may not spend it for legitimate purposes. A person can do as he pleases with his own money, .and he is responsible for its misuse, and the person who pays it to him on a just debt, has no. lawful concern, with his use of the money and can not use his moral .scruples as to fear uf misue of the money to keep from paying a just and valid .debt.

3. As to the qu/astion raised by plaintiffs as to whether the improvement is a- work of original or reconstruction, the city claims that it ds immaterial whether original or reconstruction- or by what name called.

That the improvement itself *a&*to kind and character1, where *672to be madlel and what to replace, was well known and provided for, and a misnomer dlid not change 01" .affect its- actual kind, and that if in fact reconstruction calling iit original- construction did not change its kind, and that whatever1 land it was, that the particular kind was definitely ordered 'and accordingly put in by whatsoever name called.

That conceding the improvement to be reconstruction, the-city had authority to require it to be paid for by -as-steislsments, from the fact that section 3565, which requires the -city to bear ■exclusively the costs when the improvem/emt is reconstruction, is repealed by -section 35C7, which requires the abutting, property to bear the aosjts, for this latter section, as will appear from an examination of the actls of ithe Legislature, wag enacted at a subsequent session, and hence -the city did have the power to assess the abutting property even if fffiie work was reoonstruotion.

4. That where the property abutting a street is laid off initoi •square®, all the council has to do is to silmply order the improvement at the expense of the abutting property, let the contract -and see that the work is done, land if done 'according tio contract, accept it. That these are all ministexlial and not legislative acts, where the Legislature- has 'designated the property to bear the costs, and- being ministerial and not legislative, the board and -the courts are, by the law ve&ted with full and! complete power and duty to disregard all- errors lor defeats, where! the work has been permitted! to' go so far as to-be done and completed as required by the ond-inanciei, and “make such rules and orders as may be necessary to do justice to all concerned,” and that under this rulie it being admitted that the work wals done according to ithe eo-ntraat and 'accepted, the law has already made the assessment upon the 'abutting property -amd that amount is owing and it makes no- difference what apportionments the fboard may have made, the plaintiifs owe their part of the costs and that being so lare entitled to no injunction until they have first paid that which /the law provides. Whatever that amount -is, is a matttar of law, and the court will decide which of the apportionments' in the record is the one made by law, and one or the other should have been paid befoxtel any injunction is granted.

AUTHORITIES CITED.

Kentucky Statutes, -secs. 3560, 3572, 3567, 3565; -Constitution -of Kentucky, secs. 157, 171, 172, 174; Quill v. Indianapolis, 124 Ind., 292; 7 L. R. A., 680; Beard v. ICSIty of Hopkins-ville, 44 Amer. St., 237; Nevin v. Roach, 86 Ky., 493; Lexing*673ton v. McQuillan’s Heirs, 9 Dana, 514; Hyatt v. Louisville, 2 B. M., 177; Raíeigh v. Peace, 17 L. R. A., 334; Relinken v. Fuehring, 15 L. R. A., 27; Piearson v. Zable, 78 Ky., 172; Gooiley on Const. Limitation's, 4th ed., p. 630; Gosnell v. Louisville, 20 Ky. Law Rep., 524; Barfield v. Gleason, 23 Ky. Law Rep., 134; Preston v. Roberts, 12 Bush, 570; Ludlow v. Trustees Cinti. .Southern Ky. Co., 78 Ky., .560; Bradley v. McAtee, 7 Bush, 672; Loeser v. Redd & Brp., 14 Bush, 20; Broadway Baptist Church Case, 8 Bush, 515; State v. Jersey City, 29 N. T., 441, 449; 3 A. & E. Ency. Law, 886 (old ed.); Ciity of 'Covington v. Nadaud, 20 Ky, Law Rep., 151; Acts T893, chap. 241, p. 1211, &c.; Acts 1894, chap. 114, p. 343, &c.; Gleason v. Barrett, 20 Ky. Law Rap., 1696; Thompson v. Lexington, 20 Ky. Law Rep., 457; Mehler v. Richardson 23 Ky. Law Rep., 917.

W. H. WADSWORTH and PROCTOR K. MALIN, attorneys tor APPELLEE.

The theory upon which tlhie relief sought by . appellee is based, Is:

1. That the city of Catleittsburg has incurred am indebtedness in violations of sections 157 and 158 of thei Constitution of Kentucky, and

2. That the work ordered to be diome at itha expense of the abutting loit owners, is a work of reconstruction, which work musit be done .at the exclusive expense of the city, and can not •be done at the expense of the abutting lot owners.

We .are not aittejmphing; to enjoin ¡this collection of the taxes upon ithe theory that they were imposed as .an indebtedness created by the city lin violation of sections 157 and '158 of the Constitution, nor that the tax rate of the city of iselventyfive cents upon each $100 has been exceeded 'in violation of the first part of section-157 of the 'Constitution.

But the gist of the action lies' in the fact that (tb© latter part of said section 157 has been violated;, Which provides that “•no county, city, town, ¡taxing district, ¡or! other municipality ¡shall be authorized or permitted to become ¡ilmdelbteid *in my manner or for any •purpose, to an amount exceeding; in any) year, the income and revenue provided for such year,*.without the assent of two-thirds of .the voters thereof voting, at .an election be held for that purpose: ¡alad *any indebtedness*¡contracted in violation of this section *shall be void. Nor shall such contract be enforceable by the person with Whom made; nor shall such municipality ever be anithoriged to assume the same.”*

*674*it is conceded*that the eontaaot for 'this improvement was made -and the bondis 'ilsfeued according to section; 3574 of the statute, ¡in pursuance to, ¡the plan of ¡sfeation 3572 for making the improvement, all without providing a *revenue*undelr section 157 in that year for the payment of the whole debt, and all without *a*yate of the people as provided ini section. 157, and that this indebtedness 'Was ini *-excess*.of the *lajlviwance tin,*isection 158 of the Constitution.

Our contention is, that if ¡the bonds ane 'invailM, which they are, if the Constitution means what it sayls, and) ¡if ¡section. 3577, Kentucky Statutes, means what it isay», then the taxes appropriated can never he collected’.

The plain adopted hy the oilty council was that provided by Kentucky Statutes, section 3572, under which, ¡when the work is done, the council pays the contractor off, molt, wiilth apportionment warrants, or taxes, but by issuing an order upon, the city treasurer to pay same in full out of ¡the “public improvement fund,” which fund .is provided hy the issuing of bonds of the city hy the mayor covering the priictel of the work, and these bonds are sold and the money maltes the “.street improvement fund” out of which the city treasurer pays all orders wlhich the council may order for street improvement made under section 3572. These bonds and interest are paid hy assessments upon 'the abutting property and are a lien upon that property, and that the council did not pursue a wise oours© and take a vote of the people before incurring the tindebtedlneisis was no fault of the statute, hut of the counsel of Its advisors.

We ¡submit that the answer and amended .answer ¡of ¡the appellants .present no defense to the petatiosb and 'the demurrer thereto was properly sustained.

AUTHORITIES CITED.

Constitution of Kentucky, sections 51, 157, 158, 166; Kentucky Statutes, ¡secs. 3036 to 3103, 3449 to 3455, 3564, 3565, 3567, 3571, '3572, 3573, 3574, 3576, 3577, 3490, suhsec.. 34; ¡City of Covington v. McKenna, 99 Ky., 508; United ¡Shaltes v. Fort Scott, 99 U. S., 152; City of Henderson v. Lambent, 14 Bush, 30; Brawn v. Trustees of Oatlettsburg, 11 Busih, 5®5; City of Covington v. Nadaud, 20 Ky. Law Rep., 151; Tennessee Paving Oompany 'v. Barker, 22 Ky. Law Rep., 1069; Barker v. Southern Construction Co., 20 Ky. Law Rep., 827; Kinwin v. Nevin, 23 Ky. Law Rap., 947; Richardson v. Mebfer, 23 Ky. Law Rep., 917; Gieason v. Barnett, 20 Ky. Law1 Rep., 1696; Macklin v. Wilson, 20 Ky. Law Rep., 218; Levi v. Coyne, 22 Ky. Law Rep., 493; Hazel Green v. McNiabb, 23 Ky. Law-Rep., 811.

*675Opinion of ihe court bi'

JUDGE O'REAR

Reversing.

Appellant city belongs to the fourth class. Thirty years or more ago certain of its streets had been graded and macadamized, at whose cost is not shown. The improvement-was quite deficient. The city council in 1900 determined to improve these ways by building them of fire-clay street paving brick, and to make the cost of the construction a charge against the abutting property. The proceedings were taken under section 3572, Ky. St., which allows: “The original construction of any street, road, alley, market’ space, lane, public square or grounds, wharves, levees, or avenue, may also be made at the exclusive cost of the owners of the lots and parts of lots.or land fronting or abutting or bordering upon the grounds so improved, to be equally apportioned by the board of council according to the number of front feet owned by them respectively.” The ordinance requiring the improvement to be made under the-section quoted was regularly adopted. The contract was let to the lowest bidder, and as required by statute. The contract price of the whole work undertaken was about $25,000. The work has been completed as required by the specifications of the contract, and has been accepted by the city authorities. Under section 3574, Ky. St., the city issued bonds for the payment of the work. That section required the mayor of the city, when the work was undertaken under section 3572, to within 30 days after the signing of the contract issue the bonds of the city in such amount as the council might order, not exceeding the contract price of the work and the expenses of issuing the bonds, which bonds were made redeemable at any time within 10 years. Section 3575, Ky. St., provides an elaborate plan for the payment of the bonds and interest, the substance of which is: The funds arising from a sale of the *676bonds shall be kept separately and exclusively, and be known as the “Street Improvement Fund,” and be applied only to the purpose for which the bonds were by ordinance directed to be issued. As soon as the improvement should be completed, it should, with its accruing interest, be prorated against the abutting property by the front foot. The apportionment so made thereby became an assessment upon the abutting properties, collectible therefrom as other taxes, and secured by a lien on 'the property. It was collectible in annual installments, so that when collected it would liquidate the bonds. The bonds as provided for in the section last referred to were issued to the amount of $25,-000, “payable semi-annually from the date of same, and payable and redeemable not on the faith and credit of said city, but out of and secured by a lien on the assessments to be made and equally apportioned against said lots and parts of lots or lands,” etc. Thereafter the city undertook 4 to refund those bonds by substituting its unconditional obligation to pay the holders that much money in any event, pledging all the revenue and property of the city therefor.

This suit was brought by appellees, on their own behalf, as well as on behalf of all others similarly situated, who it was alleged were too numerous to be joined, but whose interest was one in common with appellees, obtaining an injunction against the collection of the assessments made by the city against the abutting property to pay the bonds in question. Appellees are owners of some of the property affected by the assessment. Two grounds were relied on to defeat the city’s right to require appellees’ property, by any sort of tax, to pay for this improvement: First, it is 'claimed that the work was not original construction, but was reconstruction, which is by statute (section 3565) to be borne by the city, and not by the abutting property; and, *677second, that, viewing it as a debt of the city, it was in excess of the income and revenues provided for that year, and, not having been authorized by a two-thirds vote of the taxpayers at an election held for that purpose, was therefore contracted in violation of sections 157 and 158 of the Constitution, and was by the terms of that instrument forever void. The learned circuit court sustained appellees’ attack upon the assesment, but upon which of the two grounds asserted we are not advised.

Paving the streets with fire-clay paving brick was a radical improvement. For aught the record shows, the old macadamized roadway was an incomplete and insufficient provision for accommodating the public travel. It was probably more in the nature of a temporary makeshift till such time as the growth, affairs and importance of the municipality would justify its making a more permanent and expensive roadway. In McHenry v. Selvage, 99 Ky., 232, 18 R., 473, 35 S. W., 645, a macadamized road had been taken into the city by an extension of its boundary. Upon the city’s directing it to be paved in accordance with a general plan of the street improvements, it was held that this was original, and not reconstruction, within the meaning of the statute. This was followed in Mackin v. Wilson (20 R., 218), 45 S. W., 663. This view of the law seems to have been founded upon the idea that, as the abutting property is most benefited by a radical and permanent improvement, it should bear the cost of it; but, where it has once done that, reconstructions in their nature resembling repairs should be borne by the entire municipality. Until the abutting property has once been compelled to bear this burden, it has not constructed originally the street, which, in justice to all other property within the city, and upon an equal basis under the statute, it should do. We are of opinion *678that the improvement in this case comes within the term “original construction,” as used in the statute. We have not overlooked City of Louisville v. Tyler, 111 Ky., 588, 23 R., 827, 64 S. W., 415. Even if the principle of that case is not opposed to MeETenry v. Selvage, the facts are variant enough to distinguish it from this case.

If these bonds, or the cost of this improvement, be deemed a debt or liability of the city, it is admittedly in excess of the revenues and income of the city for the year-1900 (when incurred), and would be void, because, not having been authorized by two-thirds of the voters of the city voting on that subject at an election held for that purpose, it would be in violation of section 157 of the Constitution. It is a-rgued for appellees that the fact that the city has assumed by its bonds to pay for this work makes the liability that of the municipality; that it is not material, as affecting the nature of the liability, whence the city derives its means of discharging it. The construction and maintenance of proper, roadways within its jurisdiction is one of the first duties of a municipality. In. the matter of selecting the time and manner of making such improvements, the town acts legislatively. So it does, too, in providing the manner of the payment for the improvement. It derives this legislative authority, including the power of taxation to that end, by its delegation from the State Legislature, in which is vested all the power of taxation in the State. That such improvements may be made, if. deemed advisable by the proper legislative body, at the exclusive cost of the property primarily and directly benefited thereby, within the limits of such benefit, is a doctrine too long and too often applied in this State, and generally everywhere, to now admit of question or need citation of authorities. When the city directs, as it may, that such improve*679ment be made at the exclusive cost of the abutting property, and the statute requires it to be borne in such event exclusively by the abutting property, the liability for the cost of the improvement is in no sense a personal one upon the city. The contractor must look aloné to the prdperty designated by the ordinance directing the improvement for pay for his work and materials. Gosnell v. City of Louisville, 104 Ky., 201, 20 R., 519, 46 S. W., 722; Becker v. City of Henderson, 100 Ky., 450, 18 R., 881, 38 S. W., 857. The city in this matter acts for the State in exercising the legislative discretion as to when, where and how such roadway improvements shall be made. The imposition of the cost, in the nature of a tax, is generally involuntary, so far as the person to bear it is concerned. The city council must and does act for him, in making the contract with the contractor, as to terms, price, etc. The statute has undertaken to break the payments of such improvements into installments, of such duration and amounts as will likely bear least oppressively upon the taxpayer. The council, by virtue of its statutory authority to contract for the taxpaying lot owner, executes the city’s bonds for the contract price. These bonds, by the terms of the ordinance under which they are issued, and of the statute upon which their validity is dependent, are payable only out of the “Street Improvement Fund,” which is to be collected from the property benefited by the improvement and charged with it.

A statute very similar to the one here involved, and under a like constitutional provision, was before the Indiana Supreme Court in Quill v. City of Indianapolis, 23 N. E., 788, 7 L. R. A., 681. The conclusions of that court appear to us to fairly state the nature and effect of the obligations. It said: “It is enough to say the remedy of the holders of the bonds or certificates is confined exclusively to the spe*680dal fund provided for, and to the collection of assessments by enforcing the lien upon the lots or parcels of ground assessed with' the cost of the improvement. The city is in no way liable for the payment of the bonds, except out of the special fund to be accumulated from assessments made against the property benefited. According to the scheme promulgated in the statute, in case the assessments are paid without delinquency, it is impossible for a single bond or certificate to mature in advance of the accumulation of a special fund devoted exclusively to its payment. If the assessments become delinquent, the remedy of the holders of the bonds or certificates is confined to the property. There is no liability against the city. The special fund provided for and the property are the sources from which the holders of the bonds and certificates must receive their pay, the city authorities acting merely as an agency for making and collecting the assessments, and as the custodian of the fund when the assessments are collected. In this they do not act as the agents of the city, but as special agents to accomplish a public end.”

We are of opinion that the bonds first issued in settlement of this work were valid, and not in conflict with section 157 of the Constitution. Whether the second issue of bonds — the refunding bonds referred to — wherein the credit and property of the city are pledged to the payment of the cost of the improvement, as a valid one, may be doubted. City of Covington v. Nadaud, 103 Ky., 455, 20 R., 151, 45 S. W., 498. But we are unable to see wherein appellees are prejudiced by that fact, for, if these are not valid, then they owe the others which were exchanged for them. There does not appear to be any question between the city and the holders of the bonds as to their validity, and if appellees and others liable therefor pay to the city the money owing *681for the improvement as required by the ordinance and the statute, and the money is applied to discharging the liens upon their property, it does not appear to us that the matter of the form of the indebtedness, as executed by the city, is of vital materiality to appellees. It is admitted that the benefits were more than double the cost of the improvement, and that the work has,been done in every respect according to the contract.

The judgment of the circuit court is reversed, and cause remanded, with directions to dismiss appellees' petition and to discharge the injunction.

Petition for rehearing by appellee overruled.