Custer weekly chronicle. [volume] (Custer City, S.D.) 1890-1931, 1903-01-10
FUNDING BONDS VALID.
30 Held BY the State Supreme Court In
an Opinion Handed Down De.
cember 81, 1909.

In order to test the validity of Custer
County funding bonds, an original pro.
ceeding was undertaken in the supreme
court last fall, at which time the court
refused TO take original jurisdiction,
Then case submitted was prepared and
presented to Judge Rice at the adjourn
ed term ofcircuit court, December 8, lest,
resulting in judgment holding the
bonds valid. An immediate appeal was
perfected to the supreme court, and ow-
ing to coupons falling due January LIST,
1908, the court was urged to give an i'm
mediate decision. Through the interest
taken by Judge Corson, the matter was
pushed through and decided on Decem-
Der 3lst. Certain specific warrants rails
ing all possible questions were made the
subject of the action by injunction pro-
ceedings. The following is the opinion
handed down by the court:
This is an appeal from judgment in
favor of the defendant entered upon an
agreed case. 1t is stipulated in the state
ment of facts that in 1S95-6-7 there was
issued to Eta M. Drew general fund
warrants of the county of Custer to the
amount of several hundred dollars which
were duly presented for payment and
endorsed mot paid for want Of funds
and duly registered; that on July lst,
1902, the assessed valuation of Custer
county was 81 800, 900; that the outstand-
ing bonded Indebtedness was $7l ,0l9 ;
that the outstanding warrant indebted
ness of said county as represented by its
general fund warrants then outstanding
was $l26,0 that at the regular election
of 1901 the said county commissioners
duly submitted to the voters of said
county, under the provisions Of chapter
81 of the Laws Of 1901, the question of
refunaing the general warrant indebted
ness of said county and that q majority
of the voters Of the said county voted to
refund the same that said board, under
and by virtue of said act, has issued
funding bonds to exchange for said gen.
eral fund warrants including those be-
longing to Eta N. Drew and has ex-
changed 500, 900 in value Of the same and
is about to exchange $50, 900 for the bal
ance of the same; that from the year
1893 to 1902 inclusive the Indebtedness
of said county exceeded fiye per cent Of
its assessed valuation; that during each
and all of said years lsvies were made
for the county general fund which ex.
ceeded the amounts Of the warrants
drawn for said years; that large amounts
Of taxes levied for general fund purposes
have been compromised and large
amounts thereofhave been stricken from
the tax books as uncollectable 30 that the
general fund taxes collected during these
years was less than the amount of war
rants drawn against said fund; and that
the plaintiff is taxpayer ofsaid county.
The court concludes that the plaintiffs
application for an injunction should be
denied, his complaint dismissed and
judgment entered for the defendant for
his costs. Chapter 81, of the Laws of
1901, referred to provides, Each and
every county of the state is hereby au
thorized and empowered by and through
its board Of county commissioners when
ordered by majority vote Of the elec-
tors voting thereon, at a general or
special election called for that purpose,
to issue its negotiable bonds in the name
of the county corporation for the sole
purpose of refunding the outstanding in
debtedness which exists against said
county, Provided, that no bond shall
be issued under the provisions of this
act to pay or fund any Indebtedness ex-
cept such as ia represented by the legal
ly issued county warrants, or order Of
said county issued since January lst, A.
d. 1901, and prior to the passage and ap-
proval of this act, or such as is repre-
sented by the duly audited accounts or
claims against said county which have
been allowed since January lst, A. ID.
1891. and prior to the approval of this
act" 1t is in the act further provided
that in no case shall the amount Of such
bonds in the aggregate including the
then existing Indebtedness exceed FIVE
per centum of the value Of the taxable
within such county except that
the warrants or other Indebtedness taken
up by said bonds shall not be considered
or counted in arriving at the amount of
the constitutional limit Of the indebted
ness.
1t is contended on the part of the ap.
pellant that as it is stipulated in the
agreed statement of facts that the coun-
ty of Custer had a bonded Indebtedness
of $7l ,0l9 and an assessed valuation OF
81 800 900, 1t affirmatively appears that
said county had exceeded the limit of
five per cent Indebtedness allowed by
section four of article thirteen of the
which provides "The debt
Of any county, city, town, school district
or other subdivision shall never exceed
Eve per centum upon the assessed value
Of the taxable property therein" and the
bonds issued and proposed to be issued
are void. 1t will be noticed that it is
stipulated in the agreed statement that
at the time the county general fund war
rants were issued taxes had been levied
in excess of the amount so issued for
their payment. The warrants were
legally issued and constitute
legal Indebtedness Of the county. In re
State Warrants, 6 S. d. 5l8. 1t will be
noticed that by the act of 1901 provision
is made for refunding the legal indebt-
edness of the county in the form Of gen.
eral fund warrants by issueing bonds
therefor. 1t is further stipulated that
the warrants draw interest at the rate of
seven per cent per annum and tnat the
bonds are only to draw interest at the
rate of four per cent per annum. BY ex-
changing the warrants, therefore, for
bonds the indebtedness of the county
will not be increased but rather dimin-
ished and no new Indebtedness is, there
fore, created by the proposed refunding
scheme. A question quite analogous to
the one at bar was involved in the case
of National Life Insurance Co. VS.. Meade,
Is s. ID. 81, and we held in that case that
outstanding warrants issued
by the City of Pierre did not increase
the Indebtedness of the city and was not
In violation of the constitution.
This question was 30 fully discussed
and considered in that case and the
cases Of the City Of Mitchell vs. Smith,
IL 8. D. PAL; Hyde vs.. Ewert ct. al, S.
D., 91 N. w. 474; Ewert VS.. Mallery, S.
D., 81 N. w. 479, that q further discus
sion of the question in this opinion is