Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1905-09-29
Important Ruling OH Basis for
Determining Limitation Of
indebtedness
TOTAL NOT TAXABLE VALUATION
Iowa Supreme Court, All of the Judges
concurrine in tho Opinion, Holds
That the Limit of city's Legal In
debtedness is Five Per Cent of the
Value of All Taxable Property.

A recent decision of the state su-
preme court, ON the basis of ascertain-
ing city's limit of Indebtedness, wrich
is of much interest locally. in that Ii
of the many paving SUITS now pending
in the district court, has been made
public. The case, which was one car
ried up from Vinton, was brought by
N. w. Halsey 4 Company, against tins
town OF Belle PLANE, and was based
on whether or not Belle PLANE, in is
suing bonds for new water works,
had exceeded the limit of Indebtedness
Judge Bunrham, who decided the case
in the lower court, held that it had not
altho the debt exceeded per cent OF
the taxable value of the property Of
the town.
The case was carried to the supreme
court, which affirmed the decision, and
based it's affirmation on the holding
that the construction Of the law meant
per cent of the total valuation of the
towns property, and not per cent of
the taxable value, which IS just one
quarter of the total value. The opin-
ion was written by Judge Bishop, and
was concurred in by each OF the SUI
preme judges.
The Belle Plaine case was the out
growth of an attempt OH the part OF
that town to sell $4,000 worth OF
bonds, with which to build water
works system. Halsey & Co. were the
successful bidders. but one of the stip-
ulations of the contract was that each
bidder should deposit check for
$4,000, which, in the case OF the sue
cessful bidder should be, taken by the
city as part payment for the BOMBS,
which should be issued by the city lat
er to cover the cost Of building. When
the time came to take the bonds Hal
sey & Co. refused 10 do so, on the
claim that by issuing them Belle
Plaine would exceed its Lawful amount
of Indebtedness.
In the local paving cases the claim
is made that the city has exceeded its
limit Of Indebtedness, based on per
cent of the taxable value OF the city
property. This the supreme court hol Is
to be an erroneous way OF figuring
Its opinion covering this point in the
Belle Plaine case is as follows:
Now, at the time of the adoption Of
the constitution, and for that matter
continuing down to the appearance of
the present code, the law making prop
erty assessments for the purpose of
taxation recognized no other basis than
that OF full values. This was known
to, and we must assume was in the
minds of, the makers of the constitu-
ton. And from this it is an easy step
to the conclusion that in accepting
valuations as the basis from
which computation for limitation pur-
poses was to be made. no more was
intended than the meaning conveyed
by the literal reading of the provision.
If this view be sound, then an obse.v-
ance of such provision involves: First,
an inspection Of the tax list to ascer->
tain the amount of the taxable prop
erty, in value, in the city; and second,
avoidance Of debt beyond the limit Of
5 per- cent of such value
The inference locally is this: Here
tofore the limitation Of the city's in
debtedness has been based on call
culation which used s1,S13,593, the tax
able value of the property Of the city,
when, according to the above decision,
the total value, that of $7,245,372,
should have been used. AS the tax
able value is one-fourth that of the
real, the limit of the city's indebted
ness, based on the decision, would be
just quadrupled- from $780,
46O.55, which is per cent Of the tax
able value, to s362,71S60, which is 5
per cent of the real value. This hold
ing Of the supreme court will be made
a strong part of the argument present.
ed by the city in the paving cases.