The Paducah evening sun. [volume] (Paducah, Ky.) 1906-1929, 1909-12-11
Before Money May. be Spent
in Retiring Outstanding
Bonds.
City Solicitor Gets High Court
Opinion.
ALL THE JUICES CONQUERED

The sinking fund OF Paducah must
be apportioned pro rata among the
outstanding bond issues. not only as
TO their amount, but the time Of
their maturity. before any OF the@c-
cumulated fund may be Invested by
the city In retiring outstanding bond
ed obligations.
This Is the dictum OF the court Of
appeals before which a friendly suit
was taken by the city Paducah has
$i5 600 In the sinking fund. drawing
four per cent Interest, while the
bonds outstanding draw four and
four and one-half per cent. Mayor
Smith thought u advisable In view
OF the double responsibility Of the
city and the bonded obligation and
the safety of the sinking fund. TO re-
tire bonds 90 the amount OF the ac-
cumulated fund Then Il was found
that. whereas the charter provides
that the sinking fund as It is appro-
priated must be apportioned among
the various bond issues. IL has al
ways been deposited In a lump sum
by the commissioners. Now the
court says, before any bonds are re-
tired the sinking fund must be APP
portioned. and only so much as Is
apportloned to each isme may be APP
piled In retiring the bonds OF that
Issue or buying them on the market.
The Opinion.
City Solisitor Campbell vas sue
oessful in getting a hearing before
the full court aud the written opln
ion OF the cour.. which he received
today on his return from Frankfort,
follws:
This case has been submitted TO
me as Judge OF the Court OF Appeals
on a motion TO dissolve the injunc-
ton granted by the circuit eonrt.
Chief Justice Num- and Judges Lass
ing and Carroll sat with me on the
hearing OF the motion. The facts OF
the case are these:
The city OF Paducah has outstand-
ing several series OF bonas issued by
the city at different tines for diner
ent purposes. Among them are Ger
tain bonds Issued by the city on al
subscription OF 100000 TO the cap
ital stock OF the Padueah and Ten
nessee Railway company The city
for a number Of years has been max
ing a levy for taxes apportioned to
the sinking fund, without specifying
In the levy what part of the tax was
TO 20 to any series OF bonds The
fund thus accumulated amounts now
to about s45, 900. The sinking fund
commission on November 22. 1909.
entered the following order:
at was ordered that the sinking
fund commission purchase outstand-
ing bonds OF the city OF Paducah to
the amount OF forty-five thousand
dollars (si5,OOO) except the bonds
issued TO the p. T. & A. railroad
maturing October LIST, 1920.
"All OF this action Is In accord
ance with the suggestion OF the city
solicitor. and with verbal report by
the mayor to the board of aldermen"
ms Nho
IL the holder OF two of the bonds is
sued TO the Paducah and Tennessee
Railroad company, which are indi-
Gated in the order by the words Eek
cept the bonds Issued to the p. T. a
A. railway maturing October 1,
1927 brought this suit to enjo!n
the sinking fund commission from
approprlating the whole of the sink
ing fund In its hands TO the pur-
chase OF other bonds. upon the
grounds that this would leave none
OF the sinking fund for the payment
OF the series Of bonds to which his
belonged The circuit court grant
ed the injunction as prayed and the
city authorities have entered a mo-
tion before me to dissolve Il.
Sec 159 OF the Constitution is as
follows:
Whenever any city. town. county,
taxing district or other municipality
Is authorized to contract an indebt-
edness. II shall be required. at the
same time, to provide for the collec-
ton of an annual tax sufficient to
pay the interest on said Indebted
ness. and to create a sinking fund
for the payment Of the principe!
thereof. within not more than forty
years from the time OF contracting
the same"
The legal eject of the tax levies
for the benefit of the sinking fund
made by the city OF Paducah Is that
the fund thus created was provided
az sinking fund for the outstand-
ing bonds, of the city. and each Sc
ries OF the bonds Is entitled ratably
to IT'S share of the fund To allow
the city to apply the whole sinking
fund TO the retirement Of one series