Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-02-28
NO CONSTITUTIONAL MEANS FOR RAISING
NECESSARY FUNDS FOR BUILDING new
Junior HIGH SCHOOL BUILDING IN CITY

not an attempt to avoid the debt |
unit or the City but was a proper
municipal corporation for this pur-
pose occupying a position similar to
school or water district. The dis
cussion in this case makes clear the
general rule. stated by many cases
IN other Jurisdictions. that subter-
1uges to escape the effect of the con-
stltutlonal debt limit provision will
not DE tolerated by our Court lex
cept the district arrangement which
mas always been to me to be a sub |
terfuge)
Replying particularly to your in
curry regarding the computation of
particular items in determining
DEBT or liability under the Statu- |
tory provision.
Replying particularly to your in
qulry regarding the computation of
particular items in determining
debt or liability under ethe statu-
tory provision"
A bond issue is, of course, a debt
or liability and is to be included. |
Amount set aside for sinking fund, |
whether by express provision in the |
BOND itself or by voluntary act of the |
borrower, cannot in my opinion, be |
included to reduce the Indebtedness
although they do in fact have the
effect of reducing it. Assets may
not be Subtracted from liability in
order to figure percentage on net
liability. Lovejoy V. FoNcroft, 81
Maine, $50
In computing Indebtedness to as
certain whether it is within the linn
1t. the Courts do not permit the de-
ductlon of assets; the debt stands
alone. Even cash in the treasury
for the purpose of paving bonds can
not be deducted. Waxahatchie V.
Brown. Tex. SO: so neither o.. I'M
collected taxes nor the levy rdr the
present year be deducted. Council
Bluffs V. Stewart, 81 Iowa. $50
Reynolds V. Wateryille, 81 Maine at
321
Sinking funds or any amounts set
aside which would be properly taken
into consideration in figuring the net
debt Of a municipality cannot be
charged against the debt under this
constitutional provision, in my opin-
ion.
Current bills, which are met in
the regular course of business, are
not included to increase the debt,
but the several thousand dollars
balance due on the Fire Truck is a
liability to be included and does not
fall within the class of current bills
in my opinion.
Any amounts which the City has
used from Trust Funds committed
to its care are not, of course, current
bills, but are debts and debts of a
peculiarly important sort. These
must be included in the computation
Of ha o If
the city has no relation. of course,
to the right of the city to receive
funds in trust and invest those
funds within limits in certain city
Improvements in which case the In
debtedness created is not construed
to increase the constitutional limit
on Indebtedness.
Aver v. Bangor. SIS Maine. ST.
The temporary loan placed anew
annually to be paid out of money
raised by taxation during the year in
which it is made is not. by specfica-
ton provision in the constitutional
provision. article twenty two, to be
included. In this connection, how
ever. the carrying of such a loan for
a considerable period of years might
establish it as an Indebtedness to be
included under the constitutional
provision when it appears it really
is not n temporary loan at all.
Summarizing: Our board Of educa-
ton and annual school meeting is
not a municipal corporation with
borrowing power. We are limited by
our constitutional five percentum
provision. Nothing can conceive of
except school district or annual ap-
propria lions with transfer OF balance
to temporary loan can accomplish the
end proposed. Bond issue without |
deduction of sinking fund, balance
due on fire truck, amount due on
trust funds improperly used hereto
fore and any other liabilities which
are not current and in the general
course of business are included in
the computation, except the $4,000
temporary loan in anticipation of
taxes, which regardless Of the au-
thority under which it was first
placed. may he construed as liza
bility to be computed if this practice
continues long enough.
trust | have answered your ques-
ton.
Yours !ery truly.
(Signed) HERBERT +. LOCKE.
supplementary Letter
A further supplementary letter In
explanation of certain sections of the
original opinion was sent ~ Mayor
Mclean Friday afternoon by Attor-
ney Locke, and Is as follows:
February 21, 1925.
Hon. F.. l.. Mclean,
Augusta. Maine.
Dear sir:
"Supplementing my letter of
February 10 in regard 20 raising
money for the erection Of school
building, and the constitutional
limitation of Gebt in that connec-
ton:
1.-The 5000 Temporary loan in
anticipation of taxes" which has as
understand icen carried as such
bv renewal each year for five or six
years, cannot possibly be considered
such, in view of the circumstances
under which it was contracted and
is history since. No attorney for a
londing house engaged in the COM
rutation of the City's debt Limit
could possibly consider this de-
ductible temporary loan. To be
such under the constitutional Drovi- |
sen it must have been in an amount
which would reasonably be expected
to be paid from taxes Of the current
year. Such was not the case here.
Further, if it was in proper anti
cipation of taxes. the failure to pay
it, and the carrying of it by new
notes each year for several years
would clearly establish it to be a
running debt of the City and not d
temporary loan. The true circun-
stance and not the description given
the transaction by the borrower Is
the test. This $4,000 must De in
cluded in the computation of our in
debtedness for this purpose. Love-
joy VS.. Foxcroft. 81 Maine, 367. the
leading case on this subject: opinion
Of the Justices. 81 Maine, 602.
will ha clod rnonoraio with