Court Opinion

ID: 9670094
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:14:35.20525+00
Date Added: 2024-06-11T18:16:02.442534
License: Public Domain

SICKEL and LEEDOM, JJ.
(dissenting). We disagree with the majority of the court in the disallowance of the notes and subscriptions in the hospital fund as a credit against the city debt. We think they are a proper offset under the record before us and the rule of law discussed at 64 C.J.S., Muncipal Corporations, § 1849d.
*576Since a municipality is authorized to accept gifts toward the construction of a hospital, SDC 45.0201 (13), and SDC 45.0202(2) as amended, and usual business procedures involve taking promises to pay in the form of subscriptions and notes, a court in our opinion is not warranted in assuming without evidence that such promises to pay will not be performed.
The debt incurred by the city for construction of the hospital amounted to $99,268.34. Toward this cost the city legally issued bonds for $42,000. Then to avoid a violation of the constitutional debt provision the governing body in cooperation with interested citizens created the other fund not dependent on taxation to pay the additional cost of $57,268.34. This fund consisted of forty $1,000 notes of the hospital association, each guaranteed by a citizen of the community, $9,000 cash and $13,005 in citizens’ subscriptions of less than $1,000 each. When the contracts for hospital construction were signed the fund of notes, subscriptions and cash amounted to $62,005, whereas the debt against which these assets were to be applied was only $57,268.34. At the time of trial it was stipulated into the record that of the $40,000 in notes, $28,300 exclusive of interest had been paid leaving unpaid notes of $11,700; and that $8,810 had been paid on the $13,005 subscriptions leaving $4,195 unpaid. By the time of trial collections on the notes and subscriptions amounted to $37,110 and with the $9,000 cash reduced the nontaxable debt of the city ($57,268.-34) to $11,158.34. Against this debt there remained for the benefit of the fund at time of trial $4,195 of citizens’ pledges and $11,700 of guaranteed notes or a face value of $15,895 to cover the $11,158.34 debt.
This record of payment in itself in the absence of evidence that the promisors are insolvent compels the conclusion that the fund set up to take care of the nontaxable cost of the hospital is a solvent and an adequate fund. The majority opinion presumes the insolvency of the debtors, whereas an established rule of evidence presumes a debtor’s solvency. 20 Am.Jur., Evidence, § 241. Furthermore since this court has held that the constitutional limitation operates only “on actual municipal indebtedness for the payment of *577which taxes must be levied”, Williamson v. Aldrich, 21 S. D. 13, 17, 108 N.W. 1063, 1064, quoted in the majority opinion, it seems entirely logical that the respondent here, whose case depends on the inadequacy of a fund shown by appellant to be lawfully created and prima facie adequate to avoid a constitutional violation, would have the burden of proving that the debt is in fact a taxable debt. This would require respondent to show the nontaxable fund inadequate and its debtors insolvent. Respondent has not met this burden.
As we view this record there was no illegal contract on the part of the city and therefore no taint of illegality in the respondent’s promise to pay the note. He therefore should be required to pay as he promised to pay. Such holding would be well within the precedent set by this court in re Opinion of the Judges, 38 S.D. 635, 162 N.W. 536 and in addition free of even the remotest possibility of casting a burden of taxation on the taxpayers. This action does not involve municipal liability.