Court Opinion

ID: 3965157
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:24:51.751346+00
Date Added: 2024-06-11T07:43:51.082270
License: Public Domain

Plaintiffs in error, property holders and taxpayers in the city of El Paso, brought this suit to restrain said city and its officers from issuing its bonds to the amount of $175,000, for the purpose of securing a system of waterworks.
On the 11th day of August, 1893, the city council passed an ordinance providing, among other things not necessary to mention, (1) for the issuance of said bonds, to bear date October 1, 1893, with interest from date at the rate of 6 per cent, payable on the first days of April and October of each year, and to mature thirty years from date; (2) "that there is hereby created a special fund in the city treasury, to be known as the waterworks bonds sinking fund, and for that purpose, and to that end, there shall be collected annually and paid into said fund one-thirtieth of the principal of all said bonds, $5833.34, and also the interest accruing annually on said bonds, $10,500, to pay same, and *Page 174 
said moneys are appropriated to that end;" (3) "that there shall be and is hereby levied annually, upon each dollar ad valorem valuation of the taxable property in said city of El Paso, real and personal, the sum of 5 mills, or so much thereof as may be necessary, requisite, and sufficient to fully make, create, constitute, raise, and produce the said moneys required for the sinking fund and interest;" (4) "should the same be insufficient, then the proper assessing and collecting officers of said city shall, and it is hereby made their duty, annually, in due time, form, and manner, and at the same time other city taxes are assessed and levied, to compute, ascertain, estimate, and declare the sum of money required to be levied, taxed, collected, and raised upon, of, and from said taxable property, to fully and completely raise and constitute said sinking fund and interest, and when so ascertained, it shall be their duty to assess, levy, and collect same;" and (5) the duty is imposed upon the council and other officers of seeing that the provisions above are, from time to time, carried out.
It is contended, that this ordinance is void and insufficient to support the bonds under the Constitution, the general laws, and the charter of the city, for the reason, that it does not levy a tax, but delegates to the assessing and collecting officers the legislative power to make such levy from year to year.
The first question presented is, was it necessary, under the law, for the council to actually levy a tax running through the period of thirty years until the maturity of the bonds, at the time of providing for their issuance? By tax, as here used, we mean a fixed rate or per cent
of the assessed values, to be collected annually, without reference to the amount that would be realized each year, as values might advance or decline during the long life of the bonds. In order to determine the question, we must construe the provisions of the Constitution, the general law of 1893, and the charter relating thereto.
The Constitution provides, in article 11, section 5, that "no debt shall ever be created by any city unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least 2 per cent thereon;" and in article 11, section 7, that "no debt for any purpose shall ever be incurred in any manner by any city or county, unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least 2 per cent as a sinking fund."
The General Act of the Legislature, approved April 29, 1893, provides, that Commissioners Courts, city councils, or boards of aldermen, as the case may be, in authorizing the execution of bonds, "shall at the same time provide for the levy and collection of a tax annually of sufficient amount with which to pay the annual interest, and a sinking fund with which to pay such bonded indebtedness at maturity."
The charter contains no provision with reference to a tax levy or amount of sinking fund, but simply provides, that "when any bonds *Page 175 
are issued by the city, a fund shall be created to pay the interest and create a sinking fund to redeem the bonds."
Neither of these constitutional or statutory provisions requires, in express terms, the levy of a fixed rate or tax to be collected each year during the life of the bonds, without reference to the different sums that would be annually raised thereby, but they all require that provision be made for the annual collection, by taxation, of (1) the interest, and (2) a certain sum as sinking fund. They all use different language, but have a common purpose.
By requiring the annual collection by taxation of a "sum sufficient" to pay interest and provide the sinking fund, the gradual payment of the debt was secured, the taxpayers were given an annual warning of the amount of debt being imposed upon them by their officers, and the power of such officers, in contracting such debts, was limited by the restrictions placed by law upon the powers of taxation for such purpose.
The language and purpose of these provisions seem to be satisfied by an order providing for the annual collection by taxation of a "sufficient sum to pay the interest thereon and create a sinking fund," etc., though it does not fix the rate or per cent of taxation for each year by which such sum is to be collected, but leaves the fixing of such rate for each successive year to the Commissioners Court or city council.
To so construe these provisions as to require, at the time the debt is created, the levy of a fixed tax to be collected through a long series of years, without reference to the unequal "sums" that would in all probability be realized therefrom, instead of the collection annually of a certain "sufficient sum" to pay the annual interest and create the sinking fund required by law, would be doing violence to the language used, and authorize, in cases where values rapidly increase, the extortion from the taxpayers of large amounts of money in excess of the amount necessary to satisfy the interest and principal of the bonds, and this in turn would invite municipal corruption and extravagance. If it had been intended to require the actual levy of a tax at the time the debt was created, different and apt language for that purpose would have been used.
Applying these principles to the ordinance of August 11, 1893, above, it can not be held void as not being in compliance with the Constitution, law, and charter above cited. It creates a "fund" to pay interest and provide a "sinking fund" as required by the charter, and the amount of the fund stated in figures more than satisfies the Constitution, and fully meets the requirements of the Act of April 29, 1893. It then provides, that such sum shall be annually collected by taxation. It is perhaps difficult to give any plausible reason why this is not a full compliance with the law, for if an actual levy were required, the rate of taxation is a mere matter of calculation after the sum to be raised and the assessed values for a given year are known. *Page 176 
The order, however, proceeds further, and levies a tax of 5 mills, or so much thereof as may be necessary, to raise the given amount, and also provides, that if 5 mills be not sufficient, then a greater rate could be levied in order to realize the amount fixed to be annually raised for interest and sinking fund. This is, in effect, a restatement of the previous declaration that the $5833.31 sinking fund, and the $10,500 interest, should be collected annually by a tax of sufficient amount, when applied to the assessment of the particular year, to raise such sums, for it is clear that the order did not contemplate or "provide" for the raising of any other or greater sums, and did anticipate the necessity of levying a less or greater tax than five mills for that purpose.
Since we are of the opinion that it was not necessary for the council to make an actual levy of a specific tax at the time the bonds were ordered issued, and that they complied with the law by making "provision" for the collection of the interest and sinking fund, it becomes unnecessary for us to determine whether the order, by fixing the amount to be raised annually by taxation, whereby the ascertainment of the rate when the annual assessments were made became a mere matter of calculation, did not virtually amount to the levy of a tax varying each year with the assessment, and whether such order was a delegation of the power of taxation to the assessor and collector. The bonds, when issued, would be based upon and relate back to this order providing for the interest and sinking fund, and the order would be part of the contract between the city and the holder of the bonds. It would be the duty of the city council annually to levy a tax sufficient to collect the same, which duty the bondholder could enforce, but the validity of the bonds could not be affected by the failure or refusal to levy such tax, or by the levy of an insufficient tax during any year.
Plaintiffs in error contend, that the tax levied by the council in December, 1893, of 25 cents on the $100 was insufficient of itself to raise the sinking fund and interest, and therefore the bonds are void. From what we have said above, this tax, if it be conceded to be insufficient, would not affect the validity of the bonds, for the order of August 11, 1893, provided for the collection of the funds required by law, and the bonds, when sold, would relate back to and rest upon such unrescinded order as if they had been sold immediately, and the holder could compel the levy of a sufficient tax.
It is further contended by plaintiffs in error, that if the order of August 11, 1893, referred to above, be considered a levy of a tax of 5 mills on the dollar, or 50 cents on the $100, then the tax of 25 cents above must be added, making 75 cents on the $100, which they claim would be in excess of the city's power of taxation for such purpose.
As stated above, we have not deemed it necessary to determine whether the order of August 11, 1893, actually levied a tax, as we are of the opinion that it fully complied with the law bymaking provision for the collection of the interest and sinking fund by taxation; but if it be conceded to be sufficient as a levy of 50 cents on the $100, until *Page 177 
reduced or increased by the council, still we are of opinion that the special levy of December, 1893, was merely an attempt to carry out the provisions of the order of August 11, 1893, and the two can not be added together.
Plaintiffs in error further contend, that since the order of August 11, 1893, levied a tax of 50 cents on the $100, and since the council, on December 1, 1893, levied various taxes, amounting in the aggregate to $1.85 on the $100, which two taxes aggregate $2.35; or, deducting the 25 cents levy aforesaid, still leaves an aggregate of $2.10 on the $100, which is in excess of the city's power of taxation for all purposes, it being limited to 2 per cent — therefore the order of August 11, 1893, is for that reason void.
This contention can not be maintained, for if the order of August 11, 1893, be held sufficient as a levy of a tax of 50 cents, it could not be invalidated by the fact that the council subsequently levied other taxes which exceeded the limit of taxation. This proposition is not affected by the fact that the subsequent levy was made before the bonds were sold, for the order of August 11, 1893, as long as it stood unrescinded, was an appropriation of so much of the city's taxing power as might be necessary to satisfy its demands, and the bonds when sold related back to such order as above stated.
After a careful examination of the record, we are of the opinion that there is no error in the judgments of the trial court and Court of Civil Appeals in refusing an injunction, and they are affirmed.
Affirmed.
Delivered April 15, 1895.