Court Opinion

ID: 3231164
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:06:38.984185+00
Date Added: 2024-06-11T12:46:20.632915
License: Public Domain

Since the adoption of the statute now constituting section 6553 of the Code of 1923, abolishing the motion to dismiss for want of equity, and substituting therefor the general demurrer to test the equity of the bill, and requiring other defects to be pointed out by special grounds of demurrer, it has been the rule of this court on appeal from interlocutory decrees sustaining demurrers to a bill that the question of nonjoinder of parties will not be considered, unless the point is taken by a special ground of demurrer. Singo et al. v. Brainard,173 Ala. 64, 55 So. 603; McDuffie v. Lynchburg Shoe Company,178 Ala. 268, 59 So. 567; Nelson et al. v. Wadsworth, 171 Ala. 603,55 So. 120.
On final hearing on the merits, and on appeal from a final decree where it appears the cause cannot be properly disposed of because of the nonjoinder of a necessary party, the objection may be made at the hearing or on error, or it may be taken by the court ex mero motu. Singo v. Brainard, supra; Prout v. Hoge, 57 Ala. 28.
Therefore we now hold that the question of nonjoinder of Kenan as a party defendant, treated in the foregoing opinion, is not presented on this appeal, and the holdings of that opinion are disapproved.
Under an ordinance, conceded by the averments of the bill to have been legally adopted and valid, assessing the costs of the improvements against the property affected, creating a lien as a security for its payment to the extent of the value of the improvements to the property, the appellee, the city of Greenville, has let a contract to one Kenan for the completion of street and sidewalk improvements on certain of its streets, the contract providing that, as the work proceeds, monthly estimates are to be made covering the work done and materials used, 90 per cent. of the costs thereof to be paid to the contractor at the end of each calendar month by the execution by the appellee of "valid legal notes authorized by the council." Attached to the contract, and made a part thereof, is a form of note which the appellee proposes to execute, and which, after a general promise to pay a fixed sum at a given date with interest at 8 per cent. per annum, contains the following provisions:
"To secure the payment of this note, the full faith, credit and revenues of the city of Greenville are sacredly and irrevocably pledged, and, in addition thereto, the city of Greenville does hereby transfer and assign to the holder hereof the lien of the city of Greenville against all of the property improved under the provisions of improvement ordinance numbered _____, adopted by the city council of the city of Greenville, Ala., together with all assessments to be levied under said ordinance, and all rights and remedies of the city to collect such assessments.
"Provided, however, that the city of Greenville has the option and right to pay this note in its improvement bonds issued under section 2223, and following the Code of Alabama 1923, which bonds will convey a lien on the property improved under said ordinance, and bear interest at 6 per cent. per annum, and be approved as to legality by competent and reputable attorneys. Said bonds will pledge the general faith, credit, and revenues of the city of Greenville to the extent of any difference, not exceeding $20,000, in the assessments collected and paid to bondholders and the amounts due or to become due on said bonds."
The contract provides for the issuance of improvement bonds, under the provisions of section 2223 of the Code 1923, in denominations of $1,000 each in payment of said notes, in which there is embodied the following clause:
"The city of Greenville hereby agrees to pay and pledges its general faith, credit, and revenues in favor of the holder of this bond and the holder of all other bonds of this series to the extent of any difference not exceeding $20,000 in the assessments under said ordinance collected and paid to bondholders, and the amount due and to become due under this bond and the other bonds of this series; such obligation to inure to the benefit of all holders of *Page 515 
this series of bonds pro rata, no distinction to be made between principal and accrued interest."
The estimated cost of the improvements covered and provided for in the ordinance and contract is $100,000.
The appellee is a city of less than 6,000 population, and its present existing indebtedness is a bonded debt of $145,000 principal and interest. The assessed value of the taxable property as assessed for state purposes is $2,070,000, and the appellant seeks to enjoin the issuance of the notes and bonds as provided in said contract, and a cancellation of the contract on the theory that obligations as expressed in said notes and bonds are ultra vires.
When the provision of section 225 of the Constitution is read in connection with the preceding sections, especially section 216, it cannot be a matter of doubt that the provision of section 225, limiting the powers of a municipal corporation to contract debts at a fixed per cent. of "the assessed value of the property therein," means the assessed value of the property as fixed for state taxation. So, on the predicate presented here, the appellee, for all purposes authorized, including special street improvements, for which it may pledge its liability, is limited to an indebtedness of $165,000, giving it a margin over its present indebtedness of $20,000, and to this extent it may issue notes or bonds under the provisions of section 2223 of the Code, pledging its general liability.
The appellee being one of the cities "not excepted from the provisions of the Constitution prescribing the limit of indebtedness which may be incurred by cities and towns," may issue "improvement bonds" under the provisions of section 2227 of the Code of 1923, in such amounts as it may deem expedient, the same to be a lien or charge against property improved within the limits of section 223 of the Constitution of 1901, and against the funds collected from the assessment levied against the property improved. Such bonds, however, may not be made the general obligation of the city or town, and, under the express provisions of the statute, the city or town is in no way liable to the holder of such bonds in case of failure to collect the same. Code 1923, § 2227.
The notes proposed to be given, which are attached to and made a part of the contract, are nonnegotiable, in that they do not carry an unconditional promise to pay in money, but provide that the indebtedness thereof evidenced may be discharged by the issuance and delivery of "improvement bonds," containing a clause limiting the appellee's general liability "to the extent of any difference, not exceeding $20,000, in the assessment under the ordinance collected and paid to the bondholders," and, even though it be conceded that, construing the contract as a whole, the notes pledge the general liability of the appellee for the payment of these notes, a question of some doubt, yet, so far as the averments of the bill go to show, the city may keep well within its constitutional debt limit by paying its notes in the bonds proposed before its general liability debt limit is reached.
Therefore, at most, the bill presents a case based on a mere apprehension of the complaint that the appellee will exceed its constitutional debt limit, and is without equity. O'Rear v. Sartain, 193 Ala. 275, 69 So. 554, Ann. Cas. 1918B, 593.
The decree sustaining the demurrer to the bill is free from error, and the application for rehearing will be overruled.
ANDERSON, C. J., and SAYRE, GARDNER, and BROWN, JJ., concur.