Town of Bardwell v. Harlin , 118 Ky. 232 ( 1904 )

Opinion of the court by

CHIEF JUSTICE BUBHAM

Affirming.

At the November election, 1901, two-thirds of the qualified electors of Bardwell, a town of the sixth class, voted to incur a bonded indebtedness of $9,000 to enable the town authorities to erect a waterworks for the benefit of the citizens of the town. In pursuance to this vote, 18 bonds of the town, for $500 each, due in 20 years, were issued and sold by the trustees of the town, realizing therefor, $9,660 in cash, which was paid into the town treasury. Prior to the creation of 'this indebtedness the trustees of the town had regularly levied a tax of 50 cents on each $100 of taxable property 'within the limits of the town to pay the current expenses thereof. After the issual and sale of the bonds in January, 1903, the trustees of the town, in addition to the usual levy to meet current expenses, by proper ordinance, levied a 'special tax of 50 cents on the $100 of, taxable property in the town to pay the interest on these bonds, and to create a sinking fund for the payment of the principal thereof at maturity. Whereupon appellees, residents and taxpayers of the town,, brought this action against the town and its collecting officer to enjoin the collection under the ordinance of so much of said levy as was in excess of 75 cents on the $100 of taxable property within the town, on the ground that to this extent the tax was ultra vires. The defendants, in their answer, plead the various ordinances authorizing them to incur the debt to build waterworks, and allege that the special tax of 50 cents was necessary to meet the interest on the bonds as it matured, and to pay off the bonds themselves at their maturity, and claim that in so doing they were within their legal and .constitutional power. A general demurrer was filed to this answer by the plaintiffs, which was sustained by the trial court; and, defendant’s declining to plead further, judgment was rendered 'enjoining and restraining the town authorities from collecting taxes under the levy in excess of 75 cents on each $100 of taxable property within the town, and the defendants have appealed.

The decision of the questions presented by the appeal involves the construction of sections 157, 158, and 159 of the Constitution. Appellants contended that the limitation Hv contained in section 157 of the Constitution of a tax rate of 75 cents on the $100 for towns and cities having less than 10,000 inhabitants only applies to the rate of taxation which may be levied by the municipal authorities for the ordinary current expenses of the town, and does not apply do an indebtedness which has been created by a vote of the electors ; that, as to indebtedness of this character, section 159 of the Constitution expressly confers the authority and makes it the duty of the municipal authorities- to levy such •additional tax as may, in their judgment be necessary to provide the means for the extinguishment of a -debt so contracted by a vote of the people. The sections referred to were plainly intended to limit the tax rate and indebtedness of municipalities of every class by fixing a; maximum tax rate and per centum of indebtedness upon the assessed valuation of property therein, beyond which they could never go except, first, for school purposes; second, for the purpose of paying the interest and providing a sinking fund for the extinction of indebtedness contracted before the adoption of the Constitution; and, third, where the public health or safety of the municipality should so require.

Section 157 expressly provides that for other than school purposes the tax of all cities and towns having less than 10,000 inhabitants shall not exceed 75 cents on the $100, unless it be necessary to enable such city to pay the interest on, and provide a sinking fund for the extinction of indebt edness contracted before the adoption of the Constitution.

Section 158 provides that towns of the class to which Bardwell belongs shall not be authorized or permitted to incur indebtedness to an amount, including existing indebtedness, exceeding in the aggregate 3 per centum on the value of the taxable property therein, to be estimated by the assessment next before the last assessment, unless before the adoption of the Constitution such municipality had incurred an indebtedness in excess of such limitation. And to still further emphasize the purpose of the contention, it was expressly provided by section 159 that when any city, town, taxing district, or other municipality was authorized to contract an indebtedness, it should be required at the same time to provide for the collection of an annual tax sufficient to pay the interest thereon, -and to create a sinking fund for the payment of the principal thereof within not more than.40 years from the time of contracting the same. An examination of the debates which followed the report of the committee on municipalities in the constitutional convention shows that this was the construction placed upon the section ■at that time. The chairman of the committee, in explaining the provisions of the report, used these words. “The second, third, and fourth clauses relate to and control the power and methods of taxation. Property holders must have some ■rights, even against a majority. Unlimited taxation may mean confiscation, and the citizen has a right to know that there is a limit beyond which no taxation can ever go.” The construction contended for by appellant would have the effect of entirely abrogating the limitation contained' in these constitutional provisions for the protection of taxpayers. These sections were construed in Whaley v. Commonwealth, 110 Ky., 154, 23 R., 1292, 61 S. W., 35; O’Bryan v. City of Owensboro, 113 Ky., 680, 24 R., 469, 645, 68 S. W., 858; Sparks v. Robinson, 115 Ky., 453, 24 R., 2336, 74 S. W., 176; and in each of these caseá the construction indicated herein was adopted. In our ,'op'inion, appellant has no power to levy or collect a tax in excess of 75 cents on the $100 upon the value of the taxable property of the town. Judgment affirmed.

Petition for rehe'aring by appellant overruled!.