City of Houston v. Allred

71 S.W.2d 251
CourtTexas Commission of Appeals
DecidedMay 2, 1934
DocketNo. 1785—6686
StatusPublished
Cited by40 cases

This text of 71 S.W.2d 251 (City of Houston v. Allred) is published on Counsel Stack Legal Research, covering Texas Commission of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Houston v. Allred, 71 S.W.2d 251 (Tex. Super. Ct. 1934).

Opinion

CRITZ, Commissioner.

This is an original mandamus proceeding instituted by the city of Houston, Tex., as relator, against Hon. James V. Allred, Attorney General of Texas, as respondent, to compel him to approve the transcript relating to the issuance of $2,502,000 worth of city of Houston waterworks revenue bonds. James W. and Henry M. Rockwell, individually and as independent executors of the J. M. Rockwell estate, and J. H. Pittman and E. D. Holt are made parties as co-respondents. The presence herein of the co-respondents will be explained later.

Relator is a home rule city duly incorporated under the laws of this state. It also operates under a special charter duly adopted. Relator has a population of more than 290,000 inhabitants according to the last preceding federal census, and owns and operates its own water system and gas system.

It appears that relator, by ordinance duly passed, adopted, and approved on November 8,1933, authorized the issuance of these bonds in the total amount above stated. They draw 4 per cent, interest per annum, and the principal is payable at the rate of $84,000 per year, beginning November 8, 1934, and ending November 8, 1963. They are secured by a deed of trust on the excess or net earnings of the waterworks system over and above what is required to pay operating expenses and the annual sinking fund and interest due on a prior issue of waterworks revenue bonds issued in 1926. These bonds can never be a debt or claim against the tax funds of the relator, but are secured only by the revenues of the water system above mentioned.

In issuing these bonds, the city, by ordinance, purports to act under article 1109a, R. O. S. 1925, as amended and re-enacted by H. B. 212, c. 36, p. 113, Acts First Called Session, 43d Legislature 1933 (Vernon’s Ann. Civ. St. art. 1109a), and under other statutes, including articles 1111 to 1114, R. C. S. 1925, as amended by Acts 1927, c. 194 (Vernon’s Ann. Civ. St. arts. 1111 to 1114), and under chapter 314, p. 783, Acts Regular Session, 42d Leg. (1931), which act was amended so as to add section 2a, by H. B. 810, c. 53, Acts Regular Session, 43d Legislature 1933. Chapter 314, Acts 42nd Leg. as amended, supra, is carried as article 1118a, Vernon’s Ann. Civ. St. It will be noted in this connection that section 2a as carried in the 1933 pocket supplement has been amended by H. B. 810, chapter 53, Acts Regular Session, 43d Legislature (Vernon’s Ann. Civ. St. art. 1118a, § 2a). The effect of section 2a as it now exists is to exempt cities and towns acting under article 1118a, supra, from the provisions of H. B. 312, c. 163, Acts 42d Leg., 1931 (Bond and Warrant Law of 1931), Vernon’s Ann. Civ. St. art. 2368a, with reference to notice, competitive 'bids, and the right to referendum, until after June 1, 1934. Also at this point we think the reference in the ordinance to [253]*253article 1111 to 1114, inclusive, should ¡be treated as surplusage as the authority for these bonds is found in the other statutes, if it exists at all. We also here call attention to the fact that article 1109a, supra, as amended by chapter 36, First Called Session 43d Legislature (Yernon’s Ann. Civ. St. art. 1109a), is not an exclusive statute, but is cumulative of all other acts pertaining to the same or similar subjects. We quote from section 7 of chapter 36 (Yemon’s Ann. Civ. St. art. 1109a, § 7), supra, as follows: “ * * * Provided, further, that nothing in this Act, however, shall repeal or affect any other legislation pertaining to the same or' similar subjects, but shall he cumulative of all Acts granting the power to all cities and towns, including home rule cities, operating under Title Twenty-Eight (28) of the Revised Civil Statutes of 1925, and it is not intended to limit or impair any power given by any other of such acts; nor shall any other Act be deemed to limit or impair the power of any city under this Act.”

Again referring to the 1926 bonds, it is shown that during said year relator issued and sold- $1,500,000 worth of waterworks bonds. These bonds bear 5 per cent interest per annum.. They mature as to principal $60,000 each year from 1927 to 1951, both inclusive. They were issued under and by virtue of the provisions of article 1109a, Yemon’s R. C. S. of Texas 1925, as it then existed, and are secured by a deed of trust on the physical properties of the water system and the rents and revenues thereof for the years they run. These bonds also can never be a claim against the tax funds of relator, but are secured alone by the physical properties and revenues above mentioned. We will go more into detail as to these bonds and the deed of trust securing the same later in this opinion. Since the issuance of the 1926 bonds, ■relator has promptly paid each installment of principal and interest thereon when due. In this connection it is shown that there has already been paid $420,000 on the principal, and that there is now outstanding $1,080,000 thereof. All such principal and interest has been paid as it matured out of the net revenues of the water system.

During the time the 1926 bonds have been outstanding, the revenues of the water system have been sufficient to pay all actual operating expenses of the system, the annual principal and interest on the 1926 bonds, and leave a so-called surplus each year ranging in amounts from $413,315.10 to $670,433.35. As we understand this record, this surplus has gone into replacements, extensions, and bet-terments for the water system, and has not been impounded. Only so much of the revenues as was necessary to pay accrued principal and interest on the 1926 bonds has been applied thereto or held therefor.

Relator sues the Attorney General to compel the approval of this bond record. It also sues the co-respondents, Rockwell et al., as the holders of some of the 1926 bonds. It sues them personally and as the representatives of a class; that is, as the representatives of all of the holders of the 1926 bonds. In this connection relator shows that the 1926 bonds are payable to bearer, and freely circulate in the open market, passing on mere delivery. It is then shown that they are owned by numerous parties, and that relator has no knowledge or record as to who they are; Relator shows that it has made diligent inquiry to ascertain the names of the holders of said 1926 bonds, and has. been unable to learn such names, except those that are made parties hereto. Finally it is shown that the co-respondents own among them about $140,-000 of the 1926 bonds. The co-respondents have answered herein to protect their own rights, and to protect the rights of all other 1926 bondholders. We think the facts justify their presence in both capacities, and that this suit can proceed to final judgment binding on aR 1926 bondholders.

The Attorney General has filed answer, and says that he has refused to approve these bonds because he has grave doubt as to their validity on account of the following law questions:

“1. That the proposed bonds constitute a debt of the City of Houston within the provisions of Sections 5 and 7 of Article XI of the Constitution, and that under the act or acts authorizing such bonds no provision has been or can be made for the levy of a tax to pay them, as is required by such sections of the constitution.
“2. That under the provisions of Article 1111, 1112,1113 and 1114 of the Revised Civil Statutes, 1925, as amended by S. B. No.

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