Hall Lithographing v. Bd. of Comrs. of Roger Mills

1899 OK 100, 58 P. 620, 8 Okla. 378, 1899 Okla. LEXIS 74

• Court: Supreme Court of Oklahoma
• Decided: August 25, 1899
• Status: Published

Opinion

Opinion of the court by

Hainer, J.:

The only question to he considered and determined in this case upon the agreed statement of facts is whether the plaintiff in error, Roger Mills county, had the power to create a valid indebtedness, and issue warrants as an evidence thereof, prior to the making of an assessment for territorial and county taxes, within the purview of section 4 of the act of congress approved July 30,1886, which is as follows:

“That no political or municipal corporation, county or ■other subdivision of the territories of the United States, shall ever become indebted in any manner or for any purpose to an amount in the aggregate, including existing indebtedness, exceeding 4 per centum on the value of the taxable property within such corporation, county ,or ■subdivision, to be ascertained by the last assessment for territorial and county taxes previous to the incurring of such indebtedness; and all bonds or obligations in excess of such amount given by such corporation shall be void, Thlat nothing in this act contained shall be so construed as to affect the validity of any act of any territorial legislature heretofore enacted, or of any obligation existing or contracted thereunder, nor to preclude the issuing of bonds already contracted for in pursuance of express provisions of law; nor to prevent any territorial legislature from legalizing the acts of any county, municipal corporation, or subdivision of any territory as to any bond® heretofore issued or contracted to be issued.”

It is admitted by the agreed' statement of facts that at the time the indebtedness was created no assessment had been made in Roger Mills county. It is further agreed that the first assessment for territorial and county taxation was completed July 20,. 1893. and that the aggregate amount of said assessment. was $186,369.84. It further appears from the agreed statement of facts that the total amount of outstanding indebtedness of said county including the warrants in question, was only $3,564.83. It is conceded that the warrants in question were issued for a lawful, corporate purpose, and that the indebtedness was created for the purpose of furnishing books, records, and stationery for the use of the county officers, and for the purpose of conducting the ordinary business affairs of the county. It is also conceded that, if said act of congress is a prohibition on the powers of municipalities in the various territories to create any debt prior to the making of an assessment, then the warrants sued upon in this action are void, and the defendant in error cannot recover.

On the other hand, it is contended by the defendant in error that, notwithstanding the fact that no assessment had been made, said county had the power to create the indebtedness for a lawful' purpose to carry on the ordinary affairs of local government, and issue warrants as an evidence thereof, to the extent of 4 per cent, of the taxable property therein.

This same question has been construed by this court in several well-considered cases. In the case of Hoffman v. Commissioners, 3 Okla. 325, 41 Pac. 566, which involved the validity of certain warrants issued by Pawnee county prior to an assessment, this court held that the act of July 30, 1886, has been modified, as to its effect in Pawnee county, prior to the first assessment for territorial and county taxes, by various acts of congress, so that said county may contract a debt not exceeding 4 per cent. of the taxable property therein, to be ascertained1 by the first assessment. It was further decided by the court in that case that “an indebtedness created in Pawnee county within the provisions of the law, not in excess of 4 per cent, of the value of the taxable property therein for territorial and county taxes, prior to the first assessment, is a valid.and binding obligation against said county, and all bonds or obligations in excess of such amount are void.”

In the case of Sauer v. McMurtry, 4 Okla. 447, 46 Pac. 576, it was held that: “An indebtedness contracted or /incurred for necessary and lawful purposes by .any political or municipal corporation or any subdivisión of the Territory of Oklahoma created and existing under and by virtue of the Organic Act and the 'laws of the Territory of Oklahoma, prior to the taking of the first assessment for the purpose of territorial and county taxation, is valid if issued within 4 per centum of the value of said taxable property as ascertained when said first assessment has been made, and warrants may be issued in evidence thereof.”

The same rule was followed by this court in the case of McMurtry v. Commissioners, 6 Okla. 60, 55 Pac. 1069.

Bult it is contended by counsel for plaintiff in error, in an able and elaborate brief, that these decisions do not correctly -state the law, and that this court should overrule them. It is contended that section 4 of the act of congress of July 30, 1886, has not been modified by the various act® of congress and the Organic Act of the Territory of Oklahoma, and that it is now, and1 has been since the adoption of the Organic Act, in full force ‘and effect in this Territory. It is further contended that said act is a grant of power in relation to the creation of the indebtedness by various municipalities, in this Territory, and that it must be strictly construed; and that a valid indebtedness in the various municipalities of this Territory must be based upon the last assessment made for terrritorial .and county purposes previous to. the incurring of such indebtedness, and that, in the absence of such an assessment, there is a total want of power to create any indebtedness, within the provisions of said act.

This contention' of the plaintiff in error is supported by the decision of this court in the case of City of Guthrie v. New Vienna Bank, 4 Okla. 194, 38 Pac. 4, which involved the validity of certain provisional debts created 'by various subdivisions of the city of. Guthrie prior to the adoption of the Organic Act of Oklahoma, and before any provision had been- made for the assessment of property for the purposes of taxation. In this case thle court held that: “When there has been no assessment of property for the purposes of taxation, there is no power to incur indebtedness. Two factors enter into the power of cities to become indebted, — one, the assessment of property for territorial and county taxes previously made; the other, the aggregate amount of debts existing. If the first factor is absent, there is no authority to become indebted, and' all debts incurred or imposed prior to such assessment are void.”

We think that this proposition ■ is untenable, and is not a proper construction of the act of congress. The manifest intention of congress was to limit the amount of indebtedness that may be created by the various municipalities in the territories of the United States, and not to prohibit them from incurring any indebtedness for the purpose of carrying on the ordinary and necessary functions of local governm|ent. Congress- no doubt presupposed that the various municipalities, had the express or implied power to incur an indebtedness for the purpose .of carrying on the ordinary affairs of local government. Manifestly, it was not the intention of congress to prohibit newly-organized -counties or municipalities to incur indebtedness to the extent of 4 per cent, of the taxable property within such county or municipality. If the rule that, “when there has been no assessment of property for the purpose of taxation, there is no power to incur indebtedness,” is .true, then the act of congress must be construed to be a grant of power upon the municipalities to create indebtedness, and not -a limitation thereon. It is true that in determining the limit of power — that is, the ■amount of indebtedness which .a municipality may create —two factors are to be considered: (1) The amount of warrants or -other obligations that have-been issued; and (2) the amount of the assessed value of the property within the corporation for -the purposes of taxation, to be ascertained by an -assessment for territorial -and county taxes previous to the incurring of such indebtedness. These two important factors are not the source of municipal power to incur indebtedness, but they are the two neces-sary factors by which the limitation is to be determined. Hence the ascertainment of the amount of taxable property within the corporation is -the means ■of determining whether or not the federal limitation has been reached or passed, and it is- not to- be regarded as the source of power upon which any indebtedness- can be created. The fact that a newly-organized county or municipal corporation has been unable to- make an assessment does not warrant us in construing this act to mean that there is a total want of power to create any indebtedness within such county or municipality,! regardless of the amount of taxable property .therein. And this contention of ours is sustained by the supreme court of Washington.

In the case of Childs v. City of Anacortes, 32 Pac. 217, the -supreme court of Washington, in construing the constitutional limitation of that state involving the validity of certain warrants issued by the city of Anacortes prior to -the making of a regular assessment, decided that the constitutional prohibition- against the city’s incurring any indebtedness in excess -of 1-J per cent, of the value of tbe taxable property within its limits is not a source of the city’s power to incur indebtedness, but a limitation on such powers, and hence a newly-incorporated city has the power to incur indebtédness before the value of its taxable property is ascertained; the presumption being that it is acting properly in so doing. Mr. Justice Hoyt, in delivering the opinion of the court, sai-d:

“It is contended on the part -of the plaintiff that, until there has been an ascertainment of the value of the taxable property within the city, as shown by the -regular assessment r-ol-l for city purposes-, th-e city co-ul-d incur no indeht-ednesis-.; that the constitution prohibited the city f-r-om incurring an indebtedness in -excess o-f 1-J per cent, of -the value of the taxable property -so ascertained; and' that, until such valuation was made to- appear, there was nothing to show what indebtedness the city could legally incur, and that, for that reason, it eoul-d incur none at all. It is further contended in his behalf that the attempted ascertainment -of the valuation of the taxable property in 1891, as above stated, was entirely ineffectual, for the purpose of establishing the data upon which th-e 1J per cent, of th-e indebtedness could he estimated. We are unabl-e to agree with either -of these contentions. In- o-ur opinion, the provision of the constitution ns to the amount of indebtedness which, may be legally incurred! by a city is a limitation upon the powers thereof, and not a grant of the right to incur indebtedness. Without this provision of the constitution, it would have been competent for the city, acting under authority from the legislature, to -have incurred any amount of indebtedness. This being so-, it follows that the provision of the constitution is a limitation, and not a grant. If, without the provision of the constitution, tbe city could' incur, not only an indebtedness to the amount herein named, but -also- to any further -amount within the limitations of its charter, it cannot, with any degree of consistency, he claimed that it must look to such provision as the -source of its power to incur indebtedness. Such provision being, then, a simple limitation, it could- have no effect u-p-on the city until the data which gave life to -such limitation had been first ascertained. It will be presumed, in the absence of a showing to the contrary, that the city, in incurring any indebtedness, acted properly, and the fact that it exceeded the limitation authorized by the constitution could never be made to- appear until the valuation upon which the percentage named in suc-h provision is -to- he estimated had been established as required by law.”

In the case of Hoffman v. Commissioners, 3 Okla. 352, 41 Pac. 574, Mr. Justice Scott, speaking for the court, said:

“It may be further asked if, under this construction, Where is any limit at all before -an assessment is made? I<n answer to this we would1 be compelled to h-oild that, until an .assessment has been made, section 4 can have no application whatever, (1) because no assessment has ever been made and (2) because, under the statute, there is no means of applying the 4 per cent, limitation, except upon the basis laid by the assessment. Four per cent, of the value of the taxable property prior to -an assessment is an unknown quantity, -and canno-t be mathemat ieally determined', and section 4 of said act can -only bé bold to be wholly applicable -or wholly inapplicable, prior to making an assessment. It would be a mistaken- view to hold that section 4 makes' reference to- the last assessment as a period when the first indebtedness must be incurred, instead of regarding it as a basis- for the ascertainment of the amount of indebtedness that may be created. This must be true, for in 1886, when the act was passed, there was no territory in existence where no assessment had been made therein, and said act was passed with special reference to -existing territories and ’existing indebtedness, counties- completely organized and equipped, and assessments of the taxable property made therein. There is a goo-d rea,son in regarding section 4 inapplicable prior to 'an assessment, but not after-wards. After the assessment is made, this municipality comes clearly within the statute.”

Applying these principles to- the case at bar, we are •clearly of the opinion that section- 4 of -said act does not become -operative until the value -o-f the taxable property within the county or'municipality has- been ascertained by an assessment for territorial and county taxes, for the reason that, until such an assessment has been made, there is no means of determining the value -of the -tax-able property within the c-o-unty or municipality, -and hence there is no standard for ascertaining the limit -of indebtedness that may be created within the purview of -said act; that said act of congress presupposes an assessment, and, until the value of the taxable property within the corporation is ascertained, the law cannot become effective.

W-e therefore h-o-ld that the plaintiff in error, the board of county commissioners of Ro-ger Mills county, had the power to incur -a valid indebtedness, and issue warrants as an evidence thereof, prior to the making of an assess- men-t otf the taxable property within said county for the purposes of territorial and county taxation.!, to meet the ordinary and necessary expenses of carrying on and conducting the functions of county government; ‘and the incurring of such an indebtedness is not in violation or section 4 of the act of congress of July 30, 1886, which prescribes, among other things', that no county shall ever become indebted in excess otf 4 per centum of the value otf thfe -taxable property therein, to be ascertained by the last assessment for territorial and county taxes. previous to the incurring of such indebtedness. For the-reason® -herein stated, we are of the opinion that the judgment of the district court is right, and it is therefore affirmed.

Burwell, J., not sitting; McAtee, J., and Irwin, J., concurring; Burford, C. J., dissenting.