State ex rel. Merydith Construction Co. v. Dean

95 Ohio St. (N.S.) 108
CourtOhio Supreme Court
DecidedDecember 5, 1916
DocketNo. 15427
StatusPublished

This text of 95 Ohio St. (N.S.) 108 (State ex rel. Merydith Construction Co. v. Dean) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Merydith Construction Co. v. Dean, 95 Ohio St. (N.S.) 108 (Ohio 1916).

Opinion

Nichols, C. J.

This is an original action in mandamus instituted by relator in the supreme court of Ohio to require respondent, Percy W. Dean, as city auditor of Ironton, to officially sign a certain issue of bonds in the sum of $375,000, authorized by the council of such city, the proceeds of which were to be employed in the construction of a filtration plant for the purification of the water supply of Ironton.

This improvement was undertaken in response to a peremptory order of the state board of health, made on February 20, 1913, approved by the gover[110]*110nor and attorney general on April 23, 1913. This order commanded the city of Ironton to install and put in operation a water filtration plant of a design satisfactory to the state board of health. Such order was issued in pursuance to authority conferred on the state board of health by the provisions of Section 1249 et seq., General Code, commonly known as the Bense act.

Thereafter, plans, specifications and estimates for the construction of such filtration plant were formulated and submitted to and approved by the state board of health.

On March 3, 1916, the council of Ironton duly passed an ordinance providing for a bond issue in the sum of $250,000 for the purpose of securing funds to construct and install such water filtration plant.

On June 13, 1916, the council of such city passed its further ordinance, amending Section 3 of the ordinance of March 3, 1916, the amendment involving simply a change of the rate of interest from four to four and three-fourths per cent., it having been demonstrated in the meantime that four per cent, bonds would prove unmarketable.

On June 19th an additional ordinance was adopted by council providing for a second issue of bonds, the amount thus authorized being $125,000, making a total of $375,000, it having been ascertained that it would require this larger sum to complete the improvement.

Both issues of bonds so authorized were offered as one, and bids were received. The successful bidders refused to accept the bonds and thereafter [111]*111a bond-buying firm, Spitzer, Rorick & Co. of Toledo, entered into a contract with the city authorities for the purchase of the entire issue, and the bonds having been duly prepared and signed by the mayor were presented to the respondent, the auditor of the city of Ironton, with request that he sign the same. The auditor refused, and still refuses, to sign.

On May 27, 1916, the city of Ironton entered into a contract with The Merydith Construction Co., the relator in this action, for the construction of a part of said water purification plant, at the contract price of $79,617.

Acting under such contract the relator has proceeded with the work of construction and there is now due and unpaid to it upon approved estimates the sum of $15,000.

The only funds that can be made available for the payment of such estimates due relator, and the amounts yet to become due, are the proceeds of the bonds so sold to Spitzer, Rorick & Co., who are willing, ready and able to cover the full proceeds of the same into the city treasury on the signing by the auditor and delivery to them of such bonds.

The tax duplicate of the city of Ironton is approximately $16,000,000. Its total bonded indebtedness, exclusive of the issue under consideration, is $575,000. Of this amount $228,000 represents bonds issued to refund bonds representing an indebtedness incurred prior to April 29, 1902, and $24,000 represents bonds issued for the payment of obligations arising through the emergencies of flood and smallpox.

[112]*112By the terms of Section 3949, General Code, these issues of $228,000 and $24,000, respectively, are not to be considered as affecting the bond-issuing capacity of the municipality.

By the statutory definition given the term “net indebtedness,” employed in Section 3941, General Code, we find that the bonded indebtedness of Iron-ton for the purposes of this inquiry is to be still further reduced by approximately $100,000, being the amount held in the sinking fund for redemption purposes.

The net bonded indebtedness of Ironton, then, with which we are concerned, is approximately $225,000.

The evidence on this subject is quite indefinite and somewhat unsatisfactory, but the highest total with which we must reckon does not exceed $225,000.

The main questions involved in this controversy are:

1. The authority of the city, of Ironton to issue its bonds for the filtration plant in excess of two and one-half per cent, of the total value of all property of the city listed and assessed for taxation, as limited by Section 3952, General Code.

2. The authority of the city of Ironton to issue its bonds in any one fiscal year in excess of one per cent, of the total value of its property, as listed and assessed for taxation, as limited by Section 3940, General Code.

3. Do the above limitations govern and control the municipality in providing funds, by issue and sale of bonds, to comply with lawful requirements [113]*113of the state board of health, approved by the governor and attorney general, as authorized by the terms of the Bense act, Section 1249 et seq., General Code?

4. Is there a grant of power to a municipality to issue bonds for such purpose, made by Section 1259, General Code, or does the municipality secure its sole grant of power to issue its bonds by the provisions of Section 3939 et seq., General Code, commonly known as the Longworth act?

5. Is the matter of levying taxes for the purpose of providing a fund to discharge the interest on the proposed bond issue, and sinking fund for payment of principal, subject to the limitation of the Smith one per cent, tax law, both as to the total tax permitted by such law and as to the interior máximums permitted to municipalities by the same act; or, with regard to this particular improvement ordered at the time it was by the state board of health, and bonds issued at the time they were, is it freed from the Smith law limitations by the provisions of Section 1259-1, General Code, as passed by the general assembly, 106 Ohio Laws, 461 ?

The major portion of above questions is readily disposed of. Other questions of minor importance involved in this controversy will be disposed of in their logical order.

The contemplated bond issue to construct the proposed improvement, added to its present bonded indebtedness as limited by the Longworth act, would burden the city of Ironton with a total bond issue of about $600,000. Two and one-half per [114]*114cent; of $16,000,000 is but $400,000. Thus we find that the additional issue of $375,000 could not be permitted by the Longworth act.

As one per cent, of $16,000,000 is but $160,000, and the new issue authorized by council is $375,-000, we readily ascertain that it would be invalid, if the Longworth act controls the situation. We must therefore conclude that unless there is power conferred on municipalities to issue bonds independent of the Longworth act, and that this power if conferred is not limited by its one and its two and a half per cent, máximums, the writ here sought must be denied.

The constitutionality of the Bense act was assailed in the case of The State Board of Health v. The City of Greenville

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Cite This Page — Counsel Stack

Bluebook (online)
95 Ohio St. (N.S.) 108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-merydith-construction-co-v-dean-ohio-1916.