State Ex Rel. Woodard v. Ozley , 203 La. 579 ( 1943 )

I dissent from the majority ruling for the reason that it is clear to me that the certificates of indebtedness involved in this case are null, void, and of no effect, and neither this nor any other court has jurisdiction to enforce their payment, for three reasons: First, that the issuance of the certificates by the Police Jury was not authorized by the State Bond and Tax Board, as created by Act No. 6, Second Extra Session of 1935; second, that the debt, for the payment of which the certificates were issued, was one which the Police Jury was not authorized under the law to incur, and that, even if it be conceded that the Police Jury was authorized to incur such debt, the Police Jury made no provision for the payment of the debt at the time it was created, as required by Section 2448 of the Revised Statutes; and third, that the debt was incurred without the authorization and approval of the State Bond and Tax Board, as required by Act No. 6, Second Extra Session of 1935.

Section 2448 of the Revised Statutes and Act No. 6, Second Extra Session of 1935, express the public policy of the State with reference to the creation of debts and the issuance of certificates of indebtedness by police juries, municipalities, and other political subdivisions of the State. For this reason the Police Jury is not estopped by its conduct or by laches to deny the validity of the debt or the certificates, because the generally accepted rule is that "The doctrine of estoppel by conduct or by laches has no application to an agreement or instrument which is illegal because it violates an express mandate of public policy. Neither action nor inaction of a party to such an agreement can validate it; and no conduct of a party to it can be invoked as an estoppel against asserting its invalidity." 12 Am.Jur. p. 740, § 222.

"An agreement void as against public policy or because prohibited by law cannot be rendered valid by invoking the doctrine of estoppel." 17 C.J.S., Contracts, § 279, p. 669.

See, also, Phillips v. Bryan, 172 La. 269, 134 So. 88; Rhodes v. Miller, 189 La. 288, 179 So. 430.

Section 2448 of the Revised Statutes reads as follows:

"The police juries of the several parishes, and the constituted authorities of incorporated towns and cities in this State, shall not hereafter have power to contract any debt or pecuniary liability, without fully providing in the ordinance creating the debt, the means of paying the principal and interest of the debt so contracted."

There was no resolution of the Police Jury authorizing the creation of the debt for which these certificates were issued, and no provision made for its payment, until an ordinance was adopted authorizing the issuance of the certificates on July 14, 1938, more than two years after the alleged debt was incurred.

Act No. 6, Second Extra Session of 1935, is an act, according to its title, "To protect the faith and credit of the State of Louisiana, its parishes, municipalities, public boards and political or public corporations."

Section 10 of the act declares:

"That the Legislature declares it enacts this law for the preservation of government, for the public good and the general welfare and to curtail the growing dissent and dissatisfaction of the property taxpayers, the citizens, and the electors of the State, due to excessive special taxes and the incurring of burdensome and excessive indebtedness by the governmental agencies of the State, and to provide against losses of tax revenues, through adjudications at tax sales, by the State and its agencies."

Section 2 of the act declares:

"That hereafter no parish, municipality, public board, political or public corporation, * * * shall have authority to borrow money, incur debt, or to issue bonds, or other evidencesof debt, * * * without the consent and approval of the State Bond and Tax Board, created by Section 3 of this Act." (All italics in this opinion are mine.)

Section 5 declares:

"That hereafter, before incurring any debt, * * * issuing anybonds or other evidences whatever of debt, * * * every such governmental agency of the State of Louisiana named in Section 2 of this Act shall obtain the consent and approval of the State Bond and Tax Board."

Section 7 of the act provides that:

"The provisions of this act shall extend and apply to any debt incurred or bond or other evidence of debt issued by any such governmental agency named in Section 2 of this Act, whether the same has been authorized by an election of the property taxpayers who are qualified electors, whether the same is being incurred or issued without an election, or by agreement with the lender, that no election shall be required, or whether the same is otherwise incurred or issued under any provision of the Constitution or laws of this State, including any and all charters of municipalities."

This section clearly prohibits the incurring of any debt or the issuing of certificates for the payment thereof, in violation of the provisions of the act, by any parish or other political subdivision of the State even though authorized by an election of the property taxpayers or if the same is otherwise incurred or issued under any provision of the Constitution or laws of the State.

There is no evidence in the record to show, and I do not understand that it is contended by plaintiffs, that the State Bond and Tax Board ever formally authorized the issuance of these certificates, and it is certain that the Bond and Tax Board did not approve the debt until after it was created.

According to Section 8, Act No. 6 of the Second Extra Session of 1935, the obligations evidenced by these certificates are utterly null and void. That section reads as follows:

"Any contract, debt, obligation, bond, or other evidence of indebtedness whatsoever, incurred or issued in violation of this act, and without the consent and approval of the State Bond and Tax Board, shall be null and void, and no court of this State shall have jurisdiction to enforce the payment thereof, or of any suit or other proceeding affecting or involving the same."

Now, as relates to the debt for the payment of which these certificates were issued, the record establishes beyond question, in my opinion, that it was one which the Police Jury had no power or authority to incur. The Police Jury did, on October 14, 1935, by resolution authorize the members of the various wards of the parish "to purchase tractors and road machines for the maintenance of roads throughout the parish". One section of that resolution reads as follows:

"Be it further resolved that any purchases made in and for the various wards will be paid for from the funds belonging to its respective wards and said invoices shall be made for said wards and road districts."

The police jury of each of the various parishes of the State is authorized to maintain its roads and bridges, and by proper proceedings may authorize the incurring of debt for that purpose.

But this resolution relates exclusively to the purchase of "tractors and road machines for the maintenance of roads throughout the parish".

The record clearly shows, I think, that this debt was incurred, not for the purpose of maintaining the roads of the parish, but for the purchasing of machinery to be used in connection with a terracing program, and the members of the Police Jury were advised by the district attorney that it had no authority to incur debt for that purpose.

It is true that some of the members of the Police Jury testified that, according to their understanding, the machinery was purchased for use in connection with the terracing program and for the construction and maintenance of roads. Other members of the Police Jury testified that, while the machinery purchased could be used for either purpose, it was their understanding that it was intended to be used to carry out the terracing program sponsored by the Federal government, and that it was to be leased to the landowners for that purpose, the landowners to pay so much per tractor hour for its use, and that the machinery was to be paid for out of these rentals.

But the question as to the purpose for which the machinery was purchased is, regardless of the testimony, foreclosed by the resolution adopted by the Police Jury on January 3, 1938, before these certificates were issued and after the debt was incurred. That resolution recites that, whereas the Police Jury is indebted unto J.D. Adams Company in the sum of $38,183.33, and

"Whereas, said indebtedness was created in connection with Soil Conservation, and specially terracing program, and that

"Whereas, said machinery was bought in good faith, and for the purpose of carrying out Soil Conservation as suggested by the Federal Government, and that

"Whereas, the Police Jury of Bienville Parish was unaware of the statute that requires that all indebtedness, before created, shall be approved by the State Bond and Tax Board, and that

"Whereas, said indebtedness having been contracted and value received therefor in good faith, and

"Whereas, said indebtedness can not be paid for now without the approval of the State Bond and Tax Board."

That resolution was sent to the office of the State Bond and Tax Board at Baton Rouge, and on January 14, 1938, the secretary of the Bond and Tax Board wrote to the secretary of the Police Jury of Bienville Parish as follows:

"Application of the Bienville Parish police jury dated January 5, 1938, submitted to the State Bond and Tax Board for permission to pay indebtedness in the amount of $38,183.33 created in connection with Soil Conservation and Terracing Program, in accordance with resolution adopted by said police Jury January 5, 1938, was approved by the members of the State Bond and Tax Board, in accordance with Act No. 6 of the Second Extraordinary Session of the Legislature of 1935, at a special meeting of the Board held January 13, 1938."

The approval of the State Bond and Tax Board shows that the indebtedness was contracted in connection with the terracing program.

The approval of the State Bond and Tax Board of an invalid debt did not and could not have the effect of making that debt legal. Besides, this approval was obtained, not before the debt was contracted, but long thereafter.

The method resorted to for the payment of this debt clearly circumvented the laws of this State enacted to protect the faith and credit, not only of the State, but of its political subdivisions as well, and thwarted the very purpose of the laws declaring its public policy in connection with matters of this kind.

The majority opinion contains this statement: "In addition, these certificates were issued by and with the approval of the State Bond and Tax Board in accordance with all of the formalities required by Act No. 87 of 1928, as amended * * *."

This statement is based entirely upon the theory that the resolution of the Police Jury dated January 3, 1938, which we have quoted above, wherein it petitioned the Bond and Tax Board to approve the debt, should be construed as a request for the approval of the certificates, and that the approval of the debt by the Bond and Tax Board should be construed as an authorization to issue them.

This resolution was adopted, and the approval of the debt was made, more than four months prior to the date of the Police Jury's ordinance authorizing the issuance of the certificates. Furthermore, nothing whatever is said about the issuance of certificates in the ordinance asking for the approval of the debt or in the order approving it. My opinion is that the ordinance and the approval of the debt cannot reasonably be construed to mean what the majority seem to think they mean. Act No. 6 of the Second Extra Session of 1935 requires that such evidences of debt must be formally approved by the State Bond and Tax Board prior to their issuance; otherwise they are null and void, and no court has jurisdiction to enforce their payment.

I respectfully dissent from the majority ruling.