City of Quanah v. White , 88 Tex. 14 ( 1894 )

In the year 1890 the city of Quanah was incorporated, that is, all the forms of law were observed, but it was afterwards declared to be void, because it embraced territory not subject to incorporation under the law. While it remained in force the city elected officers and contracted debts, of which the debts sued upon in this case was one, or comprises perhaps more than one, all belonging to the plaintiff. In the year 1892, upon quo warranto proceedings, the incorporation of that city was declared to be void, and it was dissolved by the judgment of the District Court of that county. In the same year, and subsequently to the judgment of the court, the city of Quanah was duly incorporated under chapter 17 of the Revised Statutes, as a town containing more than 1000 inhabitants.

This suit was instituted by the plaintiff below, J.H. White, to recover of the city of Quanah, under the new corporation, debts contracted by the void corporation. Judgment was given for the defendant in the District Court, from which plaintiff, White, appealed, and the Court of Civil Appeals reversed the judgment of the District Court and rendered judgment against the city of Quanah, from which judgment of the Court of Civil Appeals this writ of error was granted.

The decision of this case involves the construction of article 541, Revised Statutes, as amended by an Act of the Legislature, approved April 13, 1891, entitled "An act to amend article 541, chapter 2, title 17, Revised Civil Statutes of the State of Texas." Laws 22nd Leg., p. 95. The article as amended reads as follows: When any corporation is abolished as provided in the preceding article, or if any de facto corporation shall be declared void by any court of competent jurisdiction, or if the same shall cease to operate and exercise the functions of such de facto corporation, all the property belonging thereto shall be turned over to the county treasurer of the county, and the Commissioners Court of the county shall provide for the sale and disposition of the same, and for the settlement of the debts due by the corporation, and for this purpose shall have power to levy and collect a tax from the inhabitants of said town or village, in the same manner as the corporation would be entitled to under the provisions of this chapter; provided, that when any town or city shall reincorporate under chapters 1 or 2 of title 17 of the Revised Civil Statutes of this State, upon a majority (vote) of the legal voters, taxpaying property holders of said town or city, all property, real and personal, of the old or de facto corporation shall be vested in the new one; provided further, that the new corporation shall assume all the indebtedness, contracts, and obligations of the old corporation; provided, where cities and towns have reincorporated under chapters 1 or 2 of title 17 of the Revised Civil Statutes prior to the adoption of this act, upon a majority vote of the taxpaying property owners of said city or town, all property, real or personal, of the old or de facto corporation shall be vested in the new one; and provided further, that the new corporation shall assume all the legal indebtedness, contracts, and obligations of the old corporation."

The question for determination is, under what conditions the new or reincorporated town or city becomes liable for the debts of the old. This liability depends upon the second proviso in the statute. Is the proviso to be construed as applying to all towns that reincorporate under the law, or to be restricted to such as are invested with the title to the property of the old corporation? It is a rule of interpretation of statutes, that a proviso is limited to the clause which precedes it and to which it is attached, unless the language indicates to the contrary. End. Cons. Stats., sec. 186; Spring v. Collector of Olney, 78 Ill. 101. The reason of the law in this case will support the construction indicated by the authorities cited. By the dissolution of the old corporation, its property passed into the control of the Commissioners Court of that county, and the court was thereby invested with the power to levy taxes to pay the debts of the dissolved corporation. To enable the new town to pay the debts and resume its powers of taxation for that purpose, the proviso was inserted. Now, if the town takes the property, it is reasonable that it should likewise assume the debts; and it is equally consistent with reason, that if the property is not vested in the new corporation, the inhabitants should not be charged with the debts. It is likewise consistent with sound reasoning, justice, and good policy, that the inhabitants of such a town should not be charged with the payment of debts for which they are not liable without the consent of those who are to bear the burdens of taxation necessary to discharge the obligation. We do not see that there can be a doubt that the liability for the debts of the old corporation was dependent upon a vote of "the legal voters, taxpaying property holders of the town," by which they would be invested with title to the property of the old corporation.

The liability for the debts of the old corporation being dependent upon a vote of the legal voters, taxpaying property holders of the town, no liability attaches until such vote has been taken.

In order to reincorporate a town which has been dissolved and charge it with the debts of the old one, two questions must be determined: 1. Shall the town be reincorporated? 2. Shall the new corporation take the property of the old? The reincorporation must be under chapters I or 2 of title 17 of the Revised Statutes. At an election for such incorporation, "every free male person who has attained the age of twenty-one years, and who has resided within the limits of the proposed town for six months next preceding, and is a qualified voter under the laws of the State, shall be entitled to vote." Rev. Stats., art. 510. At the election to assume control of the property of the old town and thereby assume the payment of its indebtedness, "the legal voters, taxpaying propertyholders," alone, could vote. The first question must be decided by all the qualified voters, which includes the taxpaying property holders, but the second question must be decided by the taxpaying property holders only, which excludes all not belonging to that class. It is manifest that there must be two elections to ascertain the will of the different classes of voters upon the two distinct questions.

The language, "when any town or city shall reincorporate under chapters 1 or 2 of title 17 of the Revised Statutes," etc., denotes the time at which the vote of the "legal voters, taxpaying property holders," shall be taken. Webster's Dictionary gives one of the definitions of the word "when" to be, "after the time that," and considering the context and the purposes of this act, we think that is the sense in which it was used in the act under investigation. In other words, the law is to be construed as if it read, after any city or town shall reincorporate," etc. This is rendered more certain as the right construction by the object of the law, which is to invest title to the property of the old or de facto corporation in the new, and it will not be supposed that the Legislature would undertake to cause that to be done before there was a new corporation to receive it. Again, nearly the identical words are inserted in a third proviso as applicable to towns reincorporated before the enactment of the law, which shows that it was not the purpose to give to the act of reincorporation the effect of charging the new corporation with debts before contracted, but that it was to be left to the taxpayers to assume them by a vote of the majority.

It is claimed that this act was construed by this court in the case of Ewing v. Commissioners of Dallas County, 83 Tex. 663 [83 Tex. 663], to mean, that upon incorporation the new town became liable for the debts of the old. But the question was not before the court in that case, and the remarks of the chief justice were not intended nor do they have the effect to so construe this act.

The question as to whether or not the Legislature can confer upon the majority of the inhabitants of a certain district of country the power to charge upon the property of the minority debts for which they were not before liable, is not before the court in this case, and is not therefore decided, but is expressly left open for consideration when the case involving it shall come before this court.

The Court of Civil Appeals erred in reversing the judgment of the District Court and in rendering judgment for the appellant, White, against the city of Quanah, and the judgment of the said Court of Civil Appeals is reversed, and the judgment of the District Court is affirmed.

Judgment of District Court affirmed.

Delivered December 21, 1894.

DENMAN, Associate Justice, did not sit in this case.