San Antonio River Authority v. Shepperd ( 1957 )

Mr. Justice McCall

delivered the opinion of the Court.

This is an original proceeding for mandamus instituted in the Supreme Court by the San Antonio River Authority, hereinafter called the “District,” against John Ben Shepperd, Attorney General of Texas, to compel him to approve an issue of $1,000,-000 of San Antonio River Authority Revenue Bonds, Series 1956.

Because of extensive damage done by floods of the San Antonio River in Bexar County, the Legislature in 1939 created “a Conservation and Reclamation District to be known as ‘San Antonio River Authority’ * * * and consisting of that part of the State of Texas which is included in the boundaries of Bexar County, and also including the natural bed and banks of the San Antonio River from its source to its junction with the Guadalupe River.” Art. 8280-119, V.A.C.S. The District is declared by the Authority Act to be “a governmental agency, a municipality, body politic and corporate” vested with the power to control the waters of the San Antonio River and its tributaries. The District is given the powers and functions of a conservation and reclamation district as specified in Section 59, Article 16 of the Texas Constitution. Among the powers specifically listed is the power to acquire or construct flood control facilities and to borrow money for its purposes, including the issuance of bonds in an amount not exceeding $25,000,000, to be secured by “a pledge of the revenues, income and funds of the District without reference to the source.” Before any bonds may be issued they must first be authorized by an election in the District and then approved by the Attorney General of Texas. The District is expressly denied any power to levy or collect taxes or assessments.

In 1948 Section 1-a of Article 8 was added to the Texas Constitution, containing the following provision:

“From and after January 1, 1951, the several counties of the State are authorized to levy ad valorem taxes upon all property within their respective boundaries for county purposes * * * not to exceed thirty cents (30c) on each One Hundred Dollars ($100) valuation, in addition to all other ad valorem taxes authorized by the Constitution of this State, provided the revenue derived therefrom shall be used for construction and maintenance of Farm to Market Roads or for Flood Control * * *.”

In 1949 the Legislature passed an enabling act under the above amendment to the Constitution, Article 7048a, V.A.C.S. This Act prescribes a complete statutory system for carrying the amendment into effect. Section 7 of said Act provides that before the tax authorized by the constitutional amendment can be levied, assessed, and collected in any county the tax must be “submitted to a vote of the qualified property tax paying- voters of such county.” The voters must approve the maximum rate of the tax, within the thirty cent constitutional limit, and the portion of the tax to be used for farm-to-market roads or flood control purposes. Section 7 concludes with the following provision:

“Provided, further, that elections may subsequently be called and held in the same manner for the purpose of changing the amount of the maximum tax within the limit of thirty cents (30c) on the One Hundred Dollars ($100) valuation, or for changing the amounts of the maximum specific tax voted for each purpose; provided, however, that such tax or taxes may not be reduced to an extent which would result in the impairment of any bonds or warrants theretofore issued under the provisions of Section 10 of this Act.”

Section 10 of the Act provides that if a majority of the qualified property tax paying voters approve the tax, the Commissioners Court may issue negotiable county bonds or county time warrants for the construction of roads or flood control facilities, provided such bonds or warrants must be approved by a majority of the qualified property tax paying voters in a separate election.

On April 1, 1951, an election was held in Bexar County in compliance with Section 7 of Article 7048a and the voters authorized the Commissioners Court to levy, assess, and collect an additional ad valorem tax of fifteen cents for flood control purposes and fifteen cents for farm-to-market roads.

On April 25, 1951, the Legislature authorized the Commissioners Court of any county to “enter into contracts for the accomplishment of plans and programs for flood control and soil conservation” with various other federal and state governmental agencies, specifically including state conservation and reclamation districts, such as the San Antonio River Authority. Art. 7048b, Y.A.C.S. This Act further provided that “the responsibility for carrying out such plans and the expenditure of funds of the county and such agencies * * * may by such agreement be divided between the parties or delegated to either the county or to one or more of said agencies * * * and such contracts may be for a specified term of years or until certain plans or programs have been accomplished.” All such contracts theretofore made were validated.

On June 6, 1955, the following amendment was added to Article 7048b:

“* * * provided further that in the event any such agency, district or municipal corporation shall issue its bonds payable from and secured by revenues to be derived from any such contract it may be provided therein that such contract will continue in effect until such bonds, or any refunding bonds issued in lieu thereof, have been fully paid.-’

On September 12, 1955, the San Antonio River Authority entered into a contract with the Commissioners Court of Bexar County, whereby the District agreed to carry out a program of flood control by widening, deepening, straightening, and otherwise improving the San Antonio River and its tributaries in Bexar County, including the construction, extension, repair, maintenance, and operation of various retaining walls, bridges, abuttments, and dams, according to plans approved by the United States Corps of Engineers or the Engineers for the District. Voluminous blue prints of the various projects along the course of the river were attached to the contract and made a part thereof.

In consideration for the agreement of the District to carry out the projects as set forth in the blue prints the Commissioners Court of Bexar County agreed that all of the proceeds of the fifteen cent flood control tax would be paid over to the District for the term of the contract, or until the project was completed and fully paid for, or until the contract limit had been paid, whichever should first occur. The contract limited the cost to Bexar County to $12,000,000 plus interest paid on any moneys borrowed by the District through issuance of its bonds or otherwise in order to finance said project. The term of the contract was specified as thirty years from the date of execution, but it was provided that if the District issued bonds payable from the revenues to be derived from this contract, the contract should continue in effect until the bonds have been paid. The County agreed to assess, levy, and collect the fifteen cent flood control tax each year throughout the term of the contract.

The contract also provided for detailed annual reports by the District to the County, and the District was authorized to coordinate the expenditure of its funds with all other federal and state agencies and municipalities.

The plans set forth in the above-mentioned blue prints were designed by the United States Corps of Engineers. It was estimated that the total cost of the projects would be $24,225,000 of which amount $14,700,000 would be paid by the federal government acting through the Corps of Engineers. The cost to the District was estimated to be $10,000,000. The only income of the District is that to be derived from the above contract with Bexar County.

The voters of the District have approved the issuance of $10,000,000 in bonds to pay for the project, and the District has authorized the issuance of the first $1,000,000 of such bonds. In accordance with Art. 8280-119, V.A.C.S. which created the District, this $1,000,000 issue of bonds was submitted to the Attorney General of Texas for his approval, but he declined to approve the bonds, specifying three objections thereto which will be hereafter discussed.

The first objection of the Attorney General to the proposed bond issue was that the Commissioners Court of Bexar County had no legal authority to enter into the above contract with the District to assess, levy, and collect the fifteen cent flood control tax for a term of thirty years because such contract attempted to deprive the voters of Bexar County of the right reserved to them in Section 7 of Article 7048a to change the amount of such tax by subsequent elections. The only limitation on this power of the voters to change the amount of the tax is as follows:

“ . . . provided, however, that such tax or taxes may not be reduced to an extent which would result in the impairment of any bonds or warrants theretofore issued under the provisions of Section 10 of this Act.”

The $1,000,000 of bonds in this case were not approved by the voters of Bexar County under Section 10 of Article 7048a, but by the voters of the District under Section 16-A of Article 8280-119. Hence the Attorney General contends that when the voters of Bexar County approved the levy of the fifteen cent flood control tax they did so with the reservation that they could subsequently in the same manner vote to change the rate unless under Article 7048a they voted to approve an issue of negotiable bonds or time warrants by Bexar County. It is argued that this reserved right was an integral part of the proposition adopted by the Bexar County voters in the election on April 1, 1951 and the Commissioners Court cannot by this contract with the District deprive the voters of Bexar County of this reserved right. The laws in force and effect on the election date become a part of the voted proposition and thereby a part of the contract between Bexar County and the voters, and the county cannot by its unilateral action vary the terms of the contract. To support the above contention the Attorney General cites San Saba County v. McCraw, 130 Texas 54, 108 S.W. 2d 200; Cochran County v. Mann, 141 Texas 398, 172 S.W. 2d 689; Wilkerson v. Otto, 289 S.W. 2d 411 (Texas Civ. App., 1956); Norton v. Tom Green County, 182 S.W. 849 (1951), cert. den. 325 U.S. 861; and David v. Timon, 183 S.W. 88 (Texas Civ. App., 1916). While such cases support this general proposition of law, they are not decisive in the present case. The most pertinent of the above cited cases is the decision of this Court in San Saba County v. McCraw, 130 Texas 54, 108 S.W. 2d 200. In that case the Constitution required that before an additional fifteen cent road tax could be levied and collected by the county, the tax should be approved by a majority of the property tax paying voters in the county. Under the statute which implemented the constitutional provision it was provided that, “No bonds shall ever be issued under the provisions of this chapter.” It was also provided that the taxpayers could repeal the tax after two years. In 1924 an election was held approving the road tax in San Saba County. The commissioners court issued a large amount of scrip warrants against its Road and Bridge Fund. Thereafter in 1937 the Legislature enacted a statute authorizing the Commissioners Court of San Saba County to issue 40 year bonds on its own motion to replace the warrants. It was provided in the new statute that these bonds would constitute a charge against the fifteen cent road tax voted in 1924. The Court held that the new statute attempted to impair the obligation of the contract between the county and the voters and was therefore unconstitutional.

It will be noted that in the San Saba County case, unlike the instant case, the Constitution required approval of the tax by the voters of the county. Pursuant to the constitutional mandate the Legislature provided for submission of the proposition to the voters of a tax against which no bonds could be issued, and which tax could be repealed after two years. After approval of the tax under such conditions the legislature obviously could not repudiate the contractual prohibition against the issuance of bonds against the tax, and thereby incidentally deprive the voters of the right to repeal the tax for forty years until such bonds were paid off.

It is true that in the instant case the statute reserved the right to the voters to repeal the fifteen cent flood control tax. There was no two year time limit. Under Section 7 of Article 7048a the voters could have repealed the tax within the same year it was approved and before a penny of taxes had been collected. Such action would have impaired any obligation of any nature incurred in anticipation of the tax by the Commissioners Court. Section 10 of Article 7048a specifically provides that the Commissioners Court may issue either negotiable county bonds or county time warrants for flood control purposes, with the approval of the voters. Section 7 provides that the tax cannot be reduced to the extent that it would impair such bonds or warrants.

Did the county at the time of the election in 1951 have the authority under Article 7048a to incur any future obligation against the tax other than by negotiable warrants or bonds? Section 10 does not purport to provide the exclusive form of future obligation. It provides the Commissioners Court “may issue either negotiable county bonds or county time warrants.” Such provision must be construed as an additional power and not the exclusive method of creating an obligation. Lasater v. Lopez, 110 Texas 179, 217 S.W. 373. As this court stated in that case “In the absence of express declaration the Legislature is not to be credited with the purpose of forcing a bond issue upon the people every time it is necessary for the county to create an interest bearing debt of deferred maturity, however small, for road improvement. Section 1-a of Article 8 authorized the counties to collect this tax to be used for flood control purposes. Section 5 of Article 7048a authorized the Commissioners Court to spend the revenue from this tax for flood control purposes within the county, and authorized the use of all or part of such funds in connection with “plans and programs” of various federal and state agencies, including a state Conservation and Reclamation District, such as the San Antonio River Auathority.

From the powers thus expressly given to engage in flood control programs and to expend money therefor, the law implies the power to use the general credit of the county to accomplish the desired end. In refusing to enjoin the issuance of time warrants by El Paso County to improve a livestock and agricultural exposition building the El Paso Court of Civil Appeals in Adams v. McGill, 146 S.W. 2d 332, (error refused) quoted with approval from 19 R.C.L., Sec. 84, p. 780:

“A distinction is drawn between borrowing money and obtaining- property or labor on credit, it being everywhere held that a municipal corporation has an implied power to use its credit for the accomplishment of any object for which it is authorized by law to expend money.” p. 335.

The court in Adams v. McGill relied upon the decisions of this court in Lasater v. Lopez, 110 Texas 179, 217 S.W. 373, and Clark v. W. L. Pearson & Co., 121 Texas 34, 39 S.W. 2d 27. The following statement was quoted from the Clark case:

“The rule is well established that municipal corporations are invested at least with an implied or incidental power to contract on the general credit of the city with respect to such improvements as they are authorized by law to make.”

Also cited and relied upon by the court in Adams v. McGill was the case of Bridgers v. City of Lampasas, 249 S.W. 1083, wherein the reason for the distinction between the rule as to borrowing money and the rule as to obtaining services or improvements on credit is discussed. Borrowed money can be diverted from its legitimate purpose and the voter deprived of any benefit therefrom, but there is no such danger when authorized services or improvements are obtained by the public on credit.

Thus the Commissioners Court of Bexar County under the above constitutional and statutory provisions and under the decisions of the Texas courts had the power to contract on the general credit of the county to further a flood control program. Such contract and program might legally take a number of years for execution and might legally involve the general credit of the county for such period. Such was done in this case and such action was authorized by the law of this state at the time of the election approving the fifteen cent tax on April 1, 1951. These propositions of law were also a part of the contract between the county and the voters. The provision of the contract that the voters could repeal or reduce the tax at any time must be construed in harmony with the above propositions. When this is done the right of the voters to repeal the tax is limited by the express and implied authority given the Commissioners Court to contract on the credit of the county and thus incur contractual obligations which cannot be constitutionally impaired by a subsequent reduction or repeal of the tax.

The District contends that Section 1-a of Article 8 authorizing the flood control tax here involved is self-executing in empowering the Commissioners Court to levy this tax, and that Section 7 of Article 7048 providing that the tax shall not be levied until approved in an election and providing for repeal thereof by an election is an unconstitutional restriction by the Legislature upon a power granted by the people in the constitutional amendment. In view of our above holding it is not necessary to pass upon this question. But it is noted that, as argued by the Attorney General, such statutory implementation can only be upheld on the theory that such legislative acts are necessary to provide the method and procedure for levying, collecting, and using the tax. Stratton v. Commissioners Court of Kinney County, 137 S.W. 1170 (error refused) ; Stevenson v. Blake, 131 Texas 103, 113 S.W. 2d 525; Mitchell County v. City National Bank, 91 Texas 361, 43 S.W. 880; Tilley v. Overton, 116 Pac. 945 (Okla. Sup. Ct.). To construe the provision concerning repeal or reduction of the tax in Section 7 of Article 7048a as nullifying any contract which created future obligations on the part of the county would seem to go beyond mere procedure and method and to seriously impair the authority given in the constitutional amendment.

The District also contends that since the Constitution required no election, all provisions concerning elections to adopt, reduce, or repeal the tax are legislative requirements only. Thus the Legislature in its discretion could provide for the levy, collection, and use of the tax by the action of the Commissioners Court without any election whatever. Having such power the Legislature could remove all or any part of the restrictions it had put upon the levy, collection, or use of the tax. It is contended that the Legislature did so by enactment of Article 7048b, which specifically approved the power of the Commissioners Court to make the type of contract made in this case between Bexar County and the District. Since under our view the pertinent provisions of Article 7048b pertaining to the power to contract were declaratory of the existing law as contained in the Section 1-a of Article 8 of the Constitution, Article 7048a, and the decisions of the courts of this state, it is unnecessary to pass upon this contention.

The second objection of the Attorney General to the $1,000,-000 bond issue in this case was that the fifteen cent tax was to be collected by Bexar County and held in trust for flood control purposes and the County had no right to assign or delegate its duties under this trust to the San Antonio River Authority. It is contended that by the contract between the County and the District the Couny is attempting to delegate its legislative powers. The Attorney General argues that Section 5 of Article 7048a provides that the tax funds “shall be under the jurisdiction and control of the Commissioners Court,” and by the contract in this case the Commissioners Court of Bexar County is placing- the funds under the jurisdiction and control of the District.

It is obvious that if the tax funds are to be expended for flood control purposes that at some point the Commissioners Court must part with jurisdiction and control over the funds by delivering them to those who have agreed to do the actual work. The Commissioners are not required to do the work themselves, but are authorized to contract for it to be done. On a similar question in Roper v. Hall, 280 S.W. 289, the Waco Court of Civil Appeals stated:

“The general powers so given to the commissioners’ courts are of little practical value without the further authority to use adequate means to insure the proper, intelligent and effective exercise thereof * * *. The purpose of the contract under consideration was to aid in securing such results. The services contracted to be rendered called for information and experience not possessed by the ordinary person * * *. The making of the contract under consideration was within the implied power possessed by the Commissioners’ Court of Freestone County * * p. 291.

Section 5 of Article 7048a authorizes the Commissioners Court to use “all or part of such funds” in connection with “plans and programs of * * * Conservation and Reclamation Districts.” It also provides that such plans for improvement be approved by the county. Here detailed plans for flood control facilities have been approved by the county, which has contracted with the District to execute such plans. The county has not violated its trust. It has collected the flood control tax and used its supervision and control over the same by purchasing therewith the execution of an extensive flood control project as set forth in the blue prints. The contract here is essentially a construction contract for public improvements with the District as general contractor instead of the customary private contractor. There is no delegation of legislative authority or trust duties by the Commissioners Court.

The third objection of the Attorney General to this bond issue is that this contract undertakes to deliver the proceeds of the flood control tax to the District in violation of Section 17 of Article 1 of the Texas Constitution, prohibiting any “irrevocable and uncontrollable grant of special privilege” and Section 52 of Article 3 of the Constitution, condemning the attempt of a county “to lend its credit or grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever.”

It is contended that by this contract the county has made an “irrevocable and uncontrollable grant of the use of public moneys and of the governmental powers and functions correlative with the use of these funds” to the District for a period of thirty years or more. In our view the payment of the tax money to the District to execute specific plans for flood control facilities approved by the Commissioners Court and incorporated into the contract does not constitute the granting of a privilege in violation of the constitution either as to use of tax money or as to legislative authority. It is undoubtedly the law that a county cannot contract away its police power, but this rule does not prevent a county from exercising its lawful function to contract for public works. The decisions in City of San Antonio v. San Antonio Irrigation Co., 118 Texas 154, 12 S.W. 2d 546; City of Crosbyton v. Texas New Mexico Utilities Co., 157 S.W. 2d 418 (error refused, w.o.m.) ; and Gulf Bithulithic Company v. Nueces County, 11 S.W. 2d 305 (Com. App.) cited by the Attorney General on the above point support the validity of the contract in this case. In the City of San Antonio case the Commission of Appeals upheld a ninety-nine year contract for the construction and maintenance of a ditch for the drainage of the city’s outfall sewer line. The court rejected the same contention being here made that there was an unlawful delegation or grant of governmental power and privilege.

In the case of Harris County Flood Control District v. Mann, 135 Texas 239,140 S.W. 2d 1098, this Court held unconstitutional a statute which allowed the Commissioners Court of Harris County to supplement the funds of the Harris County Flood Control District to help it pay the bonds issued by the District. The District had issued the bonds to be paid from state taxes donated to the District. The statute provided:

“Should the necessity arise, the Commissioners’ Court may supplement from its general funds any State taxes hereafter donated and granted, but no tax shall ever be levied or any debt be created against the County for such purpose without a vote of the people.” p. 1103.

A later statute had a similar provision. The court held that the above statutes attempted to authorize Harris County to grant public money in violation of Section 52 of Article 3 of the Texas Constitution.

Harris County of course hoped to benefit from the flood control program of the Harris County Flood Control District. The Legislature authorized Harris County to give the District county tax money. There was no obligation on the part of the District to construct or maintain any flood control facilities. There was no obligation on the part of Harris County to pay the District any money either. The statutes authorized a grant of public money by the County in violation of the Constitution.

In the instant case the San Antonio River Authority has contracted to construct according to agreed plans specific flood control facilities and Bexar County has agreed to pay therefor. No loan of credit or grant of public money is involved. Both parties are obligated in a quid pro quo contract. Articles 7048a and 7048b authorize the Commissioners Court of Bexar County to contract with the District, and not to grant money to the District. Such contract does not constitute an unconstitutional pledge of credit or grant of public money by Bexar County.

Under the above construction of the statutes and record as here presented, the Attorney General should have approved the bonds. The writ of mandamus will issue as prayed for by the San Antonio River Authority.

Opinion delivered February 13, 1957.

The foregoing opinion was prepared by Associate Justice McCall while he was a member of the Court. His membership has now terminated, but the Court adopts the opinion as its own.

ON MOTION FOR REHEARING