Smith v. Walker

July 4, 1906. The opinion of the Court was delivered by The petitioners, residents of Greenville County and taxpayers in Dunklin Township, in said county, have applied to this Court in its original jurisdiction to enjoin the county commissioners of Greenville County from issuing bonds pursuant to the act of February 21, 1906, 25 Stat., 309, on the ground that said act is unconstitutional. Reference is made to the petition and return herewith reported for a more detailed statement.

The title to the act in question is, "An act authorizing the adjustment of the bonded indebtedness of certain townships contracted in aid of railroads." The preamble of said act recites that under "An act to charter the Greenville and Port Royal Railroad Company," approved December 23, 1882, and an amendatory act approved December 24, 1885, Dunklin Township (among others), pursuant to an election held under said act, issued certain bonds of said township amounting to $11,900. The preamble also recites that in certain suits brought by the holders of certain of said bonds it has been decided by the Supreme Court of the United States and the Court of Appeals for the Fourth Circuit of the United States, that said bonds constitute a valid and binding indebtedness of said townships respectively, and that the same must be paid by taxation, and it is further recited that negotiations are pending looking to an adjustment of said bonded indebtedness.

Section one authorizes the county board of commissioners of Greenville County (and other counties named) to settle the bonded indebtedness of Dunklin Township (and other townships mentioned) by paying the bondholders sixty-five per cent. of the principal of the said bonds and designated interest, upon surrender of the bonds and coupons and satisfaction of the said judgments, and it is specially provided that the county board of commissioners of Greenville County representing Dunklin Township may make such adjustment in behalf of Dunklin Township upon the approval of a committee of citizens and taxpayers representing said township and their attorney, and to this end may issue bonds of the township as provided in the statute. Section two empowers the county board of commissioners of the several counties named to issue coupon bonds of the said townships in such an amount as may be necessary to settle the said indebtedness on the basis aforesaid. Section three declares that the bonds so issued shall be a debt of the said townships respectively to be paid by taxes upon the property of the respective townships, and the county auditor is required to annually levy upon the property in the said townships a sum sufficient to pay said interest and the county treasurer is required to collect the taxes so levied, said assessment and collection to be at times and in manner as provided for assessment and collection of other county taxes. Section four provides for the issue of new coupon bonds for refunding said bonds if not paid at maturity.

The constitutionality of this statute is assailed on two grounds, (1) that it violates the constitutional amendment adopted on February 23, 1903, and (2) that Dunklin Township is without any officers or agents authorized to act in its behalf.

Art. VII., sec. 11, of the Constitution, declares that "each of the several townships of the State, with names and boundaries as now established by law, shall constitute a body politic and corporate, etc." An amendment to this section was ratified February 23, 1903, 24 Stat., 3, providing that said section should not apply to the townships of Dunklin and Oaklawn, in the county of Greenville; the townships of Cokebury, Ninety-Six and Cooper, in the county of Greenwood; Sullivan Township, in the county of Laurens; Huiett and Pine Grove, in the county of Saluda; and further providing, "that the corporate existence of said townships be and the same are hereby destroyed, and all officers under said townships are abolished and all corporate agents removed."

The Supreme Court of the United States, in the case ofGraham vs. Folsom, 26 Sup. Ct. Rep., 245, has declared that the power of the State to alter or destroy subordinate municipalities cannot be so exercised as to impair the obligation of a contract of such municipal corporations. Judgments in the Federal Court have been obtained against Dunklin Township establishing the bonds originally issued as valid and binding bonded indebtedness of the township, and that the statute under which they were issued forms a part of the contract. It, therefore, becomes the duty of this Court, notwithstanding the case of Floyd vs. Perrin, 30 S.C. 1,8 S.E., 14, 2 L.R.A., 242, and cases based thereon, to give full faith and credit to the final judgments of the Federal Court, and to recognize the said outstanding bonds as a valid obligation of Dunklin Township. McCullough vs. Hicks, 63 S.C. 542,41 S.E., 761, 2 L.R.A., 242; Holstien vs. Commissioners,64 S.C. 374, 42 S.E., 180. There being a valid binding indebtedness of Dunklin Township existing prior to the said constitutional amendment of 1903, it was perfectly competent for the Legislature to provide for its adjustment as enacted in the said statute of 1906. We do not find in the Constitution any limitation on the power of the Legislature to enact such statute; on the contrary, in art. X., sec. 5, it is provided that "the General Assembly shall require that all property (except that herein permitted to be exempted) within the limits of municipal corporations shall be taxed for corporate purposes and for the payment of debts contracted under authority of law. * * * That nothing herein shall prevent the issue of bonds for the purpose of paying or refunding any valid municipal debt heretofore contracted, etc.," and in section 6 the power of the Legislature to authorize a county or township to levy a tax or issue bonds to pay past indebtedness is expressly recognized.

Conceding that Dunklin Township is not a full fledged municipal corporation with corporate purposes and corporate agents, it is nevertheless in the power of the Legislature to treat the debt represented by the said outstanding bonds as a valid debt of the territory known as Dunklin Township and to provide for its payment by taxation upon the property in said territory. State vs. Whitesides, 30 S.C. 580, 9 S.E., 661, 3 L.R.A., 777; State vs. Neely, 30 S.C. 600,9 S.E., 664, 3 L.R.A., 672. The statute in question supplies and designates the necessary officers and agents to carry out its purposes.

It appears that all the conditions required by the statute of 1906 for the issuing of the new bonds exist. The application for injunction must, therefore, be refused, and it is so adjudged.