City of Tyler v. Tyler Building & Loan Ass'n

Certified questions from the Court of Civil Appeals for the First District, as follows:

"In this cause now pending before this court on appeal there are presented among others the questions hereinafter propounded, and we deem it wise to certify them for your decision. They arise upon the following state of facts as disclosed by the record:

"The city of Tyler, assuming to act in the premises as a city of more than ten thousand inhabitants incorporated under the general laws, brought this suit against appellee to recover municipal and school taxes alleged to be due it by appellee for the years 1898, 1899, 1900 and 1901.

"Plaintiffs averred that having incorporated under the general laws in 1877, its mayor in 1894, in pursuance of a resolution passed by its council, procured a census of the city to be taken, which having been done, it was in 1895 duly declared by resolution to be a city of over ten thousand inhabitants, and that it thereafter acted as such.

"The taxes sued for are in excess of what may have been lawfully levied by a city of less than ten thousand inhabitants but within the power of a city of the class alleged.

"The action is a simple suit for taxes, and the appellee answered and defended in its capacity as a private taxpayer.

"The taxes within the power of a city of ten thousand and less to levy and assess were conceded to be due and recovery was had therefor. The recovery of the excess was resisted by appellee on the ground, among other things, that the inhabitants of the city of Tyler had never at any time been as many as ten thousand in number, and the city therefore had no power to levy the excess in question.

"To this defense the city excepted on the ground that the issue of the number of inhabitants of the city and its consequent right to act as and exercise the power of a city of over ten thousand can not be raised in a proceeding of this sort.

"In the answer it was also averred that a part of the taxes sought to be recovered were levied to pay interest on and create a sinking fund for the discharge of certain outstanding waterworks bonds issued by the city prior to its assumption of the power of a city of over ten thousand inhabitants, and of certain funding bonds issued in lieu thereof, and the payment of the taxes levied for this purpose was resisted on the ground that a city of ten thousand and less at the time of the issuance of the original bonds had no power to issue bonds for such purpose; that the original bonds were therefore void and the funding bonds also void.

"To this part of the answer an exception was urged on the ground that the validity of the bonds could not be adjudicated in this suit, the holders thereof not being made parties.

"The exceptions above mentioned were overruled by the trial court and proof heard upon the issues thus made.

"It was shown upon the trial that upon the date alleged in the petition, a census having been taken, the city council by resolution declared the city to have over ten thousand inhabitants and proceeded to act and thereafter acted as a city of that class. The taxes sued for were levied and assessed upon that assumption, and in issuing the funding bonds in question and other bonds it had satisfied the Attorney-General of the State of its right to so act and so secured his approval of the bonds.

"The jury found upon sufficient evidence that the plaintiff city had never at any time had as many as ten thousand population, whereupon the city's recovery was limited to the amount conceded to be due.

"Questions: First. Did the trial court err in overruling plaintiff's exception to the defense that the city had never as much as ten thousand population, or in hearing evidence upon the issue after it was shown that it had assumed to act as a city of that class?

"Second. Did the trial court err in permitting the assault upon the validity of the waterworks funding bonds and the tax levied for their payment in the absence of the bondholders as parties to the action?"

Answer to the first question: It was error for the trial court to overrule the exceptions by the plaintiff to defendant's answer, which alleged that the city of Tyler did not contain a population of ten thousand.

There is much obscurity and confusion in the provisions of the Revised Statutes, title 17, concerning the powers of cities and towns and of towns and villages, but it is unnecessary for us to undertake to clear up those obscurities, as they do not affect the question which is presented in this case.

Under the said title, a town which contained more than two hundred people and less than ten thousand might be organized into a town or village whereby it would be vested with the powers enumerated in chapter 11 of that title. A town containing over one thousand inhabitants could be organized as a city under the provisions of chapter 1 of the said title, and, being so organized, would be vested with the powers prescribed in the first ten chapters of that title. Embraced in this last class of corporations might be cities containing more than ten thousand population when organized, or the population might after organization be increased to a number greater than ten thousand, and in either case the city would come within this provision of the law: "Cities having more than ten thousand inhabitants may levy, assess and collect taxes not exceeding one and one-half per cent on the assessed value of real and personal estate and property in the city, not exempt from taxation by the Constitution and laws of the State." This power depends upon the city having more than ten thousand inhabitants, a fact that must be ascertained before the tax is levied.

There is no method prescribed by the statute for determining when a city has more than ten thousand inhabitants, but the Legislature having conferred upon the city council power to levy and collect a given rate of tax, conditioned upon the fact that the city has the requisite population, there is in the grant of power, based upon the limitation of population, an implied grant of authority to ascertain the facts upon which the right to levy the tax depends. Riggins v. Richards, 8 Texas Ct. Rep., 908. Any reasonable and suitable method by which a city should ascertain the facts and make the record thereof would be supported by the implied power arising out of that expressly conferred. After the city of Tyler ascertained the population within its corporate limits and declared that it assumed the powers of a city of more than ten thousand population it occupied the same position as if it had been incorporated as a city of ten thousand. There can be no doubt that when the city once assumed under the provisions of this law the powers of a city of ten thousand people that fact could not be questioned, except by a quo warranto proceeding, instituted as prescribed by the laws of the State for inquiring into such matters and for the dissolution of the corporation if it had improperly assumed those corporate functions. In this suit for the collection of taxes levied by the city it was not competent for the taxpayer to raise the question whether the city had ten thousand inhabitants. Bird v. Perkins, 33 Mich. 28; State v. May, 34 Atl. Rep., 885; Quint v. Hoffman, 103 Cal. 506; Mendenhall v. Burton, 22 Pac. Rep., 558; St. Louis v. Shields, 62 Mo., 247; Troutman v. McCleskey, 7 Texas Civ. App. 561[7 Tex. Civ. App. 561]; McCrary v. Comanche, 34 S.W. Rep., 679; City of El Paso v. Ruckman, 92 Tex. 86.

Answer to the second question: The facts stated do not show any proper grounds upon which the taxpayer could call in question the validity of the bonds issued by the city. By the Act of 1887 (Laws 20th Leg., p. 37), the councils of all cities having a population of more than one thousand incorporated under the general laws of the State were given power to levy and collect taxes "for the purpose of constructing, or the purchase of public buildings, waterworks, sewerage, street improvements and other permanent improvements within the limits of such cities or towns; and all cities and towns providing for such improvements shall have the power to issue coupon bonds of the city therefor in such sum or sums as they may deem expedient, to bear interest not exceeding six per cent per annum," etc. The city of Tyler had the power to issue bonds for the waterworks, and no facts are stated which would show that the bonds were not issued in accordance with the requirements of the statute. By article 419, Revised Statutes, the city had authority to refund the waterworks bonds and it will be presumed, in the absence of any fact stated to the contrary, that the law was complied with. There being nothing to show that the city was without authority to issue the bonds, we answer that the taxpayer could not set up irregularities in the issuance of the bonds as a defense against the collection of the tax.