Rogers Nat. Bank v. Marion County

^* Application for writ of error pending in Supreme Court. A part of section 7 of article 11 of the Constitution is as follows:

"No debt for any purpose shall ever be incurred in any manner by any city or county unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least 2 per cent. as a sinking fund."

In McNeal v. City of Waco, 89 Tex. 83, 33 S.W. 322, the Supreme Court determined the meaning of the word "debt" as used in said section of the Constitution to be:

"Any pecuniary obligation imposed by contract except such as are at the date of the contract, within the lawful and reasonable contemplation of the parties, to be satisfied out of the current revenues for the year, or out of some fund then within the immediate control of the corporation."

Tested by this definition, the warrant sued upon clearly was a "debt" within the meaning of the part of section 7 set out above; for it was a "pecuniary obligation imposed by contract," and was to be satisfied out of the revenues of the county for the year 1915, and not out of its current revenues for the year 1913, when it was created, nor out of any fund then "within the immediate control" of the county.

That a petition in a suit against a county for such a debt is demurrable if it does not appear from the allegations therein that provision as required by the Constitution for paying same was made at the time the debt was created, is settled by the decision of the Supreme Court in the case cited above.

If therefore appellant failed to allege in its petition as amended that such provision was made, it is clear the trial court did not err in his rulings on the demurrers so far as they questioned the sufficiency of the allegations to show a right in appellant to recover on the warrant.

The question, then, with reference to this branch of the case is this: Did it appear from those allegations that the requirement of the Constitution had been complied with?

Appellant insists it did so appear, and, as supporting its contention, calls attention to the allegation that the warrant was drawn against the general county fund, and to the allegation that:

"The levy of the legal rate of tax for general purposes was amply sufficient to produce, and did produce, revenue enough to pay all current debts and expenses and pay the warrant sued on, and a levy of 20 cents on the hundred dollars was made each year."

These allegations show nothing more than that the warrant was to be paid out of the general county fund for the year 1915, and that that fund was sufficient for the purpose. That the "provision" alleged to have been so made was not such as the Constitution required to be made was in effect settled by the Supreme Court in City of Terrell v. Dessaint,71 Tex. 770, 9 S.W. 593. In that case Dessaint recovered on a promissory note made by the city of Terrell, payable two years after its date "out of the tax of one-fourth of one per cent. collected annually for general purposes." The note was for part of the purchase price of material for extending waterworks. Dessaint claimed that the debt it evidenced was current expenses of the city, and, being chargeable against the current expense fund, was not within the purview of the inhibition in the part of section 7 of the Constitution set out above. In disposing of the contention Judge Gains said:

"We think that a debt for current expenses in order to be valid without a compliance with the constitutional and statutory requirements to which we have referred must run concurrently with current resources for such purposes, and that such a debt cannot be created without such compliance, which matures at such a time as would make it a charge upon the future resources of the city. It may not be easy to define accurately what are the current expenses of a municipality. But we may ask, if a city can create a debt of $1,500 for materials to extend its waterworks and make it payable with interest one and two years after date, why may it not create an indebtedness for a larger sum for any public improvement which it has the power to construct, and make it payable at a longer period? It is clear to us that if this were permitted the provisions of our Constitution and statutes which limit the power and regulate the manner of the creation of municipal indebtedness would be entirely nugatory."

We are of opinion therefore it did not appear from the allegations in the petition that provision was made at the time it was created for the payment of the debt evidenced by the warrant, and hence that the petition failed to show appellant to be entitled to recover thereon.

But appellant insists that, if it appeared it was not entitled to recover on the warrant because of its illegality, the judgment nevertheless is erroneous because it appeared that it was, in that event, entitled to have the title to the land divested out of Marion county and vested in it, or in Ward, Sherrell, and Rowell as trustees for its benefit, as prayed for in the trial amendment. If appellant was entitled to relief of that kind, it must have been because Ward, Sherrell, and Rowell, or one or more of them, were entitled to it, and appellant in some lawful way had acquired their or his right. That appellant did not acquire such a right by the assignment to it, as alleged, of the warrant sued upon, we think is reasonably clear. Farmers' Loan Trust Co. v. Beckley, 93 Tex. 267, 54 S.W. 1027. It was not pretended in the allegations that appellant had acquired such a right in any other way. Therefore we think it must be held that the petition failed to show appellant to be entitled to recover the land. As neither Ward, Sherrell, nor Rowell appealed from the judgment, it is not necessary in disposing of the case to determine whether it appeared that they, or either of them, were entitled to recover back the land or not. It not appearing that appellant had acquired such a right in them, if they had any, appellant is not entitled to have that question determined.

The judgment is affirmed.