City of Sherman v. R. Langham et al., 92 Tex. 13

DENMAN, Associate Justice. Langham et al., being the owners of a judgment for $1164 rendered against city of Sherman in the District Court of Grayson County on the 29th day of March, 1889, in an action to recover damages for an injury inflicted in 1888, instituted this proceeding September 6, 1894, to revive said judgment and seeking an order of court compelling the city to pay same, "and if necessary to levy a special tax in an amount sufficient to pay said judgment, interest, and costs, and apply the proceeds of such levy to the payment of said judgment,” and for general relief.

From the pleadings and agreed statement it appears that Sherman was incorporated as a city of 1000 inhabitants or more under the general law, but the date of its incorporation is not given; that in 1894, acting under the assumption that it contained less. than 10,000 inhabitants its officers levied for various purposes taxes aggregating $1.25 on the $100 valuation; that at the date of the trial of this cause in the court below, on the 29th day of April, 1895, it contained more than 10,000 inhabitants, and no tax for any purpose had been levied for the year 1895; that the revenues derived from said tax of 1894 and other sources were sufficient to meet the current expenses of the city for that year as it was then maintained, said city then acting under the general law for cities of less than 10,000 inhabitants; that the value of the property within the corporate limits is $4,600,000.

There is no evidence in the .record as to what the expenses of the city would be for the year 1895 or any subsequent year.

The trial court entered a judgment for the plaintiffs against the city, reviving the original judgment and directing a peremptory writ of mandamus to issue commanding the officers of the city and their successors “to levy and collect a sufficient ad valorem tax upon the property situated within the corporate limits of said city of Sherman, and subject to taxation by said city of Sherman, to pay said judgment, interest, and costs, and the costs of this suit,” said levy to be made at the same time that the other taxes imposed by said city are levied for the year 1895.

On appeal by the city to the Court of Civil Appeals that court affirmed the judgment of the trial court and ordered that the officers of said city “do proceed at once to levy and collect a sufficient ad valorem tax upon the property situated within the corporate limits of said city of Sherman to pay said judgment, interest, and costs, and the costs of this appeal.” The city has brought the case to this court upon writ of error, assigning as error the action of the Court of Civil Appeals “in affirming the judgment of the trial court and granting the writ of mandamus.” That part of

article 487, Revised Statutes, which relates to the question under consideration is as follows: “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 law's of the State, * * * and such cities are hereby authorized to levy, assess, and collect a further tax of twenty-five cents on the one hundred dollars’ worth of property for the purpose of paying the debts of such city lawfully contracted prior to the first day of January, 1889, not to include any bonded debt.” In awarding the mandamus the trial court and the Court of Civil Appeals proceeded upon the theory that, since the city did not show that it would be necessary to exhaust its entire general taxing power of l-£ per cent in order to raise sufficient funds to defray its current expenses, it had not met the prima facie ease made by the plaintiffs by showing their judgment unpaid and unprovided for, and the right of the city to levy said tax.

Where the city council, in good faith, in the exercise of the discretion conferred upon them by law, fix the current expenses of the city at such a sum that it becomes necessary to exhaust its taxing power, not appropriated to other purposes, to raise same, a general creditor can not compel the appropriation of a portion of such taxing power or the proceeds thereof to the payment of his claim to the exclusion of such expenses.

All persons who deal or come in contact with the city, without securing the setting aside in the manner provided by law of a portion of its taxing power for the satisfaction of their claims, are charged with notice that the very law which renders the city liable to them, and which might have denied all liability whatever, fixes the current expenses of each year as a first charge on its general revenues for that year. To adopt any other rule “would be to destroy the city. In such case, the creditor would have to wait until a surplus should accrue, just as any other creditor has to wait upon an impecunious dehtor.

And every creditor is presumed to know the extent of the power to tax, and the means to pay on the part of the city at the time of the contract.” Tucker v. City of Raleigh, 75 N. C., 267. If he be not willing to take the only chance of payment held out to him by the very law to which he must look for the city’s liability, he has the privilege of not so dealing or coming in contact with the city as to render it liable to him either by contract or tort.

If in this case the council had in good faith at the date of the trial below determined the various sums necessary for the various items of current expenses so as to aggregate such an amount that it would require a tax of 1|- per cent to raise same and had levied such tax therefor, it is clear that the court could not have compelled them to set aside any portion of said levy or fund to be derived therefrom for the payment of this judgment to the exclusion of any part of such current expenses; for the court has no power, even at the suit of • a creditor, to control or review the honest discretion of the council in determining whether they will in a given year expend a portion of its revenues for a given thing properly classed as current expense, or the amount they will pay therefor.

City of Denison v. Foster, 37 S. W. Rep., 167, in which this court refused an application for writ of error; Tucker v. City of Raleigh, 75 N. C., 267; Cromartie v. Commissioners, 87 N. C., 134; East St. Louis v. Zebley, 110 U. S., 331.

It follows that the trial court could not forestall the action of the council by ordering it in advance to .levy a portion of said 1| per cent to pay this judgment, for such order if valid would be in effect a judicial determination either that the currrent expenses were not a preference claim on the funds to be derived from such taxing power, or that the council to be assembled for that purpose could not in the exercise of their honest discretion fix the amount to he expended for current expenses at such a sum as to require a tax of 1-|- per cent to raise same.

The court, by entering the peremptory order to levy out of its 1-| per cent taxing power a sufficient tax to pay the judgment, necessarily to that extent forbade and attempted to control the council in the exercise of its discretion in determining the amount to be raised and expended for current expenses. This we have seen it has no power to do. It is no answer to say that it had only levied 1J per cent for 1894 and therefrom had realized sufficient to meet such expenses as the city was then administered, for in the discretion of the council such expenses both as to items and amounts may vary from year to year.

If this were not true a past year could be made to govern all futures ones, and the court could virtually destroy the discretion of the council by ordering the appropriation for a series of years of all that part of the taxing power, not exercised in such past year, to the' payment of such judgments as this. Upon this view of the law the writ of error was granted.

We are of opinion, however, that the court might have awarded its writ directing the levy of the full per cent each year, and the payment on the judgment each year of such of the sums realized from such tax as might not be necessary to pay such claims as were already a charge on said taxing power, such as interest and sinking fund on bonds, and such current expenses as the council in its discretion might incur; or might have ordered the exercise, each year, to payr the judgment, of such portion of said per cent taxing power as might be left after the council had annually made therefrom such levy as in its discretion was necessary to raise funds for current expenses and such levies as were already provided for out of said taxing power, such as provision made for interest and sinking fund on bonds.

Therefore, if the city had no other taxing' power applicable to this judgment than the 1% per cent, as seems to be conceded by counsel on both sides and assumed by both of said courts in the disposition of the case, we would be constrained to reform the judgment awarding the mandamus in accordance with the views above expressed.

Since the submission of the cause we have reached the conclusion that the judgment of the Court of Civil Appeals must be affirmed upon the ground that the latter portion of the statute above quoted, authorizing the city “to levy assess and collect a further tax of twenty-five cents on the one hundred dollars’ worth of property for the purpose of paying the debts of such city lawfully contracted prior to the first day of January, 1889, not to include any bonded debt,” affords ample warrant for same.

The sum necessary to pay this judgment can be raised within the limits of such taxing power, the record does not show that any portion of it has been appropriated to any other claim, and the council have no discretion or power to levy any portion thereof for' any purpose other than the payment of “debts lawfully contracted prior to the first day of January, 1889, not to include any bonded debt.” The only question that can arise is whether this judgment is a “debt lawfully contracted prior to the first day of January, 1889,” within the meaning of said statute.

The broad and just purpose of the statute, which was enacted in 1889, was to enable the cities becoming subject to its terms to pay off their lawful obligations incurred prior to January 1st of that year out of funds to be raised by the exercise of this special taxing power, without being compelled to resort to their general and permanent taxing power of 1£ per cent intended to meet their fixed charges, such as current yearly expenses and bonded debts.

It being incorporated into the Revised Statutes, which in its “Final Title” declares that “the provisions thereof shall be liberally construed with a view to effect their objects and to promote justice,” we are not at liberty to adopt a narrow construction of same, which would either deprive the city of the power of paying a judgment the justness of which is not questioned, without resorting to its general revenues, which it alleges are all needed for current expenses and other fixed charges, or force plaintiffs below to rely upon the precarious remedy above suggested as the only one open to them for the collection of their claim.

Applying a liberal rule of construction to the statute to effect its purpose, We are of the opinion that the liability of the city to plaintiffs began at the date of the accrual of the cause of action in 1888, and not at the date of the judicial ascertainment thereof by the rendition of the judgment in 1889; that the word “debts” as used in the statute is broad enough to include a liability arising out of either tort or contract (Barber v. City of East Dallas, 83 Texas, 147); that the word “contracted” is used in the' statute in the sense of incurred (Smith v.

Omans, 17 Wisconsin, 406); and that the legality of the obligation was settled by the rendition of the judgment. It results that the judgment in this case is a debt of the city “lawfully contracted prior to the first day of January, 1889,” and that the council has no discretion but to levy under said special power of taxation a tax sufficient to pay same, and therefore the judgment of the Court of Civil Appeals must be affirmed, though we base our conclusion upon . different grounds from those presented to and relied upon by that court as justifying the awarding of the writ. Brown, J., not sitting.

Opinion filed March 29, 1897.