Bolich v. . City of Winston-Salem

CoNNOR, J. Tbe Municipal Finance Act, 1921, as amended, expressly authorizes a municipal corporation organized under tbe laws of this State to issue its negotiable bonds for tbe purpose of refunding bonds of tbe corporation issued for debts contracted prior to 1 July, 1931, and maturing within one year .from tbe date of tbe passage by its governing body of tbe bond ordinance authorizing tbe issuance of tbe refunding-bonds, where tbe bonds to be refunded are valid and enforceable- obligations of tbe corporation. N. 0. Code of 1931, section 2937, subsection 2. It is expressly provided by tbe statute that tbe ordinance authorizing tbe issuance of refunding bonds need not be submitted to the voters of tbe municipality. N. 0. Code of 1931, section 2938, subsection 2. This provision is not confined to bonds issued for debts contracted for necessary expenses; it is applicable to all bonds, including those which were issued for expenses other than necessary expenses of tbe municipality. A municipal corporation does not contract a debt, within tbe meaning of section 7 of Article YII of tbe Constitution of this State, when under statutory authority it issues bonds to refund bonds which at tbe date of tbe issuance of tbe refunding bonds are valid and enforceable obligations of tbe corporation. 44 C. J., 1132. Tbe bonds in tbe instant case will not be invalid because their issuance was without tbe approval of a majority of tbe qualified’ voters of tbe city of Winston-Salem. Nor will their validity be affected by tbe fact that when issued they may bear a rate of interest in excess of tbe rates which tbe bonds to be refunded bear, provided such rate does not exceed six per cent. N. C. Code of 1931, section 2951. Tbe maximum rate of interest fixed by statute for tbe bonds to be refunded was six per cent. Tbe fact that tbe bonds when issued, bore rates of interest less than six per cent, does not determine tbe rate at which tbe refunding bonds may be issued. Tbe rate of interest which bonds issued by a *789 municipal corporation shall bear is fixed by the governing body of the corporation, in its discretion, within the statutory limitation. It is expressly provided by the statute that the period within which refunding bonds shall mature shall be determined by the governing body of the corporation. N. C. Code of 1931, section 2942, subsection 1(b). The maximum periods fixed by statute for the maturity of the bonds to be refunded is not determinative of the period for the maturity of refunding bonds. In the instant case the maximum period for the maturity of the refunding bonds which the defendants propose to issue and sell is fixed in the bond ordinance at 50 years after 1 July, 1932. If the bonds shall be so issued, this fact will not affect their validity. As the refunding bonds which the defendants propose to issue and sell will be valid, it follows that the bond anticipation notes which they also propose to issue and sell, will be valid. N. C. Code of 1931, sec-tion 2934. Of course, the proceeds of the sale of the refunding bonds'and of the loan anticipation notes can be applied only to the payment of the bonds which are to be refunded. When this shall have been done, the indebtedness of the city of Winston-Salem, incurred by statutory authority and with the approval of a majority of the qualified voters of the city, will not have been increased. The taxpayers of the city will be relieved of the burden of taxation for the payment of the bonds which will mature within one year from 8 April, 1932, which, but for the issuance and sale of the refunding bonds, would necessarily be imposed upon them. There is no error in the judgment denying plaintiff’s motion for judgment on the pleadings, and dismissing the action. The judgment is Affirmed.