Smith v. Mercer County

CHIEF JUSTICE LEWIS delivered the opinion of the court. January 10, 1887, the county judge, on behalf of the county of Mercer, subscribed $125,000 to the capital stock of the Louisville Southern Railroad Company, and, to pay therefor, issued $125,000 of county bonds, of which, in Au [597] gust, 1888, there was delivered to said company $105,000 - of bonds, with interest coupons attached, the bonds being numbered serially from 1 to 105, each bearing interest at the rate of 5 per cent., and payable on or before January 10, 1917; but each contained the following clause: “If the-county of Mercer shall determine to pay any part of said, series of bonds before the end of thirty years after their daté, the county judge shall give at least three months' notice of such intention by a publication in a newspaper-in Harrodsburg, Louisville, and New York City, stating-the time when said bonds will be paid; and such call of bonds shall be made consecutively, and not more than $25,000 of bonds shall be called in one year. Interest on the bonds so called shall cease at the end of three months-from the publication of said call; provided, the county shall have on deposit, at the place of payment, the amount of money necessary to pay the bonds named in said call.” It appears that no interest has been paid on these bonds since January, 1892, and .that the principal and interest unpaid has amounted to $145,000 or more; wherefore the fiscal court of that county, September 7, 1898, made an order to call in said indebtedness, and to issue, in place of the old bonds, new bonds to the amount of $145,000, bearing 4 per cent, interest, a specified number of them to be paid five years after date, and each succeeding year thereafter, and none to run longer than thirty years. Subsequently these bonds were offered in open court to-the highest bidder, and purchased at their faee value by appellee, Thompson. Wherefore appellant brought this action to enjoin the fiscal court from executing, issuing, or delivering said bonds to the purchaser. Authority to the various county courts, of this Commonwealth to call in outstanding county bonds-; matured i [598] or subject to call, issued prior to September 28, 1891, and to issue and substitute therefor new bonds, was conferred by act of August 16,1892, now section 1852, Ky. Stat. And the only question presented in this case or made by counsel is whether that statute authorizes the action of the County Court complained of. It is contended for the appellant that the old county bonds had not, in language or meaning of that act, either matured or become subject to call at the time the County Court ordered new ones executed. In our opinion that statute was enacted in the interest and for the relief of the various counties of this State oppressed with indebtedness. And as it is agreed by the parties that the holders of the old bonds mentioned had waived their right to postpone payment thereof, ■ and agreed to substitute the old for the new bonds, evidently the former were at the time the order of the fiscal court was made, to every intent and purpose of the statute, subject to call of the County Court. There is nothing in the limitation contained in the old bonds as to the amount thereof the county had a right to pay, and the conditions upon which it could pay, that restricts its power to now make them all subject to call, holders of the bonds consenting, as they do, thereto; for the restriction was put in the bond for the benefit of the latter. In our opinion, the fiscal court of Mercer county has full power to substitute the new bonds for the old, as it has undertaken to do; wherefore judgment of the lower court denying application for the injunction is affirmed.