Tarter v. Wesley

Opinion of the Court by Judge Judge Settle Affirming. This appeal is from a judgment of the Pulaski circuit court entered upon a demurrer to a taxpayer’s hill to enjoin E. O. Tarter, county judge, and C. M. Langdon, county clerk, from borrowing $50,000.00 pursuant to a resolution of the Pulaski fiscal court adopted at a called meeting on the 5th day of January, 1923, upon the ground that the floating indebtedness of the county is greater than the constitutional hmit, and upon the further ground that the fiscal court has no power or authority to borrow money. A general demurrer was interposed to the petition and overruled by the court, whereupon the defendants declining to further plead, judgment was entered perpetually enjoining and restraining E. C. Tarter, county judge, from executing, signing or delivering to anyone the note or obligation of Pulaski county for the sum of $50,000.00 or any other sum under the resolution of the fiscal court hereinafter copied, and from pledging the faith of Pulaski county to any such note or obligation to secure such an amount or any amount. Prom this judgment Tarter appeals. The resolution passed by the Pulaski fiscal court authorizing appellant to borrow the $50,000.00 for and on behalf of the county reads as follows: “Be it resolved by the fiscal court of Pulaski county, that the judge of this court be authorized to borrow $50,-000.00 for the liquidation of certain existing debts against Pulaski county, due for road construction and improvement ; and that it be further resolved that he be authorized to obtain the said $50,000.00 on the best terms available, and at a rate of interest not to exceed 6%; that he be authorized and empowered to sign the corporate name of Pulaski county to notes for same, and that his signa [16] ture be attached thereto by the clerk of this court with the corporate seal of said county; be it further resolved that in payment of said loan the said judge be authorized to pledge the faith and credit of the said county, together with all assets due said county from all sources; to secure payment of same, the said judge is empowered to pledge the amount due Pulaski county by the state highway commission, growing out of state contracts hitherto entered into; be it further resolved that in payment of same the original obligation growing out of claims to be paid is hereby also pledged, and that payees to notes are also abrogated to all the rights of claimholders; be it further resolved that a committee of three be appointed by this court to apply the proceeds of said loan to road claims now due against Pulaski county and that no claim shall be paid by the county treasurer unless endorsed by whole committee.” It is charged, in the petition that the total property valuation of Pulaski county subject to taxation for county purposes does not exceed ten million dollars, and that the gross sum which the county may realize from the greatest rate of taxation available is $50,000.00 per year, of which sum $25,000.00 per year is required for current expenses such as salaries of officers, etc., leaving only $25,000.00 available for sinking fund and all new improvements and obligations, and this is admitted on demurrer. The petition further avers that the total floating indebtedness of Pulaski county, so far as ascertainable, at the time of the filing of this action was something more than $191,903.83 and that the county has a bonded indebtedness of more than $305,000.00. 'There was filed with and made a part of the petition an itemized statement of the above indebtedness, which recites, however, that the $191,903.83 does not include the entire amount of the county’s floating indebtedness but necessarily omits several thousand dollars further indebtedness the amount of which the plaintiff was unable to ascertain. All these averments are admitted by the demurrer. The 'Constitution of this state, section 157, fixes a limit upon indebtedness which a county or other municipality may incur. It reads: “No county, city, town, taxing district, or other municipality shall be authorized or permitted to become indebted in any manner or for any purpose, to an amount exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the [17] voters thereof voting at an election to be held for that purpose; and any indebtedness contracted in violation of this section shall be void.” Just how the county of Pulaski became indebted in a sum in excess of $191,000.00 without submitting the question to the voters is not fully set forth, but it does appear that a part of this indebtedness has been carried over from year to year without being taken into consideration in subsequent years in estimating the indebtedness of the county and ascertaining the funds available for public improvements and the extinguishment of existing obligations. The county cannot, under section 157 of the Constitution, incur an indebtedness for any purpose in excess of the income and revenue provided for such year without the assent of two-thirds of the voters thereof voting at an election to be held for that purpose. Indebtedness contracted in violation of this provision of the Constitution is declared to be void. We have held in several cases that where, through. mistake or inadvertence in calculating the income and revenue of a county or municipality, an indebtedness was contracted slightly in excess of the actual revenue and income of the county, that same might be carried over to the succeeding year and considered as a part of the indebtedness of that year in estimating the needs and fixing the tax rate for that year. But in no case have we held that such overplus could be carried from year to year and allowed to accumulate and increase beyond the total revenue and income of the county for any year. McCracklin v. Nelson Co. Fiscal Court, 174 Ky. 308; Nelson Co. Fiscal Court v. McCracklin, 175 Ky. 199; Carman v. Hickman County, 185 Ky. 630. Whatever power a- fiscal court may have to borrow money cannot be exercised for the purpose of paying debts illegaly contracted. It therefore, appears from the averments of the petition, and' is admitted by the demurrer, that much if not all of the floating indebtedness of the county of Pulaski, which is charged to be $191,903.83, is void under section 157 of the Constitution, declaring that without the consent of two-thirds of the voters of the county voting at an election held for that purpose, indebtedness contracted in violation of the provisions of the section shall be void. The purposes for which the $50,000.00 proposed to be borrowed by the fiscal court is to be used and applied are not made sufficiently definite and certain to enable us to say what particular [18] part of the indebtedness of the county will he extinguished by such funds if obtained through the loan according to the plan set forth in the fiscal court resolution, but it does sufficiently appear from the petition that it is proposed by the fiscal court to apply it to outstanding claims against the county contracted after a floating indebtedness of more than $191,000.00“ has been incurred and that all such indebtedness must be held under section 157 of the Constitution to be void. The county therefore through its fiscal court and county judge cannot contract a new indebtedness binding upon' the county to take care of an old indebtedness void because contracted in excess of the constitutional limit. For these reasons and for others that could be assigned the chancellor did not err in overruling the general demurrer to the petition and in perpetually enjoining the appellant from executing an obligation in the name of and binding upon the county for $50,000.00- to anyone and from borrowing such sum in the name of the county for any purpose. Judgment affirmed. The whole court sitting.