Opinion
No. 28948
Decided March 4, 1942.
Taxation — Ten-mill limitation — Section 2, Article XII, Constitution, 1934 — Restriction upon tax rate and upon indebtedness — Contract obligation not impaired — Amendment applicable to new and not pre-existing indebtedness — Sinking fund levy for pre-existing indebtedness — No duty imposed to place levy within amended limitation.
1. The amended ten-mill limitation of Section 2, Article XII of the Constitution of Ohio, effective January 1, 1934, constitutes a restriction upon tax rate and upon indebtedness. (Paragraph 2 of the syllabus in the case of State, ex rel. City of Portsmouth, v. Kountz, Mayor, 129 Ohio St. 272, approved and followed.)
2. This amended limitation may not impair the obligation of a contract and applies to new and not to pre-existing indebtedness. (Paragraph 1 of the syllabus in the case of State, ex rel. Ohio National Bank of Columbus, v. Village of Hudson, 134 Ohio St. 150, approved and followed.)
3. Such amended limitation imposes no obligation upon taxing authorities to place within it the tax levy necessary to pay the principal and interest due on bonds evidencing a preexisting indebtedness.
IN MANDAMUS.
This action for a writ of mandamus is addressed to the original jurisdiction of this court.
The relators, as taxpayers, are seeking to compel the respondent taxing authorities of Franklin county and of the city of Columbus to revise the city's budget for the year 1942.
The relators' petition discloses in substance that subsequent to the year 1922 but prior to 1934, the city of Columbus issued certain general bonds and certain special assessment bonds for the purpose of borrowing money with which to provide various municipal improvements; that all of these bonds were issued without a vote of the electors of the city; that in order to produce the necessary fund with which to pay the current installments of interest and principal due and payable on the outstanding bonds, a tax levy has been provided in the city's budget for the year 1942; that only a small part of this levy may properly be placed outside of the ten-mill limitation established by Section 2, Article XII of the Constitution of Ohio, which became effective January 1, 1934; that the respondents nevertheless have placed the levy outside of this limitation in violation thereof; and that unless this court compels the respondents to revise the city's budget in conformity therewith, they will not do so.
To this petition the respondents have interposed a demurrer on the ground that the facts alleged are not sufficient to constitute a cause of action.
Mr. James M. Hengst and Messrs. Arnold, Wright, Purpus Harlor, for relators.
Mr. John L. Davies, city attorney, Mr. Charles R. Petree, Mr. Ralph J. Bartlett, prosecuting attorney, and Mr. Robert P. Barnhart, for respondents.
The single question requiring the court's attention is whether the instant controversy is controlled by the principles announced by this court in the case of State, ex rel. Ohio National Bank of Columbus, v. Village of Hudson, 134 Ohio St. 150, 16 N.E.2d 266. The contention of the respondents is in the affirmative while that of the relators is to the contrary.
The two paragraphs of the syllabus in the Hudson case read as follows:
"1. The inhibitions of Section 2, Article XII of the Ohio Constitution, with respect to tax rate limitations, are directed against new and not against pre-existing debts.
"2. Municipal funding bonds, exchanged for an original indebtedness created prior to the adoption of a constitutional tax limitation, are not subject to such limitation even though the tax levy for the payment of principal and interest of such bonds exceeds such new limitation."
The relators seek to distinguish the cases upon the particular facts involved in each. They assert that they are taxpayers, while in the Hudson case the relator was a bondholder; that here the principle of inviolability of contract is not involved, while in the Hudson case it was; that here no question of estoppel is presented, while in the other controversy there was; that here a period of but one year is involved, while the other case covered a general course of action over several years; that here the relators are asking to have the ten-mill constitutional amendment applied as a tax limitation, while in the former case this court simply refused to construe it as a debt limitation; and that in the instant case the city of Columbus can meet its bond requirements without placing any part of the levies therefor outside the ten-mill limitation, while in the Hudson case the village had refused to make any levy for such purpose.
Assuming the correctness of the foregoing factual distinctions urged by the relators, this court is nevertheless clearly of the opinion that the fundamental principles followed in the Hudson case are likewise decisive of the present controversy. Concededly the bonds here involved were issued prior to January 1, 1934, the effective date of the ten-mill amendment to Section 2, Article XII of the Constitution of Ohio. These bonds constituted a pre-existing obligation which could not be impaired by the subsequently amended limitation; and this is true, irrespective of whether such an amendment be considered as a limitation upon tax rate or upon indebtedness. This court has held it to be both. State, ex rel. City of Portsmouth, v. Kountz, Mayor, 129 Ohio St. 272, 194 N.E. 869. Hence, there is both the authority and the duty to make the necessary levy. Of course there must be a compliance with the limitation in effect at the time the debt was incurred, but there is no implied obligation upon the taxing authorities to place the levy within the reduced limitation of a subsequent amendment. That is a matter of discretion rather than authority.
To entitle the relators to a writ of mandamus they must allege facts disclosing a duty specially enjoined by law upon the respondents to place the questioned levy within the subsequent ten-mill limitation. Since such duty has not been shown, the demurrer of the respondents must be sustained and the relators' petition dismissed at their costs.
Demurrer sustained.
WILLIAMS, MATTHIAS and HART, JJ., concur.
ZIMMERMAN, J., concurs in the judgment.
TURNER, J., not participating.