Opinion
No. 25439
Decided June 26, 1935.
Taxation — Ten-mill limitation — Section 2, Article XII, Constitution — Outstanding unvoted bonds issued before amendment adopted — Obligation of existing contracts not impaired — Bonds may be refunded, when.
IN MANDAMUS.
This is an original action in mandamus to compel John L. Steel, as Mayor of the city of Wellston, Ohio, to sign and execute refunding bonds for and on behalf of that city in the sum of $59,083.86.
The Industrial Commission of Ohio is the owner and holder in due course of certain bonds which were legally issued by the city of Wellston, Ohio, on various dates in the years 1923 and 1924, in anticipation of the collection of special assessments duly levied by that city for the payment of certain improvements described in the bonds.
The petition alleges substantially that such bonds are in default and past due as to the payment of principal, aggregating the sum of $59,083.86.
The petition further alleges that such bonds were originally issued in accordance with the provision of the constitution and general laws of the state of Ohio then in effect; that in the legislation under which such indebtedness was incurred a provision was duly made for the levying and collecting annually by taxation of an amount sufficient to pay the interest on such bonds and to provide a sinking fund for their redemption at maturity; that no limitation of indebtedness or taxation, either statutory or constitutional, has been exceeded in their issuance; and that due provision was made for the levying and collecting annually by taxation of amounts sufficient to pay the interest thereon and to provide a fund for their final redemption at maturity.
The petition further alleges that the City Council of Wellston, by proper legislation, authorized the refunding of the bonds owned by relator as aforesaid, such refunding bonds to mature in substantially equal annual installments beginning with the year 1938 and ending with the year 1947; that the city of Wellston offered the refunding bonds to the Industrial Commission of Ohio for purchase and that the commission accepted the offer and purchased the same.
The petition further alleges that such refunding bonds were presented to respondent, John L. Steel, as mayor, with the request to sign the same, but that he refused to do so on the ground that such refunding bonds can not be issued within the debt limitations of the city of Wellston, and that the tax levy required to meet the interest and principal payments thereon can not be made within the constitutional ten-mill limitation.
The petition further alleges that the millage within the city of Wellston required to service the aforesaid refunding bonds and all other bonds of that city and overlapping subdivisions, payable by tax levies within constitutional limitations, will require that there be levied on the 1935 tax duplicate for the fiscal year 1936 an aggregate millage in excess of ten mills, after deducting funds on hand available for the payment of such obligations.
Relator prays that a writ of mandamus issue commanding the respondent to sign and execute such refunding bonds for and on behalf of that city.
A general demurrer was filed by respondent to the petition.
Mr. John W. Bricker, attorney general, Mr. William S. Evatt and Mr. Thomas M. Miller, for relator.
Mr. H.W. Ankrom, city solicitor, for respondent.
In our opinion the bonded indebtedness here under consideration is not, and cannot be, affected by the adoption of the amendment to Section 2, Article XII of the Ohio Constitution, for the reason that even such constitutional amendment may not impair the obligation of existing contracts.
Our conclusion is that outstanding bonds of a political subdivision issued prior to the effective date of the constitutional ten-mill limitation imposed by Section 2, Article XII, of the Ohio Constitution now in effect, may be refunded to the extent of the unpaid principal balance then due thereon, notwithstanding the fact that the ten-mill limitation may be thereby exceeded.
It is not necessary, therefore, to consider other questions presented or other contentions made by counsel.
The demurrer to the petition will be overruled, and, respondent not desiring to plead further, the writ of mandamus will be allowed.
Writ allowed.
WEYGANDT, C.J., STEPHENSON, WILLIAMS, MATTHIAS, DAY and ZIMMERMAN, JJ., concur.
JONES, J., not participating.