duty upon the legislature in authorizing the creation of debt, or upon the municipality in exercising the power to incur debt, to provide for the levy each year of a tax sufficient to pay the interest and to extinguish the principal at maturity, and that the duty thus imposed is absolute and may be enforced by mandamus or other appropriate remedy, their soundness is beyond question. But the Constitutions do not in general expressly provide that if the municipality does not at or before the time of creating a debt pass an ordinance levying such a tax, that such debt, if otherwise in all respects authorized and valid and for which the municipality has received full consideration, shall be void. If the debt is void, the failure of the municipal officers to do their duty is visited upon third persons, although these persons can enforce such duty in the courts just as effectually as if the duty enjoined by the Constitution or by statute had been reaffirmed and redeclared in a municipal ordinance or resolution. Moreover, in many cases it is almost impossible for contractors or others dealing with a city, or investors in its bonds or securities, to ascertain and determine whether or not the debt limit has been reached. It has been said that this constitutional provision is selfexecuting and is to be read into every law passed after the adoption of the Constitution which allows a debt to be incurred. Under this provision of the Constitution no municipal corporation can incur debt without legislative authority, express or implied; but the grant of such legislative authority carries with it the constitutional obligation on the part of the municipality to levy and collect a sufficient annual tax to pay the interest as it matures and the principal within the prescribed term of years.1 Hence an obligation imposed by the Constitution itself rests upon the municipality to make the required provision for payment of principal and interest whether the statute contains such provision or not, and accordingly it has also been held that the constitutionality or unconstitutionality of the statutory requirements as to such provision is immaterial. The provision required by the Constitution means such fixed and definite provision for the levying and collecting of the required tax as will become a legal right in favor of the holder of bonds issued thereon, or in favor of any person to whom such debt

East St. Louis v. Amy, 120 U. S. 600; East St. Louis v. People, 124 Ill. 655; Pettibone v. West Chicago Park Com'rs, 215 Ill. 304, 324; Evans v. McFarland, 186 Mo. 703, 727.

2 Pettibone v. West Chicago Park Com'rs, 215 Ill. 304, 326. In Missouri,

only the question of contracting the debt is required to be submitted to a vote. Upon a vote being given to contract the debt, the power to provide therefor becomes vested in the appropriate local authorities. Benton v. Scott, 168 Mo. 378, 395.

may be payable.' But the provision of the Constitution is sufficiently complied with if the statute which confers authority upon the municipality to incur the debt directs that an annual tax shall be levied sufficient to pay the interest on and create a sinking fund for the redemption of the bonds. It is not essential, where an ordinance is not expressly required, that the municipality itself should make provision by ordinance for the levy of the tax, as the insertion of the direction in the enabling or other statute that a sufficient tax be levied gives the bondholder the right to enforce the levy by mandamus or other suitable remedy. This sound view will probably have the effect to modify prior decisions in several States which assert, or assume, or proceed upon the view that a resolution or ordinance for the levy of the tax is in all cases a sine qua non to the validity of the debt. No plan or scheme for raising the necessary revenues to pay the principal and interest can, in Georgia, lawfully be substituted for the assessment and collection of such a tax.1

Where the requirement is simply that the municipality shall at or before the time of incurring any indebtedness provide for an annual tax sufficient to pay the interest and also the principal thereof within thirty years, it is not necessary that the bonds issued should be redeemable in annual instalments. The intent simply is that a certain sum shall be raised annually in anticipation of payment; and whether paid out in redemption of the bonds annually, or into a sinking fund for their payment at the expiration of a term of years, it is a sufficient compliance with the requirement. The language and purpose of the constitutional requirement seem to be satisfied by an ordinance which provides for the annual collection by taxation of a "sufficient sum to pay the interest" on the debt "and create a sinking fund," although it does not fix the specific rate or percentage of taxation for each year

'Mitchell County v. City National Bank, 91 Tex. 361.

2 Wade v. Travis County, 174 U. S. 499; Mitchell County v. City National Bank, 91 Tex. 361; infra, § 212; also chapter on Municipal Bonds, post. An ordinance which authorizes the issue and sale of municipal bonds and provides for the collection of a tax to pay the principal and interest is a part of the contract between the city and the holder of the bonds. Bassett v. El Paso, 88 Tex. 168. Subsequent legislation which withdraws or impairs the taxing power, without providing a substantial equivalent, is unconstitutional as impairing the obligation of the contract. Austin v. Cahill, 99 Tex. 172; 88 S. W.

by which such sum is to be collected, but leaves the fixing of such rate for each successive year to the municipal authorities.1 This is a sound and reasonable, if not indeed an almost necessary, construction; for how is it possible to fix in advance the rate of taxation year by year through a period of years in each of which the assessed valuation may differ, without levying in some years too much and in others not enough? In Georgia, it is held that where the requirement of the Constitution is that provision shall be made by the assessment and collection of an annual tax sufficient in amount to pay the principal and interest of the debt within a prescribed term of years, an amount sufficient to pay off the bonds at maturity must be raised by an annual tax, and that it is not a compliance with this requirement to provide for a tax sufficient to pay a sum which may by annual accretions by investment produce the amount required. The Constitution contemplated that there should be no uncertainty, and the amount to be raised by tax must be sufficient in itself to pay off the entire amount of the bonds at the end of the prescribed period. But this does not mean that the municipal authorities are compelled to collect the tax if, when the time arrives for the payment of any part of the debt, either principal or interest, there are funds in the treasury derived from other sources which may be lawfully applied to the payment of the debt. The municipal authorities must make provision for the levy and collection of an annual tax in the event the collection of the tax is necessary for the purpose of paying the debt, but it was not intended that they should be compelled to collect the tax although levied, when there are funds in the treasury derived from other sources which can be lawfully appropriated for the purpose of complying with the provisions of the Constitution. If the tax levied at the time of incurring indebtedness is sufficient to comply with the requirements of the Constitution when computed upon the existing valuation, it is no ground of objection that the assessed valuation

sary," is a sufficient compliance with the constitutional requirement. The latter clause authorizes the city council to reduce the rate as the debt is paid off. State v. Allen, 183 Mo. 283.

Howland v. Board of Supervisors, 109 Cal. 152; Pettibone v. West Chicago Park Com'rs, 215 Ill. 304; Ewing v. West Chicago Park Com'rs, 215 Ill. 357; State v. Allen, 183 Mo. 283; Bassett v. El Paso, 88 Tex. 168; Mitchell County v. City National Bank, 91 Tex. 361; Wade v. Travis County, 174 U. S. 499. See also East St. Louis v. Amy, 120 U. S. 600; infra, chapter on Municipal Bonds. Contra, Kyes v. St. Croix County, 108 Wis. 136; Wilkins v. Waynesboro, 116 Ga. 359. An ordinance fixing a specified rate of tax, "or so much thereof as may be neces- 263.

2 Wilkins v. Waynesboro, 116 Ga. 356; Oliver v. Elberton, 124 Ga. 64. With deference, this view seems to us not to be necessary for the security of the creditor and to impose to the extent of the accretions of the fund, and actually in the fund, an unnecessary burden on the taxpayer.

3

Epping v. Columbus, 117 Ga.

may possibly decrease so that this tax will prove inadequate. There is no presumption that the valuation will decrease, and the requirement of the Constitution is complied with.'

Constitutional provisions requiring the collection of an annual tax sufficient to pay the interest and to pay and discharge the principal within a prescribed term of years have no application to debts for the ordinary running expenses of a city, or to debts within the power of the city to contract, payable within the year out of incoming revenues actually levied or in good faith intended to be levied. If, however, the debt is made to mature at such a time as to make it a charge upon the future revenues of the city beyond the year, then the levy of the tax is necessary to its validity. In Illinois, the constitutional

1 State v. Allen, 183 Mo. 283. Where the provision made is sufficient to provide for the creditor's claim when contracted, the fact that it becomes insufficient therefor by the act of the city in contracting other obligations payable from the same fund, does not prevent a recovery against the city. Houston v. Potter, 41 Tex. Civ. App. 381; 91 S. W. Rep. 389. The fact that the fund provided pursuant to the constitutional provision may have been misappropriated or applied to other purposes than the payment of the principal and interest of the debt does not affect the power of the municipality to contract the obligation or prevent a recovery upon it. Coles County v. Goehring, 209 III. 142, 159. See also Pope County v. Sloan, 92 Ill. 177.

stitution requiring the levy of a tax to pay interest and the principal within twenty years, the court said: "These words are significant and serve to identify and give essence and character to the indebtedness had in mind by the framers of the amendment. They indicate with certainty that the indebtedness against which a tax must be levied is one bearing interest, the time of which has been extended over a series of years and more than one year. A contrary view would lead to the palpable absurdity of requiring the city, if temporarily out of funds, to levy a tax on every item of debt created, whether payable out of current revenue or not. Such a construction is not necessary to carry out the purpose of the provision."

The term "indebtedness" as used in 2 Dawson v. Dawson Water Works these provisions refers to indebtedness Co., 106 Ga. 696; O'Bryan v. Owens- created by contract. O'Bryan v. Owensboro, 113 Ky. 680; Butler v. Lewiston, boro, 113 Ky. 680; supra, § 193. Sums 11 Idaho, 393; Blanks v. Monroe, 110 payable by a city under agreement for La. 944; Ice, Light & W. W. Co. v. rentals of fire hydrants and water for the St. Charles, 106 La. 65, 67; Laycock protection of the city should be rev. Baton Rouge, 35 La. An. 475; New garded as matters of ordinary expenOrleans G. L. Co. v. New Orleans, 42 ditures, and the prima facie presumpLa. An. 188, 189; Receiver v. City, tion is that an indebtedness incurred 49 La. An. 804; State v. Lafayette, for this purpose was intended to be 49 La. An. 1748, 1769; State v. New paid out of the current revenues anOrleans, 37 La. An. 13; Corpus Christi nually collected for the payment of v. Woessner, 58 Tex. 462; Smith v. current expenses. Tyler v. Jester Dickey, 74 Tex. 61; Kuhls v. Laredo (Tex. Civ. App.), 74 S. W. Rep. 359; (Tex. Civ. App.), 27 S. W. Rep. supra, § 195. The cost of building 791; Waco v. McNeal, 89 Tex. 83; sewers is not a part of the ordinary Terrell v. Dessaint, 71 Tex. 770; Tyler running expenses of a city which are v. Jester (Tex. Civ. App.), 74 S. W. primarily payable from its current Rep. 359; Houston v. Glover, 40 revenues. Kuhls V. Laredo (Tex. Tex. Civ. App. 177; 89 S. W. Rep. Civ. App.), 27 S. W. Rep. 791; Bid425; Hermann v. Oconto, 110 Wis. dle v. Terrell, 82 Tex. 335; supra, 660. See supra, §§ 194, 195, 196. In § 195. Hermann v. Oconto, 110 Wis. 660, 677, In Georgia, the rule has been adopted in speaking of the provision in the Con- that without the previous sanction of a

2

provision that any municipal corporation incurring indebtedness shall before or at the time of doing so provide for the collection of an annual tax sufficient to pay the interest and to discharge the principal within twenty years from the time of contracting the same, has reference only to indebtedness the amount whereof has become fixed and absolute and the payment thereof deferred to a stated period in the future.' In Texas, it has been held that the provisions of the Constitution of that State do not apply to instruments merely acknowledging or extending the time of payment of valid existing obligations of a city. But a city is not authorized, without complying with the constitutional requirement as to the levy of a tax, to renew a debt that is barred by the statute of limitations, or to increase or add to the existing obligations by increasing the rate of interest thereon or provide for the payment of attorney's fees, because in doing either of these things it would, to the extent of the barred debt thus renewed, or by increase in the rate of interest, and the obligation to pay attorney's fees, be creating a debt which could only be done by complying with the constitutional requirement that provision be made for payment by the levy of a tax.3

popular vote, as required by the Con- Tyler v. Jester (Tex. Civ. App.), stitution, a municipal corporation can- 74 S. W. Rep. 359. In Georgia, where not contract for a supply of water on the credit of the city for a longer period than one year; and a contract which by its terms is to run for twenty years, each year's supply to be paid for semiannually from year to year, is operative only from year to year so long as neither party renounces or repudiates it. Dawson v. Dawson Water Works Co., 106 Ga. 696. See ante, § 196, Contracts calling for Future Periodical Payments. 1 Kankakee v. McGrew, 178 Ill. 74; Danville v. Danville Water Co., 180 Ill. 235, 244; Baltimore & O. S. W. R. Co. v. People, 200 Ill. 541, 553; Coles County v. Goehring, 209 Ill. 142, 159; supra, 196. This constitutional provision does not apply to a contract to purchase an electric light plant which provides for the payment and assumption of the debt of the vendor on its plant payable in yearly instalments and bearing interest. Baltimore & O. S. W. R. Co. v. People, 200 Ill. 541. It does not apply to the obligation of a city under an ordinance fixing the reasonable rate of annual rental to be paid for water hydrants. Danville v. Danville Water Co., 180 Ill. 235, 244; supra, § 196.

2 Tyler v. Jester (Tex. Civ. App.), 74 S. W. Rep. 359.

the provision is that an annual tax must be provided for sufficient to pay the principal and interest within thirty years from the date of incurring the indebtedness, it has been declared that the controlling idea is that the purchaser of a municipal bond can be assured that his bond will be paid at maturity, and that the Constitution does not contemplate that debts incurred by a municipality which fall within these provisions of the Constitution shall be renewed after the principal matures. Payment of the principal sum may be postponed to one year, two years, or even the end of the thirtyyear limit, but no further extension can be made, and no matter what be the period fixed by the municipality in its discretion in which the bonds are to be paid, and no matter when the bonds mature within this period, the terms of the Constitution are mandatory. There must be levied each year a tax sufficient in amount to pay the interest due during the current year as well as any part of the principal that may mature during that year, and also a sufficient amount in addition to these items to make a sinking fund which by the end of the period will be sufficient to discharge the entire principal of the