Caywood v. Stivers

STEINFELD, Judge

(dissenting).

The petition for declaration of rights alleged that the banks had “ * * * offered to lend to Franklin County an amount equal to the total accrued but unpaid ad valorem taxes and interest theretofore levied and assessed upon distilled spirits stored within Franklin County or $500,000.00, whichever amount was the lesser, for a term not to exceed six years at an annual interest rate of 4¾% provided that the Fiscal Court'of Franklin County, acting for and on behalf of Franklin County, would pledge to the aforenamed banks a sufficient amount of the unpaid ad valorem taxes and accrued interest levied and assessed upon said distilled spirits as of the date of such loan to secure the same.” It further alleged *330that the fiscal court intended “ * * * to enter into such loan transaction, accompanied by a pledge of accrued but unpaid ad valorem taxes and interest * * ”.

Attached to the petition as an exhibit was a letter of intent from the banks which said in part “ * * * we can lend an amount not to exceed the total accrued but unpaid ad valorem taxes and interest levied and assessed upon distilled spirits stored within Franklin County for years prior to 1967 or $500,000.00, whichever is lesser. We propose a loan term of up to six (6) years at an annual interest rate of 4¾%, secured as indicated in your letter.” Another exhibit is a specimen of the form of the loan agreement which refers to a resolution of the fiscal court and which says in part, “ * * * that to accomplish the aforesaid purpose, the said Franklin County Fiscal Court borrow from the * * * ” several banks the amount of money to be decided upon and then this exhibit continues that the county judge and the treasurer of the county “ * * * be and they are hereby expressly authorized to borrow and execute and deliver to the said * * * ” banks “ * * * the promissory note(s) of the Fiscal Court of Franklin County, Kentucky, for the sum of * * * ” the amount borrowed.

The anticipated taxes are to be paid through the year 1971.

Section 157 of the Kentucky Constitution in part provides that:

“No county * * * 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 voters thereof, voting at an election to be held for that purpose; and any indebtedness contracted in violation of this section shall be void.”

Without a vote of the people, the transaction between Franklin County Fiscal Court and the banks will create an indebtedness in “an amount exceeding * * * the income and revenue provided for (the) year” in which the county becomes indebted.

The majority opinions cites Combs v. Letcher County, 107 Ky. 379, 54 S.W. 177, wherein this court approved an arrangement so that the county could accumulate “* * * a fund with which to pay in cash for the court house when erected.” (Italics mine). That case pointed out that the fiscal court “without in fact going in debt” had arranged for the accumulation of money to pay for a court house after the money was on hand. There was no borrowing. The plan proposed by the Franklin County Fiscal Court does not fall within this framework, but on the contrary creates an indebtedness in violation of Section 157 of the Constitution.

For these reasons I respectfully dissent.

Joining with me in this dissent are MONTGOMERY and HILL, JJ.