ELECTRIC LIGHT COMPANY v. KEENAN

Holman Montgomery, for appellant. — The Legislature of Texas has provided by general law, "An act entitled an act to amend article 541, chapter 11, title 17, of the Revised Civil Statutes of the State of Texas," approved April 13, 1891. That act imposes the duty upon the Commissioners Court to take charge of the property and effects of a de facto corporation when declared void by a court of competent jurisdiction, and to provide for its sale, and the levying and collection of a tax upon property within the limits of said dissolved corporation to pay its legal debts.

Has it the constitutional power to do so? Its power over municipal corporations and the power of taxation is absolute and unlimited, except by the Constitution. Cool. on Tax., 5; Dill. Mun. Corp., secs. 52, 113; Bass v. Fontleroy, 11 Tex. 350 [ 11 Tex. 350]; Morris v. The State, 62 Tex. 743 [ 62 Tex. 743]. But it can not alter or repeal an act chartering a municipal corporation to the injury of creditors of said corporation, or of persons holding contracts with it. Morris Cummings v. The State, 62 Tex. 743, and authorities cited. If not absolutely void, so that no rights could accrue or liability attach to it, it is a legal substantial equity, a corporation, and if able to acquire and hold property, it can create a debt for which that property can be made liable.

By no fiction of law or logic can the truth be so tortured as to deny that the corporation of Seymour could hold property; for it has it, which no one else does own or can legally claim. That it does owe debts is equally undeniable.

Justice Clifford, in Mt. Pleasant v. Beckwith, 10 Otto, 514, quoting Chief Justice Dixon, in Hasbrock v. Milwaukee, 25 Wisconsin, 123, says: "When a municipal corporation has the power to contract a debt, it has by necessary implication authority to resort to the usual mode of raising money to pay it, which undoubtedly is taxation."

That the corporation of Seymour had the right to contract and to tax before its dissolution is not debatable. That that power to tax, though by its dissolution ceased and determined, did not extinguish the right any more than the debt, but only renders it dormant, is settled by the fact that the power to tax for that debt revives, and is transmitted to its successor upon reincorporation, not only by this express statute in Texas, but also by settled American law without the statute. Dill. Mun. Corp., sec. 170; New Orleans v. Clark, 95 U.S. 644; Mt. Pleasant v. Beckwith, 10 Otto, 514.

Nor does it matter whether it be a reincorporation of the same people and district, enlarged or restricted, in the same or a different name, in the same or a different mode of government; the new will be regarded as the successor of the old corporation, entitled to its property rights and subject to its liabilities. Nor does it matter that the Legislature, in repealing the charter and incorporating them into a different organization, expressly provided that the new should not levy a tax to pay the debts of the old; the courts will declare such provision void, and by mandamus will compel the new to levy the tax. Dill. Mun. Corp., 171, and notes, citing Memphis City case, Mobile case, Pensacola, Brownsville, and Selma.

Mr. Dillon, in section 173, suggests this solution: "The power of a municipality to levy taxes to pay its debts, as the power existed at the time when the debts were created, is in its essence not the grant of a power to the incorporated body, but to the inhabitants of the incorporated territory. In this view, the power or contract obligation, and duty of its exercise, survives the repeal of the charter and the dissolution of the old corporation, and passes, equally with the obligation to pay the debt, to the inhabitants who continue to reside, under any form of organization, within the municipal area in behalf of which the debt was created; the exercise of which power and consequent duty may be compelled by the judicial process of mandamus whenever there are officers in existence who, under the general legislation of the State, have the power to levy and collect taxes."

This states the rule applied to pre-existing de jure corporations, and fully accords with article 342, Revised Statutes: "All the inhabitants of each city, etc., * * * shall continue to be a body corporate," etc.

Does it apply to a de facto corporation? Evidently it was the legislative intent to make it so, by this very act.

It is the province of the Legislature to prescribe by general law for what public purpose, to what extent, and territorial limit, taxes shall be imposed. Dill. Mun. Corp., sec. 737, and notes.

They have enacted, that when a de facto corporation has contracted legal debts (debts for such purposes as are allowed by law for municipal corporations to make, and have thereafter been declared void), such debts for a public purpose for which a tax may be imposed, and that duty, purely ministerial, is laid upon the Commissioners Court, a refusal to obey it subjects them to mandamus. The debt for which plaintiff sues was for a purpose expressly allowed by statute. Rev. Stats., art. 377.

It is well settled by the highest judicial authority, that all property of a public nature held by a dissolved corporation reverts to the State, subject to the claims of its successor, should any appear, and is not liable for its debts. Dill. Mun. Corp., sec. 169; Broughton v. Pensacola, 93 U.S. 265; Merriweather v. Garrett, 102 U.S. 472.

Will the State hold this property, for which the corporation justly owes its creditors, upon faith of their power to tax, which the taxpayer could not question, evade, or resist, after destroying their power to tax, and leave the creditor without remedy? Is their payment not such public purpose as authorizes and invokes the legislative power to tax, demanded alike by justice, necessity, and honor, which they are estopped to deny? Railway v. Commissioners, 30 Am. St. Rep., 274, and authorities cited.

Newton Dalton, for appellee, cited section 53, article 3, of Constitution; also section 18, article 5; Ewing v. Commissioners Court, 83 Tex. 663; Ewing v. The State, 81 Tex. 172.