Mathews v. Darby, mayor, etc., et al.

Supreme Court of Georgia1928-01-13No. No. 6272

165 Ga. 509

Summary · law.co

Holding. The court affirmed the lower court's refusal to enjoin the sale of city hall and use of sale proceeds for school construction, but reversed and enjoined the diversion of the sinking fund from its designated purpose of paying bonded indebtedness to school construction.

Vidalia's city officials sought to sell the city hall and use the proceeds to construct a school building. A lower court refused to stop this action, and the plaintiff appealed. The court addressed two separate questions: whether city officials could lawfully sell city hall and redirect those funds, and whether they could redirect a sinking fund (money set aside to pay bonded debt) toward school construction instead.

The court held that city officials possessed broad charter authority to buy, hold, and convey property, which included discretion to sell city hall and apply sale proceeds to school construction. Courts will not interfere with such municipal decisions merely because the sale price is below fair market value or the decision seems unwise—only if the action exceeds official authority or involves fraud or corruption. However, the court distinguished the sinking fund from general city property. When a city failed to levy taxes as required to pay bonded debt, it properly set aside proceeds from properties funded by those bonds as a replacement sinking fund. Once designated for this debt-payment purpose, that fund could only be invested in specified securities and could not be diverted to other uses like school construction.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether city officials have authority to sell municipal property and redirect proceeds
Standard for judicial intervention in municipal fiscal decisions
Treatment of sinking funds created from bond-funded property proceeds
Restrictions on use of funds designated to satisfy bonded debt obligations

Procedural posture

The plaintiff appealed from a lower court judgment that refused to enjoin city officials from selling city hall and diverting funds toward school construction.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Hines, J.

1. The mayor and council of the City of Yidalia ‘are authorized, under the general powers contained in the charter of said city, to build schoolhouses within its limits, there being nothing in its charter which forbids this. Mayor etc. of Cartersville v. Baker, 73 Ga. 686.

2. The City of Vidalia, under its charter, is authorized to “buy, hold, exchange, and convey property.” Ga. L. 1922, p. 1004. Under this power the mayor and council of that city are authorized in their discretion to sell the city hall, and use the proceeds in erecting a school building for the city.

No. 6272.

January 13, 1928.

3. The mayor and council of the City of Vidalia being authorized to sell the city hall and use the proceeds in the erection of a school building for the city, a court of equity will not interfere to restrain or control such action, upon the ground that these officers are selling the city hall for less than its fair market value, and that in consequence their action is unwise and extravagant. To sustain such interference, it must appear either that the act is ultra vires, or fraudulent and corrupt. Wells v. Atlanta, 43 Ga. 67; Danielly v. Cabaniss, 52 Ga. 211.

4. The fact that the light plant and the city hall were built with the proceeds of bonds sold by the city does not require that the proceeds of the sales of these properties should be applied to the redemption of these securities, these properties being in no way pledged by the city to the payment of these bonds, and the constitution of this State requiring that the city should, at or before the time of issuing said bonds, provide for the assessment and collection of an annual tax sufficient in amount to pay the principal and interest of any bonded indebtedness within thirty years from the date of the incurring of the same. Civil Code (1910), § 6564.

5. Where the City of Vidalia failed to levy and collect a tax for the purpose of paying the principal of its bonded indebtedness, as required by par. 2 of sec. 7 of art. 7 of the constitution of 1877, and thereafter, from the proceeds of property in the improvement of which the proceeds of its bonds had been invested, the mayor and council of the city by resolution set aside a portion of such proceeds as a sinking-fund to meet the principal of its several series of bonds, such funds so set apart will be treated as taking the place of the sinking-fund which the city is required to assess and levy for the purpose of meeting the payment of its several issues of bonds; and so treating such funds, it became the duty of the officer or officers of said city, under the direction of the mayor and council thereof, or a duly authorized committee thereof, to invest the same in the securities specified in the act of August 13, 1910 (Acts 1910, p. 100; 1 Park’s Code, § 467(a)); and any other investment or disposition of said funds would be illegal and void. Hogansville Banking Co. v. Hogansville, 156 Ga. 855 (120 S. E. 604).

6. The court erred in refusing to enjoin the mayor and council of the City of Vidalia from diverting said sinking-fund from the purpose for which it was created, and from using the same for the purpose of erecting a school building for the city.

7. We affirm the judgment of the court below in so far as it refused to enjoin the mayor and city council from selling the city hall, and from using the proceeds of the sale thereof in the building of a schoolhouse in the city; but we reverse that portion of the judgment refusing to enjoin the mayor and city council from diverting such sinking-fund and from using the same in the erection of such school building.

Judgment affirmed in part and reversed in part.

All the Justices concur.

Saffold & Sharpe, for plaintiff.

D. G. Pattülo and B. P. Jackson, for defendants.