Voice from the Past
Chapter 1

When I started practicing law in 1950 most of the municipal bonds being issued were school bonds to build the facilities to educate the baby boomers. These were general obligation bonds, approved at elections by the qualified voters, and were required to be sold at advertised public sale. We had to review the proceedings calling the election, canvassing the votes, directing publication of the notice of sale, and authorizing and selling the bonds, as well as one of the ballots printed for use at the election and publishers' affidavits with newspaper clippings attached showing publication of the notice of election and of the notice of sale. We also had a schedule of fees. We charged $75 for approving a small (under $35,000) issue; for large issues (over $600,000) we charged sixty cents per $1,000 bonds. If we prepared the proceedings we charged an extra $50. I objected to this practice because when some of the local lawyers with whom we worked prepared the proceedings it took me much more time correcting them than it would have taken for me to prepare them correctly in the first place.

The amount of different kinds of law you had to know in those days was considerably greater in some respects than in the more recent days of unvoted revenue bonds sold at negotiated sales. We had to know the quirks in each State where we worked pertaining to counting the number of days between the first publication of a notice and the date of the election or sale, and whether, under the law of the State involved, a publication one day late was fatal. We had to know how to compute debt limits, and whether money in a sinking fund could be counted as an offset against the amount of outstanding debt in determining how much new debt the issuer could incur (no in Georgia, yes almost everywhere else). We had to know whether a notice published on Sunday was effective. And most arcanely we had to know who was qualified to vote in a bond election.

In fourteen States the right to vote in a bond election was limited to taxpayers; in Nevada and Wyoming they had one election for taxpayers only and another, at the same time, for all qualified electors. There was always the question of whether the spouse of a taxpayer was a taxpayer; we generally hid behind the official records -- if a person's name was on the tax roll he or she was a taxpayer, otherwise not. In Louisiana the vote was not only limited to taxpayers, but each had to write on his ballot both his name and the amount of his taxable property in the jurisdiction; the election had to carry in both number and amount. In Texas one merely had to have "rendered his property for taxation" to vote, whether he actually paid a tax or not.

Nowadays we are likely to think of the taxpayer requirement as a form of racial discrimination, but I doubt that it was originally intended that way. In the southern and western States it was intended to discriminate against those whom the railroads would cause to move to a town just long enough to cast their votes for railroad aid bonds and then move on. In New York and New England it was probably left over from colonial days when only male property owners were citizens. In any event, the practice was discontinued when the U.S. Supreme Court held that such restrictions violated the Equal Protection Clause of the 14th Amendment in the cases of Cipriano v. City of Houma, 395 U.S. 701 (1969), Kolodzeijski v. City of Phoenix, 399 U.S. 204 (1970) and Hill v. Stone, 421 U.S. 289 (1975). I wrote Amicus Curiae briefs each of those cases and got other bond lawyers who worked in States with taxpayer qualifications to join me in submitting them. I also got the chief legal officer of a State or city to sign, too, because these signatures create exceptions to the rule that such briefs are not favored in the absence of approval of all parties to the litigation. The purpose of these briefs was to make sure that the Court did not say anything that would make outstanding bonds illegal, but I have sometimes wondered how much my pointing out to the Court that there were only 14 or 16 States with such requirements had to do with the decision to hold them unconstitutional.

Thus all that knowledge about the intricacies of complying with taxpayer requirements for voting in bond elections was made obsolete. I recall one Louisiana lawyer lamenting about all the horrible things that would happen when everyone could vote in such elections; he was only partly mollified when I pointed out that Mississippi did not have such a qualification and nothing much bad seemed to have resulted from that State's liberality.

It's nice to think of the old days as simpler and more pleasant than current times. It used to be that our opinion would be double spaced yet occupy only one page. It expressed the view that the bonds were valid and legally binding payable from taxes to be levied on all taxable property in the jurisdiction without limitation as to rate or amount. Period. No tax language was necessary because all municipal bonds were exempt and everyone knew it. No bankruptcy exceptions were invoked because our opinion was that the bonds were legal, not that they were collectable. No SEC language was used because we never looked at whatever meager information was sent to investors. We did require evidence that bonds were supported by a source of payment that would make default unlikely, not because we considered it our duty to the bondholders but because we did not want to be associated with bad bonds; the fact that we examined such evidence was not mentioned in our opinion; there just wasn't any opinion if the evidence was not satisfactory. Yet I have found a remedy for this nostalgia. I just try to recall the last time my bill for approving a bond issue was $75.

Manly W. Mumford