Board of Drainage Com'rs of New River Drainage Dist. v. Arnold
| Decision Date | 14 November 1923 |
| Docket Number | 3794. |
| Citation | 120 S.E. 310,156 Ga. 733 |
| Parties | BOARD OF DRAINAGE COM'RS OF NEW RIVER DRAINAGE DIST. ET AL. v. ARNOLD ET AL. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
Several landowners in a drainage district can join in an equitable petition to restrain the enforcement of void executions issued to collect assessments levied upon their lands in such district; and the existence of a remedy by affidavit of illegality in favor of each individual landowner would not defeat their remedy by injunction.
Drainage bonds cannot be sold for less than par.
(a) The par value of an interest-bearing bond on the day of its issuance is the principal thereof; and on any date thereafter such par value is the sum of the principal and the accrued interest.
(b) The allowance of commissions, directly or indirectly, to the purchaser of such bonds violates the provision of the drainage act prohibiting their sale at less than par.
(c) Under this statute a sale of these bonds, bearing 8 per cent interest, in part for cash, and in part for a noninterest-bearing time certificate of deposit, payable in the future, amounts to a sale at less than par.
(d) The contract between the drainage commissioners and the purchaser of these bonds, if such there be, by which the latter is to pay to the former the par value thereof, is a legal and binding contract; and the purchaser will be liable to the drainage district for their par value, notwithstanding the contract between the drainage commissioners and a person other than the purchaser, by which commissions for the sale of these bonds were to be paid nominally to such third person, but in fact were to go to the purchaser. The commission contract, being void, furnishes no defense to the contract for the purchase of the bonds at par.
The present proceeding by the plaintiffs having been taken after the sale and delivery of these bonds, with a large part of the purchase money paid, and large sums expended on this drainage project with their knowledge, they are now estopped from seeking to enjoin present and future assessments on their lands to pay the principal and interest of said securities, and payments to the contractor and others, under valid contracts for work and services rendered and to be rendered in connection with this improvement, the effect of such injunction being to stop the improvement, leave it in an unfinished condition, and render the work done of little value.
The executions issued against the plaintiffs being conceded to be void, the trial judge did not err in enjoining their enforcement; but did err in all other respects in granting a temporary injunction.
Additional Syllabus by Editorial Staff.
The sale of drainage bonds at less than par in violation of statute does not affect their validity in the hands of innocent purchasers.
Error from Superior Court, Coweta County; C. E. Roop, Judge.
Suit by J. H. Arnold and others against the Board of Drainage Commissioners of New River Drainage District and others. Judgment for plaintiffs, and defendants bring error. Affirmed in part, and reversed in part.
J. H Arnold and others filed their equitable petition against (1) the board of drainage commissioners of New River drainage district; (2) C. S. Colley, W. A. Bohannon, and W. A. Post, members of said board; (3) W. A. Nall, the board's attorney; (4) D. Conger, its superintendent of construction; (5) the sheriff of Coweta county and his deputy; (6) the tax collector of Coweta county; (7) the bank of Grantville; (8) Thompson & Moseley, contractors; and (9) the Hanchett Bond Company of Chicago. They made this case: W. A. Nall, an attorney at law, and D. Conger, who were promoting the creation of said district, the former representing himself to be an expert in creating drainage districts under the Drainage Act of 1911 (Laws 1911, p. 108) and the latter representing himself to be an experienced drainage engineer, represented to petitioners and other owners of land now embraced in said district that it was entirely feasible and practicable to drain the wet and overflowing lands therein at a cost not exceeding $20 per acre. As a result of said representations, a petition for the establishment of said district was filed on August 1, 1920. Nall acted as attorney for the drainage commissioners, and Conger acted as drainage engineer in the establishment of the district. The drainage commissioners made an assessment roll, assessing lands of plaintiffs and other landowners in the district at a much higher figure. The commissioners issued bonds amounting to $55,000, bearing 8 per cent. interest, payable semiannually, and procured a judgment of Coweta superior court validating the same on June 14, 1922. The bonds were dated July 1, 1922. In the fall of 1922 the commissioners sold these bonds to the Hanchett Bond Company at 91 cents on the dollar, without reference to the interest that had accrued thereon from July 1, 1922, receiving only $10,000 at the time of the delivery of said bonds. Since they have received from said company additional sums aggregating some $20,000. To disguise the fact that said bonds were not sold for par, the commissioners made a contract with the cashier of the bond company by which he was to be paid a commission of 9 per cent. for selling these bonds, which in fact was retained by the Hanchett Bond Company; and said transaction, stripped of subterfuge, simply meant that the commissioners agreed to sell the bonds to said company at not more than 91 cents on the dollar. If commissioners had agreed in good faith to pay a commission to effect a sale of the bonds, such agreement would have been illegal, as under the law it was their duty to sell the bonds for not less than their full face value; and the commissioners did not receive the par or face value thereof. The sale of the bonds to the Hanchett Bond Company was null and void, and that company received no title to the bonds. That company had full knowledge that the Drainage Act of 1911 prohibited the sale of the bonds at less than their par value. In said sale the commissioners acted under the advice of Nall. Nall and Conger were the moving spirits in all the proceedings in the creation of the district and in the sale of the bonds, and have largely profited thereby, Nall having received $2,000 from the commissioners for his services as their attorney, and is exacting $500 additional; and Conger has received $3,000 for his services, and still receives $100 per month.
In the fall of 1922 the commissioners entered into a contract with Thompson & Moseley to dig the ditches and do other work in connection with said drainage project, according to alleged plans drawn by Conger, and under his supervision Under this contract New river was to be straightened and ditched out a depth of not less than 8 feet; Thompson and Moseley to receive 10 1/2 cents per cubic yard for dirt, and about 14 cents for rock. All obstructions were to be removed, and the banks and sides of the ditch were to be freed from stumps, rocks, or other obstructions. Acting on the representations of Nall and Conger and some of the commissioners that said project was feasible and that their lands would be rendered dry and cultivatable, petitioners were lulled into security, but were awakened in the winter of 1922 and 1923, when they discovered the excessive assessments on the lands in the drainage district. J. H. Arnold had his lands surveyed by an expert, and found that the project, as regards his lands, was not feasible or practicable, and that said ditch would wash sand and other matter on his lands instead of benefiting them, and also render wet and uncultivatable his lands adjoining his lands on New river. At the time of this discovery, the ditch had not been dug on his lands. He promptly notified the commissioners and the bond company that he objected to said ditch being dug through his lands, offering to pay his pro rata part for the digging of said ditch above his lands; but his objections were unheeded, and Thompson & Moseley proceeded with great haste to enter upon his lands, and are now engaged in ditching thereon. Said work is not being done in accordance with plans and specifications. Instead of being dug straight, it is being dug crooked, and rocks, stumps, roots, and other obstructions are being left in and on the sides of said ditch. Conger still permits Thompson & Moseley to draw compensation, making no deduction for earth removed by nature where the ditch is sunk into the channel of the river. The commissioners claim they are powerless to correct this fraud, that the same rests with Conger. Nall and Conger confederated and conspired in the making of said representations. They fully understood each other, and conspired to commit fraud upon petitioners and other landowners in said district, and have committed a fraud upon them. Conger and Thompson & Moseley are in collusion as to the digging of said ditch, and are sharing the fruits of the fraud which they are perpetrating upon the commissioners, petitioners, and the other landowners. The commissioners have taken no steps to restrain Conger, but continue to permit him to act, and continue to pay Thompson & Moseley for alleged work on the estimates and approval of Conger. Said drainage project is not feasible or practicable, and the lands cannot be drained or dried properly with the kind of ditch being dug, and it is doubtful if any plan could be executed by which the lands could be drained and made cultivatable, as the fall through them is less than 9 feet in a distance of 2 miles. The Bank of Grantville is the treasurer of the commissioners.
The commissioners and the board of viewers undertook to classify the lands in said drainage district. They put 100 acres of J H. Arnold's lands in...
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