City of Victor v. Halstead

• Decision Date: 08 October 1928
• Docket Number: 12087.
• Parties: CITY OF VICTOR et al. v. HALSTEAD.
• Court: Colorado Supreme Court

271 P. 185

84 Colo. 450

CITY OF VICTOR et al. v. HALSTEAD.

No. 12087.

Supreme Court of Colorado, En Banc.

October 8, 1928

Rehearing Denied Oct. 29, 1928.

Error to District Court, Teller County; Arthur Cornforth, Judge.

Mandamus by David Halstead against the City of Victor, its Mayor and members of the City Council. Peremptory writ granted, and respondents bring error.

Affirmed.

Pershing Nye, Tallmadge & Bosworth and John Pershing, all of Denver and Ernest B. Upton, of Cripple Creek, for plaintiffs in error.

Henry McAllister, Jr., and Stephen R. Curtis, both of Denver, for defendant in error.

BUTLER J.

David Halstead, the defendant in error, obtained a peremptory writ of mandamus against the city of Victor, its mayor and the members of the city council, ordering the levy of a tax to pay certain overdue coupons cut from bonds of the city. The city seeks a reversal of the judgment.

The amended answer discloses the following situation: The city is heavily in debt. The assessed valuation of its property is (1927) greatly reduced in value, being only $325,000, while its bonded debt is $523,000, which it is unable to pay. Because of this, some of its creditors have accepted new bonds to the amount of $55,800 in satisfaction of judgments for $168,552.89, upon the condition, however, that the city should levy and collect an annual tax of 40 mills to pay the new bonds, and should levy not more than 10 mills annually for running expenses. This agreement permitted any bondholders to exchange their old bonds for new at the ratio of 10 for 1 upon the same conditions. $83,000 in bonds have been so exchanged for $8,300 in new bonds. The contract provides that, if the city fails to levy and collect the 40 mills' tax, the compromise should become null and void and the judgments be in full force and effect. The necessary levies in addition to the said 40-mill and 10-mill levies, will be 33 mills, a total of 83 mills. It also alleges that a total levy of 83 mills is as great a burden as the property within the city of Victor liable for the payment can assume, that a levy in excess thereof will result in forcing property owners in the city of Victor who are now paying taxes to abandon their property and leave the city, to decrease stocks of merchandise on hand, and to otherwise seek to depreciate the assessed valuation of the property within the limits of the respondent city, and that a diversion of any part of the 40 mills will forfeit the compromise, resulting in a loss to the city of some $170,000, thereby rendering the city unable to pay anything. The plaintiff demurred to the amended answer. At the hearing on the demurrer, counsel for the respondents admitted the facts alleged in the petition, and stated that they relied upon the amended answer; whereupon counsel for Halstead admitted, 'for the purpose of the demurrer,' the facts alleged in the amended answer. The court found in favor of Halstead, and adjudged that the alternative writ be made peremptory. The recitals in the judgment indicate that the court considered the case as having been submitted upon stipulated facts.

The bonds were issued under the authority conferred by the act of 1909 (Sess. L. 1909, c. 144). Section 5 provides:

'When any bonds shall have been issued under this act, an annual tax shall be levied and collected by the proper city or town authority, sufficient to pay the interest on said bonds as it shall become due. * * *'

The ordinance authorizing the bonds contains a similar provision.

Only two questions are presented: (1) Had the court any discretion with reference to granting or refusing to grant the writ? (2) If it had, did the court, in ordering one levy to pay the entire amount of Halstead's unpaid interest coupons, abuse its discretion?

1. Is the granting or refusing to grant the writ of mandamus discretionary with the court? That a court has some discretion in the matter is clear. East St. Louis v. Amy, 120 U.S. 600, 7 S.Ct. 739, 30 L.Ed. 798; Duncan Townsite Co. v. Lane, 245 U.S. 308, 38 S.Ct. 99, 62 L.Ed. 309; Ex parte Skinner & Eddy Corp., 265 U.S. 86, 95, 44 S.Ct. 446, 68 L.Ed. 912; City of Cleveland v. U.S., 166 F. 677, 93 C.C.A. 274; Perry v. Town of Samson (D. C.) 11 F. (2d) 655; Fawkes v. City of Burbank, 188 Cal. 399, 401, 205 P. 675; Wiedwald v. Dodson, 95 Cal. 450, 30 P. 580; Warehousemen's Ass'n v. Cosgrove, 241 N.Y. 580, 150 N.E. 563; Kenneally v. City of Chicago, 220 Ill. 485, 507, 508, 77 N.E. 155. In Perkins v. People, 59 Colo. 107, 147 P. 356, we held there was no abuse of discretion by the court in granting a writ requiring the levy of a special tax commanded by the charter of Denver; thereby recognizing the discretionary character of the writ.

2. Was the discretion of the court abused in the present case? In City of Galena v. Amy, 5 Wall. (72 U.S. ) 705, 18 L.Ed. 560, cited by counsel for Halstead, Amy obtained a judgment against the city for unpaid interest which had accrued on certain bonds issued by the city. To his application for mandamus, the city made a return, a demurrer to which was sustained. The opinion by Mr. Justice Swayne states:

'The counsel for the plaintiffs in error [the city] has called our attention, with emphasis and eloquence, to the diminshed resources of the city, and the disproportionate magnitude of its debt. Much as personally we may regret such a state of things, we can give no weight to considerations of this character, when placed in the scale as a counterpoise to the contract, the law, the legal rights of the creditor, and our duty to enforce them. Such securities occupy the same ground in this court as all others which are brought before us. When clothed with legal validity, it is our purpose to sustain them, and to give to their holders the benefit of all the remedies to which the law entitles them. When invalid, we have not hesitated and shall not hesitate to say so. But we cannot recognize a distinction, unknown to the law, between this and any other class of obligations we may be called upon to enforce.'

Counsel also cite the following cases where courts refused to be favorably influenced by a showing of financial embarrassment on the part of the municipality, and granted the writ...