Covington v. Meletio

• Decision Date: 08 January 1934
• Docket Number: 30949
• Citation: 168 Miss. 497,151 So. 735
• Court: Mississippi Supreme Court
• Parties: COVINGTON et al. v. MELETIO et al

151 So. 735

168 Miss. 497

COVINGTON et al. v. MELETIO et al

No. 30949

Supreme Court of Mississippi

January 8, 1934

Division B

Suggestion Of Error Overruled February 5, 1934.

APPEAL from chancery court of Winston county HON. T. P. GUYTON Chancellor.

Suit by W. D. Covington and others, Commissioners of the Tallahaga Drainage District in Winston county, against W. A. Meletio and others. From a decree of dismissal, complainants appeal. Affirmed.

Affirmed.

Thos. G. Hopkins, of Louisville, for appellants.

If the First National Co. procured the titles to the lands to be matured in the state for the purpose of purchasing therefrom in order to perfect its titles purchased from the commissioners of the district then we can find authority for such a procedure which probably would not affect their liens thereon. But, if it procured the titles to be matured in the state for the purpose of avoiding any payment for the consideration expressed in its deed from the commissioners, then the liens of its bonds were shedded and to that extent the mortgage debt is extinguished, and the district is entitled to such a credit.

27 Cyc. 1383; Ex parte Powell, 68 S.C. 324, 47 S.E. 440; Devereux v. Taft, 20 S.C. 555; 29 S.C. 64; 6 S.E. 938; 17 S.C. 499; 43 Am. Rep. 624.

The doctrine of a merger of estates has been well reasoned out and adopted by the courts to take care of innocent people, in just these circumstances and a court of equity should not ignore the doctrine of a merger in such circumstances when there is no question to the contrary that the titles in fee are in the defendants, who are holding both the titles to the lands and the bonds, and treating the question of a merger with utter indifference when sued for an accounting. A court of equity will follow the rule at law and a merger will be held to have taken place and the debt will be extinguished or paid pro tanto.

27 Cyc. 1381 (e); Jarvis v. Frink, 14 Ill. 396; Campbell v. Carter, 14 Ill. 286; Freman v. Paul, 3 Me. 260, 4 Am. Dec. 237; 3 R. C. L., sec. 217; Ames v. Miller, 65 Neb. 204, 91 N.W. 250.

We think that the commissioners as directors of the corporation, holding such lands in the district abandoned by its owners, had some legal and equitable right and authority to deal and dispose of such lands, first, to the best interest of the public service corporation; second, to the best interest of its creditors and third, to the best interest of the other landowners in the district.

Stevens v. Beaver Dam. Dr. Dist., 123 Miss. 884; Farmer's Loan & Trust Co. v. N. Y. & Northern Ry. Co., 55 A. S. R. 689; Atlas Nat. Bank v. More, 152 Ill. 528, 43 Am. St. Rep. 274.

A court of equity will exact restitution, when the interest of the public has been involved, to the extent of any favor or advantage acquired by the creditor in the contract, when such advantage is the prime contributing cause, and will exact a performance of the contract, in the absence of a specific agreement between the parties or will exact a nonperformance of the contract, in the face of a specific agreement between the parties, when the ability of the corporation will be restored to enable it to conform to and complete the objects of its charter.

E. M. Livingston, of Louisville, for appellees.

Appellants undertake to get the court to order a reorganization of the drainage district and a new assessment of taxes against the lands therein. I know of no provisions in the statute authorizing the chancery court to reorganize the district, except the Laws of 1932, and it can then be done only after the district has been declared to be insolvent by proper decree of the court.

The commissioners are apparently asking the court to do what they, themselves should do. Section 4497, Code of 1930, provides the method of assessment for drainage taxes, and makes it mandatory on the drainage commissioners to cause the proper assessment to be made. This section also vests almost unlimited powers ill the commissioners, and eliminates that contention from this law suit.

Under the provisions of the above section of the Code it seems to be mandatory on the commissioners to see that proper assessments are made, and they cannot invoke the aid of the chancery court to do what it is their plain simple duty under the statute to do themselves.

Counsel for appellants cite numerous authorities in his brief undertaking to show that the bonds held by appellees should be cancelled for some reason, but it is respectfully submitted that none of his authorities are in point. He has not cited a single authority shedding any light on controversies arising out of a drainage district.

The holders and owners of the bonds had a perfect right to own lands in the drainage district.

Whoever purchased the lands from the state as tax forfeited lands took their title with full knowledge that the lands were located in the drainage district and subject to the lien for the unmatured installments due.

Seward v. City of Jackson, 144 So. 686.

Argued orally by Thos. G. Hopkins, for appellant.

OPINION

Griffith, J.

An original and two amended bills were filed in this case; demurrers were sustained; and, upon sustaining the demurrer to the second amended bill, the court dismissed the cause finally. It has been exceedingly difficult to determine from these bills what exactly are the facts and what precisely is the basis for the relief which complainants are seeking. Apparently, however, the situation presented is, in brief, about as follows:

The Tallahaga drainage district in Winston county was created in 1919, and a bond issue of one hundred twenty-five thousand dollars was sold to cover the expenses of the special drainage improvements. Of these bonds about one hundred thousand dollars remains outstanding, and of this amount the defendants own approximately ninety-six thousand dollars. The drainage district comprises an area of twelve thousand five hundred thirty-seven acres. On May 4, 1925, about six thousand nine hundred acres of this land was forfeited to the district for the nonpayment of the drainage assessments due thereon for the year 1924. However, on April 7, 1925, the same lands had been sold to the state for the delinquent state and county taxes. No question is raised as to the validity of the aforesaid sales to the district and to the state, and for that reason we do not pause to inquire into it.

Early in April, 1927, and a few days before the tax title to the six thousand nine hundred acres would...