Denver Land Co. v. Moffat Tunnel Imp. Dist., 12954.

• Decision Date: 19 December 1932
• Docket Number: 12954.
• Citation: 18 P.2d 455,92 Colo. 43
• Parties: DENVER LAND CO. v. MOFFAT TUNNEL IMPROVEMENT DIST. et al.
• Court: Colorado Supreme Court

18 P.2d 455

92 Colo. 43

DENVER LAND CO. v. MOFFAT TUNNEL IMPROVEMENT DIST. et al.

No. 12954.

Supreme Court of Colorado, En Banc.

December 19, 1932

Rehearing Denied Jan. 7, 1933.

Error to District Court, City and County of Denver; E. V. Holland Judge.

Action by the Denver Land Company against the Moffat Tunnel Improvement District, a body corporate, and others. To review a judgment dismissing the action, plaintiff brings error; a plea in bar being filed by the American National Bank, as trustee, and others.

Plea in bar sustained, and writ of error dismissed.

ADAMS C.J., and HILLIARD and ALTER, JJ., dissenting.

Grant, Ellis, Shafroth & Toll, of Denver, for plaintiff in error.

Hughes & Dorsey, of Denver, for International Trust Co., trustee.

Montgomery & Myer, of Denver, for Moffat Tunnel Improvement Dist.

Fillius Fillius & Winters, of Denver, for American Nat. Bank, trustee.

Rhoads & Seeman, of Denver, for Supreme Camp of American Woodmen.

James D. Parriott, Frederick P. Cranston, and James H. Pershing, all of Denver, amici curiae.

MOORE J.

The Denver Land Company, a Colorado corporation, owning property subject to taxation under the Moffat Tunnel Act (S. L. of 1922, c. 2, p. 88), for itself and others similarly situated, on June 23, 1928, instituted an action in the Denver district court against the Moffat Tunnel Improvement District and its officers seeking to enjoin the collection of assessments made to pay certain amounts due upon so-called 'supplemental bonds of the district' which were charged to be invalid because issued without authority of law. (Plaintiff did not seek a temporary injunction restraining this collection; none was ordered, and the district proceeded to collect assessments then and subsequently made. On August 1, 1930, the commission had collected $776,560.28 for such purposes, and this 'supplemental bond fund' now exceeds $1,700,000.)

On October 6, 1928, Judge Robert G. Smith of the Eighth judicial district, most of which lies without the Moffat Tunnel District, sitting in the Denver district court, construed the Moffat Tunnel Act and held that the tunnel commission was thereby not only authorized, but commanded, to build a tunnel and clothed with all power necessary to that end; that the limit of indebtedness for this purpose was not $6,720,000, the amount of negotiable bonds authorized by section 10(a), but the amount of appraised benefits, $43,000,000, and that the $8,750,000 of supplemental bonds, the proceeds of which were used to complete the tunnel, the total cost thereof being $15,470,000, were valid. Judgment of dismissal was thereupon entered.

On January 20, 1930, upon writ of error, this court held (Denver Land Co. v. Moffat Tunnel Imp. Dist., 87 Colo. 1, 6, 284 P. 339, 340) that the lower court was without jurisdiction to determine the validity of said supplemental bonds in the absence of bondholder litigants or a showing why such could not be made parties, reversed the judgment, and remanded the cause with directions to make holders of supplemental bonds parties defendant and 'to issue its injunction restraining the Moffat tunnell improvement district, a body corporate, and the commissioners of the Moffat tunnel commission, their agents, attorneys, and employees, and all persons acting under their direction and control, from paying out or otherwise disposing of any funds in their possession, realized from special assessments, for the purpose of paying interest on $8,750,000 Moffat tunnel supplemental bonds, all until such time as this case shall be fully and finally determined; that the cause be retried upon the issues presented, and judgment rendered not inconsistent with the views herein expressed.' On February 1, 1930, pursuant to this direction, the district court entered such order.

Thereafter two supplemental complaints were filed, and the American National Bank, as trustee, the International Trust Company, as trustee, Larry Maroney, and the Supreme Camp of American Woodmen, a Colorado corporation, alleged owners of supplemental bonds, were joined as parties defendant. On January 30, 1931, the supplemental bond fund was ordered paid into the registry of the district court. This order was not complied with and on February 13, 1931, was modified, the tunnel commissioners being appointed custodians of said fund and as such permitted to retain it subject to further order of the court.

On June 26, 1931, the district court, this time speaking through Judge E. V. Holland of the Denver district, again sustained the validity of the supplemental bonds and dismissed the action and all injunctive orders. At the request of plaintiff, this judgment was stayed until December 23, 1931, upon which date it became finally effective. To review this second judgment of dismissal, this writ is now prosecuted.

On April 11, 1932, the American National Bank, as trustee, the International Trust Company, as trustee, and the Supreme Camp of American Woodmen, filed in this court a plea seeking to bar further action herein and a dismissal of the writ of error. The plea recites the pleadings and issues in a suit instituted August 19, 1930, by other supplemental bondholders against the Moffat Tunnel District in the United States District Court for the District of Colorado (No. 9312, commonly called the Boynton suit); the injunctive order entered therein on February 4, 1931, restraining the tunnel commission from disposing of the supplemental bond fund; the judgment of dismissal, the appeal therefrom, and the decree of the United States Circuit Court of Appeals for the Tenth Circuit (Boynton v. Moffat Tunnel Improvement Dist., 57 F. (2d) 772, certiorari denied October 10th, 1932, 53 S.Ct. 20, 77 L.Ed. 538) reversing the judgment of the Federal District Court sustaining the validity of said bonds and ordering the Moffat Tunnel Commission to disburse the supplemental bond fund pursuant to the prayer of the complaint.

On November 21, 1932, a supplemental joint and several plea in bar was filed adopting all of the allegations of the joint and several plea in bar and reciting that on November 17, 1932, the United States District Court entered its decree pursuant to the prayer of the complaint and in strict accord with the decree rendered by the Circuit Court of Appeals.

Thus, it is claimed that this judgment of the United States Circuit Court of Appeals, the third adjudication of the validity of the supplemental bonds, and the decree of the United States District Court entered at the direction thereof, are conclusive here and estop the Denver Land Company, the plaintiff in error herein, from further asserting their invalidity. If the plea in bar is good, the writ of error must be dismissed; otherwise not.

The character and extent of the jurisdiction of both courts have been disputed from the inception of each case; the Denver Land Company contending that the state court had exclusive jurisdiction because its suit was filed first, and the bondholder litigants in each court claiming otherwise.

The United States District Court held that the state court had jurisdiction and dismissed the action. The Circuit Court of Appeals reversed this decision, decreed that the federal court had jurisdiction and could and should proceed, and it thereupon determined that the Moffat Tunnel supplemental bonds were valid. The decree of the United States District Court entered pursuant to this mandate has now become final.

The Circuit Court of Appeals, in Boynton v. Moffat Tunnel Improvement Dist., supra, through Judge McDermott, after a complete recital of facts, states on page 777 of 57 F. (2d):

'The plaintiffs and interveners have invested $6,677,000 in the obligations of the Moffat Tunnel district. Their money has been expended in the construction of the tunnel. They have not been paid their interest as it became due, although taxes have been collected for that purpose. They have come into a court of competent jurisdiction, presented their grievances, and have asked for a hearing. They are stopped at the threshold, and their bill dismissed. The Constitution of the United States (article 3, § 2) confers upon courts of the United States the power to determine controversies between citizens of different states, and to cases arising under the Constitution. The statutes of the United States (Jud. Code § 24 [28 USCA § 41]) confer upon those situated, as are these plaintiffs, the right to invoke that jurisdiction. They have invoked it. It becomes then the duty of the federal court to hear and determine the controversy, unless the established principles of law relieve such court of that duty. The trial court found, at the time it dismissed the cause, that the state court had such exclusive control of the res that the federal court might not proceed. At that time, the custodial order of February 13, 1931, was in force. It is no longer in force, and since appeals in equity are trials de novo, and since equity speaks as of the present (Richardson v. Green [C.C.A. 9] 61 F. 423; City of Denver v. Mercantile Trust Co. [C.C.A. 8] 201 F. 790; 21 C. J. 663), we need not explore the effect of that order. Our task is to determine, upon the facts drawn onto the record by stipulation of the parties, whether the cause should stand dismissed, whether it should be reinstated and stayed, or whether the plaintiffs are entitled to a decree at our hands, on the record. * * *

'No question arises when the actions in the two courts are in personam; both may proceed; when one has gone to judgment, the judgment may be set up in the other action. It does not matter that both may involve the same controversy, for 'a controversy is not a thing.' Kline v. Burke Constr. Co., 260 U.S. 226, 230, 43 S.Ct. 79, 81, 67 L.Ed. 226, 24

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