Diggs v. Lobsitz

• Court: Oklahoma Supreme Court
• Writing for the Court: BURFORD, J.
• Citation: Diggs v. Lobsitz, 43 P. 1069, 4 Okla. 232, 1896 OK 11 (Okla. 1896)
• Decision Date: 13 February 1896
• Parties: JAMES B. DIGGS v. JAMES LOBSITZ, Treasurer of the City of Perry.

1896 OK 11

43 P. 1069

4 Okla. 232

JAMES B. DIGGS v. JAMES LOBSITZ, Treasurer of the City of Perry.

Supreme Court of Oklahoma

Decided: February 13, 1896

Original Proceeding in Mandamus.

Syllabus

¶0 1. CITY WARRANTS--When Funded; Payable from Proceeds of the Sale of the Bonds. Treasury warrants issued by a city of the first class, and duly registered and not paid for want of funds; and subsequently included in an issue of funding bonds regularly issued by said city, are payable only from the funds realized from the sale of said bonds, and are not payable from the funds in the treasury applicable to current expenses.

2. BONDS--Sale of--Trust Fund. When bonds are issued for the purpose of funding outstanding warrant indebtedness, the warrants embraced within such bonds, and for the payment of which said bonds are issued, become merged in said bonds, and the funds realized from the sale of such bonds is a special trust fund for the payment of the warrants so merged, and said fund cannot be diverted to, or used for any other purpose. And until said bonds are sold, payment of such warrants is necessarily suspended.

3. MUNICIPAL CORPORATIONS--Obligations of--Payment. One who deals with a municipal corporation, deals with it with reference to the laws regulating the manner in which such corporation shall pay its obligations, and when such person takes a warrant on the city treasury, he is bound to know the law authorizing such city to bond said warrant, and that payment of his warrant may be postponed thereby.

4. WARRANTS--Registration of--Laws Regulating. The laws regulating the issue and registration of warrants, and for issue and sale of bonds for the purpose of realizing a fund out of which to pay such warrants are pari materia and must be construed with reference to each other.

5. SAME. The statute prohibits the payment of warrants not embraced in the funding bonds, from the funds realized from sale of bonds, and a violation of this statute is made a misdemeanor.

BURFORD, J.:

¶1 This is an original action in this court, brought by the plaintiff to procure a peremptory writ of mandamus, compelling the defendant, as treasurer of the city of Perry, to pay a certain city warrant, of which the plaintiff alleges he is the owner. The alternative writ and the return constitute the pleadings.

¶2 It appears from the alternative writ that the city of Perry is a city of the first class, under the laws of the Territory of Oklahoma, and has been since October, 1893. The defendant, Lobsitz, is the treasurer of the said city of Perry, and, as such officer, has in his possession, belonging to said city, a sufficient amount of money in the general fund to pay all the registered outstanding warrants of said city up to and including registered number six hundred and twenty-four, of which the plaintiff Diggs is the owner. That the plaintiff, Diggs, presented said warrant numbered six hundred and twenty-four to the said Lobsitz for payment on the 2d day of December, 1895, and that said payment was refused by said treasurer. That said warrant is for a valid indebtedness of said city, and was on the 28th day of March, 1894, presented to the treasurer for payment, and payment refused for want of funds, at which time said warrant was duly registered and became entitled to payment out of the general funds of said city in the order of its registration.

¶3 An alternative writ was allowed by Associate Justice Bierer, returnable before this court. The city treasurer filed his return to the alternative writ on the 7th day of January, 1896, in which it is alleged in substance that on the 9th day of November, 1895, the city of Perry funded its outstanding warrant indebtedness and issued bonds therefor, which bonds were approved, signed and delivered by the district court to said treasurer. That the warrant in question is one of the warrants embraced within said bonds, and for the payment of which said bonds were issued. That said bonds are now in the hands of the city treasurer for sale, but unsold at the date of said return.

¶4 Said treasurer further alleges that he has no authority to pay any warrants for the payment of which said bonds were issued from any funds in his hands at this time, but is required to pay the same from the proceeds of the sale of said bonds only.

¶5 Upon the facts shown by the writ and return, the plaintiff has moved for judgment on the pleadings. But one question is presented for our consideration. The case has not been briefed and in the oral argument no authorities were cited bearing upon the indentical question here presented. The question calls for an interpretation of our Statutes relating to warrant and bonded indebtedness of cities of the first class.

¶6 It is conceded that the warrant in question was for a valid claim and regularly issued and registered for the lack of funds to meet its payment at the time of its presentation. It is also conceded in the argument that in the month of November, 1895, the city of Perry, by its proper officers, went before the district court of that county and proceeded to and did, issue bonds for the purpose of funding the outstanding legal indebtedness of said city, and that the warrant in question is one of the warrants embraced within said bonds and for the payment of which said bonds were issued.

¶7 It is contended by the plaintiff, that inasmuch as the statute which provides for the issuance of warrants on the city treasury, requires that said warrants shall be paid in the order of their registration, whenever funds are in the hands of the treasurer sufficient to meet the same, that the issuance of funding bonds does not defeat this right, but that the warrants embraced within the funding bonds are still payable within the order of their registration from any funds in the hands of the treasurer, and that when said bonds are sold, the funds realized from such sale should be applied to the payment of an equal amount of outstanding warrants in the order of their registration, without any reference to the question as to whether or not such warrants were in existence at the time of the issuance of such bonds. This contention is untenable under the provisions of the Statute relating to the subject of municipal indebtedness. These bonds were issued under an act of the legislative assembly, approved March 8, 1895, Session Laws 1895, ch. 7, p. 63. By the provisions of said act, any city of the first class is authorized and empowered to refund its outstanding legal warrant indebtedness in the order of registration, and to issue bonds for that purpose in a sum not exceeding the amount of such indebtedness, nor in excess of four per cent. of the assessed valuation according to the last preceding assessment of such municipality. The act further provides the means of determining the amount of indebtedness; the manner in which the officers shall proceed and how the bonds shall be signed, issued, delivered to the treasurer and sold. It is provided in section four among other things that, "the proceeds of such bonds shall be applied to the payment of the outstanding warrant indebtedness and the interest upon the same, and for no other...