DiSt v. Conway

• Decision Date: 26 June 1913
• Docket Number: No. 17,196.,17,196.
• Citation: 94 Neb. 205,142 N.W. 797
• Parties: PAXTON IRR. DIST. v. CONWAY ET AL.
• Court: Nebraska Supreme Court

94 Neb. 205

142 N.W. 797

PAXTON IRR. DIST.

v.CONWAY ET AL.

No. 17,196.

Supreme Court of Nebraska.

June 26, 1913.

Syllabus by the Court.

To prevent a multiplicity of suits against an irrigation district, a court of equity may acquire jurisdiction to cancel void district bonds in the hands of many different holders.

Void bonds, illegally issued by officers of an irrigation district to pay for excavating a canal, may be canceled without requiring the district to pay the holders of the bonds the reasonable value of services performed, where the contract for such work was made in violation of statute, and resulted in no benefit to the district.

Bonds of an irrigation district are void if issued in violation of mandatory legislation that they shall be signed by the secretary of the district; that the seal of the district shall be attached; that they shall be paid in installments maturing at different times; that they shall be numbered consecutively as issued; and that they shall bear date from the time of their issuance.

An irrigation district by paying interest on void bonds with taxes levied for that purpose does not thereby ratify the bonds or estop itself from assailing them as illegal.

In a statutory proceeding, an order confirming the preliminary steps leading up to the execution of bonds of an irrigation district does not affect a subsequent, unlawful negotiation or transfer of the bonds.

A person who negotiates for the purchase of bonds executed by an irrigation district and enters into a contract to excavate a canal in exchange for such bonds is required to take notice of the statutes governing the district and of the limitations of its officers.

Appeal from District Court, Keith County; Grimes, Judge.

Suit by the Paxton Irrigation District against John H. Conway and others. From the judgment, certain defendants appeal. Affirmed.Wilcox & Halligan, A. Muldoon, and L. E. Roach, all of North Platte, for appellants.

Hoagland & Hoagland and J. G. Beeler, all of North Platte, for appellees.

ROSE, J.

Plaintiff was organized in 1895 as an irrigation district to make a canal from the South Platte river through the lands of the organizers in Lincoln and Keith counties for the purpose of irrigation. To that end some work was done, but the project was a failure. The canal was never completed nor used to carry water for irrigation. When water was needed, the river was generally dry at the point of diversion. Bonds in the sum of $100 each were executed by the district July 1, 1896, to the extent of $27,000. At an election held July 11, 1905, the electors of the district determined to dissolve the organization. Afterward the district property was appraised at $111. Creditors were notified by publication to assert their claims. As a result, demands were made as follows: Warrants and other claims, composed of 27 items, including $13 earned by F. G. Hoxie, as appraiser, $1,138.23; judgment in favor of Diana Hawley, $102.83; irrigation bonds in the hands of 11 holders, $6,300. The claimants are defendants. The suit is one in equity to cancel the bonds, the warrants, and other evidences of indebtedness as being illegal and void, and to enjoin the enforcement of all claims against the district. Upon a trial of the cause the court below allowed the claim of the appraiser and of the judgment creditor, held that the bonds, the warrants, and other claims were illegal and void, canceled them, and enjoined defendants from attempting to collect them from plaintiff. Three defendants only appeal, claiming to be innocent holders of the bonds. They are the First National Bank of North Platte, Daniel Schurtz, and Howard Miles.

[1] A reversal is demanded on the ground that plaintiff had an adequate remedy at law, which defeated jurisdiction in equity to cancel the negotiable bonds held by appellants. The decision is not controlled by the rule invoked. Plaintiff is a public corporation, and is seeking by lawful means to end an unprofitable existence. Many of the bonds have never passed out of the hands of the officers of the district. If they are negotiable, they ought to be destroyed when the district is dissolved. Taxes levied against the lands in the district will be affected by the cancellation of the bonds. Bonds said to be void are in the possession of different holders. Warrants and claims for excavating were in some instances exchanged for bonds. It is alleged that contracts for work on the canal were void, and that bonds were accepted in payment for such work. These are conditions under which equity will take jurisdiction to prevent a multiplicity of suits.

[2] The next point argued is that plaintiff, in any event, should have been required to do equity by paying...