Fooshee v. Martin

• Decision Date: 21 February 1939
• Docket Number: Case Number: 28459
• Citation: 184 Okla. 554,88 P.2d 900,1939 OK 107
• Parties: FOOSHEE, City Treas. v. MARTIN
• Court: Oklahoma Supreme Court

1939 OK 107

88 P.2d 900

184 Okla. 554

FOOSHEE, City Treas. v. MARTIN

Case Number: 28459

Supreme Court of Oklahoma

Decided: February 21, 1939

Syllabus

¶0 1. MUNICIPAL CORPORATIONS--Statute Requiring Paving Bonds to Be Paid in Numerical Order Applicable to Both Principal and Interest.

The provisions of section 6237, O. S. 1931, that bonds of a series of paving bonds "shall be payable in their numerical order," applies not only to the payment of the principal of said bonds when due, but also to the payment of interest accrued thereon.

2. SAME--MANDAMUS--Writ to Compel City Treasurer to Pay Both Interest and Principal of Paving Bonds.

It is the duty of a city treasurer to pay both the interest and principal due upon bonds that are payable under section 6237, O. S. 1931, and when proper and sufficient funds are available to pay both sums, and the city treasurer refuses, upon demand, to make such payment, he may be compelled to do so by mandamus.

Appeal from District Court, Cleveland County; Tom P. Pace, Judge.

Mandamus by J. Shan Martin against lone Fooshee, City Treasurer of City of Norman. Judgment for plaintiff, and defendant appeals. Affirmed.

J. D. Holland, for plaintiff in error.

T. Jack Poster, for defendant in error.

A. L. Jeffrey, Norman E. Reynolds, and W. Otis Ridings, Amici Curiae.

DAVISON, J.

¶1 J. Shan Martin, holder of an overdue and unpaid street improvement bond issued by the, city of Norman, commenced this action February 7, 1938, by the filing of a petition in which a writ of mandamus was sought to compel the treasurer of said city to pay the principal of said bond together with the delinquent interest due thereon.

¶2 From the stipulation of facts, it appears that the bond in question is No. 16 of a series of 21 bonds numbered consecutively, all of which were issued on November 16, 1925. The amount of the principal of each bond is $250, which was due on October 1, 1935. The interest rates prescribed in said bonds are "six (6) per cent. per annum, payable October 1st 1926, and semiannually thereafter on the first day of April and October of each year until maturity or date same is called for payment as provided by law, as evidenced by and upon the surrender of the annexed interest coupons as they severally become due, and after due, interest at the rate of ten (10) per cent. per annum until paid."

¶3 It further appears that all of the interest coupons on the plaintiff's bond have been paid, and though it does not specifically appear in the agreed statement of facts, the argument for both parties seems to proceed upon the assumption that the interest coupons, on the entire series of bonds have all been paid. It was stipulated that the number appearing on the plaintiff's bond is smaller than the number upon any of the other outstanding bonds.

¶4 When the bond in question was Presented for payment, the city treasurer offered to pay the principal thereof, but refused to pay the delinquent interest thereon, and in her answer to the plaintiff's petition she admitted the validity of the bond, and also admitted that she had on hand the sum of $332.47 which had been collected from assessments for the paving for which the series of bonds had been issued.

¶5 At the trial, the plaintiff was granted the relief sought, and the city treasurer brings this appeal.

¶6 The only questions submitted to this court for determination are: (1) Was all of the accrued delinquent interest on plaintiff's bond payable at the time it was presented? And (2) if so, does mandamus lie to enforce such payment?

¶7 A decision of the first question involves a determination of whether the matter is controlled by section 6237, O. S. 1931, and if so, which portion thereof is applicable. The portions of said statute referred to in the briefs read as follows:

"Said bonds shall be issued in series, and the bonds of each series shall be numbered consecutively beginning with Number One. and said bonds of each series shall be payable in their numerical order."

"The city or town shall have the right to call in and pay bonds or any number thereof in the following manner: Whenever there shall be sufficient funds in the hands of the city or town treasurer after the payment of all interest due and to become due within the next six (6) months, such treasurer shall on September 1st of any year give notice by registered mail addressed to the last registered holder of the bonds called, at the address appearing upon his registry that there has accumulated funds sufficient to pay the designated bonds, and interest thereon to a date thirty (30) days hence from the date of such notice, and directing the presentation of such bond or bonds for payment and cancellation, and said bonds will cease to bear interest after expiration of said thirty (30) days, and upon the payment and cancellation of said bond or bonds, proper entry thereof shall be made upon the books of the clerk and treasurer, and it is hereby made the duty of such city or town treasurer upon the accumulation of sufficient funds as herein provided to pay one or more bonds to so call and pay such bond or bonds, and in the event of failure so to do, he shall be liable for all such damages as may result therefrom, and the provisions hereof may be enforced by appropriate proceedings in mandamus against such treasurer." (Emphasis ours.)

¶8 The plaintiff contends that the first of the above-quoted portions of the statute is controlling and authorizes the payment as ordered by the trial court, while the treasurer contends that the provision for payment in numerical order applies only to payment of the principal of the bonds and does not include or refer to the payment of delinquent interest. She asserts that if any of said section is applicable to the payment of interest, it is the portion last quoted, and that according to the design therein indicated, the delinquent interest on none of the bonds is payable until she has on hand a sum sufficient to pay the delinquent interest rate on all of the outstanding bonds of the series for a period of six (6) months longer duration than the period of delinquency. The treasurer further asserts that if any part of the fund in her possession is now applied on said bonds, it must be applied to the whole series in the form of partial payments on the delinquent interest due on each and every outstanding bond of the series on a pro, rata basis. As authority for this contention, she cites the following cases: State v. City of Carlsbad, 39 N. M. 352, 47 P.2d 865; State v. Walters, 156 Wash. 664, 287 P. 874; and Tootle-Campbell Dry Goods Co. v. Mounts, 90 Okla. 40, 216 P. 113.

¶9 The case of State v. City of Carlsbad, supra, has no direct bearing upon the present question, for there the only interest involved was prematurity interest rather than delinquent interest.

¶10 While it is true that in State v. Walters, supra, the Supreme Court of Washington held that the principal of the street improvement bonds there involved had preference of payment in the order of their serial numbers over any further accruing interest, yet the only apparent reason for this holding seems to have been the fact that neither the bonds nor the statute authorizing their issuance provided for the payment of delinquent interest, while in the present case the payment of delinquent interest is specifically prescribed both in the bonds themselves and in section 6237, supra.

¶11 We do not consider the decision in TootleCampbell Dry Goods Co. v. Mount, supra, directly in point, for the reason that the delinquent interest in that case was due and payable apart from the maturity of the payments on the principal, while, according to the rules here followed, the interest in the present case becomes due and payable only when the principal is paid. The bonds involved herein merely provide for the payment of delinquent interest at a certain rate per annum, while in the ease cited the notes specifically provided:

"If this note is not paid when due, it shall bear interest thereafter at the rate of ten per cent. payable semiannually."

¶12 One of the rules laid down in that case is as follows:

"Where a note provides for the payment of a certain rate of interest per annum, it only fixes the rate to be paid, and has no reference to the time when such interest should be paid, and, consequently, interest so reserved becomes due and payable only with the principal."

¶13 In accord, see Ramsdell v. Hulett (Kan.) 31 P. 1002, 1093; Motsinger v. Miller (Kan.) 53 P. 869; Koehring v. Muemminghoff, 61 Mo. 403, 21 Am. Rep. 402, 404; Gibbs v. Mendoza (Cal. App.), 284 P. 250, 251; and annotations at 10 A. L. R. 999. It can readily be seen that if this rule is applicable, the Tootle-Campbell Case supports the plaintiff's rather than the treasurer's theory, for if the delinquent interest becomes due and payable only with the principal, and the plaintiff's bond is the only one of the series that is due and payable, then the delinquent interest thereon is the only delinquent interest that is now due and payable.

¶14 In Lucas v. First National Bank of Pawnee, 171 Okla. 606, 43 P.2d 752 (decided since the enactment of section 6237, supra), we applied the general rule that the holders of outstanding bonds should share the funds pro rata, where said funds are insufficient to pay all of them, because in section 4516, C. O. S. 1921 (predecessor to section 6237, supra) numerical order payment was prescribed only for prematurity payment, but there we indicated our view of the present statute in the following words:

"Had the bonds in question been issued

...