In re Gorton
| Decision Date | 03 May 1927 |
| Citation | 193 Wis. 118,213 N.W. 885 |
| Parties | IN RE DANCY DRAINAGE DIST. PETITION OF GORTON. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Marathon County; A. H. Reid, Judge.
In the matter of the Dancy Drainage District. Petition by Laura R. Gorton praying for the payment of bonds held by her. The Federal Insurance Company and others intervened. From an order denying the claims of the interveners, the Federal Insurance Company and the Loyal American Life Association, Christopher Graham, and the Hanchett Bond Company to a prior lien, ordering the disbursement of a fund, and denying the other prayers of the petitioners, the insurance companies and the intervener Graham appeal. Order reversed, and cause remanded.--[By Editorial Staff.]
Proceedings for the disposition of a fund held by the commissioners of the Dancy drainage district.
The affairs of this drainage district were before this court in 190 Wis. 327, 208 N. W. 479. After the record was returned, an order was made for an additional assessment of $130,000 now in process of collection. Thereafter, and in August, 1926, Laura R. Gorton, owner of two $500 bonds of the district dated November 15, 1907, due June 1, 1922, and with unpaid interest coupons thereon due at six months' intervals from December, 1919, petitioned for payment. The Federal Insurance Company and the Loyal American Life Association, who were the petitioners and appellants in the former case, one Christopher Graham and the Hanchett Bond Company, all holding bonds of the issue of 1907, and the latter also holding other bonds of later issue, intervened and were heard on the questions as to the manner in which a fund then held by the commissioners should be disbursed. This fund was $1,091.09 in the “interest and bond account,” but such moneys could not be identified as coming from any particular prior assessment or collection.
Many of the facts concerning this district, the form of the first issue of the bonds, and the statutes involved in the construction thereof are found in the former decision and need not be here repeated. The following facts are now in the record:
Under the original proceedings in 1907 one assessment of benefits amounting to $440,000 was made on the entire drainage district, and there was then levied an assessment for construction purposes of $140,460.50. Against this, by order of the court, a series of negotiable instruments were issued, all bearing date November 15, 1907, maturing annually in equal installments from June 1, 1913, until and including June 1, 1922. Of this issue $136,000 worth were sold. There has been paid thereon $95,500, leaving an unpaid principal of $40,500 of which $26,500 was represented by the petitioners on the hearing below.
A second construction assessment was made in August, 1910, for $35,115.10, against which obligations were issued maturing substantially as those of the first issue and to the amount of $34,000. This issue recited in each obligation:
That it “is based upon and constitutes a lien upon and is payable solely out of the proceeds of the special assessment for benefits authorized by order of the court on August 1, 1910, upon the lands in said district and also as a second lien, subject to prior issue of bonds, upon first assessment under November 5, 1907, both of which assessments are hereby irrevocably pledged therefor.”
This $34,000 issue was sold, $24,800 thereof paid, leaving unpaid $9,200. No holders of such obligations seem to have appeared or been represented on the hearing below.
The third, or what is called the Howe creek subdistrict issue, was made by order of August 17, 1914, dated as of June 11, 1914, authorizing an additional assessment of over $38,000 upon the land in that subdistrict. This issue was divided into seven equal interest installments, payable annually from November 5, 1915, all bearing interest from November 5, 1914. Such order subsequently, but without notice to any parties amended, contained the following recital:
“This bond is based upon, and constitutes a lien upon, and is payable solely out of the proceeds of the special assessment for benefits authorized by order of the court on June 11, 1914, upon the lands in the Howe creek subdistrict.”
Of this issue $37,000 worth were sold, $14,000 thereof paid, leaving unpaid $23,000. The total of unpaid obligations of the three issues is $72,700. There was a refunding and the giving of new obligations for some such originals, but the record is not definite as to the amount.
The trial court determined that the Loyal American Life Association and Federal Life Insurance Company and Christopher Graham, holders of the obligations of the first issue, must be denied their claim of prior lien upon the particular fund.
It was further ordered that the said $1,091.09 be applied to the payment of the earliest due unpaid interest coupons and principal of bonds of the first and second issues, paying in the order of the maturity thereof, with provision as to prorating where necessary. Except as so ordered the prayers of the respective petitioners were denied.
By written decision the trial court expressed the opinion that the obligations of the distict are not a lien upon the assessments for benefits, and that, it being impossible to trace the source of the fund then in the hands of the commissioners, it must be applied in accordance with the equitable rule for the applying of payments upon notes falling due at different times secured by the one mortgage, and therefore that the fund should be applied to the longest past-due security, whether interest coupons or the principal of the bonds themselves. Further information being required as to what were the earliest due interest coupons or bonds now unpaid, so for that reason no exact provision was made in the original order for disposition.
From such order, the insurance companies and Graham appeal.Mason & Priestley, of Madison (Simeon W. Dixon, of Chicago, Ill., of counsel), for appellants Federal Life Ins. Co. and others.
B. M. Vaughan, of Wisconsin Rapids, for appellant Hanchett Bond Co.
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