J. R. Phillips Inv. Co. v. Road Dist. No. 18

• Decision Date: 29 April 1943
• Docket Number: No. 2488.,2488.
• Citation: 172 S.W.2d 707
• Parties: J. R. PHILLIPS INV. CO. et al. v. ROAD DIST. NO. 18 OF LIMESTONE COUNTY et al.
• Court: Texas Court of Appeals

Page 707

172 S.W.2d 707

J. R. PHILLIPS INV. CO. et al. v.ROAD DIST. NO. 18 OF LIMESTONE COUNTY et al.

No. 2488.

Court of Civil Appeals of Texas. Waco.

April 29, 1943.

Rehearing Denied June 24, 1943.

Appeal from District Court, Limestone County; W. S. Barron, Judge.

Suit in behalf of Road DistrictNo. 18 of Limestone County, Texas, and others against J. R. Phillips Investment Company and others to recover money paid out of the interest and sinking fund account of Road DistrictNo. 18 to named defendant by county depository on a warrant drawn by county clerk and countersigned by county auditor and county treasurer, and authorized by an allegedly void order of the commissioners' court, and to enjoin further payments out of county funds to named defendant.The surety on county treasurer's bond asked for recovery over against county treasurer and named defendant of any amount that surety might be required to pay under judgment of trial court, and county treasurer asked for similar relief against named defendant.From a judgment in favor of plaintiffs and against defendants, and denying relief sought by county treasurer and surety on his bond, defendants appeal.

Judgment in favor of plaintiffs and against defendants affirmed, and judgment denying relief sought by county treasurer and surety on his bond reversed and judgment rendered in favor of county treasurer and surety.

L. W. Shepperd, Carl Cannon, Scott Reed, and F. B. Kimbell, all of Groesbeck, C. D. Jessup, Sr., of Houston, and Currie McCutcheon and Bruce Graham, both of Dallas, for appellants.

L. L. Geren, J. B. Engledow, Norton Fox, and Bradley & Bradley, all of Groesbeck, for appellees.

RICE, Chief Justice.

This suit was instituted in behalf of Road DistrictNo. 18 of Limestone County, The State of Texas and Limestone County, by L. L. Geren as County Attorney of Limestone County, and by four property-owning taxpayers of said Road District, the latter suing for and in behalf of themselves, all other taxpayers of Limestone County and of said Road District, and for the benefit of said Road District, against J. R. Phillips Investment Company, a corporation, J. R. Phillips, the Commissioners Court of Limestone County, the four Commissioners and the County Judge of said County in their official capacities; the County Treasurer, County Clerk, County Auditor, Lawyers Lloyds of Texas, and City National Bank of Mexia, Texas, County Depository.

The relief sought by plaintiffs was the recovery from J. R. Phillips Investment Company, a corporation, J. R. Phillips, The County Treasurer of Limestone County, Lawyers Lloyds of Texas, as surety on the County Treasurer's official bond, and City National Bank of Mexia, jointly and severally, of the sum of $5,703.13 paid out of the interest and sinking fund account of Road DistrictNo. 18 to J. R. Phillips Investment Company by said County Depository on a warrant drawn by the County Clerk and countersigned by the County Auditor and by the County Treasurer, payable to J. R. Phillips Investment Company, which warrant was authorized by an allegedly void order of the Commissioners Court.Plaintiffs also prayed that the County Treasurer, County Auditor, County Clerk, and County Depository be enjoined from paying any additional sum to J. R. Phillips Investment Company or to J. R. Phillips under said order of the Commissioners Court, out of said interest and sinking fund account, or future delinquent tax collections of said Road District; and that the County Judge and Commissioners Court be enjoined from ordering any payment to be made to J. R. Phillips Investment Company or J. R. Phillips out of any funds of said County.

The trial was to the court without a jury.No findings of fact or conclusions of law were requested and none were filed.The plea in abatement of the City National Bank was sustained, and it was dismissed with its costs.Judgment was rendered that Road DistrictNo. 18 of Limestone County recover of J. R. Phillips Investment Company, J. R. Phillips, S. J. McCoslin, County Treasurer, and Lawyers Lloyds of Texas, jointly and severally, the sum of $5,703.13, together with interest thereon at six per cent per annum from June 13, 1941; the contract between the Commissioners Court and J. R. Phillips Investment Company, as well as the order of said Court passed pursuant thereto and ordering payment made thereunder, were each cancelled and declared void; the County Treasurer, County Clerk and County Auditor were permanently enjoined from paying any further sum to J. R. Phillips Investment Company or J. R. Phillips under said contract or order.The County Judge and members of the Commissioners Court of Limestone County were likewise enjoined from ordering any payment to be made to J. R. Phillips Investment Company, or to J. R. Phillips, under said contract or order, but of any funds of said county; it was further ordered that plaintiffs recover their costs of the defendants, and that all relief not specifically granted was denied.From this judgment the defendants have appealed.

The controlling facts of this case are not in dispute.Road DistrictNo. 18 of Limestone County is a road district created by a vote of the taxpayers of said district and by order of the Commissioners Court under Article III, Sec. 52, of the Constitution of this State, Vernon's Ann.St.The legal creation of this district was validated by Acts of the 39th Legislature, 1st CalledSess., S.B.No. 116, Chap. 410, Special Laws, p. 1175.After its creation the District issued its negotiable bonds in the aggregate sum of $100,000, for the purpose of constructing, maintaining and operating macadamized, graveled or paved roads and turnpikes, or in aid thereof.These bonds were negotiated and their validity is not here questioned.For the purpose of paying the interest on these bonds as it accrued and creating a sinking fund for their redemption at maturity, an annual ad valorem tax was levied and assessed on the real and personal property within the limits of said District, as provided in the original order creating the District and the validating act above referred to.

Thereafter, the County Judge and members of the Commissioners Court of Limestone County diligently endeavored to induce the Board of County and District Road Indebtedness of the State to recognize and declare that the bonded debt of said Road DistrictNo. 18 was eligible and entitled to participate in the County and Road District Highway Fund in accordance with the applicable provisions of Title 116, Revised Civil Statutes.Prior to the execution of the contract here attacked, the efforts of said officials proved fruitless.

The County Judge of Limestone County testified that in January, 1940, after his efforts above referred to had failed, he made a tentative oral agreement, subject to the approval of the Commissioners Court, with J. R. Phillips, President of and representing J. R. Phillips Investment Company, to assist the Commissioners Court in prosecuting the claim of Road DistrictNo. 18 against the Board of County and Road District Indebtedness and to pay said Company for its services twenty per cent of the amount of cash collected on said claim and of the bonds of said District assumed by the State, the compensation to be paid out of the interest and sinking fund of said Road District, with the exception of taxes to be paid for the year 1940, with the qualification that if such remuneration could not legally be paid out of that fund, a similar amount would be paid out of the general fund; that the contract was later orally approved by the Commissioners Court in open court; that some services were performed under the contract by J. R. Phillips and thereafter, and at the instance of J. R. Phillips, the Commissioners Court orally agreed in open court that the compensation be raised from twenty per cent to twenty-five per cent.He further testified that this contract, at the request of J. R. Phillips, was not placed of record, and that no record was made thereof until the Commissioners Court, on June 11, 1941, passed and entered of record in the Minutes of said Court the order which is hereinafter set forth.The County Judge did, however, confirm the agreement by letter dated February 1, 1940, as follows:

"J. R. Phillips Investment Company
                  "P. O. Box 317
                  "Houston, Texas
                      "Attention: Mr. J. R. Phillips
                

"Gentlemen:

"Re Claim of Road District #18, Limestone County, Texas.

"Enclosed herewith I hand you copy of our file in the above mentioned claim, which is self-explanatory.This will also confirm our trade of a fee of twenty per cent on whatever you might recover for said Road District, it being agreed and understood that said fee is to be paid out of the Interest & Sinking Fund of said District."

The order of the Commissioners Court, entered of record in June, 1940, and above referred to, reads as follows:

"Whereas, at the February Term of the Commissioners Court in 1940, the Commissioners Court entered into a contract with J. R. Phillips Investment Company, of Houston, to assist the Court in prosecuting a claim for Road DistrictNo. 18, of Limestone County, Texas, against the Board of County and District Road Indebtedness; and

"Whereas, the said Commissioners Court on said date agreed in said contract to pay to the said J. R. Phillips Investment Company a sum equal to twenty-five per cent (25%) of the amount of cash collected and bonds assumed, said sum not to be paid out of the cash collected, if any, but to be paid out of the Interest and Sinking Fund of Road DistrictNo. 18, except that part of said Interest and Sinking Fund placed therein from 1940 taxes, and should there be a balance due said J. R. Phillips Investment Company, then in that event the remainder of said fee is to be paid out of the delinquent road taxes as collected in Road DistrictNo. 18; and it was further agreed in said contract that if there be not sufficient delinquent road taxes...