Lewis W. Thompson & Co. v. Conran-Gideon Special Road Dist. of New Madrid County

• Decision Date: 13 September 1929
• Docket Number: 27772
• Citation: 19 S.W.2d 1049,323 Mo. 953
• Parties: Lewis W. Thompson & Company v. Conran-Gideon Special Road District of New Madrid County, Appellant
• Court: Missouri Supreme Court

19 S.W.2d 1049

323 Mo. 953

Lewis W. Thompson & Company v. Conran-Gideon Special Road District of New Madrid County, Appellant

No. 27772

Supreme Court of Missouri

September 13, 1929

Appeal from New Madrid Circuit Court; Hon. Henry C. Riley Judge.

Affirmed.

Oliver & Oliver for appellant.

(1) The court erred in overruling the demurrer offered by defendant at the close of plaintiff's case. The bonds, from which the coupons sued on were cut, recited on their face that they were issued under the provisions of Article VIII, Chapter 98 R. S. 1919 (Secs. 10833 to 10857). It was admitted that New Madrid County was operating under the township-organization plan at the time the bonds were issued. No special road district could be organized under Article VIII, Chapter 98 in a county that was operating under township organization. Sec. 10833, R. S. 1919. Hence it is apparent to the most casual reader that the bonds were void on their face and carried notice to all of their own infirmity and defectiveness. The bonds were illegal on their face and the demurrer should have been sustained. McClure v. Township, 94 U.S. 429, 24 L.Ed. 129; Ogden v. Daviess, 102 U.S. 634, 26 L.Ed. 265; Harshman v. Bates Co., 92 U.S. 439, 23 L.Ed. 748; Lewis v. Comanche Co., 35 F. 347; National Bank v. Grenada, 41 F. 94; Northern Nat. Bank v. Trustees, 110 U.S. 608, 28 L.Ed. 261; State ex rel. Wilson v. Garrouttee, 67 Mo. 445; Thornburg v. School Dist., 175 Mo. 12; 9 C. J. 65, sec. 109; Richmond Trust Co. v. Charlotte Co., 300 F. 127. (2) Plaintiff relies on Secs. 1063 and 1068, R. S. 1919, and contends that these sections, together with the certificate of the State Auditor on the bonds, give the bonds an immunity that renders them valid and free from any attack. Eminent counsel for plaintiff go too far in attempting to shut out the facts. The sections relied on do not prevent the making of the defense interposed by the defendant; on the other hand, they expressly authorize it. Section 1063 provides that before certain bonds can be negotiated they must have indorsed on them a certificate by the State Auditor to the effect that all the conditions of the law with reference to the issuing of the bonds have been complied with, but that such certificate shall constitute only prima-facie evidence to that effect, and that it "shall not preclude nor prohibit any person from showing or proving the contrary in any suit or proceeding to test or determine the validity of such bond or the power of the . . . board of commissioners of any special road district . . . to issue such bond." Sec. 1063, R. S. 1919. Section 1068 contains a similar provision with reference to the indorsement of the State Auditor on the bonds, and then says: "Provided, the only defense which can be offered against the validity of such bonds shall be for forgery or fraud." Sec. 1068, R. S. 1919. The defense set up and the proof attempted to be offered and made fell within the exception. The constitutionality of the clause restricting the assertion of all other defenses except forgery and fraud need not necessarily be inquired into, for the reason that the defenses made or attempted to be made fell within the exception. The plaintiff was too anxious to shut out the facts in this case and hit upon these sections in aid of achieving that end, but they do not support his position. (3) The court erred in shutting off the defense of fraud and forgery without hearing it. The proof may have been found insufficient, but the defendant was at least entitled to present it. The answer was verified. The defense of fraud and forgery should never be throttled as a matter of public policy. The courts have always allowed the greatest latitude in showing fraud. Every circumstance tending to show its existence is admissible. 27 C. J. 50, sec. 181; Sawyer v. Walker, 204 Mo. 160; Hopkins v. Sievert, 58 Mo. 202; Stewart v. Severence, 43 Mo. 334; Smalley v. Hale, 37 Mo. 104. (4) The bonds under no conditions can be held to be good under Article VIII, Chapter 98. The only other article they could have been issued under was Article XIII. This article does not meet the requirements of either the State or National Constitutions; hence bonds issued under it are void. Browning v. Hooper, 70 L.Ed. 330, 269 U.S. 396; State ex rel. v. Thompson, 315 Mo. 65; Embree v. Road District, 60 L.Ed. 624, 240 U.S. 242; In re C., R. I. & P. Ry. Co., 28 F.2d 62.

Benjamin H. Charles and Charles Claflin Allen, Jr., for respondent.

(1) The court did not err in overruling the demurrer offered by defendant at the close of plaintiff's case. (a) The bonds and coupons being in evidence, bearing indorsed thereon the certificate of the State Auditor, made a prima-facie case. Sec. 1068, R. S. 1919. (b) A recital of the wrong act in the face of the bonds will not render them void, there being a valid act under which they could lawfully be issued. Smith v. Clark County, 54 Mo. 58; Johnson County v. January, 94 U.S. 202; Allen v. City of Davenport, 77 N.W. 534; Gould v. Town of Sterling, 23 N.Y. 458; Evansville v. Dennett, 161 U.S. 434; Abbott, Public Securities, sec. 288, p. 592. (c) Article XIII of Chapter 98 is constitutional. Defendant district is a public corporation and political subdivision of the State, with power to levy general taxes for governmental purposes, and issue general bonds under Article X, Section 12, of the Constitution, payable by direct and general ad valorem taxes on all taxable property in the district. Secs. 10937, 10938, 10941, 10942, 10943, 10944, 10747, R. S 1919. (d) Where a political subdivision of the state is given general power and authority over all public roads in its boundaries, and to levy ad valorem road taxes like counties, townships or unincorporated road districts as an arm of government, and to borrow money and issue general bonds payable from such taxes, the taxes so levied are general taxes, not special assessments based on benefits. State v. Thompson, 315 Mo. 56; Harris v. Compton Co., 244 Mo. 664; St. Louis S.W. Railroad v. Nattin, 277 U.S. 157; Hopkins v. Spec. Rd. & Bridge Dist., 73 Fla. 247, 74 So. 310; Gulf S. I. Railroad v. Duckworth, 286 F. 645; Embree v. Road District, 257 Mo. 593. (e) General taxes are not based on special benefit to property, and no question as to notice and hearing can arise therefrom. State v. Thompson, 315 Mo. 56; St. Louis S.W. Railroad Co. v. Nattin, 277 U.S. 157. (f) The Legislature has power to prescribe the means and agencies to be employed in creating a road district, including limiting the petitioners to resident landowners, without violating any rights of non-resident landowners. State v. Harper, 301 Mo. 115; Harris v. Compton Co., 244 Mo. 664; In re City of Uniondale, 285 Mo. 143; Buchan v. Broadwell, 88 Mo. 31; Miners' Bank v. Clark Co., 252 Mo. 20; Field v. Asphalt Co., 194 U.S. 618. (g) The proceedings for special assessments under Article XIII are valid and afford due process, because notice and hearing as to benefits are provided: In the county court on listing the lands; and in the suit to collect the assessments. State ex inf. v. Harper, 301 Mo. 115; State v. Hackmann, 295 Mo. 14; Embree v. Road District, 257 Mo. 593, 240 U.S. 241; Davidson v. New Orleans, 96 U.S. 97; Hagar v. Reclamation District, 111 U.S. 701. (h) The appellant had no constitutional rights which might have been denied by the act in question, and, therefore, it may not attack the act on those grounds. Const. Mo., Art. II, sec. 30; Const. U.S., Amendment XIV, sec. 1; Dunn v. Fort Bend County, 17 F.2d 329; St. Louis v. Shields, 52 Mo. 351. (2) The trial court did not err in excluding the evidence offered by defendant. (a) The evidence offered was inadmissible by reason of the certificate of registration of the State Auditor. Sec. 1068, R. S. 1919. (b) Fraud must be specifically pleaded and affirmatively proved; there were no allegations or offer of proof of facts amounting to fraud. Brownlee v. Hewett, 1 Mo.App. 360; Sugg v. Blow, 17 Mo. 359; Nichols v. Stevens, 123 Mo. 96. (c) It is not alleged that plaintiff was party to the alleged fraud and therefore is not chargeable with its consequence; if there was fraud it was perpetrated by defendant's own officers and agents, and defendant cannot take advantage of it. Hardwicke v. Hamilton, 121 Mo. 465; Henderson v. Henderson, 13 Mo. 151; Day v. Graham, 97 Mo. 398; Steines v. Franklin Co., 48 Mo. 167; Grand Chute v. Winegar, 15 Wall. 355; Nat. Life Ins. Co. v. Bd. of Education, 62 F. 784. (d) Aside from the effect of the registration statute, the defenses offered are not available against the plaintiff. The treasurer and the commissioners were at least officers de facto and their acts were as binding as to this plaintiff as if they were officers de jure. State v. Dierberger, 90 Mo. 369; St. Louis County Court v. Sparks, 10 Mo. 118; Aiken v. Steel Scraper Co., 197 Mo.App. 673; State v. Churchill, 41 Mo. 42; Nofire v. United States, 164 U.S. 657; Rex v. Bedford Level Corp., 6 East, 368; State v. Carroll, 38 Conn. 449; State v. Bd. of Equalization, 108 Mo. 235; State v. Miller, 111 Mo. 542; Akers v. Kolkmeyer & Co., 97 Mo.App. 520; Powers v. Braley, 41 Mo.App. 556. (e) The Constitution and statutes do not limit the qualified voters to owners of land in the district; moreover, the circuit court in a suit on the bonds has no power to inquire into the result of the bond election. Const. of Mo., Art. X, sec. 12; R. S. 1919, sec. 10944; State ex rel. v. Speer, 284 Mo. 45; State ex rel. v. Hackmann, 295 Mo. 417; Boney v. Sims, 304 Mo. 369. (f) Appropriation by the treasurer of the proceeds of the bonds to improper uses is no defense to the bonds in the hands of plaintiff. See cases cited last above. (g) Failure of board to order the issuance of the bonds and to sign the minutes is...