Miller v. Perris Irr. Dist.

• Decision Date: 21 February 1898
• Docket Number: 752.
• Court: U.S. District Court — Southern District of California
• Parties: MILLER v. PERRIS IRRIGATION DIST. et al.

85 F. 693

MILLER v. PERRIS IRRIGATION DIST. et al.

No. 752.

United States Circuit Court, S.D. California.

February 21, 1898

L. L Boone and O. A. Trippet, for AEtna Iron & Steel Co.

C. C Wright, for Erskine, Lacy, and others.

WELLBORN District Judge.

This is a suit for a decree declaring illegal and void the proceedings for the organization of the Perris irrigation district, canceling the bonds issued by said district, and enjoining the board of directors of said district from taking a deed to the property of complainant, heretofore sold for taxes, and also perpetually enjoining any further taxes or assessments on complainant's land by said district or its officers. The bill, which was filed July 20, 1897, challenges the corporate existence of said district, and also the validity of the proceedings subsequent thereto for the issuance and sale of bonds.

Among the allegations of the bill which relate to the former ground of relief, namely, the alleged invalidity of the proceedings for the organization of said district, are the following:

'That the defendant the Perris irrigation district claims to be a corporation organized and existing under and by virtue of the laws of the state of California providing for the organization of irrigation districts in said state, and is, and has been during the times herein mentioned, acting as such corporation. ' That complainant was at the times mentioned in the bill, and is now, the owner in fee simple of a large tract of land within the boundaries of said district as claimed to exist, which land has been, and will continue to be, subjected to taxation by said alleged district, to meet the current expenses incurred, and the interest and principal of the bonds issued, by said district; and that said bonds are, and will continue to be, a cloud upon complainant's title to said lands, unless the relief which complainant prays for is granted him. That said alleged district is not such in fact, and never has been, but the proceedings for its organization are and were wholly void and inoperative, because the petition for its organization was not signed by either 50, or a majority, of the freeholders within said district as proposed, nor was any notice ever given of the time and place when and where said petition would be presented. That a petition was presented to the board of supervisors of the county wherein said district was proposed to be organized, to which were appended 55 names, purporting to be names of freeholders in said proposed district; but that 2 of the freeholders within said proposed district, knowing that a sufficient number of qualified signers could not be obtained to said petition as required by law, fraudulently and in violation of law executed to various persons deeds of conveyance for small tracts of land within said proposed district, upon the agreement and understanding that the said parties should accept said deeds, and thereafter sign said petition, and that they should, after said district was organized, reconvey said real estate to the parties executing said conveyances. That deeds were thus executed to 42 persons for the sole and fraudulent purpose of making it appear that they were qualified to sign said petition, and that said persons did sign said petition, and afterwards reconveyed said lands to their grantors, and that, excluding these fraudulent signers, said petition was not signed by 50. nor a majority, of the freeholders within said proposed district. That, pursuant to the statutes of the state of California, said alleged district, purporting to act through its board of directors, petitioned for and obtained orders or decrees, in the superior courts of the counties of San Diego and San Bernardino, in said state, declaring said district to have been duly and legally organized as such; but the persons by whom said proceedings for confirmation were instituted and carried on were not the directors of said, or any, district, or authorized to institute or carry on said proceedings, and that said pretended district was never organized, and did not exist as such, and no proceedings had in its name could be effective. That said persons who assumed to act as directors of said district had full knowledge of the fraudulent character of the petition, as alleged, and that the orders confirming the organization of said district were procured by the fraudulent concealment, on the part of said persons, in said pretended district, of the true facts with respect thereto, and by the fraudulent allegation and representation that said petitioners, who fraudulently signed said petition, were bona fide and competent signers thereof, and that, but for said concealment and fraud, said orders of confirmation would never have been given.

Among the allegations of the bill which relate to the issuance and sale of bonds are these: That, by the laws of the state of California, irrigation districts organized thereunder may, for the purpose of acquiring water and water rights, and constructing waterworks, issue and dispose of bonds, as provided therein. That, before issuing any bonds, or calling an election therefor, the board of directors of the district are required by law to estimate and determine the amount of money necessary to be raised. That said district has issued and disposed of bonds, purporting to be the bonds of said district, in the aggregate amount of $442,000, in denominations of $500 each. That no estimate or determination of the amount of money necessary to be raised by issuing bonds was ever made or had by said pretended district before issuing said bonds. That said bonds, with certain exceptions specifically set forth, were not sold for cash, upon bids called for, as provided by law, nor in exchange for property, as provided by the statute, but were exchanged and bartered away to various persons, in various amounts, for labor, salaries of officers, employes, and attorneys, and for material used in the construction of the works of said pretended district, for less than their face value and in direct violation of law. Among the bonds so issued were 50, dated August 11, 1893, for $25,000; 27, dated August 17, 1893, for $13,500; 24, dated October 17, 1893, for $3,000; 33, dated May 3, 1893, for $19,500; and 42, dated June 7, 1893, for $21,000,--all issued to the Lacy Manufacturing Company; 12 dated January 4, 1893, for $5,400; 18, dated January 13, 1893, for $9,000; and 17, dated May 26, 1893, for $7,650,-- to the Aetna Iron & Steel Company; the consideration of all of said bonds being labor and material used in construction of system. That the board of directors of said district have sold the lands of complainant, for taxes levied by said district, and caused the same to be bought in by said district, and are about to, and will, if not enjoined, take a deed for said lands, continue to levy assessments against the lands of complainant, and enforce the collection thereof; and, if they should fail to do so, the board of supervisors of the county in which said district is situated is authorized by the laws of the state of California to levy such assessments; and, if said board should fail to levy the same, the owners and holders of said bonds are authorized by the laws of said state to compel the levy of such assessment and the collection of the taxes necessary to pay the interest and principal of said bonds, if valid. That the holders of said bonds, or a part of them, claim that the same are negotiable instruments, and that they are innocent purchasers and holders thereof, and that the lands of complainant are bound for the payment of said bonds, whether valid or not. That said bonds are a cloud upon complainant's title to said land, and destroy the sale thereof, and render the same worthless, to complainant's damage in the sum of $3,000, and that he has no speedy or adequate remedy in a court of law for the injury thus resulting to him.

The bill also sets out those provisions of the statute of the state of California, approved March 7, 1887, known as the 'Wright Act,' which, it is claimed, were not complied with in the organization of the district, as follows:

'Section 1. Whenever fifty or a majority of freeholders owning lands susceptible of one mode of irrigation from a common source, and by the same system of works, desire to provide for the irrigation of the same, they may propose the organization of an irrigation district under the provisions of this act, and when so organized such districts shall have the powers conferred, or that may hereafter be conferred, by law upon such irrigation districts.

'Sec. 2. A petition shall first be presented to the board of supervisors of the county in which the lands, or the greatest portion thereof, is situated, signed by the required number of freeholders of such proposed district. * * * Such petition shall be presented at a regular meeting of said board and shall be published for at least two weeks before the time at which the same is to be presented, in some newspaper printed and published in the county where said petition is presented, together with a notice stating the time of the meeting at which the same will be presented.'

The bill also sets forth certain other provisions of said act which, it is claimed, were violated in the issuance and sale of said bonds, as follows: 'Sec. 16. The board may sell said bonds from time to time, in such quantities as may be necessary and most advantageous, to raise money for the construction of said canals and works, the acquisition of said property and rights, and otherwise to fully carry out the objects and purposes of this act. Before making any sale the board shall, at a meeting, by resolution, declare its intention to sell a specified amount of the bonds, and the day...