Morris, Mather & Co. v. Port of Astoria

• Decision Date: 18 October 1932
• Citation: 15 P.2d 385,141 Or. 251
• Parties: MORRIS, MATHER & CO. v. PORT OF ASTORIA et al. (STATE ex rel. HOLMAN, State Treasurer, Intervener). [*]
• Court: Oregon Supreme Court

15 P.2d 385

141 Or. 251

MORRIS, MATHER & CO. v. PORT OF ASTORIA et al. (STATE ex rel. HOLMAN, State Treasurer, Intervener). ^[*]

Supreme Court of Oregon

October 18, 1932

In Banc.

Original proceeding in mandamus by Morris, Mather & Company against the Port of Astoria and others, in which the State of Oregon upon the relation of Rufus C. Holman, State Treasurer of the State of Oregon, intervened.

Petition dismissed.

This is an original proceeding in mandamus by Morris, Mather & Co. an Illinois corporation, against the Port of Astoria, a municipal corporation, B. F. Stone, Ira S. Miller, A. G. Spexarth, S.W. Lovell, J. O. Convill, and R. R. Bartless. The first five of the aforementioned individuals are the commissioners of the port, and the sixth is its manager. The plaintiff is the owner of overdue interest coupons to the amount of $12,535 issued by the defendant municipality. The purpose of this proceeding is to compel the defendants to pay these coupons out of cash in their possession. After the filing of plaintiff's petition, the state of Oregon, upon the relationship of Hon. Rufus C. Holman, State Treasurer became an intervener, praying for a dismissal of the petition.

Albert B. Ridgway, of Portland (Ridgway, Johnson &amp Kendall, of Portland, on the brief), for plaintiff.

G. C. Fulton, of Astoria (G. C. & A. C. Fulton, of Astoria, on the brief), for defendants.

Fred H. Paulus, of Salem, and Willis S. Moore, Asst. Atty. Gen. (I. H. Van Winkle, Atty. Gen., on the brief), for intervener.

John W. Shuler, of Portland, amicus curiæ.

ROSSMAN, J. (after stating the facts as above).

Undenied allegations of the pleadings and a stipulation signed by the parties establish the following facts: The Port of Astoria whose boundaries are the same as those of Clatsop county, is a municipal corporation organized pursuant to the provisions of sections 65-701 to 65-801, Oregon Code 1930. Pursuant to the provisions of section 65-708, subd. 8, the municipality issued bonds of which $3,670,000 were outstanding January 1, 1932. In December of 1930, when the commissioners of the port prepared its annual budget, showing the amount of tax money needed for the ensuing twelve months, they were faced with the fact that on July 1, 1931, interest coupons to the extent of $96,037.50 would become payable, together with a like amount and $100,000 of bonds on January 1, 1932. Thus, in the levy made in December of 1930 it was necessary to make provision for $192,075 interest and $100,000 principal money with which to satisfy those obligations. Since the commissioners anticipated that a large number of taxpayers would fail to pay the tax about to be levied, and being desirous of securing a return sufficient to meet needs, they added to the aforementioned interest item of $192,075 a margin of $31,000, and to the principal item of $100,000 the additional sum of $18,500. Thus, they inserted in their budget the item of $223,075 to provide sufficient interest money, and $118,500 to take care of principal. At taxpaying time delinquencies were so great that the tax collector received, up to January 1, 1932, only $118,586.23 upon the interest item, and $62,994.35 upon the principal item. All of the parties to this proceeding anticipate that additional sums will be received, but agree that they will be insufficient to enable the port to discharge in full the above obligations of principal and interest. July 1, 1931, the port paid the semiannual interest due upon that day, aggregating the aforementioned sum of $96,037.50, and thus had left in its interest money fund only $22,548.73 with which to meet the January 1, 1932, installment. January 1, 1932, the plaintiff was the owner of interest coupons in the amount of $12,535, and the intervener, the state of Oregon, was the owner of $37,000 of bonds issued by the port, and payable on that date, as well as interest coupons in the amount of $1,925 likewise due and payable. When the defendants found themselves confronted with the situation of an insufficient amount of cash with which to satisfy the above obligations, they submitted to the bondholders an offer to pay on account to all owners of interest coupons such a reduced amount as the $22,548.73 of cash bore to $96,537.50. The plaintiff rejected the offer, but the state expressed a willingness to accede to it.

The plaintiff contends that although the port possesses only $22,548.73 cash available for payment of interest, and owes $96,037.50 interest, yet it is entitled to the relief it seeks, namely, a writ directing the defendants to pay to it $12,535. In support of its contention it argues that the defendant port's interest and principal obligations are payable, not out of a closed limited fund, but through an inexhaustible power of taxation which, when exercised, will readily replenish the port's treasury with cash, thus enabling it to discharge its obligations to the other bondholders. The delay which would confront the latter in the collection of their claims, the plaintiff contends, would be nothing more than the penalty tardiness exacts from those who delay their applications for relief. It also points out that the port's promises in the interest coupons are unconditional, and argues that the defendants, therefore, should not be permitted to assert that payment to the plaintiff will jeopardize the rights of other bondholders. The plaintiff insists that such a defense, if available, can be submitted only by bondholders. The defendants argue that the statutes authorizing taxation by ports (section 65-708) permit them to levy a tax for the payment of interest and principal in an amount no greater than the total of all interest and principal payable in the ensuing year, and that since they did so the bondholders must be content with their appropriate share of the taxes collected. The state, as intervener, after insisting that the port must anticipate delinquencies and levy for an amount sufficient to discharge in full all interest and principal items, argues: (1) That the complaint's prayer asks for payment of interest coupons out of funds levied for the payment of principal, and that, hence, all relief must be denied; (2) that principal and interest moneys are payable to bondholders through the fiscal agency of the port (the Chase National Bank of New York), and that since the plaintiff asks for payment to it directly, the prayer must be denied; (3) that since the relief sought asks for the payment of interest upon the overdue interest, the prayer must be denied; (4) that the port has no inexhaustible source from which to meet its obligations and that, hence, each bondholder should share proportionately and none should secure complete relief; and (5) that an allowance of the relief sought by the plaintiff would precipitate a multiplicity of mandamus proceedings. From the state's pleading we quote the following paragraph, which is not denied by either the plaintiff or the defendants: "There is no inexhaustible source from which intervener may enforce payment of the principal and interest now due it on bonds and interest coupons of said defendant port district which matured January 1, 1932, and if payment of the interest alleged to be due plaintiff be made as commanded in the alternative writ of mandamus issued to defendants in this cause, intervener and others similarly situated will be thereby deprived of adequate means for the collection of the respective proportionate amounts due it and them from funds now available for the payment of matured bonds and interest coupons of said port district."

The stipulation, signed by the parties, recites: "It is further stipulated that said special tax levies of December 9, 1930, were duly and seasonably made and duly and seasonably certified to the county assessor as by law provided. That the defendants port and port commissioners have duly and seasonably performed all of its and their duties by law required in the levying, certifying and collection of the above and special taxes." Section 65-708 provides: "Such corporation shall have power: *** 8. Borrowing Money and Issuing Bonds.-For the purpose of carrying into effect all or any of the powers hereby granted such corporation shall have the power *** to borrow money upon any evidence of debt and to sell and dispose of bonds. *** Such bonds or other evidences of indebtedness shall be executed on behalf of the said corporation by its president and secretary, and shall be so conditioned as that said corporation shall therein and thereby undertake, promise and agree in consideration of the premises, and be held to pay at a place therein named to the bearer or registered owner thereof the sum named therein in gold coin of the United States, with interest thereon in like gold coin at the rate per annum named therein. *** 9. Taxation.-Such corporation shall have power and there is hereby granted to it the power, to assess, levy and collect taxes upon all property, real and personal, situated within its boundaries *** each year not to exceed 1 per cent, the proceeds of which shall be by it applied in carrying out the objects and purposes hereinbefore provided; and such corporation shall also have the power each year to assess, levy and collect a special tax upon all such property, real and personal, in an amount sufficient to pay the yearly interest on bonds or other evidences of indebtedness theretofore issued by such corporation and then outstanding, together with any portion of the principal of such bonds maturing within such year. *** The special tax hereby authorized shall be applied only in payment of interest and principal of bonds issued by such corporation *** but such corporation shall have power to apply any funds derived from the regular annual tax toward...