Munro v. City of Albuquerque.

• Decision Date: 07 September 1939
• Docket Number: No. 4488.,4488.
• Citation: 93 P.2d 993,43 N.M. 334
• Parties: MUNROv.CITY OF ALBUQUERQUE.
• Court: New Mexico Supreme Court

43 N.M. 334

93 P.2d 993

MUNRO

v.CITY OF ALBUQUERQUE.

No. 4488.

Supreme Court of New Mexico.

Sept. 7, 1939.

Appeal from District Court, Bernalillo County; Bryan G. Johnson, Judge.

Action for declaratory judgment by James Munro against the City of Albuquerque, New Mexico, a municipal corporation. From an adverse judgment, plaintiff appeals and defendant cross-appeals.

Reversed and remanded, with directions.

Under statute authorizing municipality to issue negotiable coupon bonds for improvement and providing that bonds shall bear interest at a rate not exceeding the rate of interest on referred installments of assessments, where ordinance provided that paving assessments might be paid in deferred installments with interest at 6 per cent. upon unpaid principal until maturity, holders of paving bonds bearing interest at 6 per cent. “until payment” were not entitled to payment of interest upon interest after maturity of bonds. Comp.St.1929, § 90-1701.

Donald B. Moses, of Albuquerque, for appellant.

Simms, Modrall & Seymour, of Albuquerque, for appellee.Kiker & Sanchez and Anthony J. Albert, all of Santa Fe, amici curiæ.

MABRY, Justice.

The plaintiff sought in the district court a declaratory judgment to determine the respective rights of bondholders to collect, and the corresponding duty of the City of Albuquerque to pay interest after maturity upon the principal of certain paving bonds and upon the interest coupons attached to such bonds issued pursuant to the provisions of Section 90-1701, Comp.Laws, 1929.

The plaintiff, a bondholder, alleges in his complaint, the allegations of which are admitted by the defendant, that he is the owner and holder of two bonds in Paving District No. 19 of the said city; that the defendant has failed and neglected to pay said interest coupons numbered 19, 20, 21, and 22, which respectively became due on the 1st day of November, 1935, the 1st day of May, 1936, the 1st day of November, 1936, and the 1st day of May, 1937, and has also failed and neglected to pay the principal amount of the bond, the maturity date of which was May 1, 1937.

Plaintiff prays for a declaratory order of the court determining whether interest is payable on the coupons and on the bonds from their maturities until paid, and if interest be payable on the bonds, or the coupons, or both, what shall be the priorities of the bondholders and what shall be the order of payment.

Appellant Munro will hereafter be referred to as Plaintiff and Appellee City as Defendant.

Plaintiff assigns as error the court's ruling (1) that the interest coupons did not bear interest from maturity date; and, (2) that though the court held interest to be payable on the principal of such bonds from maturity until paid, it erroneously concluded that this should be paid to all bondholders equally and ratably and this only after the payment of the principal of all the bonds of the district.

Plaintiff contends that the court should have held that the interest upon the principal accumulating after maturity upon any bond should be paid at the time of the payment of the principal of the bond itself in order to satisfy the requirement for payment and discharge of such bond.

Defendant City, as cross-appellant, assigns one error, and this goes to the court's ruling that plaintiff was entitled to receive interest at all upon the principal of the bonds after maturity. Defendant City contends that in view of the statutes, the ordinances and the language of the bonds themselves, interest ceased at maturity. Defendant admits, however, that if the court has correctly determined that interest after maturity on such principal is an obligation to be met from the funds of the district, that it properly disposed of the other question involved therewith, viz., the method and time of payment of such interest.

Incidentally, the city disclaims any interest in this controversy other than as a trustee of the funds so collected from the property owners of the district, and is concerned merely in a fair and equitable solution of the problem in impartial justice to all bondholders and all parties. It concedes that by virtue of defaults in the collection of assessments that the particular district in question will not fully liquidate its paving bond obligations, with the result that some of the higher numbered bonds will suffer the loss.

Counsel for both parties concede that there is considerable if not hopeless conflict among the courts upon the questions here presented, and, while urging upon us a full and complete analysis of the decisions of other states and the statutes, ordinances and contracts these courts were endeavoring to interpret, point out that, after all, it becomes rather a matter of adopting the rules we must apply to our own situation in view of the language of the controlling paving statutes, the city ordinances enacted in pursuance thereof, and the language of the bonds and the coupons themselves.

We take first that part of the language of the statute in question, viz., sec. 90-1701, Comp.Laws of 1929, pertinent to the issues here presented to find authority for ordinances providing for paving under this, the “provisional order” plan. Much is left indefinite and uncertain as to what the interest shall be and for what time it shall run, excepting that we do have language clearly limiting the city's right to pay out, fix or assess interest, as to rate and amount. It is provided by said statute after reciting that the governing body of municipalities shall have power to issue “negotiable coupon bonds” in an amount not exceeding the total assessment levied to pay the cost of the improvements, that: “The governing body shall fix the terms and conditions of such bonds providing, however, such bonds shall be made payable out of the moneys collected from said assessments and on or before a date not later than twelve months after the last deferred installment of such assessments is due from said property owners and shall bear interest at a rate not exceeding the rate of interest on such deferred installments.” (Emphasis ours)

[1] There is no detailed statement to be found in the statute, showing what the “negotiable coupon bonds” shall be as to form and substance. We assume and therefore hold that by the term it is meant bonds with coupons attached to the face thereof indicating interest due on the face of the bond. Words and Phrases, First series, Vol. 2, page 1669, Tennessee Bond Cases, 114 U.S. 663, 5 S.Ct. 974, 29 L.Ed. 281. We observe also that a part of Sec. 17 of ordinance 253 would indicate the coupons should be attached to the bonds and the bonds themselves refer to “the annexed coupons.”

We next examine portions of the city ordinances applicable to the paving district here involved.

In ordinance No. 275 of Defendant City, passed in pursuance of the above mentioned statutory sanction, we find the authority for the levy of the paving assessment. The Defendant relies strongly upon language found in section 3 of said ordinance whereby it is provided that in making the levy against the property benefited and providing for payment of deferred installments, annually over a period of ten years, to the effect that such deferred assessments bear “interest in all cases on the unpaid principal of each of such installments until the maturity thereof, (emphasis ours) at the rate of six percent per annum, payable semi-annually ***”, with a further provision that in case of default in the payment of any deferred assessment the whole amount shall become due, and during default, and as to the amount in default, this shall bear interest at one per cent per month.

[2] This court in the case of City of Roswell v. Levers, 38 N.M. 419, 34 P.2d 865, held the one per cent per month provision illegal as being violative of the statute which limits interest upon such liens to 8% per annum. So, the question of more than 8% interest is conceded by counsel to be out, and it is agreed that the city of Albuquerque has at all times and now continues to charge 6%, but no more, upon all paving assessments until paid, whether delinquent or not. It is suggested by Plaintiff and not disputed by Defendant that this practice prevails throughout the state with all municipalities having delinquencies upon like deferred paving assessments. Whether, under like ordinances to the ones here under consideration, more than 6% and not exceeding 8% might properly be charged against the property owners, was not decided in the Levers case supra. The court there refused to consider that feature of the interest matter upon the grounds it was presented for the first time upon motion for rehearing and that the trial court was not advised of any objection to its fixing the rate at 6%. Such question however, is not here presented.

It must be conceded, as counsel for both parties apparently agree, that the cases presented and relied upon as to both Plaintiff and Defendant, particularly as they pertain to interest after maturity on principal, leave the court without much actual aid for the reason that each case rests upon the peculiar and somewhat different statute of each state cited.

Plaintiff and Amici Curiae rely upon the recently decided case of Fooshee, City Treasurer v. Martin, 184 Okl. 554, 88 P. 2d 900, as being sustained by the better reasoning and sounder principles of law. We feel however, that this case, upon this point, may be distinguished from the one at bar, as the Oklahoma court itself distinguished that case from State ex rel. Moses v. Walters, City Treasurer, 156 Wash. 664, 287 P. 874, upon which defendant relies. Speaking of the Wash. case the court in the Fooshee, Treasurer, case supra, says [184 Okl. 554, 88 P.2d 901]: “*** The only apparent reason for this holding seems to have been the fact that neither the bonds nor the statute authorizing their issuance provided for the payment of delinquent interest, while in the present case the payment of...