Nipper v. Excise Bd. of Osage Cnty.

• Decision Date: 11 December 1934
• Docket Number: Case Number: 25470
• Citation: Nipper v. Excise Bd. of Osage Cnty., 1934 OK 720, 39 P.2d 110, 170 Okla. 6 (Okla. 1934)
• Parties: NIPPER et al. v. EXCISE BOARD OF OSAGE COUNTY.
• Court: Oklahoma Supreme Court

1934 OK 720

39 P.2d 110

170 Okla. 6

NIPPER et al. v. EXCISE BOARD OF OSAGE COUNTY.

Case Number: 25470

Supreme Court of Oklahoma

Decided: December 11, 1934

Syllabus

¶0 Municipal Corporations--Taxation--Courts--Decision of Federal Court Holding Municipal Bonds Valid in Hands of Bona Fide Holders Held not in Conflict With Decision of State Supreme Court Holding Bond Election Invalid--County Excise Board Properly Required to Make Levy to Pay One-Third of Federal Court Judgment in Favor of Bondholders and One Annual Installment of Principal and Interest on Bonds.

An election was held in the town of Shidler to determine whether or not bonds should be issued for the purpose of acquiring a waterworks system. A legal majority of the qualified voters voted in favor of the issuance of the bonds. An application for injunction against issuing the bonds was denied by the trial court and the cause appealed to this court. Pending the appeal a contract for the construction of the waterworks system was let and the bonds sold. Thereafter this court reversed the judgment of the trial court, holding that the election was invalid, and enjoined the issuance of the bonds. The bondholders sought relief in the federal court, where it was held that the bonds were valid obligations in their hands. A judgment was rendered against the city for the amount of the principal and interest which had accrued on said bonds and the excise board was directed to make a levy to pay said judgment and to make levies for other installments of principal and interest as they came due. Record examined, and held, that the judgment of the federal court does not conflict with the prior judgment of this court and the court of tax review did not err in ordering the excise board to make a levy sufficient to pay one-third of the judgments rendered in the federal court and one annual installment of the principal and interest on said bonds.

Appeal from Court of Tax Review.

Protests by Frank S. Nipper and others and by the Oklahoma Power & Water Company against certain tax levies being made by the Excise Board of Osage County. From judgment of Court of Tax Review, protestants appeal. Affirmed.

Hamilton & Howard, for plaintiffs in error Nipper et al.

Stuart & Doerner, for plaintiff in error Oklahoma Power & Water Company.

C. K. Templeton, Co. Atty., and Leander Hall, Asst. Co. Atty., for defendant in error.

OSBORN, J.

¶1 This is an appeal from the Court of Tax Review by Frank S. Nipper, T. A. Hamra, Lawrence Deihl, Hubert Nipps, H. P. Jones, Otto Brandon, Jack R. Hays, B. E. Dozier, C. H. Guild, E. C. Keys, and O. M. Maxey, taxpayers within and for the city of Shidler, Osage county, hereinafter referred to as protestants, from an order and judgment of the Court of Tax Review directing that certain levies be made in the sinking fund of the city of Shidler in payment of obligations arising through the issuance of certain water system long-term bonds.

¶2 A similar protest was filed by the Oklahoma Power & Water Company, and the causes were consolidated in the Court of Tax Review.

¶3 In order to make the issues clear, it is necessary to review some of the history relating to the bond issue.

¶4 On January 15, 1924, an election was held in the city of Shidler to determine whether or not bonds should be issued for the building of a water system within said city. One hundred eighty-four votes were cast in the election, 107 being for the bonds and 77 against.

¶5 On March 3, 1924, the Attorney General of the state, as ex officio Bond Commissioner, approved the bond issue and indorsed his certificate of approval on each bond.

¶6 On February 9, 1924, certain taxpayers in the city of Shidler commenced an action in the district court of Osage county wherein it was sought to enjoin the execution, issuance, and sale of the bonds and to enjoin the city from entering into a contract for the construction of the system of waterworks. The injunction was denied and the cause appealed to this court. On November 14, 1926, this court reversed the judgment of the trial court and held that the election was void for the reason that the city was divided into three voting precincts and the election was held in only one precinct. Hall v. Turner, 125 Okla. 248, 257 P. 328. This court directed the trial court to enter an order enjoining the city officials from selling or disposing of the bonds.

¶7 Pending the appeal to this court, and on September 11, 1924, a contract was entered into for the construction of the waterworks, and the bonds were delivered to the contractor in payment therefor.

¶8 Thereafter certain bondholders commenced an action in equity against the city of Shidler in the United States District Court for the Northern District of Oklahoma wherein they claimed to be innocent holders of said bonds for value. Other bondholders intervened in the same action. The cause was duly heard by the federal court, and a judgment rendered against the city and in favor of plaintiffs and interveners for the amounts due and unpaid on the bonds, and directing the county excise board to make levies to pay the judgments so rendered and the interest and principal of the bonds as they subsequently matured. The city of Shidler appealed the cause to the Circuit Court of Appeals for the Tenth Circuit, and the judgment of the District Court was in all things affirmed. City of Shidler v. H. C. Speer & Sons Co., 62 F.2d 544.

¶9 In compliance with the judgment of the federal court, the city officials certified their levies to the county excise board, and the excise board attempted to make a levy for seven installments of principal and interest on the bonds. A protest was duly filed in the Court of Tax Review, and it was therein held that the excise board was without authority to make a sinking fund levy for seven installments for the reason that:

"Where a deficit appears in a sinking fund due to failure to levy a sufficient tax for preceding years, such omitted levies cannot be levied at any subsequent year." M., K. & T. Ry. Co. v. Goad, 117 Okla. 129, 245 P. 617; Protest of C., R. I. & P. Ry. Co., 143 Okla. 161, 288 P. 337; Going, County Treas., v. A., T. & S. F. Ry. Co., 106 Okla. 258, 234 P. 346; City of Ardmore v. Excise Board of Carter County, 155 Okla. 126, 8 P.2d 2; Protest of C., R. I. & P. Ry. Co., 156 Okla. 197, 10 P.2d 398; In re Gypsy Oil Co., 141 Okla. 291, 285 P. 67; Id., 141 Okla. 298, 285 P. 66.

¶10 The Court of Tax Review approved a levy for an amount sufficient to pay the accruals on the bonds for one year, and directed the county excise board to make a levy sufficient to pay one-third of the judgments rendered by the federal court in favor of the bondholders against the city.

¶11 Protestants call attention to section 27, article 10, of the Constitution, which provides that no bond issue shall be made except pursuant to a vote of a majority of the qualified property taxpaying voters in a city or town, voting at an election to be held for that purpose. It is argued that, since this court, in the case of Hall v. Turner, supra, held that the election was void, there is no valid outstanding bond issue against the city of Shidler.

¶12 It is contended that the judgment of the federal court is ineffective for the reason that it is contrary to the established doctrine of this court, and that the excise board is bound by the decisions of this court and not by the decisions of the federal court. The cases relied upon are City of Norman v. Van Camp, 87 Okla. 182, 209 P. 925; Enid v. Warner Quinlan Asphalt Co., 62 Okla. 139, 161 P. 1092; Severns Paving Co. v. Oklahoma City, 158 Okla. 182, 13 P.2d 94; Guaranty Title & Trust Co. v. City of Sapulpa, 164 Okla. 271, 23 P.2d 629. These cases are not in point for the reason that they deal with paving assessments, which are chargeable to the property owners within special improvement districts on the basis of benefits to the property so improved.

¶13 We quote from the body of the opinion in the case of City of Shidler v. Speer & Sons, supra, as follows:

"The bonds contained a recital that all conditions precedent to their issuance had been properly performed; the Attorney General appended his certificate to the same effect; the parties stipulated, and the trial court found, that these bonds were acquired in reliance upon such recital and certificate, and without notice of anything to the contrary. The language of Mr. Justice Brewer, in Provident Life & Trust Co. v. Mercer County, 170 U.S. 593, 18 S. Ct. 788, 42 L. Ed. 1156, is apposite:

" By a long series of decisions, such recitals are held conclusive in favor of a bona fide holder of bonds that precedent conditions prescribed by statute and subject to the determination of those county officers have been fully complied

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