Pryor, Com'rs of Sabougla Drainage Dist. v. Goza

• Decision Date: 28 January 1935
• Docket Number: 31559
• Citation: 172 Miss. 46,159 So. 99
• Parties: PRYOR et al., COM'RS OF SABOUGLA DRAINAGE DIST., v. GOZA et al
• Court: Mississippi Supreme Court

159 So. 99

172 Miss. 46

PRYOR et al., COM'RS OF SABOUGLA DRAINAGE DIST., v. GOZA et al

No. 31559

Supreme Court of Mississippi

January 28, 1935

Suggestion Of Error Overruled, March 11, 1935.

(In Banc.)

1 DRAINS.

Drainage districts provided for by statutes for the purpose of reclaiming swamp and overflowed lands and the promotion of public health are a political subdivision of state and have governmental powers.

2. CONSTITUTIONAL LAW.

Statute providing for scaling down of indebtedness of a. drainage district when assessed benefits received are less than its bonded or other indebtedness, and providing for issuance of liquidation certificates, which may be made payable at dates different from original obligations, and providing that payment of such certificates would prevent further levy on lands for the benefits received, held unconstitutional as impairing obligation of contracts evidenced by bonds issued before enactment of the statute (Laws 1932, chapter 278; Const, Miss. section 16; Const. U.S. article 1, section 10 clause 1).

3. CONSTITUTIONAL LAW.

Obligation of a contract is "impaired" where statute makes contract more beneficial to one party and less to another than its terms provide, or where statute enlarges, abridges or in any substantial manner changes the intention of the parties as expressed in the contract.

4. CONSTITUTIONAL LAW.

Contract clause of Federal Constitution prevents state action which would impair obligation of contracts of state and its political subdivisions as well as those of persons, partnerships, and corporations engaged in private business (Const. U.S. article 1, section 10, clause 1).

HON. N. R. SLEDGE, Chancellor.

APPEAL from the chancery court of Calhoun county HON. N. R. SLEDGE, Chancellor.

Suit by A. Pryor and others, Commissioners of the Sabougla Drainage District No. 2, against R. E. Goza and others. From a decree in favor of defendants, plaintiffs appeal. Affirmed.

Affirmed.

W. J. Evans, of Calhoun City, and Stone & Stone, of Coffeeville, for appellants.

Chapter 278 does not create insolvency but it simply declares the existence of insolvency that has been created by the unparalleled depression that has existed since the beginning of 1930, and provides instead of the knock-down and drag-out system of foreclosures and demoralization and chaos, an orderly administration by way of liquidation, with the rights of creditors as well as debtors protected, with no rights or asset taken from creditors, with no burden on debtors except those that have been voluntarily assumed and which in all respects constitutes the best that can possibly be done by the law-making power for the public welfare, creditor and debtor alike.

On the proposition that the Chapter 278 is unconstitutional in that its operation would impair the obligation of the contract of the district; here we are met with a perfect flood of authority, not only extending back many years but right up to this very good day and hour from every court of every state in the Union and from the lesser Federal Courts and from the Supreme Court of the United States, declaring and proclaiming the validity of the statutes remedial in their nature and obligation.

Dunn v. Love, 155 So. 333.

It would be a vain thing for us to try to discuss or argue out a proposition that has been so fairly and so well stated as the decision of this court. While not a drainage statute but the principle is the same that citizens of Mississippi in making contracts with reference to Mississippi property are always subject to the laws inspired by the wisdom of the Mississippi Legislature taken in the interest of the public welfare and under the police power of the state.

Union Dry Goods Co. v. Georgia Public Service Corporation, 63 L.Ed. 309-12; Home Building & Loan Association v. Blaisdell, 78 L.Ed. --, 88 A.L.R. 481, 86 A.L.R. 1488, 89.

The application is plain and the petition shows the conditions to be attributable to the ravages of the economic depression. In construing statutes this Honorable Court will take official notice of the existence, and somewhat of the extension, of the said depression.

C. A. Jaquess, Dulaney & Bell and W. L. Bankston, all of Tunica, for appellants.

An act of the legislature will not be held unconstitutional if under any reasonable construction it would be valid.

Mississippi Digest, Constitutional Law, sec. 48; Natchez, etc., R. R. Co. v. Crawford, 99 Miss. 697, 55 So. 596; Tucker Printing Co. v. Attala County, 158 So. 336.

The court will not pass upon the constitutionality of a statute unless necessary for the determination of a pending case.

Mississippi Digest, Constitutional Law, sec. 46; Adams, State Revenue Agent, v. Capital State Bank, 74 Miss. 307.

The Sabougla Drainage District was solvent and not subject to liquidation under the liquidation act.

C. R. Bolton, of Tupelo, for appellees.

States may not pass or enforce laws interfering with or complimenting the Bankruptcy Act or provide additional or auxiliary regulations.

International Shoe Company v. Pinkus, 73 L.Ed. 318.

While some of the lands are delinquent, the title to none of them have matured in the state, and even if a portion of them should go to the state, the drainage tax thereon would be merely in abeyance and not lost to the district, except, temporarily, and would doubtless be returned to the district before the maturity of the last bond.

Howie v. Panola County, 151 So. 154.

The bondholders' contract is impaired by reducing the assets from which he may collect his indebtedness and by an extension of time for the collection of same without any compensation benefits or corresponding protection in his security.

Thos. L. Haman, of Houston, for appellees.

The petition shows that the district is not insolvent as contemplated by Chapter 278, Laws 1932, in that it shows that the levies decreed in 1924 against the land of the district not delinquent for taxes, on the strength of which decree as part of the contract, the bonds were issued and are now held, which levies have not been made, provide ample funds to meet both defaulting bonds and unmatured bonds as they mature.

There is a question whether insolvency can result from a redeemable sale to the state of lands of the district, or for that matter from such sale after the time for redemption has passed without a showing that the land is without any value and the state is unable to sell the land for any price, so that it would have to remain indefinitely a long time in the state, since district improvement taxes remain merely in abeyance on the sale of the land to the state (or district) for taxes, as held in Howie v. Panola County, 151 So. 154.

Under the contractual decree entered in 1924 under the law as it existed at the time and when the bonds were issued and sold, fixed liens on the land of the District were impressed to be paid to the District in definite and fixed amounts in annual installments, as a part of the benefits assessed against each tract of land in the district to result from the proceeds of sale of bonds of the district secured by these liens of the district as its only assets. In the procurement of that decree and in the sale of the bonds the district became bound by all the terms and provisions of the decree and the law then in force as a part of its contract with the bondholders, and the rights of the bondholders became vested under that decree and the law.

There can be little disagreement, in general, as to the law with regard to the impairment of contracts. The question of serious import is what effect has the act under consideration as applied to this case on the original contract with regard to security of the bondholders and the rights of the parties, and does it in such application, derogate from substantial contractual rights.

Mississippi Laws 1932, Chapter 278.

Mississippi Laws 1912, Chapter 195, and amendments thereto in force in the years 1924 and 1925 comprehended in Article 4 of Chapter 110, of the unofficial Hemingways Miss. Code of 1927, section 4946, to 5003 inclusive, with especial reference to sections 4591 and 4975.

Section 10, Article I, U. S. Constitution; Section 1, Article XIV, U. S. Constitution; Sections 14, 16, Article III, Mississippi Constitution; Eastin v. Van Dorn, Walk. 214; Rice v. Smith, 72 Miss. 42, 16 So. 417; Payne v. Baldwin, 3 S. & M. 661; Commercial Bank v. State, 6 S. & M. 599; Lesley v. Phipps, 49 Miss. 790; Johnson v. Fletcher, 54 Miss. 628; Priestly v. Watkins, 62 Miss. 798; Fosdick v. Levee Commissioners, 79 Miss. 859, 25 So. 637; Woodruff v. State, 77 Miss. 68, 25 So. 483; Richards v. City Lumber Co., 101 Miss. 678, 57 So. 977; Wisconsin Lumber Co. v. State, 97 Miss. 571, 54 So. 247; Columbia County Commissioners v. King, 13 Fla. 451; Southern Realty Co. v. Tchula Co-op. Stores, 75 So. 121, 114 Miss. 309; City of Ensley v. Simpson, 52 So. 21, 166 Ala. 366; Mobile Electric Co. v. City of Mobile, 201 Ala. 607, 79 So. 39; Price v. Harley, 142 Miss. 584, 107 So. 673; McNealy v. Gregory, 13 Fla. 417; Myrick v. Battle, 5 Fla. 345; Rhodes v. Marengo County Bank, 205 Ala. 677, 88 So. 850; McCreight v. W. W. Scales & Co., 134 Miss. 303, 99 So. 257; Harris v. Monroe Building & Loan Ass'n, 154 So. 503; State ex rel. Sherrill v. Milam, 153 So. 100; Coombes v. Getz, 285 U.S. 434, 52 S.Ct. 435, 76 L.Ed. 866; Home Bldg. & Loan Association v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 88 A.L.R. 1481, 78 L.Ed. 413; W. R. Worthen Co. v. Thomas, 292 U.S. 426, 54 S.Ct. 816, 78 L.Ed. 1344; Franklin v. Ellis, 130 Miss. 164, 93 So. 738.

OPINION

Anderson, J.

The Legislature of 1932 adopted a bankruptcy act for drainage districts (chapter 278, Laws 1932). Appellants, the commissioners of the Sabougla...