Shipley v. Smith

• Citation: 107 P.2d 1050,45 N.M. 23
• Decision Date: 13 November 1940
• Docket Number: No. 4568.,4568.
• Parties: SHIPLEYv.SMITH et al.
• Court: New Mexico Supreme Court

45 N.M. 23

107 P.2d 1050

SHIPLEY

v.SMITH et al.

No. 4568.

Supreme Court of New Mexico.

Nov. 13, 1940.Rehearing Denied Dec. 21, 1940.

Appeal from District Court, Otero County; Numa C. Frenger, Judge.

Action by Lorna M. Shipley, as a resident taxpayer of Otero county, for herself and all others similarly situated, against F. A. Smith and others, as members of and constituting the Board of County Commissioners of such county, and others to enjoin payment of public moneys of the county under an illegal contract. From a judgment of dismissal, plaintiff appeals.

Reversed, with directions.

In taxpayer's action to enjoin payment of money of county under illegal contract, absence of showing of demand by plaintiff on county officers to protect county's rights did not affect plaintiff's right to relief prayed, where circumstances obviously rendered such demand useless.

Seth & Montgomery, of Santa Fe, and George Shipley, of Alamogordo, for appellant.

M. A. Threet, Dist. Atty., Third Judicial District, of Las Cruces, for appellees.

BICKLEY, Chief Justice.

This action was brought by appellant as a resident taxpayer of Otero County against appellees to enjoin payment of public monies of Otero County to R. L. Harrison Co., Inc., under a contract alleged to be illegal as in violation of the provisions of Chap. 233, N.M.S.L.1939, governing purchases involving expenditure in excess of $500 and requiring that such purchases be made from the lowest responsible bidder after advertisement for bids.

The court found and concluded as follows:

“5. That the monies which came into the hands of the Board of County Commissioners of Otero County, who are defendants hereto, and out of which such Commissioners propose to pay the said R. L. Harrison Co., Inc., in the purchase of a certain road grader as disclosed by the evidence herein, are monies which came into the hands of the said Board of County Commissioners by way of donation, and they are not monies realized under any process of taxation or through any collections from the taxpayers of the State of New Mexico or of the County of Otero; that said monies so came into the hands of the said Board of County Commissioners by means of and through the process set up under an Act of the United States Congress of January 28th, 1934, known as the Taylor Grazing Act, the same being set out as Section 315i, 43 U.S.Code Annotated; and under Chapter 125 of the New Mexico Session Laws of 1939;

“6. That while the plaintiff is a taxpayer of Otero County, New Mexico, she, and those on whose behalf she brings this suit, have no taxpayer's interest in or to the said monies above referred to out of which it is proposed by the said Board of County Commissioners to pay for the road grader in question; and that said plaintiff, and those on whose behalf she has brought this action, have no personal right or interest in and to said monies; and that, consequently, said plaintiff, and those on whose behalf she has brought this action, are entitled to no relief whatever by way of injunction herein sought;

“7. That under the facts disclosed, the plaintiff has no cause of action whatever either against the defendants now before this Court, or against the said R. L. Harrison Co., Inc., whereby she is entitled to either temporary or permanent injunctive relief, such that it would be useless and unnecessary to now make the said R. L. Harrison Co., Inc., a defendant hereto, or to continue this case.

“8. That under all the facts and circumstances presented to the Court, and under the law in relation thereto, this action should be dismissed.”

[1] In Asplund v. Hannett, 31 N.M. 641, 249 P. 1074, 58 A.L.R. 573, while deciding that “a taxpayer's interest is not sufficient to invoke the aid of equity to enjoin state officers from making illegal expenditure of state funds”, we said that the taxpayer may have injunction to prevent devastavit of municipal funds and that, “Such is said by Dillon to be the prevailing rule. He says it may be vindicated upon principle in view of the nature of the powers of municipal corporations, and the analogy in the relations between such corporations and the taxpayers and private corporations and their stockholders. ‘It is better,’ he says, ‘that those immediately affected by corporate abuses should be armed with the power to interfere directly in their own names than to compel them to [rely] upon the action of a distant state officer,’ Municipal Corporations (5th Ed.) §§ 1579, 1580.”

The trial court, in his opinion, concluded that because the monies belonging to Otero County were given to it by the state and were not raised by taxation of the property of the taxpayers of Otero County, that therefore as to the plaintiff taxpayer and other taxpayers similarly situated: “anything that may be done in connection with those funds, any actions contemplated, or done, in connection with those funds, are not actions in which a taxpayer has any interest, those funds not having been created through taxation, and that, therefore, the taxpayer has no interest therein, it being clearly the law, in the Court's opinion, that there is always combined with the proposition of the right of a taxpayer to sue for injunctive relief, that the taxpayer or the alleged taxpayer must show he is a taxpayer, and that its (his) interest as a taxpayer will be affected. Now that is not present in this case.”

It appears from other expressions employed by the learned trial judge in his opinion that he was misled into believing that we had said in Asplund v. Hannett, supra, that the question turns upon whether the public fund was created through taxation. True, it was there hinted that the decision might be turned on that question. We said: “As already pointed out, it is not satisfactorily shown that appellant will be in any way injuriously affected in his property by the proposed expenditures. Perhaps his failure to show such injury should be deemed decisive. We prefer, however, to assume, for the purposes of this case, that the necessary result of the proposed use of the ‘permanent reservoirs for irrigating purposes, income fund,’ will result in increasing state taxes.”

So, it appears we did not decide in that case that the suing taxpayers were not injuriously affected because the fund in question said to be threatened with a misuse was derived through sources other than taxation.

Appellant, in her brief in chief, vigorously challenged the production of decisions in support of appellee's position that the taxpayer has no interest in protecting the public funds of a municipality from devastavit unless such funds were derived solely from taxation. Appellee has cited none. Counsel for appellant persuasively argues: “From all this it appears that where the governing board of a county or other municipality is, as in this case, about to disburse funds in the treasury of the county or municipality, in violation of law, a resident taxpayer may maintain an action to enjoin such illegal expenditure, without alleging or proving further interest. As we pointed out in our brief in chief and in Asplund v. Hannett, supra, this right of the taxpayer grows out of the analogy between the relation of the stockholder to the private corporation. When a sum of money passes into the treasury of a private corporation and becomes the property of the corporation, the interest of each individual stockholder of the corporation attaches immediately, regardless of whether the fund originated in a gift, or in profit made from the...