State ex rel. American Freeholdland Mort. Co. of London, Ltd. v. Tanner

• Decision Date: 15 January 1907
• Parties: STATE ex rel. AMERICAN FREEHOLDLAND MORTGAGE CO. OF LONDON, Limited, v. TANNER et al., Councilmen, et al.
• Court: Washington Supreme Court

88 P. 321

45 Wash. 348

STATE ex rel. AMERICAN FREEHOLDLAND MORTGAGE CO. OF LONDON, Limited, v. TANNER et al., Councilmen, et al.

Supreme Court of Washington

January 15, 1907

Appeal from Superior Court, Jefferson County; Geo. C. Hatch, Judge.

Action in mandamus by state of Washington, on the relation of the American Freehold-Land Mortgage Company of London, Limited against Thomas J. Tanner and others. From a judgment for respondents, relator appeals. Affirmed.

R. P. Oldham, for appellant.

A. W. Buddress, for respondents.

HADLEY, J.

This is an action in mandamus, by which it is sought to compel the mayor and city council of the city of Port Townsend to levy annually a tax to the full amount allowed by statute for the payment of warrants owned by the relator and drawn upon the indebtedness fund of said city. The cause was once before appealed to this court, and the appeal was determined upon demurrer to the alternative writ of mandate. It was held here that the demurrer should have been sustained, but upon reversal the trial court was directed to grant leave to amend the affidavit for the writ so as to state additional facts. State ex rel. American, etc., Mtg. Co v. Mutty, 39 Wash. 624, 82 P. 118. The affidavit was accordingly amended, and an amended alternative writ was issued. The primary question presented by this appeal is whether the relator's warrants are void, and upon the determination of that question depends the further one of the right to an increased levy. Thr amended alternative writ recites that during the months of May, September, and November, 1898, the warrants in question were, by order of the city council, drawn upon the indebtedness fund of said city; that each of the warrants was issued in part satisfaction of judgments which were rendered in the superior court of Jefferson county; that by indorsement of the payee and for a valuable consideration, the relator is the present owner and holder of the warrants. It is further alleged that there are outstanding warrants drawn upon the indebtedness fund, amounting to about $116,000, exclusive of interest that the annual interest upon said amount is about $7,000, and the accrued interest is now about $52,000, making a total of outstanding and unpaid indebtedness against the indebtedness fund of about $168,000. Allegations are made concerning the available assets of the indebtedness fund, followed by the statement that the same are insufficient in amount to even be equal to the annual interest upon the warrants, by reason whereof the indebtedness against the fund is increasing, instead of diminishing. It is further alleged that of the indebtedness outstanding against said fund there are warrants amounting to about $105,000, together with accrued interest thereon, which were issued prior to those owned by the relator and which will have to be paid from the fund before any of relator's warrants are paid; that, unless the city exercises its full taxing power in behalf of said fund, the relator's warrants will never be paid. A writ is asked to compel the levy of an additional tax of five mills for the indebtedness fund for the years 1904 and 1905, respectively, and of six mills for each successive year until the relator's warrants are paid in full. The defendants answered, showing the nature of the actions in which the several judgments were rendered, in partial satisfaction of which these warrants were issued. It is shown that the indebtedness in its inception arose out of contracts for the grading of streets in Port Townsend, which was all to be paid from special assessment funds; that warrants were drawn to be paid from such special funds, but that no sufficient funds were provided therefor, and that the warrants were not paid; that by reason of the failure of the city to provide and collect such special funds suits were instituted in the year 1898 by the holders of street grade warrants to obtain general judgments against the city; that the city failed to appear or answer in said suits, and judgments by default were rendered; that in 1898, before the commencement of any of said actions upon the street grade warrants, there were outstanding and unpaid street grade warrants of the same nature and effect, amounting in all to about $130,000, but that prior to the commencement of said actions the city council entered into an agreement with all of the several holders of street grade warrants, including the plaintiffs in the actions, by the terms of which the council agreed that, if the holders of street grade warrants should commence actions against the city to recover general judgments for the respective amounts of their warrants, the city would not appear in any such actions, but would permit each plaintiff to obtain a general judgment against the city by default, and that the city council would thereupon direct all such judgments to be satisfied by the issuance of warrants upon the city's indebtedness fund, to draw interest at the rate of 6 per cent. per annum until paid; that in pursuance of said agreement actions were commenced, the city failed to appear, judgments by default were taken, and warrants were issued upon the indebtedness fund in satisfaction of such judgments, amounting in all to the total principal of about $100,000, of which the warrants in question were a part; that on the 1st day of January, 1899, after the issuance of said $100,000 of indebtedness fund warrants, and while there were still outstanding and unpaid a balance of about $30,000 of street grade warrants, which had not been reduced to judgments by the holders thereof, the city council refused to recognize any of said indebtedness fund warrants issued in pursuance of the agreement aforesaid in satisfaction of said default judgments; that the city still refuses to recognize said warrants, and refuses to permit any more judgments to be rendered upon the remaining grade warrants by default or otherwise. The relator replied to the answer by setting out in full copies of the several judgments taken in the actions on the street grade warrants, and in partial satisfaction of which the warrants in question were issued. The judgments severally show that the city was personally served, and that it made default. It is alleged that no one of the judgments has been modified, vacated, or reversed on appeal, and that each judgment remains in full force and effect. With the issues, in effect, as above stated, the cause was submitted to the court for its decision and for judgment without any evidence. The defendants by their counsel in open court admitted all the allegations contained in the amended alternative writ of mandate and in the reply to the answer. Upon the other hand, the relator by its counsel admitted all the allegations contained in the defendants' answer. The court thereupon rendered judgment that the judgments and the indebtedness fund warrants set forth in the amended alternative writ and in the reply are null and void, and that no one of them is, or ever was, a valid claim or obligation against the city of Port Townsend. The action and amended alternative writ were dismissed, and the relator has appealed.

It is first assigned that the court erred in denying appellant's motion to require respondents to separately state the defenses in the answer. One paragraph of the same motion called for striking parts of the answer. We find an order in the record expressly denying that part of the motion which calls for striking parts of the answer, but nothing appears in the record to show that the court took any action with reference to that part of the motion which called for separate statement of the defenses. The appellant both demurred and replied to the answer, and, in the absence of a showing in the record that the court either ruled or was asked to rule upon that branch of the motion calling for separate statement of the defenses, we think appellant must now be deemed to have waived that part of the motion.

The other assignments of error are discussed together. They are that the court erred in overruling the appellant's demurrer to the respondents' answer, and also in rendering judgment against appellant holding the warrants void. It is argued that the superior court, which rendered the judgments in the suits upon the grade warrants, had jurisdiction of the parties and of the subject-matter, and had, therefore, power to render the judgments. It is conceded, however, that a court of equity has the power, under an original bill filed as a direct attack for that purpose, to impeach a judgment which has been obtained by fraud or collusion. It is also conceded that, under our Code practice, equitable defenses may be pleaded in an action at law, and that the answer setting up such a defense has the same force as a bill in equity.

It is however, argued that the answer in ...