State ex rel. Bliss v. Grand River Drainage Dist. of Livingston and Linn Counties

• Decision Date: 03 May 1932
• Docket Number: 31079
• Parties: State of Missouri at the relation of Wyllys K. Bliss, Sam Koewing and W. L. Hager, Relators, v. Grand River Drainage District of Livingston and Linn Counties, et al
• Court: Missouri Supreme Court

49 S.W.2d 121

330 Mo. 360

State of Missouri at the relation of Wyllys K. Bliss, Sam Koewing and W. L. Hager, Relators, v. Grand River Drainage District of Livingston and Linn Counties, et al

No. 31079

Supreme Court of Missouri

May 3, 1932

Peremptory writ awarded.

Jourdan & English for relators.

(1) Mandamus is the proper remedy to compel a drainage district to pay amounts due on bonds. R. S. Mo. 1929, sec. 10885; State ex rel. Nolen v. Nelson, 310 Mo. 526. (2) The statutes make it the duty of a drainage district incorporated under Article I, Chapter 64, Revised Statutes of Missouri 1929, and it is the statutory duty of the officers of such district to issue warrants for the payment of and to pay the principal and interest of the matured bonds held by relators. R. S. 1929, sec. 10788. (3) Respondents do not deny that relators are the holders of the bonds sued on; that respondent, Grand River Drainage District, is a public corporation, organized under Article I, Chapter 64, Revised Statutes of Missouri 1929; that the other respondents have the capacities as alleged; nor do respondents deny that the bonds and coupons mentioned in the petition were properly issued; are past due and have been duly presented for payment, and that sufficient taxes have been levied and are being collected to pay all bonds. Such allegations therefore, stand as admitted, and since respondents admit that they have more than sufficient money in the interest and sinking fund of the district to pay the bonds and coupons held by relators, a peremptory writ of mandamus should issue compelling such payment. Bank of the State of Mo. v Smith, 33 Mo. 364; State ex rel. v. Riley, 219 Mo. 690; State ex rel. v. Craig, 69 Mo. 565. (4) It is no defense to a drainage district corporation or its officers when sued on the obligations of the district that such district owes similar amounts to others or that others have demanded or will in the future demand the payment of similar obligations. Meyer v. Widber, 58 P. 532, 126 Cal. 252; Hook v. German-American Bank, 136 N.Y.S 1019; Pittsburgh, etc., Ry. Co. v. Schmuck, 103 N. E. (Ind.) 325; Perris Irr. Dist. v. Thompson, 116 F. 834 (certiorari denied, 196 U.S. 637. (5) Relators, as the bondholders of the drainage district, are not compelled to join third persons having similar claims in a petition for mandamus to compel the district to perform its duty to relators, especially where such third persons are not known to the district and, therefore, cannot be known to relators, and relators cannot be compelled to wait for relief until such unknown parties are ascertained and joined because the effect would be to impair the obligation of relators' securities and the securities of third persons. State ex rel. v. Fraker, 166 Mo. 130; R. S. 1929, sec. 10788; Meyer v. Widber, 58 P. 532; Hook v. German-American Bank, 136 N.Y.S. 1019. (6) A return in the nature of a bill of interpleader is not authorized in a mandamus proceeding against a public corporation or officer to compel the payment of a debt required by the statutes to be paid by such public corporation or officer to relator, and this is especially true where it is admitted by the respondent officers and corporation that the debt to relator and the debt to third persons are both due. State ex rel. v. Burkhardt, 59 Mo. 75; State ex rel. Hikson v. Nerry, 105 Mo.App. 458; Young v. Miller, 182 S.W. 822. (7) Since it is the duty of respondents to obtain funds sufficient to pay all the bondholders of the district and the only defense of the respondents being founded upon this neglect of respondents, such defense should be stricken out and being stricken out the return shows no cause why the duties commanded by the alternative writ should not be performed and, therefore, the alternative writ should be made peremptory. State ex rel. Taylor v. Moss, 35 Mo.App. 445.

Roger S. Miller and Scott J. Miller for respondents.

In drainage districts, the right of mandamus proceeding by an individual bondholder that is in a class to collect his money in full when the statute directs that it shall be paid pro rata on certain specific bonds and coupons. (1) Bonds maturing in 1929 and 1930, interest on all outstanding bonds for those same two years as designated in the contract or bond itself. State ex rel. Nolan v. Nelson, 310 Mo. 526. This case is cited for the reason that the writer doesn't think it is applicable to support the mandamus in this case for the reason that this warrant was issued and held by the treasurer. The act sought to be compelled to be done in this case against this Board had already been done in that case. The warrant had been issued and delivered to the treasurer, and the treasurer refused to deliver it to Nolan, and the Supreme Court mandamused the treasurer not to issue the warrant, but to deliver the warrant, and I think the right of mandamus would lie in that case, but a different question is here in this case. On page 531, it is clearly stated: By order of the Board of Supervisors of Andrew-Nodaway County Drainage District, Nodaway County, Missouri, there was duly filed by the president of the Board of Supervisors and attested by the secretary that were drawn on the treasurer of Andrew-Nodaway Drainage District, and were presented to the treasurer and protested. (2) The statute requires the board to make levy for each year sufficient to pay all maturing bonds that year plus the interest due on all the outstanding bonds. This they did. They did not recover from the taxpayer sufficient amount, nor was the mandate of the levy obeyed by the taxpayer. But, if not a single taxpayer had paid, then there would be no fund to mandamus. If it had been paid in full, then the board would have distributed in accordance with the statute and paid all bonds maturing in these years plus all interest outstanding on the bonds. But the fact is that for these years, part only of the levy was paid in by a few less than two-thirds of the taxpayers making a fund less than one-third the size that the levy required. Then the question arises in the mind of the board, if they could not pay all of it, they would prorate it in accordance with the facts, but before the proration, a certain select few by mandamus attempts to get the whole fund, thus the board, willing to pay to the right party, becomes a stakeholder and can only relieve itself by paying the money into court and thus protect the fund for all those who are interested therein.

Bryan, Williams, Cave & McPheeters, amicus curiae.

(1) The Board of Supervisors under the Drainage Act have discretion in the exercise of the powers and duties conferred upon them and in the payment of funds collected by them and where such discretion exists it will not be interfered with by mandamus. State ex rel. Cameron Special Road District v. Everett, 245 Mo. 706; Sec. 10788, R. S. 1929; Art. 1, Chap. 64, R. S. 1929. (2) All bonds issued and sold to the public under Section 10788 by any drainage district are clearly intended to be on a parity and the law clearly does not contemplate a "race of diligence" between the bondholders. Nor is there any warrant or authority in the law for judicial process to obtain payment of bonds held by one person or group of persons to the exclusion of other holders of bonds of the same issue. Sec. 10788, R. S. 1929. (3) Funds collected by the Board of Supervisors under the provisions of Section 10,788 of the Revised Statutes of 1929, are in the nature of trust funds and the relation of the board to those funds is that of trustees. These funds are, therefore, not subject to be reached in a proceeding of this character brought by one having a beneficial interest in the fund and seeking to exclude all others similarly beneficially interested. Art. I, Chap. 64, R. S. 1929; Alexander v. Wade, 106 Mo.App. 141; Babcock Mfg. Co. v. Ramous, 164 N.Y. 440; Rogers Locomotive Works v. Kelly, 88 N.Y. 234; Dolph v. Cross, 153 Iowa 289; 2 Paton's Banking Digest, p. 1142.

Oliver & Oliver, amicus curiae.

When the district makes the annual tax levy, whatever it may be it puts life into the tentative total tax levy made when the bonds were issued, as was so well expressed in the case of McAnally v. The Little River Drainage District, 28 S.W.2d 650. It is not until the board annually "determines, orders and levies the annual installment of the total tax" that it becomes an enforceable lien, but when that action is taken, the board is required to take into account "the maturing bonds and interest on all the bonds" (Sec. 10788, R. S. 1929) irrespective of whether they have been deposited or not. The statute contemplates a levy sufficient to pay the maturing bonds and interest on all the bonds, but there is no assurance or guarantee to the bondholders or anyone else that the tax so levied will be paid. In the event the property owner fails to pay his tax, the statute provides that a suit may be instituted, judgment had and the land sold, and funds received applied to payment of bonds and coupons. When that is done, no matter the amount the land brings at tax sale, the security of the bondholder so far as that particular levy is concerned has been exhausted. If the bondholder thinks the land is selling too cheaply there is nothing to prevent him from bidding it up or purchasing it. If half the lands in the district defaulted in the payment of taxes and suits were instituted to enforce the collection and the amount obtained at the tax sales was five per cent of the amount of the tax assessed, the bondholders would be out forty-five per cent of the tax levy for that particular year, and their security for that year would have been exhausted. The bonds of a drainage district do not constitute a mortgage on the land. They constitute only a lien on the...