State Ex Rel. Lynch v. Dist. Court of Mckinley County

• Decision Date: 28 September 1937
• Docket Number: No. 4319.,4319.
• Citation: 41 N.M. 658,73 P.2d 333
• Parties: STATE ex rel. LYNCH et al.v.DISTRICT COURT OF McKINLEY COUNTY et al.
• Court: New Mexico Supreme Court

41 N.M. 658

73 P.2d 333

STATE ex rel. LYNCH et al.

v.DISTRICT COURT OF McKINLEY COUNTY et al.

No. 4319.

Supreme Court of New Mexico.

Sept. 28, 1937.Rehearing Denied Nov. 22, 1937.

Original proceeding by the State of New Mexico, on the relation of Frank M. Lynch and others, for a writ of prohibition restraining the District Court of McKinley County and David Chavez, Jr., the judge thereof, from proceeding further in a pending suit by W. Gordon Ward against the town of Gallup and others, wherein Allen Rollie, was appointed receiver of Paving District No. 2 in such town, and C. M. Sabin was appointed referee.

The district court having jurisdiction to entertain town paving district bondholder's suit for accounting of moneys received by town in payment of assessments from proceeds of which ordinance required town to pay bonds, an alternative writ of prohibition restraining further proceedings in such suit must be dissolved.

Alternative writ made permanent as to further proceeding with receivership, and dissolved as to further proceeding with suit as one for accounting.

H. W. Atkins, of Gallup, and W. A. Keleher and Theo E. Jones, both of Albuquerque, for petitioners.

H. C. Denny and H. S. Glascock, both of Gallup, and Gilbert & Hamilton, of Santa Fé, for respondents.

SADLER, Justice.

Relators, as holders of certain bonds issued by Paving District No. 2 of the town of Gallup, invoke the original jurisdiction of this court to restrain by prohibition the district court of McKinley county and the Honorable David Chavez, Jr., as judge thereof, from further proceeding in a certain cause pending before said court wherein a receiver was appointed to take over the duties of the town of Gallup, acting through its mayor and board of trustees, in the collection and distribution of the proceeds of the assignable lien certificates securing said bond issue.

The bond issue in question arose out of a paving program initiated and conducted pursuant to Laws 1903, c. 42 (Code 1915, §§ 3665 to 3671), as amended by Laws 1919, c. 152. The proceedings were had in 1921. The provisional order plan was used, and it resulted in the construction of the paving and assessments against abutting property to pay the cost thereof. Assignable certificates were at first issued to the contractor to meet the cost of the improvement. Then, an agreement was made between town of Gallup and the contractor, incorporated in an ordinance whose preamble recited proceedings theretofore had in connection with the paving program, and had further pertinent provisions as follows:

“Section 1. That all the proceedings heretofore had, taken, done or performed in connection with the street improvements described and ordered by resolution adopted on the 13th day of December 1921 and the 15th day of December A. D. 1921, be and the same hereby are in all respects ratified, approved and confirmed.

“Section 2. That the Town of Gallup be and it is hereby authorized and empowered to receive, collect and enforce the payment of all the assessments made for the said improvements and all installments thereof and all interest thereon, in the same manner and at the same time or times as the owner or owners of the assignable certificates issued to pay the cost of said improvements might receive, collect or enforce the said payments, and to pay and disburse such payments, the installments thereof and the interest thereon, to any person or persons lawfully entitled thereto.

“Section 3. That the Treasurer of the Town of Gallup be and he is hereby authorized and empowered, and it shall be his duty to receive and collect all assessments levied to pay the costs of said improvements, the installments thereof and the interest thereon, at the times and in the manner heretofore specified, and to pay and disburse such payments to the person or persons lawfully entitled to receive the same in accordance with the laws of the State of New Mexico and all ordinances and resolutions of said town heretofore or hereinafter to be adopted. All moneys received shall be placed in a separate fund to be designated “Paving Fund” and shall be used for the purpose of paying the principal and interest on the paving bonds hereinafter mentioned, and for no other purpose whatsoever.

“Section 4. That if the owner of any parcel of land assessed for the said improvements shall be delinquent in the payment of any assessment, installment or interest due, it shall be the duty of the town treasurer to notify such owner in writing that such delinquency exists, and that, if the amount due is not paid within 30 days after the date of the said notice, the matter will be referred to the town attorney for collection and foreclosure.

“Section 5. If the payment or payments due as specified in the next preceding section is or are not paid within the stated time, it shall be the duty of the town treasurer to refer the matter to the town attorney, whose immediate duty it shall be to enforce and collect the amount due, together with all costs and penalties, by foreclosure, or in any manner which is now or may be provided by law.

“Section 6. If any property shall be offered for sale for the non-payment of any assessment, installment thereof or interest thereon, and no person or persons shall bid for said property, then the Town of Gallup shall have the power, and it shall be its duty to bid for said property and to take and receive in its corporate name any certificates or deeds to said property, and to sell or dispose of said property for the benefit of the owner or owners of the paving bonds hereinafter specified.

“Section 7. That the Town of Gallup be, and it is hereby authorized and empowered to issue in the name of the town, paving bonds payable on or before eleven years from the date thereof, the principal and interest of which shall be paid solely and exclusively from the revenues derived from the assessments made for the improvements herein specified. The said paving bonds shall bear interest at the rate of seven per centum per annum, payable semi-annually, and shall be in the denomination of five hundred dollars each, and the principal thereof and the interest thereon shall be payable in lawful money of the United States of America, with New York exchange, at the office of the treasurer. Said bonds shall be signed by the mayor of the Town of Gallup, shall be countersigned by the town treasurer, sealed with the seal of the town and attested by the town clerk. The said bonds shall have attached thereto twenty-two coupons evidencing the semi-annual interest thereon, which coupons shall be signed by the facsimile signatures of the town treasurer, and when so executed shall represent the semi-annual interest on the bonds to which they are attached.

“Section 8. The said paving bonds and the coupons to be attached thereto, shall be in substantially, the following form, to-wit: (Here follows the form of bond prescribed.)

“Section 9. That when the said paving bonds are prepared and executed, they shall be exchanged for a like amount of assignable certificates which have been or will be issued to the contractor constructing said improvements, and the said paving bonds and the interest thereon shall be paid and discharged in the manner and at the times specified herein. The assignable certificates received in exchange for said paving bonds shall be retained by the town treasurer for the purpose of endorsing payments thereon; and when said assignable certificates have been paid in full, the proper officers of said town shall discharge and release the liens and liability created by the issuance of said assignable certificates.

“Section 10. The said paving bonds shall be paid and discharged in numerical order, commencing with number One, and when the town treasurer has funds on hand in said Paving Fund sufficient to pay the principal of any of said paving bonds, shall notify the firm of Sidlo, Simons, Fels and Company of Denver, Colorado, by written notice through the United States Mails, postage prepaid, designating the bonds to be paid, and thirty days after said notice is given the interest on said paving bonds shall cease.

“Section 11. All ordinances or resolutions or parts thereof in conflict with the provisions of this ordinance, are hereby repealed. After said paving bonds are issued, this ordinance shall be and remain irrepealable until said bonds and the interest thereon shall be fully paid, satisfied and discharged as herein provided.”

A copy of the material provisions of bond No. 139, held by one of the plaintiffs in said receivership suit, is as follows:

“No. 139 $500.00

“The Town of Gallup, in the County of McKinley, and State of New Mexico, for value received, hereby promises to pay to the bearer hereof, the sum of Five Hundred Dollars, on the First day of June, A. D. 1933, with interest thereon from date until payment at the rate of Seven Per Centum Per annum, payable semi-annually on the First Days of June and December in each year; both principal and interest being payable in lawful money of the United States of America, with New York exchange, at the Office of the Town Treasurer, upon presentation and surrender of this bond, or of the annexed coupons, as they severally become due.

“The said Town reserves the option to redeem this bond at any time before maturity, by paying therefor its par value and accrued interest.

“This bond is issued in exchange for a like amount of assignable certificates representing the cost of paving and improving certain streets and alleys in said Town, in full conformity with the Constitution and laws of the State of New Mexico and the ordinances and resolutions of said Town duly adopted and approved prior to the issue hereof.

“This bond is payable solely out of a special fund designated the Gallup Paving Fund, containing the receipts derived by the Town from special assessments levied to pay for said improvements. And it is hereby certified and recited that for...