State ex rel. Mueller v. Todd

• Decision Date: 15 December 1942
• Docket Number: 8291.
• Citation: 132 P.2d 154,114 Mont. 35
• Parties: STATE ex rel. MUELLER v. TODD, Treasurer and Clerk of Town of Ryegate, et al.
• Court: Montana Supreme Court

132 P.2d 154

114 Mont. 35

STATE ex rel. MUELLER v. TODD, Treasurer and Clerk of Town of Ryegate, et al.

No. 8291.

Supreme Court of Montana

December 15, 1942

Appeal from District Court, Fourteenth District, Golden Valley County; George W. Padbury, Jr., Judge.

Proceeding by the State of Montana on the relation of Harold E. Mueller against H. G. Todd, as treasurer and clerk of the town of Ryegate, Montana, a municipal corporation, and others for an alternative writ of mandate commanding respondents to pay a water bond issued by the town and held by relator with accrued interest and damages, or forthwith to raise funds to pay such bond by levying sufficient taxes, or show cause why one of the specified courses should not be followed to satisfy relator's claim. From a judgment denying a writ of mandate, relator appeals.

Judgment reversed and cause remanded with directions.

Emmet O'Sullivan, of Harlowton, for appellant.

G. J Jeffries, of Roundup, for respondent.

ERICKSON Justice.

This appeal is from a judgment of the district court of Golden Valley county, denying to relator a writ of mandate.

On December 10, 1919, Ordinance No. 23 of the town of Ryegate Montana, was passed, providing for the holding of a special election to determine whether or not the indebtedness of the town should be increased over the three per cent. limit fixed by section 6, Article 13 of the Constitution of the State of Montana, for the purpose of procuring a water supply and constructing a water system. The material part of the ordinance is as follows:

"That a special election be held in the Town of Ryegate *** for the purpose of *** ascertaining the will of the taxpayers to be affected ***, and that authority may be given *** the town council *** to increase the indebtedness of said town over and above the three per cent. limit ***, and within the extent of the limit of ten per cent. provided by law by the issuance of water bonds of said town to the amount of fifteen thousand dollars ($15,000.00), *** That the amount and character of the bonds proposed to be issued *** shall be as follows: That said bonds shall be fifteen (15) in number and numbered consecutively from one to fifteen, inclusive, of the denomination of one thousand dollars ($1,000.00) each, aggregating the sum of fifteen thousand dollars ($15,000.00); said bonds shall be designated 'Water Bonds' ***. Said bonds shall bear interest at the rate of six per cent. (6%) per annum, payable semi-annually on the first day of January and July of each year; said bonds shall be dated the first day of January, A.D., 1920, and shall be absolutely due and payable in series in the following manner: Bond No. 1, payable on January 1, 1931; Bond No. 2 payable on January 1, 1932; Bond No. 3 payable on January 1, 1933; Bond No. 4 payable on January 1, 1934; Bond No. 5 payable on January 1, 1935; Bonds Nos. 6 and 7 payable on January 1, 1936; Bonds No. 8 and 9 payable on January 1, 1937; Bonds No. 10 and 11 payable on January 1, 1938; Bonds No. 12 and 13 payable on January 1, 1939; Bonds No. 14 and 15 payable on January 1, 1940; and each of said bonds shall be redeemable at the option of the said town on the first day of January preceding the date of its absolute maturity ***. A tax *** must be levied each year for the purpose of paying interest on the bonds and to create a sinking fund for the redemption. Whenever at any time after any such bonds become redeemable the sum in the sinking fund equals or exceeds $1,000, the town treasurer must redeem such amount of the bonds which may then be payable or redeemable according to law."

The election was held on January 8, 1920. A majority of the votes cast was in favor of the proposed increase in the indebtedness of the town. On February 11, 1920, Ordinance No. 25 of the Town of Ryegate was enacted. It recited facts concerning the passage of Ordinance No. 23 and directed that the water bonds be issued. The material parts of Ordinance No. 25 are as follows: "Said bonds shall be absolutely due and payable in series [reciting the schedule noted above] *** and each bond shall be redeemable at the option of the town on the first day of January preceding the date of its absolute maturity."

Fifteen negotiable "water bonds," each dated January 1, 1920, and payable to bearer, were issued by the town as provided in the ordinance. Relator purchased in due course Bond No. 13 of the issue for value prior to its maturity date and now asserts his claim as the owner and holder of the bond. The bond provides that the Town of Ryegate acknowledges its indebtedness to, and promises to pay, the bearer on the first day of January, 1939, $1,000, with interest at the rate of six per cent. per annum, payable semi-annually; that it was one of a series of bonds issued for the purpose of procuring a water system for the town; that it was issued under and in conformity with the Constitution and laws of the State of Montana, pursuant to a vote of the majority of the taxpayers of the town at a special election held January 8, 1920, and that provision has been made for applying revenue of the water system to the payment of the bonds and to a sinking fund for redemption of the bonds; and that "The full faith and credit of said town are hereby pledged for the punctual payment of the principal and interest of this bond according to its terms."

On October 28, 1939, relator filed an application for a writ of mandate in the district court of Golden Valley county, praying for an alternative writ commanding the respondents to pay Bond No. 13, with interest accrued, and damages and costs, or forthwith to raise funds to pay the said bond by levying sufficient taxes on the property of the taxpayers of Ryegate, or to show cause why one of the specified courses should not be followed to satisfy his claim. Relator alleged ownership of the bond; that it was due and payable on January 1, 1939; that demand was made on respondents for payment after maturity date; that respondents refused to pay the claim; that there is in the sinking fund a sufficient sum in excess of $1,700; that all of the bonds remain unpaid, and that all save Bonds 14 and 15 are in default.

The initial question presented by the record is whether the treasurer of Ryegate is required, as a matter of law, to call water bonds for payment after maturity in the order of their serial numbers.

It is the contention of relator that the requirement that the bonds be called in their numerical order applies only where they are called for payment on their due date, or where they are called for redemption prior to maturity.

Ordinances numbered 23 and 25 both recite that "said bonds *** shall be absolutely due and...