State ex rel. Truax v. Town of Lima
| Decision Date | 04 March 1948 |
| Docket Number | 8785. |
| Citation | 193 P.2d 1008,121 Mont. 152 |
| Parties | STATE ex rel. TRUAX et al. v. TOWN OF LIMA et al. |
| Court | Montana Supreme Court |
As Amended on Denial of Rehearing June 5, 1948.
Appeal from District Court, Fifth Judicial District, Beaverhead County; Lyman H. Bennett, Judge.
Proceeding in mandamus by the State of Montana, on the relation of L. H Truax and another against the Town of Lima, Montana, a municipal corporation, and others to compel respondents to pay special improvement district bonds held by relators or forthwith raise the funds for that purpose by levying the necessary assessments. From orders commanding payment of the bonds and damages as and for attorneys' fees, respondents appeal.
Cause remanded with directions to modify the orders.
John A. Collins and Leonard A. Schulz, both of Dillon, for appellants.
Earle N. Genzberger, of Butte, for respondents.
Relators as holders of special improvement district bonds issued by the town of Lima brought this proceeding in mandamus to compel the town and its officers and the county treasurer to pay the bonds or forthwith raise the funds by levying the necessary assessments for that purpose.
The court, after hearing, made an order in which it was recited that relators are the owners and holders of 26 bonds issued by the town of Lima whereby it promised to pay to the owners thereof $100 and interest thereon as set out therein on each bond. That none of the principal of the bonds held by relators has been paid though they have all matured and that some interest is due on each bond. That the town of Lima has on hand a special improvement district fund and water fund. That the water fund was made up of sums credited to it from income from water rentals, all for the purpose of retiring bonds issued for money loaned to the town by the purchaser of the bonds; that there is sufficient in the two funds to redeem, retire and pay off all the bonds owned by relators and that it is the duty of respondents to pay off the bonds.
The order commanded the issuance of a writ of mandate commanding respondents to immediately retire and pay off the bonds with interest as specified in the bonds with the funds on hand in either or both of the funds referred to. This order was signed on June 9, 1947. On July 22, 1947, another order was made which recited that relators are entitled to damages as and for attorneys' fees in the sum of $400 and reiterated substantially the same matters as the order of June 9th excepting that respondents were ordered to make the payments within five days, and ordered the payment of the $400 as damages for attorneys' fees.
The appeal is from both of those orders.
The record discloses that there was created in the town of Lima a special improvement district on November 5, 1923. The resolution levying the assessment was approved January 21 1924. It recited that the amount of indebtedness for making the improvements for which the district was created was $4,681.31. The resolution levied and assessed a tax upon the real estate in the district, each tract bearing the proportion of the tax that its area bore to the total area in the district. It recited that the indebtedness shall be paid in 20 equal annual assessments. The interest was fixed at 6% per annum.
The bonds matured 20 years after December 18, 1924, the date of their issue. Interest has been paid on all the bonds at their face value to December 24, 1942, amounting to $4,987.12 and 24 of the bonds issued have been paid off at their face value. The record shows that Charles Truax, father of relators, purchased 50 of the 60 bonds issued for $90 each and that relators inherited the bonds in question here from their father's estate.
Each bond recites that it 'is payable from the collection of the special tax or assessment which is a lien against the real estate within said improvement district,' and is otherwise in the form provided by section 5249, Rev.Codes 1921, in effect when the bonds were issued.
Defendants have made several assignments of error the one most vital being that the court erred in ordering the bonds paid out of the water fund.
This assignment is meritorious.
This court has held that a judgment based upon improvement district bonds is not a general obligation of the town and is no part of the town indebtedness. State ex rel. Mueller v. Todd, 114 Mont. 35, 132 P.2d 154. The following cases in effect hold that special improvement district bonds are not a general obligation of the city or town: Griffin v. Opinion Publishing Co., 114 Mont. 502, 138 P.2d 580; Stanley v. Jeffries, 86 Mont. 114, 284 P. 134, 70 A.L.R. 166; State ex rel. Griffith v. City of Shelby, 107 Mont. 571, 87 P.2d 183; State ex rel. Clark v. Bailey, 99 Mont. 484, 44 P.2d 740.
Relators seek to avoid the effect of these decisions by the following facts. That for many years prior to the creation of the special improvement district the people of the town were furnished water by the railroad company. About the time of the creation of the district the town made an agreement with the railroad company whereby the company agreed to deliver the water to the town instead of to the individuals and the special improvement district was organized to distribute the water to the people in the district by means of new pipes which were laid to replace the old which had decayed. There was evidence that the town tapped the new pipe in two places and took water for the electric light plant and for a municipal skating rink. Water was also used by individuals outside the special improvement district and rental was paid to the town. Relator L. H. Truax testified that he overheard discussion before the city council in about the year 1936 regarding the creation of a water fund for the purpose of paying the bonds. This was done in response to the order of the state examiner that something be done about these bonds. There were no records of the town concerning this subject. The water fund was made up of water rentals from water users. The record shows that about one-half of the water users were outside the special improvement district. After the creation of the water fund two of the bonds were paid off out of the water fund.
This evidence does not warrant a finding that the bond holders have a right to compel the town to redeem the bonds from the water fund. Were there any merit to relator's contention that the town has the right to use the water fund for any municipal purpose it pleases, it does not follow that the town can be compelled to use it to pay special improvement district bonds.
Relators cite the case of George v. City of Asheville, 4 Cir., 80 F.2d 50, 103 A.L.R. 568, as sustaining the right to resort to the water fund to pay the bonds. That case involved a statute which required that the net income derived by a municipality from the operation of any revenue producing enterprise shall be applied on the interest and principal of bonds issued for such enterprise. Obviously under such a statute that was proper. But we have no such statute.
True, under our statute, subsection 64, section 5039, Rev.Codes 1921, and under section 6 of art. XIII of our Constitution, the obligation might have been incurred originally by the town but instead of proceeding so as to make the obligation a general one there was created a special improvement district under section 5226, Rev.Codes 1921, and the obligation was expressly confined and limited to the property within the district. The case of McClintock v. City of Great Falls, 53 Mont. 221, 163 P. 99, relied on by relators had to do with the proceedings under section 6 of art. XIII of the Constitution whereby the city as a whole and not a special improvement district undertook the project there under consideration. If we assume that the proof was sufficient to show that the water fund was created to provide funds to pay off these bonds (though there were no written records of the town so showing) this would do no more than to recognize a moral obligation of the town to pay off the bonds and it would not give relators a legal right to compel resort to the water funds as a means of realizing their payment.
The record discloses that there is only $409.60 in the special improvement district fund. That amount may properly be applied in payment of principal and interest on the bonds and the court properly so held.
Other questions have been presented, and particularly as to whether it was proper to issue bonds to the extent of $6,000 par value on the resolution showing the need for $4,681.31 only and whether relators may recover the face value of the bonds when their father paid only $90 for each $100 bond and whether it is proper to allow interest on the face value of the bonds or only on a value of $90 each. But since the amount in the special improvement district fund added to what has already been paid on the bonds already redeemed will not amount to sufficient to represent payment of $90 per each bond and interest at 6% on a $90 valuation, those questions require no consideration at this time.
The order for the payment of attorneys' fees was undoubtedly predicated upon the view that relators won a complete victory. It was shown that there was in excess of $3,000 in the water fund when the action was commenced. Since relators cannot compel payment of the bonds out of the water fund and since therefore they recovered but little as a result of this action, the award of attorneys' fees in the sum of $400 cannot stand. It is not clear from the record before us whether any legal action was necessary to enable relators to have the proceeds from the special improvement district fund applied in payment of their bonds. If such action were necessary then the court may fix and...
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In re the Marriage of Shannon Marie Johnson
... ... Walak lived in the same Pennsylvania town as Shannon and had been her boyfriend for approximately six ... State ex rel. Vaughn v. District Court, 111 Mont. 552, 55556, 111 P.2d 810, 811 (1941). See also State ex rel. Truax v. Town of Lima, 121 Mont. 152, 158, 193 P.2d 1008, 1011 ... ...