State v. Board of Com'rs of Cascade County

• Decision Date: 23 January 1931
• Docket Number: 6700.
• Parties: STATE ex rel. MALOTT et al. v. BOARD OF COM'RS OF CASCADE COUNTY et al.
• Court: Montana Supreme Court

296 P. 1

89 Mont. 37

STATE ex rel. MALOTT et al. v. BOARD OF COM'RS OF CASCADE COUNTY et al.

No. 6700.

Supreme Court of Montana

January 23, 1931

Original mandamus proceeding by the State, on the relation of Conner Malott and others, against the Board of Commissioners of Cascade County, and L. H. Kommers and others, as members of said board. On motion to quash alternative writ and on answer of respondents.

Motion to quash alternative writ granted, proceeding dismissed, and motion for rehearing denied.

Gunn Rasch, Hall & Gunn, of Helena, for relators.

Frank P. Gault, Co. Atty., and Charles Davidson, Asst. Co. Atty both of Great Falls (Cooper, Stephenson & Hoover, of Great Falls, of counsel), for respondents.

Fred J Cunningham, of Spokane, Wash., Murphy & Whitlock, of Missoula, Johnston, Coleman & Jameson, of Billings, Henry V. Beeman, of Forsyth, Sterling M. Wood, of Billings, and C. N. Davidson, Asst. Atty. Gen., amici curiæ, on motion for rehearing.

LEIPER District Judge.

This is an original proceeding, wherein the relators seek a writ of mandate against the board of county commissioners of Cascade county. An alternative writ issued. The respondents appeared by motion to quash and by answer.

The facts out of which this controversy grows may be briefly summarized: The Chestnut Valley irrigation district was organized under the provisions of chapter 146 of the Session Laws of 1909, and acts amendatory thereof. The lands included within that district are situated in Cascade county, Montana, and embrace about 4,549 acres. In July, 1920, this district duly issued bonds aggregating $140,000, bearing interest at 6 per cent. per annum, payable semiannually, and duly provided for the levy of a special tax or assessment on all of the lands within the district, sufficient in amount to pay the interest thereon, together with the principal of said bonds, as the same became due. The issuance of the bonds, together with the provision for the levy of a special tax or assessment, was duly approved by a judgment of the district court of Cascade county. The bonds were issued in denominations of $1,000 each, numbered from 1 to 140, inclusive, and all were sold. Fourteen of such bonds became due on January 1, 1926, and a like number on the 1st day of January of each successive year for nine years thereafter. The relators are the owners of 128 of these bonds, none of which have been paid, and there is interest accrued and unpaid in a sum in excess of $30,000, with no funds in the county treasury of that county for the payment of any part of either the principal or the interest. The commissioners of this district levied a tax or assessment against all of the lands within the district for the year 1920, and for each subsequent year up to and including the year 1927, for the payment of the principal and interest, but no levy for either principal or interest has been made since 1927. For several years preceding the year 1926 the taxes or assessments levied by the commissioners of this district for the payment of the principal and interest of these bonds, together with the state, county, and school district taxes against said lands were not paid, except on about 600 acres of the lands included within the district. All of the lands upon which the general taxes and assessments for irrigation district purposes were not paid were sold to the county of Cascade for irrigation district and general taxes. None of these lands have been redeemed. Time for redemption has expired, and tax deeds have issued therefor to Cascade county, and that county now holds the legal title thereto. More than one year has elapsed since these deeds were issued.

It is alleged that the respondent board has refused to sell these lands, or any thereof, or to offer them for sale. Respondents assert that, when these lands are sold, such sale will pass title thereto free and clear of the lien of these bonds, and free and clear of any further taxes or assessments for the payment of the principal or interest thereon; that, after Cascade county procured tax deeds to these lands, the respondents "proceeded with diligence to ascertain whether or not purchasers for said lands might be secured who would be willing to pay a reasonable, or any, price for said lands, and ascertained that, for the reason, among others, that the relators herein, and others, were asserting that such sale did not convey or pass a title free and clear of the lien of said bonds, purchasers could not be secured at prices satisfactory to respondents, or any prices, until such claims or asserted claims by the said bondholders should be determined; and with due diligence, after having secured said tax deeds, respondents heretofore, and upon the 5th day of April, 1920, filed in the district court *** in and for the county of Cascade, an action *** for the purpose of quieting the title of Cascade county to a portion of said lands. That Cascade county *** is plaintiff in said action, and that the relators *** are, among others, defendants in said action; that this action is now pending, and the relators have been duly served with process, and have appeared therein"; that, by this action, the county seeks to quiet the title to these lands "as against all adverse claims of any nature or description, including the claim of the relators that the title of the purchaser of said lands will be encumbered by the lien of said irrigation district bonds, or liable to any future taxes or assessments for the payment of any part of the principal or interest on said bonds."

Respondents assert further that, not until the action now pending in the district court of Cascade county "has been brought to a termination will the title of Cascade county to said lands be of a sufficiently merchantable character to attract purchasers for the said lands; that, while the determination of the question presented by this proceeding in mandamus will dispose of the objection to said title commonly presented by prospective purchasers, the title adjudicated in Cascade county by said action to quiet title will be a more merchantable and acceptable title"; and that "the failure of the board of county commissioners to sell said lands has not been a wrongful refusal on their part, but a practical market condition making said sale impossible until the determination of the question of title merchantability."

Respondents assert that the relators have a plain, speedy, and adequate remedy by interposing their defense in the action now pending in Cascade county.

It appears that there are many other similar irrigation districts within the state of Montana in which bonds have been issued and sold; that the assessments thereon for both principal and interest remain unpaid; that the general taxes are unpaid; that the lands included therein have been sold to the county in which such lands are situated; that the legal title thereto is now in such county; and that all of these lands have thus been removed from general taxation.

As above noted, the relators seek a writ of mandate commanding the board of county commissioners of Cascade county to sell all of these lands to which it holds the legal title at public auction for cash, after giving thirty days' notice, as provided by chapter 162 of the Session Laws of 1929, and that such sale be made subject to the lien of these bonds, and to future taxes or assessments to be levied for the payment of the principal and interest thereon.

There are a number of questions presented for our determination, but all of these are incident to, and will be considered under, the following subdivisions:

(1) Are the provisions of either section 3, of chapter 85, Laws of 1927, or chapter 162, Laws of 1929, (a) violative of the provisions of section 10, article 1 of the Federal Constitution or (b) in contravention of the provisions of either section 6 of article 12, or section 39, of article 5 of the Constitution of the state of Montana?

(2) When the lands included within the Chestnut Valley irrigation district are sold by Cascade county, will the purchaser, or purchasers, acquire title free and clear of the lien of these bonds?

(3) Should a writ of mandate issue commanding the respondent board to sell these lands?

Of these in their order.

1(a). In the brief of counsel for the relators it is said: "A law in force when the bonds were issued became a part of the contract with the bondholders, the same as though incorporated in the bonds." That this is a correct statement of the law may not be denied. This rule is based upon the provision of article 1, § 10, of the Federal Constitution, which provides in part: "No State shall *** pass any *** Law impairing the Obligation of Contracts."

In the case of United States ex rel. Von Hoffman v. Quincy, 4 Wall. 535, 550, 18 L.Ed. 403, the Supreme Court of the United States said: "It is also settled that the laws which subsist at the time and place of the making of a contract, and where it is to be performed, enter into and form a part of it, as if they were expressly referred to or incorporated in its terms. This principle embraces alike those which affect its validity, construction, discharge, and enforcement." In the same case it is further said "It is competent for the States to change the form of the remedy, or to modify it otherwise, as they may see fit, provided no substantial right secured by the contract is thereby impaired. No attempt has been made to fix definitely the line between alterations of the remedy, which are to be deemed legitimate, and those which, under the form of modifying the remedy, impair substantial rights. Every case must be determined upon its own circumstances." See, also Louisiana v. New Orleans, 102 U.S. 203, 26 L.Ed. 132; Louisiana ex...