TOWN OF FAIRFAX, OKL. v. Hubler

• Decision Date: 21 April 1938
• Docket Number: No. 1205.,1205.
• Citation: 23 F. Supp. 66
• Parties: TOWN OF FAIRFAX, OKL., ex rel. BARRINGER et al. v. HUBLER et al.
• Court: U.S. District Court — Northern District of Oklahoma

23 F. Supp. 66

TOWN OF FAIRFAX, OKL., ex rel. BARRINGER et al. v. HUBLER et al.

No. 1205.

District Court, N. D. Oklahoma.

April 21, 1938.

Shirk, Danner & Earnheart, of Oklahoma City, Okl., for plaintiffs.

Hamilton & Howard, of Pawhuska, Okl., for moving defendants.

FRANKLIN E. KENNAMER, District Judge.

This suit was instituted by certain individual holders of special improvement bonds, in the name of the Town of Fairfax, Oklahoma, a municipal corporation, ex rel. Brandon Barringer, H. N. Perkins, and William W. Allen, Jr., to foreclose bonds in paving district No. 1 in the Town of Fairfax, pursuant to statutory authority therefor. Some one hundred forty persons are joined as defendants in the fifty-eight separate causes of action set forth in plaintiffs' bill. Each separate cause of action is directed against one or more separate defendants and involves one to ten separate tracts of land. The bill, in its separate causes of action, alleges the creation of the improvement district, the issuance of the bonds, that default has been made in the payment of the special assessments, the ownership of the lands, and contains all necessary allegations entitling complainants to the relief sought. The bill contains the general allegation that the amount involved exceeds $3,000 exclusive of interest and costs. Only one of the fifty-eight separate causes of action shows on its face to involve the sum of $3,000, exclusive of interest and costs, but the aggregate of the causes of action exceeds the sum of $3,000, exclusive of interest and costs.

The action was instituted in this court originally, and motion to dismiss has been interposed by a number of the defendants. Three separate reasons have been urged in support of the motion to dismiss, as follows:

1. That the bill of complaint shows upon its face that the sum of $3,000, exclusive of interest and costs, is not involved in fifty-seven of the fifty-eight causes of action, and that in the cause of action wherein the sum of $3,000 is involved, the paving bond constitutes a lien against ten separate lots owned by six separate defendants.

2. That the statute under which this action is prosecuted provides that the holders of separate improvement bonds shall have the right to institute an action in the district court of the county in which the property is located to foreclose the lien of such assessments, and that by reason thereof the district court of Osage county, Oklahoma, has exclusive jurisdiction, and that this court is without authority to entertain this suit.

3. That the bill of complaint fails to allege any matter of equity entitling the plaintiff to the relief sought.

The paving bonds involved in this action were issued pursuant to the Act of March 23, 1923, of the Legislature of Oklahoma, section 29, being section 6240, O.S.1931, 11 Okl.St.Ann. § 107. The legislative act is largely determinative of the issues presented on the motion, and it is set out in full in subjoined note.¹

The bill of complaint shows on its face that fifty-seven of the fifty-eight separate causes of action, each do not involve the sum of $3,000, exclusive of interest and costs. It shows, however, that the aggregate due upon the bonds, upon which the several causes of action are predicated, involve a sum in excess of $3,000, exclusive of interest and costs. Two questions are, therefore, presented for determination. The first one is whether this suit involves a "class" action. If this is a class suit, the fund involved will determine whether this court has jurisdiction, as the fund involved exceeds the sum of $3,000, exclusive of interest and costs; on the other hand, if it is not a class action, then the amount involved is the amount sought by plaintiffs as their individual recoveries. If the plaintiffs are entitled to and seek less than $3,000, exclusive of interest and costs, then this court is without jurisdiction. The other question presented is whether the provision of the Act of March 23, 1923, § 29, Section 6240, O.S.1931, 11 Okl.St. Ann. § 107, set out in the subjoined note,¹ providing for the foreclosure of the liens in the district court of the county in which the property is located, confers exclusive jurisdiction upon the district court of Osage county, and thus excludes any other court from exercising any jurisdiction therefor.

It is well settled that the construction placed upon a statute of a state by the highest court of that state is binding and conclusive upon the federal courts. The legislative act under which the bonds were issued, and under which this suit is being prosecuted, has been construed by the Supreme Court of Oklahoma, in the case of Service Feed Company v. City of Ardmore, 171 Okl. 155, 42 P.2d 853, 857. The cited case involved an action instituted in the district court of Carter county, Okl., seeking to foreclose delinquent paving assessment installments against several apportionment areas in a particular street improvement district in the city of Ardmore. The Supreme Court of Oklahoma had the following to say in passing upon the cited case:

"The claim that there was a defect of parties plaintiff is not well founded. The statute expressly authorizes any holder of any street improvement bond to foreclose his lien by action in the name of the city, which is, as to the collection of the assessments, trustee for all the interested bondholders. If there are other outstanding bonds of the same class which are affected by the foreclosure, the action of a single bondholder is for the benefit of himself and others similarly situated. That such action is a class suit further appears from the requirement: `Upon the institution of an action to collect delinquent and unpaid assessments in any paving district against property liable therefor, no other or further action shall be instituted and maintained to collect such delinquent assessment against said property for said year.'

"The contention that there is a misjoinder of causes of action cannot be sustained. Spears and Bastine owners of lot 8, covered by the complaining bondhonders' lien, in like manner as lot 1, owned by plaintiffs in error, are owners within the meaning of the provision requiring that `all owners or encumbrancers shall be made parties defendant in such suit.' Section 29 11 Okl.St.Ann. § 107. Separate assessments are made as to each parcel of land, but the lien of all the bondholders covers the whole district as a unit. Such action should proceed in rem against all those lots or parcels of land in the improvement district as to which assessments have been in default for a period of twelve months. This procedure avoids multiplicity of suits. Section 29, existing at the time of the issuance of the bonds, and under authority of which they were issued, entered into and became part of the contract. The bondholders accepted the terms of the statute. The owners and encumbrancers of the district are likewise bound by the terms of the statute."

It is to be observed that the Supreme Court of Oklahoma has decided that such cases are "class" actions.

In further support of its position, the Supreme Court of Oklahoma, in the case of Morgan v. City of Ardmore, 78 P.2d 785, has declared a judgment void wherein it was ordered that the individual bondholder recover judgment for the amount due under his particular bond. In other words, an individual bondholder is not permitted to recover separately, but if he institutes a suit, the same must be for the benefit of all bondholders. As stated by the Oklahoma Supreme Court, a multiplicity of suits is avoided. This being a class suit, jurisdiction of this court must be determined by the amount involved in the fund, or the amount ultimately to be recovered in the case. Under the statute, an individual bondholder is not entitled to a recovery upon his separately owned bonds. Upon entry of judgment and sale of the real estate, as provided in the statute, the proceeds are payable to the city or town treasurer, to become a part of the special fund to pay such outstanding bonds and interest thereon.

Class suits have been the subject of jurisdiction of the federal courts for many years. They have been entertained as common-law actions, and evolved in English equity through necessity. The class suits arose by reason of the impracticability or impossibility in certain cases to get all interested parties before the court, and at very early dates class suits were recognized as proper. Proposed Federal Rule 23, Rules of Civil Procedure for District Courts of the United States, will directly deal with class suits, and the rule should eliminate some of the questions heretofore involved in...