Tulare Irrigation District v. Alfred Shepard

• Decision Date: 24 March 1902
• Docket Number: No. 508,508
• Citation: 22 S.Ct. 531,185 U.S. 1,46 L.Ed. 773
• Parties: TULARE IRRIGATION DISTRICT, George G. Kelly, and G. Garibaldi, as Executor of the Last Will of B. W. Jauchius, Deceased, Plffs. in Err. , v. ALFRED SHEPARD
• Court: U.S. Supreme Court

185 U.S. 1

22 S.Ct. 531

46 L.Ed. 773

TULARE IRRIGATION DISTRICT, George G. Kelly, and G. Garibaldi, as Executor of the Last Will of B. W. Jauchius, Deceased, Plffs. in Err.,

v ALFRED SHEPARD.

No. 508.

Submitted January 13, 1902.

Decided March 24, 1902.

Messrs. George H. Maxwell, John Garber, Calvin L. Russell, G. W. Zartman, and R. M. F. Soto for plaintiffs in error.

Mr. S. F. Leib for defendant in error.

Statement by Mr. Justice Peckham:

This is a writ of error to the circuit court of the United States for the southern district of California, sued out for the purpose of reviewing a judgment of that court in favor of the defendant in error in an action brought by him against the irrigation district only, to recover interest due on certain coupons attached to bonds issued by the district for the purpose of raising money to build its irrigation works. It appeared from the complaint that the plaintiff was a resident of Michigan, and that the Tulare irrigation district had at all times since September 2, 1889, been a corporation duly incorporated under the laws of the state of California, and since that time had been acting as such corporation; that under the laws of such state the irrigation district duly issued its bonds for the amount of $500,000, with coupons attached; that the plaintiff was a bona fide purchaser and holder of certain of those coupons, and that he had paid full value for the same, in the usual course of business, and before any of them were due or dishonored, and in good faith and without any notice of any defect or invalidity of the same or any of them. Judgment for $13,185 and interest was demanded. The defendant demurred to the complaint, the demurrer was overruled (94 Fed. 1), and the defendant then answered.

The answer, among other things, set up which occurred in the attempted formation of the irrigation district, on account of which, as contended, the corporation never was legally formed and never had power to issue bonds, and whatever bonds may have been issued were for those reasons void. The individual defendants at this stage applied to the court for an order permitting them to intervene in the action as parties therein, and to unite with the defendant corporation in resisting the claims of the plaintiff in this action. The court thereupon ordered that the petitioners' complaint in intervention should be filed without prejudice to the plaintiff's motion to strike out the same. They then filed what they termed their complaint in intervention in this action (which is nothing more than an answer to the complaint), in which they set up that the defendant Kelly was a citizen of the United States and a resident of the state of Massachusetts, and that ever since January 1, 1889, he had been, and was at the time of the commencement of the suit, the owner of the land which is described, and which was situate within the boundaries of the county of Tulare, California, and within the boundaries of the alleged Tulare irrigation district; that Jauchius, the other de- fendant, was a citizen of the United States and a resident of the state of California, and that he, ever since January 1, 1889, had been the owner of certain tain other described real property also situate in the district, and they alleged that they were interested in the subject-matter of the action and in the success of the defendant; that if the bonds and coupons mentioned in the plaintiff's complaint were adjudged valid claims against the district, then the property of interveners in the district would be assessed and taxes levied thereon to pay the claim of the plaintiff. They then set up substantially the same defenses that were pleaded by the irrigation district in its answer; also, that to permit the collection of the bonds would take defendants' property without due process of law and in violation of the Federal Constitution.

The chief defect as set up in both pleadings and specially argued here was in regard to the organization of the district, the defect being an alleged insufficiency of the notice of the intended presentation of the petition to the board of supervisors, by reason of which, as averred, no legal notice was given, and, therefore, all subsequent proceedings were void and of no effect. Subsequently to the service of the answer Jauchius died, and his executor was made a party in his place.

The case came to trial upon a stipulation to waive a jury, was submitted upon an agreed statement of facts, and thereafter the court made its general findings in favor of the plaintiff, assessed his damages at the sum of $13,185, and ordered judgment against the irrigaton district for that sum.

It was stipulated that any of the facts contained in the statement might be offered in evidence by any party to the action, and when so offered the party not offering the same might object to such facts or any of them upon legal grounds which might exist against their admissibility. The statement of facts contained twenty-one paragraphs. The first twelve were offered in evidence on the part of the plaintiff, and received by the court under the defendant's objection and exception. The facts thus admitted showed that under the provisions of the irrigation act of the state of California, approved March 7, 1887, an effort was made in the county of Tulare to form an irrigation district to be known as 'Tulare irrigation district,' and such proceedings were had in that behalf that what purported to be a certified copy of an order of the board of supervisors of that county was duly filed with the county recorder on September 14, 1889; that order recited that the board of supervisors of Tulare county, state of California, met as a board of canvassers on Monday, September 2, 1889, for the purpose of determining the result of the special election held in Tulare county on August 24, 1889, to vote upon the subject of the organization of the Tulare irrigation district and officers therefor, by which it appeared that there were 484 votes cast in favor of forming the district, and 7 against it. The order then continued as follows: 'And we further declare the territory embraced in the following described limits, to wit: [describing territory] an irrigation district duly organized under the name and style of 'Tulare irrigation district,' being situate in the county of Tulare, state of California.' This declaration was made in accordance with § 3 of the act to form irrigation districts. The order further declared the election of the directors in the various divisions of the district.

The material sections of the act under which the attempt to form the district was made are to be found set forth in the case of Fallbrook Irring. Dist. v. Bradley, 164 U. S. 112, 116, 17 L. ed. 369, 370, 17 Sup. Ct. Rep. 56.

The persons declared by the order of the board of supervisors to have been elected as officers of the district immediately thereafter assumed to organize as such officers, and thereupon entered upon their duties the same as though said district had been legally organized and as though they had been legally elected as such officers, and they and their successors in office have ever since continued to act as such officers and to maintain the name of 'Thlare irrigation district,' and in its name have caused the defendant to act as though it was in every respect legally organized as an irrigation district under the act of the legislature, and in that behalf it has at all such times had the name 'Tulare irrigation district' printed upon a sign above a door in front of an office in which the archives and papers of said defendant are kept; and its board of directors have met from time to time in such room from the time of such purported organization thereof until the present weekly and sometimes oftener, averag- ing twice a month. In June, 1890, pursuant to the provisions of the statute, an election was held within the district to determine whether its bonds should be issued, resulting in favor of issuing the same, and in the years 1891, 1892, 1893 its board of directors purported to issue bonds of such Tulare irrigation district in the sum of $500,000, being 1,000 bonds of the face value of $500 each, and levied assessments on the property embraced in said district, purporting to act in so doing under the act of the legislature, and previous to July 1, 1896, it assessed, levied, and collected taxes upon the lands in such district of over $100,000, and paid the same out through its treasurer as interest upon such bonds; the proceeds arising from the sale of the bonds have been used by the district in constructing a system of canals, ditches, and laterals through the lands of the district, by means of which such lands have been irrigated; it has engaged in litigation as plaintiff in suits before the issuing of such bonds, and therein alleged that it was a corporation under the provisions of the act of the legislature, and from the time of its purported organization until the present time, whatever it has done and performed, it has done and performed in the same manner as if it had been legally organized as such district, in full compliance with the law, and so continues to act and hold itself out as a corporation organized under that law. No one ever brought suit or took any action to prevent the issuing of any of the bonds, nor was any suit or action ever brought to annul or cancel or have declared void any of the bonds until after the year 1896. No action in the nature of a quo warranto was ever commenced, nor any other proceeding, to test the validity of the organization of the district.

The plaintiff at the commencement of the action was the holder and owner of the coupons upon which action was brought, and became the holder of the coupons on whch he brought his action under the circumstances detailed in the agreed statement of facts, showing that he was a bona fide holder for value without notice.

The plaintiff also offered, and the...