Upper Blue Bench Irr. Dist. v. Continental Nat. Bank & Trust Co.

• Decision Date: 25 October 1937
• Docket Number: 5878
• Citation: 72 P.2d 1048,93 Utah 325
• Parties: UPPER BLUE BENCH IRR. DIST. v. CONTINENTAL NAT. BANK & TRUST CO
• Court: Utah Supreme Court

72 P.2d 1048

93 Utah 325

UPPER BLUE BENCH IRR. DIST. v. CONTINENTAL NAT. BANK & TRUST CO

No. 5878

Supreme Court of Utah

October 25, 1937

Appeal from District Court, Third District, Salt Lake County; Allen G. Thurman, Judge.

Action by the Upper Blue Bench Irrigation District against the Continental National Bank & Trust Company. From a judgment of dismissal, plaintiff appeals.

REVERSED AND REMANDED.

L. A Hollenbeck, of Duchesne, and Jesse R. S. Budge, of Salt Lake City, for appellant.

Fabian & Clendenin, of Salt Lake City, for respondent.

HANSON Justice. FOLLAND, C. J., and MOFFAT and LARSON, JJ., WOLFE Justice, concurring.

OPINION

HANSON, Justice.

This is an action brought by the plaintiff hereinafter referred to as the district, to recover funds which it had deposited in a checking account with the defendant, hereinafter referred to as the bank. The questions that divide the parties are matters of law growing out of the affirmative defense relied upon by the bank to defeat the district's action. The evidence shows the following facts: Plaintiff is an irrigation district organized and existing under our laws and contained wholly within Duchesne county. It has not as yet constructed any irrigation works. Its activities so far engaged in have consisted chiefly in making and protecting certain water filings in contemplation of the construction of irrigation works at some future time. No bonds have been issued and no assessments have ever been made or taxes collected for the benefit of the district. What money it has required and used has been raised by other means not exactly disclosed, except that the funds sought to be recovered in this action were obtained by borrowing the same from a private individual. The district borrowed $ 250 in December, 1933, and $ 75 in November 1934, and deposited the money so obtained with the defendant. The money so borrowed and deposited, together with a balance previously on deposit, after deducting withdrawals, amounted to $ 338.71 on June 1, 1935. No checks were drawn against this amount until October 14, 1935, when a check was drawn by the district treasurer in favor of the district's attorney in payment of a warrant issued by the district for services and expenses incurred in connection with obtaining an extension of time to submit final proof or its water filings. This check was dishonored by the bank because it had already paid over to the sheriff of Salt Lake county the whole of said sum of $ 338.71, being all of the district's money on deposit with the bank. It appears that on August 28, 1928, a money judgment was rendered in the district court of Duchesne county against the district in favor of E. S. Hallock. An abstract of said judgment was filed in the district court of Salt Lake county. On June 26, 1935, an execution, issued out of the last-named court upon said judgment, was served by the sheriff of Salt Lake county upon the bank. A writ of garnishment, issued by the same court, in aid of the execution was also served on the same date. On June 27, 1935, the bank sent to the district, by mail, a notice of such execution and garnishment proceedings; the notice being mailed to Duchesne, Utah, the address of the district appearing upon the ledger account of the district with the bank. The envelope containing the notice shows it was received at the Duchesne post office on June 27, 1935. It was not delivered to nor received by the district, but was returned to the bank about July 3, 1935. Nothing further was done by the bank to notify the district of the process served upon the bank. On July 3, 1935, the bank filed with the court its answer to the writ of garnishment, showing the following:

"We have an account in the name of the defendant The Upper Blue Bench Irrigation District with a balance to the credit of the same of Three Hundred Thirty Eight Dollars and seventy one cents ($ 338.71)."

A garnishee judgment was rendered July 9, 1935, against the bank for the said sum of $ 338.71. That same day execution on said garnishee judgment was served upon the bank and the money was paid over to the sheriff by the bank. The district had no knowledge that its funds had been so seized and paid over until in October, 1935, when the check to its attorney above referred to was dishonored. The bank then advised the attorney by letter of the seizure of the funds by the process above described. Thereafter, the district made written demand upon the bank that it pay over to the district's treasurer the said sum of $ 338.71. Upon the bank's refusal to comply with the demand this action was brought. The trial court rendered judgment against the district dismissing its complaint, concluding as a matter of law that the bank in paying the money on deposit over to the sheriff did so under a valid levy made pursuant to a valid unsatisfied judgment, and acted pursuant to a valid and legal garnishee judgment rendered against it.

The district, in appealing from the judgment of the trial court, maintains, first, that the money on deposit with the bank was not subject to execution and the bank was not justified, so far as its liability to the district is concerned, in paying it over to the sheriff in response to the execution; and, second, the bank did not perform the duty owing by it to the district to notify the district of the garnishment and to protect the district by making proper disclosures and averments of the district's claim in its answer to the writ of garnishment. By virtue of section 88-1-2, R. S. Utah 1933, Chapter 68, Laws of Utah 1919, relating to irrigation districts, as subsequently amended in the succeeding sessions of the Legislature, has been carried over and given effect though not contained in the volume of the Revised Statutes. Neither in the Revised Statutes, nor in said chapter 68, 1919 Laws, is there a provision specifically exempting from execution the property of an irrigation district, such as exists in favor of counties, cities, towns, and school districts by virtue of section 104-37-13 (subparagraph 10). We must look to the law under which irrigation districts may be created and maintained and to the general principles of the law to settle the question of the right of such districts to be exempt from execution.

It is clear from a reading of chapter 68, 1919 Laws, that the purpose to be effected in the creation of an irrigation district is public rather than private. The district is given certain powers to be exercised in behalf of the public within its territorial limits. It is given power to levy and collect taxes for its organization, for the construction of its works and for its maintenance. Under Section 54, 1919 Laws, such district is declared to be a body politic and corporate, and its bonds and other securities are declared to be exempt from taxation within this state. It has been described by this court in the case of Bonneville Irrigation Dist. v. Ririe, 57 Utah 306, 195 P. 204, as a "quasi public corporation." It is not necessary to a decision in this case to attempt a more definite description or designation. Being public in its purpose and nature, its rights and duties are to be determined, generally speaking, by the same considerations which determine the rights and duties inhering in what are commonly known as municipal or public bodies.

"Unless allowed by statute, courts generally hold that no execution can be issued against a municipality." 6 McQuillin, Municipal Corpns. (2d Ed.) § 2664, p. 719. In State v. Blake, 88 Utah 584, 20 P.2d 871, on rehearing 88 Utah 600, 56 P.2d 1347, this court held that taxes levied for the construction and repair of the drainage system and for management and supervision of a drainage district were exempt from execution upon the ground that to allow a judgment creditor to seize such property would prevent the district from performing its functions. The bank argues that the language of the decision just cited draws a distinction between property "necessary for the performance of the governmental functions of the district" and property held or acquired for other purposes, so as to make the first class of property exempt from execution, but not the second class. We do not think the decision is susceptible of such an interpretation. In this connection, we refer to the case of Utah Oil Refining Co. v. Millard County Drainage Dist. No. 4, 90 Utah 67, 50 P.2d 774, 780, in which were considered the rights and remedies of certain bondholders of a drainage district as against the lands within and property of the drainage district. On this subject the court says:

"In this case the bondholders are really not true lienholders of the land in the district. They only have a right to compel assessment and collection of the tax against such landowners. On the other hand, they are not general creditors of the district. See State ex rel. Malott v. Board of County Comm'rs of Cascade County, 89 Mont. 37, 296 P. 1. They are really creditors who have no right to come against any land directly to satisfy their debts nor can they by a general judgment against the district execute against any of the lands in the district, except perhaps such lands which the district may perchance hold which are not derived from tax sales or not held in lieu of the fund for the benefit of bondholders. They have a debt which is payable only out of taxes to be assessed against the lands in the district. It is quite doubtful whether, if they obtained a judgment against the district, they can execute against property which the district holds for the benefit of all the bondholders. Their remedy may be only to come into equity to have such property administered for the benefit of all the bondholders if the district fails to so administer them. A group of...