Watts v. Gross

Citation468 S.W.2d 223
Decision Date05 April 1971
Docket NumberNo. 25452,25452
PartiesEarl WATTS et al., Respondents, v. Edward L. GROSS et al., Appellants.
CourtMissouri Court of Appeals

Wayne H. Hoecker, Jefferson City, for appellants.

Raymond C. Lewis, Jr., Columbia, W. B. Nivert, Jr., Glasgow, for respondents.

HOWARD, Judge.

This is an appeal from the judgment of the circuit court of Howard County, Missouri, enjoining the appellants as the purported Board of Supervisors of Levee District No. Two of Howard County, Missouri, and the county collector, from levying and collecting levee district taxes and mandatorily requiring the purported Board of Supervisors to wind up and liquidate the business of the district. We shall refer to the parties as they appeared below.

Plaintiffs are the owners of three tracts of land, parts of which were included within the boundaries of said levee district. The suit was brought as a class action wherein the plaintiffs purported to represent all of the owners of land within the district. At the trial no evidence of proper representation was adduced and at the conclusion of the evidence, the plaintiffs announced that 'the matter of the class action was dropped' and the plaintiffs proceeded as individuals.

The important matters of record were stipulated and it appears that the levee district was organized on January 11, 1910, by the circuit court of Howard County, Missouri, under the provisions of Article 7 of Chapter 122, Revised Statutes of Missouri, 1899. Section 8251 of the 1899 revision required that the Articles of Association for such levee district state: 'the number of years the same is to continue.' Pursuant to this requirement, the Articles of Association for the levee district here in question recited: 'This corporation shall continue for a term of fifty years.' The decree of the circuit court declared the district to be a public corporation of the state of Missouri and recited that the Articles of Association provided that such association should continue for fifty years. Such fifty year period expired on January 11, 1960. It appears that since that date, the levee district has continued to function without regard to such expiration. It has held annual meetings, elected officers and levied maintenance taxes upon the lands within the district, which taxes have been collected, the proceeds turned over to the secretary of the levee district as ex officio treasurer thereof, and expended for purposes of the district. Taxes for the year 1968 were levied and at least some part of them collected. The individual plaintiffs did not pay their 1968 taxes and the same are considered delinquent by the district. Tax bills, including the levee taxes for the year 1969, had been sent out just prior to time of trial but it does not appear that any such taxes had been collected.

The trial was conducted on the assumption that the sole issue presented was whether or not the levee district had ceased to exist at the expiration of the fifty year limitation contained in the Articles of Association, on January 11, 1960. No question was raised at the trial as to the scope of relief to which the individual plaintiffs were entitled, probably because the petition was drafted as a class action and it did not descend to an action by the individual owners of three tracks of land until the termination of the trial.

At its organization in 1910, the district included 21 tracts of land which aggregated more than 5,000 acres. The number of tracts presently existing in the district does not appear in the record; neither does the amount of land within the district owned by the individual plaintiffs appear. It is brought out that each of the three tracts owned by plaintiffs is bisected by the district levee. Thus, each tract consists of land within and without the district but the total acreage owned by plaintiffs within the district does not appear. Such factual void, of necessity, raises the question of the scope of relief to which plaintiffs are entitled but this question was not litigated or determined in the trial court and has not been properly presented for determination on this appeal.

The central issue litigated below and presented on this appeal is whether the district is now an existing legal entity or whether it ceased to exist on the expiration of the fifty year limitation contained in its Articles of Association (January 11, 1960). In this connection, it is noted that the present statute, Section 245.015, RSMo. 1969, V.A.M.S., remains unchanged in this regard and requires that the Articles of Association of such a levee district must state 'the number of years the same is to continue.' By contrast, the statutes make no provision for a time limitation on the life of a levee district organized by the county court and such districts would presumably continue forever unless dissolved by the legislature or by a procedure provided by the legislature. See State ex rel. and to Use of Behrens v. Crismon, 354 Mo. 174, 188 S.W.2d 937, and In re City of Kinloch, 362 Mo. 434, 242 S.W.2d 59.

Plaintiffs contend that the levee district ceased to exist on January 11, 1960 by operation of law because its life was limited to fifty years by the Articles of Association and such fifty year period expired on that date. Defendants contend that the district continued to exist as a legal entity because it continued to perform its functions and that it was, at least, a de facto corporation which cannot be attacked by these individual plaintiffs; that its valid existence can only be questioned by the state in a quo warranto proceeding. Under the authorities, we are constrained to agree with plaintiffs and deny defendants' contention.

It is apparent that the levee district here in question is a public corporation and a governmental subdivision of the state of Missouri; that it is not a private corporation, see Mound City Lake & Stock Co. v. Miller, 170 Mo. 240, 70 S.W. 721, and as such, a resident landowning taxpayer cannot attack the regularity and legality of its organization, Spiking School Dist. No. 71, De Kalb County v. Purported 'Enlarged School District R-11, De Kalb County, Missouri', 362 Mo. 848, 245 S.W.2d 13. An attack upon the regularity and legality of the organization of such a subdivision of the state can only be maintained by the state itself in a proceeding in the nature of quo warranto. See also Spilker v. Bethel Special School Dist. of Shelby County, Mo.App., 235 S.W.2d 78; and Lane v. Finney, Mo.App., 274 S.W.2d 521. However, it should be noted that the plaintiffs are not here attacking the regularity or the validity of the organization of the levee district. Rather, they are contending that, by reason of the fifty year limitation contained in the Articles of Association, the district ceased to exist by operation of law; that such cessation appears on the face of the record and that the individual plaintiffs can, therefore, attack the present existence of the district. They point out that where the defect appears on the face of the record, the organization cannot have de facto existence and that collateral attack is permissible. In this instance, they rely on State ex rel. Hand v. Bilyeu, Mo.App., 346 S.W.2d 221. See also Pearson Drainage Dist. v. Erhardt, 239 Mo.App. 845, 201 S.W.2d 484, and cases cited therein. We, therefore, hold that plaintiffs can properly raise the issue of the legal existence of the levee district in this proceeding; that such question is not reserved to the state in a quo warranto proceeding for that purpose.

Defendants next contend that even if the existence of the district has legally terminated, it still has de facto existence and tht the individual defendants are de facto supervisors of the district and that their actions are valid. We cannot agree with such contention. In Bradley v. Reppell, 133 Mo. 545, 32 S.W. 645, it was held that where a corporate charter expired by the passage of time as limited in such charter, the corporation is both de jure and de facto dead; that in such circumstances the corporation ceased to exist as a separate entity and that any powers in relation thereto resided in its last officers and board of directors as trustees. See 1 McQuillin, Municipal Corporations, 3d Edition, Sections 3.48, 3.49 and 3.50. Such trustees could not continue to conduct the business of the corporation but could only pay the debts of the corporation and liquidate the business. It has been otherwise expressed that where the law ceases to authorize the existence of the corporation, the corporation expires as a matter of law. This doctrine is said to apply to both private and public corporations alike, Meramec Spring Park Co. v. Gibson, 268 Mo. 394, 188 S.W. 179. It has been applied to semi-private corporations operating what would now be considered a public utility in the maintenance of a toll road in State ex rel. Hines v. Scott County Macadamized Road Co., 207 Mo. 54, 105 S.W. 752, and State ex rel. Allison v. Hannibal & R.C. Gravel-Road Co., 138 Mo. 332, 39 S.W. 910. It likewise applies under specific statutory authority to strictly private corporations. See Turner v. Browne, 351 Mo. 541, 173 S.W.2d 868; Leibson v. Henry, 356 Mo. 953, 204 S.W.2d 310; Clark Estate Co. v. Gentry, 362 Mo. 80, 240 S.W.2d 124; and Land Clearance for Redevelopment Authority of the City of St. Louis v. Zitko, Mo., 386 S.W.2d 69. As to private corporations, when the corporate powers are forfeited or cease to exist by limitation or otherwise, the directors and officers in office at the time of such forfeiture are constituted trustees of the corporation with power only to wind up its business and affairs, sell and liquidate its property and assets, pay its debts and obligations and distribute the net assets among the shareholders. See Section 351.525, RSMo., 1969, V.A.M.S. If such trustees or anyone else exercise or attempt to...

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