Wilkinson v. Boomer

• Court: North Carolina Supreme Court
• Writing for the Court: WINBORNE, Justice
• Citation: Wilkinson v. Boomer, 217 N.C. 217, 7 S.E.2d 491 (N.C. 1940)
• Decision Date: 28 February 1940
• Docket Number: No. 17.,17.
• Parties: WILKINSON et al. v. BOOMER et al.

217 N.C. 217

7 S.E.2d 491

WILKINSON et al.

v.BOOMER et al.

No. 17.

Supreme Court of North Carolina.

Feb. 28, 1940.

Appeal from Superior Court, Beaufort County; Q. K. Nimocks, Judge.

Action by John A. Wilkinson and another against Hoyt Leo Boomer and others to enforce the lien of drainage district bonds. From a judgment sustaining defendants' demurrers to the complaint, plaintiffs appeal.

Affirmed.

Civil action to enforce lien of drainage district bonds, heard upon demurrers to complaint.

Plaintiffs in complaint filed make substantially these allegations: 1. That defendant, Pantego Run Drainage District, Beaufort County Drainage District No. 14, embracing lands in said county, was organized under the provisions of chapters 442 and 509, Public Laws of 1909, and amendatory acts; that all things required by law to be done to complete the establishment of said District have been done; that a Board of Commissioners, composed of the defendants J. M. Benson, P. H. Johnson and N. B. Marriner, were elected and qualified; and that said "Board is now, as to its entire personnel, in existence and operating".

2. That in accordance with the provisions of the said acts, bonds in the amount of $18,000 were issued and sold and "the proceeds expended in the construction of original canals and other necessary work for the construction and operation of said District".

3. That the General Assembly of North Carolina, by Chapter 357, PLL 1925, declared said bonds to be "valid and a first lien on all the lands of the district"; that the validity of the bonds was sustained by judgment of superior court in an action entitled "Board of Drainage Commission, etc. v. J. S. Wilkinson", which was affirmed on appeal to Supreme Court, 193 N. C. 830, 136 S.E. 926, and that thereafter, in September 1934, in a civil action in the District Court of the United States for the Eastern District of North Carolina at Washington, a judgment was entered in favor of Safe Deposit & Trust Company of Baltimore, trustee, the then holder of all said bonds, and against Board of Drainage Commissioners for said District in the principal sum of $9,000, represented by the bonds maturing in the years referred to in the complaint there filed.

4. "That from time to time and as law required for the several years since the establishment of the District, correct assessment rolls have been prepared by the secretary of the Board of Drainage Commissioners and duly filed in the official file of this court, which * * * show the amount of the sum total of said assessments upon which it is hereinafter alleged that the lands hereinafter described are liable and subject to the lien of said assessments."

5. That plaintiffs, by purchase for value from the Safe Deposit and Trust Company of Baltimore, trustee, are the owners of and hold all the outstanding unpaid bonds of the said original issue.

6. That the assessment rolls filed as alleged show assessments against certain specifically described lands of defendant Hoyt Leo Boomer and wife, Ercil Boomer, in the total amount of $860.52 to be due and unpaid for the years 1926-1937, inclusive.

7. That on December 1, 1934, defendants Hoyt Leo Boomer and wife, Ercil Boomer, executed a deed of trust to defendant Southern Loan and Insurance Company, trustee, for defendant, Virginia-Carolina Joint Stock Land Bank of Elizabeth City, registered as alleged, which has not been discharged, and is a lien on said lands of defendants Boomer subject to the first lien of the drainage assessment as above described.

8. That by reason of the facts as above alleged plaintiffs are entitled to payment of the amount of said assessments, due and unpaid, and to judgment so declaring and for the appointment of a commissioner to make sale of the lands of defendants Boomer for the enforcement of said rights.

Defendants demur to the complaint for that upon the face thereof it appears that facts sufficient to constitute a cause of action are not stated, in that, mainly and substantially: (1) The statute under which the bonds were issued and the assessment made provides an adequate remedy for the enforcement of collection of assessments; (2) In the event of failure to pay either principal or interest represented by the bonds, the statute gives to the holder ofthe bonds right of action against the drainage district or the board of drainage commissioners wherein writ of mandamus may issue as there prescribed, and the right to such other remedies "as may be authorized by law", and (3) In the enforcement of collection of drainage assessments, the bondholders are not given right of action in the nature of an action to foreclose mortgage.

From judgment sustaining demurrers filed, plaintiffs appeal to Supreme Court and assign error.

H. S. Ward, of Washington, for plaintiffs appellants.

Worth & Horner, of Elizabeth City, and Rodman & Rodman, of Washington, for defendants appellees.

WINBORNE, Justice.

The question for decision is this: Where bonds regularly issued by a drainage district duly established, organized and existing under and by virtue of Chapter 442, P.L.1909, as amended, Subchapter III of Chapter 94, Section 5312 et seq., of Consolidated Statutes of 1919, as amended, pertaining to the establishment of drainage districts, for the payment of which assessments duly made under authority of said act are due and unpaid, may the holder of such bonds maintain an action against an individual owner of land within the district for the foreclosure of the lien of such unpaid assessments? The answer is "No".

It is noted at the outset that the legislature has declared: "That the State having authorized the creation of drainage districts and having delegated thereto the power to levy a valid tax in furtherance of the public purposes thereof", such districts "are created for a public use and are political subdivisions of the State". P.L. 1921, Chapter 7, Section 2, amending C.S. § 5360.

It is a basic principle that the legislation by authority of which bonds of a municipal corporation or other political subdivision of the State are issued, and their payment provided for, becomes a constituent part of the contract with the bondholders. So the provisions of the statutes regarding the issuance of drainage bonds and the levying, assessing and collecting of assessments, as well as remedies generally existing for the enforcement of such assessments, in effect at the time the bonds are issued, become a part of the contract between the district and the bondholders. Jones on Bonds and Bond Securities, sec. 527, vol. 1, page 590.

What then are the provisions of the statute under which the bonds held by the present plaintiffs were issued, regarding the collection of the assessments levied for the payment of those bonds?

Section 5360 of Consolidated Statutes, as amended, provides that the assessment roll, after the clerk of Superior Court has appended thereto an order directing the collection of such assessments, "shall thereupon have the force and effect of a judgment as in the case of state and county taxes".

Section 5361 of Consolidated Statutes declares in part that: "The assessments shall constitute a first and paramount lien, second only to state and county taxes, upon the lands assessed for the payment of the bonds and interest thereon as they become due, and shall be collected in the same manner and by the same officers as the state and county taxes are collected."

Adverting to these and other provisions of the drainage act, in the case of Com'rs. v. Lewis, 174 N.C. 528, 94 S.E. 8, 11, Allen, J., said: "The assessments are to be collected by the sheriff, who collects the...