Wise v. First National Bank of Nogales

• Decision Date: 27 February 1937
• Docket Number: Civil 3627
• Citation: 65 P.2d 1154,49 Ariz. 146
• Parties: J. E. WISE, as Mayor of the City of Nogales, and F. B. CARROON, LUIS ESCALADA, C. T. FRAZIER, E. A. WESSELL, LOUIS HUDGIN, and E. JAY DITTMER, as Members of the Board of Aldermen of the City of Nogales, Appellants, v. THE FIRST NATIONAL BANK OF NOGALES, a National Banking Association, Appellee
• Court: Arizona Supreme Court

65 P.2d 1154

49 Ariz. 146

J. E. WISE, as Mayor of the City of Nogales, and F. B. CARROON, LUIS ESCALADA, C. T. FRAZIER, E. A. WESSELL, LOUIS HUDGIN, and E. JAY DITTMER, as Members of the Board of Aldermen of the City of Nogales, Appellants, v. THE FIRST NATIONAL BANK OF NOGALES, a National Banking Association, Appellee

Civil No. 3627

Supreme Court of Arizona

February 27, 1937

APPEAL from a judgment of the Superior Court of the County of Santa Cruz. Levi S. Udall, Judge. Judgment affirmed.

Mr James V. Robins, former City Attorney, and Mr. Gordon Farley present City Attorney, for Appellants.

Mr Duane Bird and Mr. Thomas L. Hall for Appellee.

Mr. I A. Jennings, City Attorney, Mr. Hess Seaman, Assistant City Attorney, Phoenix, Mr. B. G. Thompson, City Attorney, Tucson, Mr. E. Colman Gorman, City Attorney, Winslow, and Mr. A. Van Wagenen, Jr., City Attorney, Casa Grande, Amici Curiae.

OPINION

LOCKWOOD, J.

This is an appeal from a judgment of the superior court of Santa Cruz county, directing J. E. Wise, as mayor of the city of Nogales, and F. B. Carroon, Luis Escalada, C. T. Frazier, E. A. Wessell, Louis Hudgin, and E. Jay Dittmer, as members of the board of aldermen of said city hereinafter called defendants, to include in their annual budget of the city for the fiscal year ending May 31, 1935, which we shall hereafter refer to as the current year, a sum of money to be determined by rules laid down in the judgment. It is admitted by the parties that the defendants have already complied with the order and judgment appealed from, and it was suggested that the questions involved in the appeal have become moot. It appears, however, from the record that the principles of law on which the judgment of the superior court was based may be questioned annually by subsequent litigation, and that almost every incorporated city and town in the state is vitally interested in the final determination of these principles, for the reason that until they are definitely settled many, if not most, of these municipalities will be seriously embarrassed in the raising of funds for the improvement of their streets. We have concluded, therefore, to disregard the suggested moot feature of the case, and consider the legal questions presented on their merits.

The facts necessary to a determination of the specific case and raising the legal questions to which we have referred are not in dispute and may be stated as follows: Between the years 1922 and 1930, the city of Nogales engaged in an extensive system of street improvements and issued bonds therefor in a total amount of $230,594.91. A large portion of these bonds were issued under the provisions of chapter 13, title 7, Revised Statutes of Arizona 1913 (section 1953 et seq.), as modified by chapter 144, Session Laws of 1919, and the amendments thereto, and are in the form prescribed by section 4 of the act of 1919. A smaller portion were issued under article 16, chapter 12, Revised Code of 1928 (section 511 et seq.), and are in the form prescribed by section 536 of that Code. The First National Bank of Nogales, a national banking corporation, hereinafter called plaintiff, was and is the holder of a large amount of the bonds referred to, which are payable in installments. Many of the bonds so owned both by the bank and by other parties were overdue as to the interest and one or more installments thereon, and default had been made in payment thereof, for the reason that the owners of the property against which the cost of the improvements aforesaid had been assessed had not paid their assessments as required by law. At the beginning of the current year, there was a deficit in the fund established by law for the payment of these bonds, amounting to something over $21,000, and it was estimated that if the property owners were delinquent during that year, as they had been in the past, the total deficit at the end of such year would amount to approximately $30,000. Between the year 1930 and 1934, there had been sold to the city, as provided by law, certain property on which the assessments were due and unpaid, for the amount of $6,797.86, but it had not paid the purchase price of said property in any manner.

On July 19, 1934, some six weeks after the beginning of the current fiscal year, the defendants met and adopted a tentative budget, as required by law, for the current year amounting all told, for the general fund, to the sum of $66,952.65. This amount was exactly 10 per cent. in excess of the expenditures for the preceding fiscal year from the general fund of the city. Among the items in the tentative budget, which included general government, health, police and fire protection, and others of the usual municipal expenditures, was one entitled, "Purchases of delinquent assessments," amounting to $721.42. At the meeting above referred to, when the tentative budget was adopted, plaintiff demanded of defendants that they budget a sufficient amount so that there could be appropriated out of the general fund of the city for the current fiscal year to the special fund established by law for the payment of street improvement bonds such amount as might be reasonably necessary to pay for any property which the city had purchased, or would be obliged by law to purchase on account of delinquencies of the property holders in their assessments for the street improvement bonds aforesaid, or, in lieu thereof, such amount as would be necessary to pay whatever unpaid and delinquent street improvement bonds and interest might exist during the current fiscal year. This the defendants failed and refused to do, and announced that on August 13th they would meet for the purpose of making their final budget. Thereafter and on August 7th, the plaintiff filed its petition in court praying that a writ of mandamus be issued to compel defendants to budget in accordance with the demands that had been made on them on July 19th. The alternative writ was issued and, after hearing, was made peremptory in the following language:

"Now, therefore, we, being willing that speedy justice should be done in this behalf, to-wit, the said The First National Bank of Nogales, a national banking association, do command and enjoin you and each of you that immediately after the receipt of this writ you, and each of you, do place in said budget of the expenditures and tax levies estimated and proposed to be made, and of the receipts, from sources other than taxation, estimated to be received, by said City of Nogales for the now current fiscal year, that is, the year beginning June 1, 1934, and ending May 31, 1935, a sum or item for the general fund of the Treasury of said City of Nogales sufficient in amount to enable the legislative body of said City of Nogales to appropriate from and out of such general fund to the said special bond funds the amount or amounts that heretofore had been bid by said City of Nogales to purchase any and all property assessed for said improvements and offered for sale by the Superintendent of Streets of said City of Nogales because of delinquency in the payment by the owners of such property of assessments, or installments thereof, for said several improvements and for which there had been or will be no purchaser or purchasers, or to enable said legislative body to direct the treasurer of said City of Nogales to pay out of said general fund into said special bond funds the sum or sums required to pay the said improvement bonds and interest that were due and unpaid at the beginning of the said current fiscal year and to pay the said improvement bonds and interest to become due during said current fiscal year as aforesaid for and in connection with said several improvements...."

Whereupon this appeal was taken.

The question before us is whether it was the duty of defendants to budget as aforesaid, and the answer will depend upon a construction of certain statutes of the state of Arizona, together with the Constitution of the state and the charter of the city of Nogales.

It is necessary in determining the question that we first review briefly the statutes of the state regarding street improvements. In the year 1912, chapter 55 of the First Regular Session of the First Legislature was adopted, which set up a complete and comprehensive plan of street improvements for the municipalities of the state. It followed substantially the street improvement act of the state of California, generally called the Vrooman Act (Stats Cal. 1911, p. 730), and its provisions may be summarized as follows so far as material to this case: The governing body of a municipality seeking to take advantage of the act was first required to pass a resolution of intention for street improvements. These improvements might be made solely at the cost of the city as a whole from the general fund, and in such case a certain procedure was to be followed. If, however, it was determined that the improvement was of more than local or ordinary public benefit, it might establish an improvement district, and unless a certain percentage of the owners of the property in the district protested within a time fixed by law, the governing body might order the improvement to be made. A contract was then let for the improvements, and the cost thereof was assessed against the property in the district in the manner set forth in the act. Serial bonds might be issued to represent the cost of the improvement, and these bonds followed a prescribed form, showing that they were a lien on the specific property in the amount fixed by the assessment against it. If the bonds were not paid, and the holder of the bonds so requested, the property was advertised and sold, as provided by law, and the money received therefrom paid into the fund used for the payment of the bonds and...