Yoakum County Water Control and Imp. Dist. No. 2 v. First State Bank, 358
| Decision Date | 03 October 1968 |
| Docket Number | No. 358,358 |
| Citation | 433 S.W.2d 200 |
| Court | Texas Court of Appeals |
| Parties | YOAKUM COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 2, et al., Appellants, v. FIRST STATE BANK, Appellee. . Tyler |
Crenshaw, Dupree & Milam, O. V. Scott, Jr ., Lubbock, for appellant, R. E. McFall Estate.
Key, Carr, Carr & Clark, Donald M. Hunt, Lubbock, for appellants, Guetersloh.
J. W. Lyon, Jr., Silverton, Vernon A. Townes, Denver City, Wilson, Kendall, Koch & Randle, Gaynor Kendall, Austin, for appellee.
This is an appeal from a summary judgment. First State Bank, of Silverton, Texas, plaintiff below and appellee herein, brought suit against defendants, Yoakum County Water Control And Improvement District No. 2 (hereinafter called the 'district') and its directors, seeking a judgment against the district upon ten $1,000.00 bonds issued by the district and subsequently purchased by the bank.
The bank alleged that at the time of the respective maturities of the bonds, the bank duly presented said obligations to the district and demanded payment thereof, but that the district failed and refused, and continues to fail and refuse, to pay the bonds and coupons or any part thereof. The prayer was for judgment (1) adjudicating the bonds to be valid and enforceable obligations of the district, for the payment of which the district is legally obligated to impose ad valorem taxes on all taxable property in the district in accordance with the covenants contained in the bonds; (2) for judgment upon the bonds in the sum of $10,000.00, together with all accrued interest thereon; and (3) for an order compelling performance of the covenants contained in the bonds by a writ of mandamus directed to defendants, Mike W. Butler and all other members of the Board of Directors of the district, commanding them to levy and collect sufficient taxes to produce the sum necessary to discharge the obligations evidenced by the bonds. The bank's petition also named as party defendants all owners of the mineral estate under the lands comprising the district (hereinafter referred to as the 'McFall group'), and certain owners of the surface estate of the lands comprising the district (hereinafter referred to as the 'Guetersloh group'). The petition recites that the landowners were joined as party defendants because of certain alleged attempts by them to interfere with the assessment and collection of taxes upon the lands owned by them lying within the district.
The district answered with a general denial. The directors answered with a general denial and specifically denied that they had failed to levy and collect taxes.
The McFall and Guetersloh groups of defendants filed answers consisting of general denials and special pleas attacking the validity of the district, as well as the bonds, alleging: (1) that the district was invalid and not legally created according to law because the petition for its creation was not signed by a majority in number, or a majority in value of the owners of taxable property in the proposed district; (2) that (a) the order of the Commissioners' Court creating the district was invalid, and (b) the adoption by the district of a plan of ad valorem taxation was invalid as a denial of due process because the notice by publication as provided by the statute was not sufficient to constitute notice of the petition to establish the district or the adoption of the plan of ad valorem taxation as required by the Constitution of this state and the United States; and (3) that the bonds were invalid because no election was held at which the proposition of their issuance had been submitted to and approved by the taxpaying voters of the district as required by Sec. 59, Art. XVI of the Constitution of Texas, Vernon's Ann.St.
After depositions had been taken, the parties entered into an 'Agreement and Stipulation as to Certain Facts' attaching thereto a 'Transcript of Legal Proceedings' containing all of the legal instruments used in the formation of the district, together with an instrument showing final authorization by the Attorney General for the issuance of the bonds in question.
Appellee, First State Bank, filed a motion for summary judgment alleging that upon the basis of the 'agreements,' the depositions, and affidavits attached to the motion, no material issue of fact remained to be determined and therefore the bank was entitled to a summary judgment for the following reasons:
(1) The 'Transcript of Legal Proceedings' shows upon its face, as a matter of law, that the district was regularly created in accordance with the statutory law of this state.
(2) That subsequent to its creation and organization, the district was validated by an Act of the Legislature of the State of Texas.
(3) That the undisputed facts show that the bank is a bona fide purchaser of the bonds, and under the doctrine of estoppel by recital, appellants are estopped to assert that the recitals in the instruments creating the district, as well as in the bonds, are incorrect or untrue.
Prior to the hearing on the motion, the bank moved for a severance, seeking to sever all causes of action and cross-actions except the bank's cause of action against the district. After a hearing, the trial court granted the motion for severance and granted the summary judgment in favor of the bank against the district for the sum of $10,000.00 on the principal of the bonds, together with accrued interest thereon, and ordered the issuance of a writ of mandamus and such other writs as necessary to enforce the judgment.
The Guetersloh and the McFall groups of defendants duly perfected an appeal from the judgment. Yoakum County Water Control And Improvement District No. 2 did not appeal nor did any of its directors perfect an appeal. Consequently, the only appellants on this appeal are the Guetersloh and McFall groups of appellants.
Section 59 of Art. XVI of the Constitution of Texas expressly authorized the Legislature to create or provide for the creation of conservation and reclamation districts which shall be governmental agencies and bodies politic and corporate with such powers of government and with authority to exercise such rights, privileges and functions as may be conferred by law. The applicable articles of the revised statutes relating to the formation of water control and improvement districts are to be found in Art. 7880-1 et seq., Vernon's Ann.Tex.Civ.Stat.
Without setting out the statutes at length, they provide for initiation of proceedings for the establishment of such a proposed district by a petition signed by a majority in number of the holders of title to the lands therein, and the owners of a majority in value of the lands therein as shown by the county tax rolls. (Art. 7880-10). The petition is required to be filed in the office of the County Clerk, and therefrom the County Judge is required to enter an order setting the date of a hearing thereof by the County Commissioners' Court. The statute provides that the County Clerk shall thereupon issue a notice of such hearing by causing the notice to be published in a local newspaper for three successive weeks. (Art. 7880-14).
At the hearing before the Commissioners' Court, '* * * any person whose land is included in or would be affected by the creation of such district may appear and contest the creation thereof * * *.'
If the Commissioners' Court, upon a hearing, makes the required findings as to necessity for the district, etc., it enters an order establishing the district, and interim directors are appointed (Art. 7880-20) who must call an election and submit to the vote of the qualified resident property taxpaying voters the proposition of confirming or disaffirming the creation of the district. (Arts. 7880-23 and 7880-24).
If the Commissioners' Court enters an order establishing the district, '* * * any person who did actually appear and protest said petition and offer testimony against the creation of the district, may appeal from the order of the court by giving notice of appeal in open court * * * and by filing with the clerk of the court within five days a good and sufficient appeal bond in the sum of $2,500.00, * * *.' The appeal is to the district court and when such appeal is taken, the court hears the matter de novo. (Art. 7880-18).
The act expressly provides that the Commissioners' Court shall hold a hearing and '* * * shall afford all interested persons adequate and exclusive opportunity to protest the creation of a district, and thereafter, save as hereinafter provided, no suit shall be permitted in any court of this State contesting the validity of the formation and boundaries of a district created hereunder, * * * provided, however, that all such matters may be judicially inquired into and determined in any suit brought by the State of Texas, through the Attorney General, upon his own motion, or upon the motion of any person affected by the existence or plans of the district, * * *.' (Art. 7880-25a).
The facts show that prior to the organization of the district, the land embraced in the district was known as the Duckworth Ranch and contained seven sections of unimproved land. The surface estate was owned by the Duckworths, and the mineral estate was owned by eight separate owners comprising the McFall group. The petition for the establishment of the district was filed on December 8, 1955, and was signed by Lela B. Woolsey, W. L. Norman, J. P. Gibson, David T. Roche, Mike W. Butler, C. Willard Houser and Marvin C. Turner. At the time of the filing of the petition, these seven parties did not reside within the district, nor did they own the fee simple title to the land. They did have a contract, however, to purchase the land from the Duckworths, and on December 12, 1955, they acquired title to the surface estate for a consideration of $90,986.00.
The petition for the establishment of the district purports, upon its face, to be...
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