190 Wis. 327 | Wis. | 1926
Lead Opinion
The following opinions were filed April 6, 1926:
The appeal presents the sole question whether or not the petitioners are entitled to an additional assessment to pay the principal and interest due on their bonds. The trial court was of the view that the only assessment out of which the principal could be paid was the assessment for construction, and that, at any rate, the petitioners must exhaust their remedy against all the lands affected by the assessment for construction by a sale of the delinquent lands as provided by sub. (4) (d), sec. 89.37, enacted in 1923, before further assessments under sec. 89.44 as amended in 1913 could be made.
Both parties set out in detail for the convenience of the court the drainage laws that in any way affect the question at issue. It is the view of the court that many of them need not be set out or commented upon, because the general scheme of the drainage laws so far as the question here is presented may be summarized in a few words.
Aside from the general public benefit which must inhere in a drainage scheme, the private benefit consists in the drainage of land so as to render it more valuable and productive agriculturally. Since each individual owner of land cannot drain his own effectively, the law permits a number to act jointly as a quasi-public corporation to drain a large area. And thus a drainage district is formed in which all landowners therein become jointly interested and jointly.
If the view taken by the trial court is correct, then prior to the amendment of sec. 89.37 (4) (d) in 1923 there was no way in which a deficit could be met if a portion of the assessment for construction remained unpaid, for an assessment for construction can be levied only for the amount of principal and interest to become due, on the assumption that each owner pays in full. If any tax remains unpaid there will be a deficit, and sub. (1), sec. 89.44, as it stood before the amendment of 1913, in terms provided only for an additional assessment to pay interest, the provision for an additional assessment to pay principal being added in 1913. The remedy to take a tax deed and sell the lands was not given till 1923.
When it is borne in mind that, in an area as large as the ordinary drainage district and including lands of very different values and very differently benefited, nonpayment of assessments is almost certain to occur, it will be seen that some scheme for making up the deficit occasioned by such nonpayment must exist in order to collect the amount due on outstanding bonds where, as here, they equal ninety-five per cent, of the first total cost of construction.
Another fact must be borne in mind also, and that is that bonds issued nearly up to the total assessment for construction, as they usually are because the district has no money except as it is raised by assessments, would not be salable in the market, for there would be no adequate mar
While it is true that in proceedings governed by statutes nothing can lawfully be done that violates a direct provision thereof, it is equally true that in drainage proceedings, which are declared by sec. 89.03 to be equitable throughout, any lawful remedy contemplated in a contract between a creditor-and the district, not in conflict with the statutes and not contrary to public policy, may be enforced.
If we turn to the bond which constitutes the contract between the petitioners and the district we find these provisions :
“This bond is based upon and constitutes a lien upon and is payable solely out of the proceeds of the special assessment for benefits heretofore legally levied upon the lands in said district, and the said special assessments are hereby irrevocably pledged therefor. And it is hereby certified and recited that all acts, conditions, and things required to be done precedent to and in the location and establishment of said drainage district and in the making and levying of the assessment against the lands of said district benefited thereby, and precedent to and in the issuing of this bond, have been done, have happened, and have been performed in regular and due form of law, and that the total amount of bonds issued on account of said assessment does not exceed the amounts thereof unpaid at the time said bonds are issued; and for the performance of all of the covenants, recitals, -and stipulations herein contained, and for the collection and application of said assessments and of the interest thereon and such other and further assessments authorized or required to provide for the prompt payment of this bond and the interest thereon, the faith, resources, and credit of said drainage district are hereby irrevocably pledged.”
The latter part of the above quoted portion of the bond declares that the faith, resources, and credit of the district are pledged “for the collection and application of said assessments and of the interest thereon and such other and further assessments authorized or required.” The words “assessments authorized or required” can refer only to further assessments on the assessment for benefits. There can be no further assessments on an assessment for construction. And the bond expressly provides for further assessments if required. In the instant case they are required to meet the amount due on the bonds, and there was nothing in the statutes as they stood when the bonds were issued to forbid such further assessment except the inference arising from the fact that the legislature provided for further assessments to pay interest, but not to pay principal. Such
The amendment of 1913 providing for additional assessments does not in any manner affect the contract between the petitioners and the district, but only in terms expresses a remedy not theretofore specifically mentioned. In such case the remedy may be invoked though given subsequent to the execution of the contract. State ex rel. Davis & Starr L. Co. v. Pors, 107 Wis. 420, 427, 428, 83 N. W. 706; Stone v. Little Yellow D. Dist. 118 Wis. 388, 396, 95 N. W. 405; Read v. Madison, 162 Wis. 94, 101, 155 N. W. 954.
It is also quite plain that the legislature conceived of the assessment of benefits as a security fund for assessments for construction, repairs, or maintenance. Sec. 89.04 provides:
“(1) All orders of confirmation made in drainage district proceedings may be modified by the court at any time on such notice as the court may order, but no assessment shall be decreased to the detriment of the owner of bonds or notes which are liens on such assessment.
“(2) This chapter shall neither render more difficult the collection of bonds or notes heretofore issued by any drainage district, nor impair the obligation of any contract made by such district; neither shall any assessment of supplemental benefits nor any reassessment of benefits disturb any assessment for construction previously confirmed by the court while bonds or notes secured thereon are unpaid. Confirmed assessments shall remain liens upon the same lands and claims against the same corporations in the same amounts as when first assessed and recorded until the district bonds and notes based thereon are paid or refunded.”
If the assessment for construction measured the limit of the security, no reassessment of benefits would disturb it unless made below the assessment for construction, and this
It is suggested that since the bond recites that it is given for the purpose of paying for the cost of construction of drainage in the district that it must be limited in securing payment thereof to the construction fund. This contention was negatived in Fowler v. Superior, 85 Wis. 411, 417, 54 N. W. 800, on the ground that it was immaterial as to what fund the city looked for the payment of the bond when it had pledged its full faith and credit to the payment of it.
It is also urged that it is inequitable to levy further assessments because those who pay will have to pay more than their share — some not having paid at all. This is true, but it is a species of inequity that exists whenever there is a joint liability and one that exists as to the levy of general taxes. Whenever there is a failure to collect all general taxes there is a loss that must be borne by those who pay, but that does not release them from the burden of meeting the obligations jointly due. State ex rel. Soutter v. Madison, 15 Wis. 30. In that case the court said:
“The duty of the common council is continuing, and does not cease with the levying of one tax which is in part unT successful. It ends only when the whole money is collected and the debt actually paid.” See, also, Norris v. Montezuma Valley I. Dist. 248 Fed. 369.
By the Court. — Order reversed, and cause remanded with directions to enter an order for an additional assessment or assessments to be apportioned ratably according to the assessment of benefits.
Concurrence Opinion
{concurring). I think it should be understood that the bonds here involved constitute general obligations of the drainage district. The opening provision of the bonds is as follows:
“Know all by these presents, That the Dancy Drainage District, of the counties of Marathon, Portage, and Wood, in the state of Wisconsin, acknowledges itself to owe, and, for value received, hereby promises to pay to bearer the sum of five hundred dollars lawful money of the United States,” etc.
It is then declared that “This bond is based upon and constitutes a lien upon and is payable solely out of the proceeds of the special assessment for benefits heretofore legally levied upon the lands in said district, and the said special assessments are hereby irrevocably pledged therefor.” It is then certified that said special assessments have been duly made in the manner required by law. Other recitals appear in the opinion of the court.
This constitutes a general bond of the drainage district. Fowler v. Superior, 85 Wis. 411, 54 N. W. 800. That the drainage commissioners had power to issue the general bonds of the drainage district is apparent from the provisions of sec. 1379 — 31&, Sanborn & Sanborn’s Supp. to the Statutes, 1906; that section authorized the commissioners
The question presented is whether at the present time the drainage district has power to make a reassessment for the purpose of paying the principal of these bonds. It appears that sufficient money was not realized to pay these bonds from the original assessment because the assessment on some of the land assessed cannot be realized thereon. This leaves a deficiency, and the question is whether other lands of the district upon which the assessments for the payment of these bonds are not in default may be reassessed up to the limit of the benefits conferred upon those lands by the project to make up the deficiency, resulting from a default of the assessment upon lands apparently not worth the assessment made against them. It is not seriously questioned that sec. 89.44 confers upon the district power to levy an additional assessment “necesssary to pay the principal or interest on lawful indebtedness of such district.” It is contended, however, that this was not the provision at
Dissenting Opinion
(dissenting). I am unable to agree with the conclusion reached by the court in this case, and briefly indicate the grounds of my dissent.
A drainage district is but an arm of the state, created for the purpose of performing a single function, and is a gmsi-municipal corporation with limited powers. McMahon v. Lower Baraboo River D. Dist. 184 Wis. 611, 200 N. W. 366; Harkins v. Smith, 204 Ala. 417, 85 South. 812. It being a g«m’-public corporation, the commissioners could exercise only those powers which were conferred upon them by statute. Qííím'-corporations are of the lowest rank and their authority must be found within the four corners of the statute. They are not political bodies, have no political
The power to borrow funds is conferred by sec. 1379— 316, S. & S. Stats. 1906:
“The commissioners may borrow money, not exceeding the amount of assessments for construction, additional assessments and assessments for repairs unpaid at the time of borrowing, for the construction or repair of any work which they shall be authorized to construct or repair, or for the payment of any indebtedness they may have lawfully incurred, and may secure the same by notes or bonds bearing interest at a rate not to exceed six per cent, per annum, and not running beyond one year after the last instalment of' the assessment, on the account of which the money is borrowed, shall fall due; which notes or bonds shall not be held to make the commissioners personally liable, but shall constitute a lien upon the assessments for the repayment of the principal and interest of such notes or bonds.”
The cost of construction is defined as follows (sec. 1379— 18):
It “shall include all incidental expenses, the reasonable cost of organizing said district, the costs of proceeding and all probable damage to lands, both within and without the district, together with a reasonable attorney fee for the petitioners.”
By the provisions of sec. 1379 — 30, S. & S. Stats. 1906, assessments are provided for as follows:
“If in the first assessment for construction the commissioners shall have reported to the court a smaller sum than is needed to complete the work of construction, or if in any year an additional sum is necessary to pay the interest on lawful indebtedness of said drainage district, further or additional assessments on the lands and corporations benefited, proportioned on the last assessment of benefits which has been approved by the court, shall be made by the commissioners of said drainage district under the order of the court or presiding judge thereof without notice, which*341 further or additional assessment may be made payable in instalments.”
Nowhere in the act is there conferred on the commissioners the authority to pledge the full faith and credit of the district for the payment of bonds issued by them. Recitals in the bonds issued cannot confer power upon the commissioners or enlarge the liabilities of the district, there being no statutory authority to insert such recitals in the bonds. Dixon County v. Field, 111 U. S. 83, 4 Sup. Ct. 315. Nor is there to be found within the law as it stood in 1907, at the time these bonds were issued, any power either in the commissioners or the court to levy an assessment to cover a default in the payment of bonds. The bonds were to be issued against the assessments already made and payable out of them.
In addition to that, the whole scheme and purpose of the statute was to impose liability for the improvement upon the lands benefited, first, not in excess of the amount found by the assessment of benefits; and second, to distribute the cost in proportion to the benefits received, and not upon area, value of the lands, or other basis.
By the provisions of sec. 1379 — 22, S. & S. Stats. 1906:
“Any owner of land, or any corporation assessed for construction, may at any time within thirty days after the confirmation of said report, pay into court the amount of the assessment against his land or any tract thereof or against any such corporation. Said payment shall relieve said lands, from the lien of said assessment and said corporation from all liability on said assessment.”
By the provisions of sec. 1379 — 315, already quoted, the bonds are made a lien on the assessment. If, as now proposed, a new assessment can be levied upon those landowners who paid and discharged their liability, their land will not be relieved from the lien of this assessment, but in order to relieve themselves they will have to pay a new and
“Each and every sum assessed for construction, for additional assessment or for repairs against any land or against any corporation, as soon as srich assessment is confirmed by the court, shall be and is declared to be a judgment of the circuit court in favor of said drainage district and against said land or corporations,”—
indicating that there was no intent to make one parcel of land liable for assessments against other parcels, else why put it in such final and conclusive form as a judgment.
It is not contended that the statute as it stood in 1906 contained any provision for an additional or supplemental assessment for the payment of the principal of bonds in default. By ch. 633 of the Laws of 1913, the words “principal or” were inserted in sec. 1379 — 30, so that as amended it read:
“If in the first assessment for construction the commissioners shall have reported to the court a smaller sum than is needed to complete the work of construction, or if in any year an additional sum is necessary to pay the principal or interest on lawful indebtedness of said drainage district, further or additional assessments on the lands and corporations benefited, proportioned on the sum of all the assessments of benefits which have been approved by the court, shall be made by the commissioners,” etc.
, The court holds that the insertion of the words “principal or” by ch. 633, Laws of 1913, gave to the bondholders a new remedy, and that the bondholders may now avail themselves of it without violating any of the constitutional guarantees. If ch. 633 provides nothing but an additional remedy, I should of course agree with the conclusion reached by the court. It is my opinion, construed as it is now construed by the court, that it conferred a new
“Hence it is that a vested right of action is property in the same sense in which tangible things are property, and is equally protected against arbitrary interference. Whether it springs from contract or from the principles of the common law, it is not competent for the legislature to take it away. A vested right to an existing defense is equally protected, saving only those which are based on informalities not affecting substantial rights, which do not touch the substance of the contract and are not based on equity and justice.” See, also, Board of Education v. Blodgett; 155 Ill. 441, 40 N. E. 1025, 31 L. R. A. 70.
The petition of the bondholders and the response of the commissioners under our practice is no doubt a special proceeding rather than an action, but I perceive no reason why the rule should not be as applicable to one as to the other.
It is argued that a great injustice will be done the bondholders if it be held that they are limited to the assessments authorized by the statute as it stood in 1907. I do not concur in that conclusion for the following reason: In the first place, there was an assessment of benefits by which it
I am authorized to say that Mr. Justice Stevens concurs in this dissent.
A motion for a rehearing was denied, with $25 costs, on June 21, Í926.