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person. They are separate and distinct transactions and acts of bankruptcy, and the acceptance of the payment to himself cannot be an estoppel on his right to complain of a payment to others, unless involved in the same transaction.
For the reasons stated, it is respectfully recommended that the petition be dismissed.
Wheeler & Trimble and Sidney B. Wright, for petitioning creditors. Brown & Spurlock, for defendant Douglas Coal & Coke Co.
CLARK, District Judge. In regard to this case, it is only necessary to say shortly that in view of the language of the act of Congress, and the changes which were deliberately made in the provisions of the act while it was before the Senate judiciary committee, I am constrained to affirm the ruling of the referee, and for the reasons which he states. There is no doubt in this case about insolvency being established, in the legal sense; but Congress has used such language as makes it necessary that a receivership in a state court, in order to constitute an act of bankruptcy, must have been established, or the receiver appointed, on the ground of the corporation's insolvency. It is very much open to doubt whether Congress has not here used language which makes necessary a result which Congress itself intended to avoid. Looking to the practical bearing of the question, there is much reason to believe that Congress intended to make the appointment of a receiver in a state court conclusive as a ground of bankruptcy, without requiring this court to inquire into the grounds on which the receivership was created; but the language of the amendatory act is perfectly plain, in requiring that the existence of a receivership in a state court, in order to be a ground of bankruptcy, must have been on account of the insolvency of the corporation, and this leaves open in any case to inquiry by this court the grounds on which the appointment of a receiver was made, and, if the appointment was made on any other ground than that of insolvency, it does not constitute an act of bankruptcy. Now, in the case here considered, the appointment was on account of breaches of covenants—covenants like the covenant to keep down taxes, and the like-and, although these particular acts or defaults strongly tend to show insolvency, they justify the appointment of a receiver, regardless of insolvency; and it seems that, in form, at least, the receivership was established on the ground of breaches of these covenants. I do not think the payments which were made, and which are here called in question, constitute a preference or an act of bankruptcy.
The ruling of the referee is accordingly affirmed, in view of the natural and necessary construction which must be placed upon the language used in the act of Congress. It is accordingly so ordered.
NOTE. Since the decision in the principal case of In re Douglas Coal & Coke Company the opinion of the Circuit Court of Appeals for the Fourth Circuit in the Case of Blue Mountain Iron & Steel Co., 131 Fed. 57, has been published, and the doctrine of the opinion in this case appears to be in substantial accord with the ruling in Re Douglas Coal & Coke Company.
MARRA 1. SAN JACINTO & P. V. IRR. DIST. et al. (two cases).
(Circuit Court, S. D. California, S. D. April 27, 1904.)
Nos. 1,086, 1,087.
1. IRRIGATION DISTRICTS-BONDS-PAYMENT-REMEDIES-MANDAMUS-RECEIVER.
Act Cal. March 7, 1887, p. 29, c. 34, as amended by Act March 20, 1891, p. 142, c. 127, providing for the organization of irrigation districts, authorizes such districts to issue bonds for the construction of necessary works; and section 17 (page 37) provides that the bonds and interest thereon shall be paid by revenue derived from an annual assessment upon the real property of the district, and that all real property therein shall be and remain liable to be assessed for such payment as provided in the act. Held, that where an irrigation district, duly organized, issued and sold bonds under such act, the remedy of a holder thereof, after having recovered judgment and securing a return of an execution against the property of the district unsatisfied, was to compel the officers of the district by mandamus to levy an assessment against the property of the district, and not by a suit in equity for the appointment of a receiver.
The following is the opinion of Circuit Judge ROSS on an application for leave to intervene in the suit in equity, as hereinafter referred to:
The oral application made on behalf of the California Cattle Company to intervene in this suit in equity is denied, without prejudice to another appiication of a similar nature based upon a proper showing. The bill, I think, presents a proper cause for the appointment of a receiver of the property of the defendant corporation. If it be true that the complainant is a bona fide owner of valid bonds issued by the defendant irrigation district, while acting as such under the laws of the state, and that property acquired and owned by it is in the hands of strangers, holding and claiming the same adversely, a failure to appoint a receiver may result in depriving the complainant of rights to which he may be entitled; whereas, if it shall be hereafter found, upon proper judicial inquiry, that the alleged rights of the complainant are not well founded, the parties in the possession of such property may very readily be protected.
A receiver will therefore be appointed in case No. 1,087, upon the execution of a bond by the complainant, with suflicient sureties, to be approved by the court, in the sum of $10,000, as security for the costs of the receivership. The parties in interest may suggest for the consideration of the court some proper person for the position.
John G. North and John W. Lane, for complainant.
ROSS, Circuit Judge. A consideration of the objections made to the proposed order of appointment of a receiver and a further consideration of the bill of complaint in this cause satisfies me that the court was in error in its ruling made and entered on the 28th day of March, 1904, providing for such an appointment.
On the 7th of March, 1887, the Legislature of California passed an act entitled "An act to provide for the organization and government of irrigation districts, and to provide for the acquisition of water and other property, and for the distribution of water thereby for irrigation purposes” (St. Cal. 1887, p. 29, c. 34), which was amended and supplemented by subsequent acts (St. 1889, pp. 15, 18, 212, 213, cc. 19, 20, 178; St. 1891, pp. 53, 142, 145, 147, 244, cc. 57, 127, 128, 171).
11. Mandamus to enforce payment of judgment against municipality, see note to Holt County v. National Life Ins. Co. of Montpelier, Vt, 25 C. C. A. 475.
The first section of the act of 1887, as amended by that of March 20, 1891, provides that whenever 50 or a majority of the holders of title or evidence of title to land susceptible of one mode of irrigation from a common source, and by the same system of works, desire to provide for the irrigation of the same, they may propose the organization of a district under the provisions of the act, and when so organized such district shall have the powers conferred or that may thereafter be conferred by law upon such irrigation districts. The equalized county assessment roll next preceding the presentation of the petition for the organization of the irrigation district under the provisions of the act, it is declared, shall be sufficient evidence of title for the purposes of the act.
Its second section, as amended by the act of March 20, 1891, is as follows:
“A petition shall first be presented to the board of supervisors of the county in which the lands, or the greatest portion thereof, is situated, signed by the required number of holders of title, or evidence of title, of such proposed district, evidenced as above provided, which petition shall set forth and particularly describe the proposed boundaries of the district, and shall pray that the same may be organized under the provisions of this act. The petitioners must accompany the petition with a good and sufficient bond, to be approved by the said board of supervisors, in double the amount of the probable cost of organizing such district, conditioned that the bondsmen will pay all the said costs in case said organization shall not be effected. Such petition shall be presented at a regular meeting of the said board, and shall be published for at least two weeks before the time at which the same is to be presented, in some newspaper printed and published in the county where said petition is presented, together with a notice stating the time of the meeting at which the same will be presented ; and if any portion of such proposed district lie within another county, or counties, then said petition and notice shall be published in a newspaper published in each of said counties. When such petition is presented, the said board of supervisors shall hear the same and may adjourn such hearing from time to time, not exceeding four weeks in all; and on the final hearing may make such changes in the proposed boundaries as they may find to be proper, and shall establish and define such boundaries : provided, that said board shall not modify said boundaries so as to except from the operation of this act any territory within the boundaries of the district proposed by said petitioners which is susceptible of irrigation by the same system of works applicable to the other lands in such proposed district; nor shall any lands which will not, in the judgment of said board, be benefited by irrigation by said system be included within such district: provided, that any person whose lands are susceptible of irrigation from the same source may, in the discretion of the board, upon application of the owner to said board, have such lands included in said district. Said board shall also make an order dividing said district into five divisions, as nearly equal in size as may be practicable, which shall be numbered first, second, third, fourth, and fifth, and one director, who shall be a free-bolder in the division, and an elector and resident of the district, shall be elected by each division: provided, that if a majority of the holders of title or evidence of title, evidenced as above provided, petition for the formation of a district, the board of supervisors may, if so requested in the petition, order that there may be either three or five directors, as said board may order, for such district, and that they may be elected by the district at large. Said board of supervisors shall then give notice of an election to be held in such proposed district, for the purpose of determining whether or not the same shall be organized under the provisions of this act. Such notice shall describe the boundaries so established, and shall designate a name for such proposed district, and said notice shall be published for at least three weeks prior to such election
in a newspaper published within said county; and if any portion of such proposed district lie within another county or counties, then said notice shall be published in a newspaper published within each of said counties. Such notice bball require the electors to cast ballots, which shall contain the words 'Irrigation District-Yes,' or 'Irrigation District-No, or words equivalent thereto, and also the names of persons to be voted for to fill the various elective offices hereinafter prescribed. No person shall be entitled to vote at any election held under the provisions of this act, unless he shall possess all the qualitications required of electors under the general election laws of this state."
The third section provides how such election shall be conducted, and for the canvass of the vote, and that if, upon such canvass, it appear that at least two-thirds of all the votes cast are “Irrigation District-Yes," the board of supervisors shall, by an order entered upon its minutes, declare such territory duly organized as an irrigation district under the name and style theretofore designated, and shall declare the persons receiving respectively the highest number of votes for the several offices to be duly elected thereto, and shall cause a certified copy of such order to be immediately filed for record in the office of the county recorder of each county in which any portion of such land is situated, and shall also immediately forward a copy thereof to the clerk of the board of supervisors of each of the counties in which any portion of the district may lie; and from and after the date of such filing the organization of such district shall be complete, and the officers thereof shall be entitled to enter immediately upon the duties of their respective offices upon qualifying according to law, and shall hold such offices, respectively, until their successors are elected and qualified. The third section of the act, as amended by that of Varch 20, 1891, also provides that "no action shall be commenced or maintained, or defense made, affecting the validity of the organization unless the same shall have been commenced or made within two years from the making of said order" of the board of supervisors declaring the territory duly organized as an irrigation district. Section 4 et seq. provide for subsequent elections, at which an assessor, a collector, a treasurer, and a board of directors for the district shall be elected. Section 11, as amended March 20, 1891, provides for the organization of the board of directors after their election; and by section 12, as so amended, it is provided that the board shall, among other things, have the right to enter upon any of the land to make surveys, and may locate the necessary irrigation works and the line for any canal or canals, and the necessary branches for the same, on any of the lands which may be deemed best for such location; and shall also have the right to acquire, either by purchase, condemnation, or other legal means, lands, waters, water rights, and other property necessary for the construction, use, supply, maintenance, repair, and improvements of said canal or canals and works, including canals and works constructed by private owners, land for reservoirs for the storage of needful waters, and all necessary appurtenances, and may also construct the necessary dams, reservoirs, and works for the collection of water for the district, and do any and every lawful act necessary to be done that sufficient water: may be furnished to each landowner in the district for irrigation purposes. And it is declared by the twelfth section of the act, as so amended, that the use of all water required for the irrigation of the lands of any district formed under the provisions of the act, together with the rights of way for canals and ditches, sites for reservoirs, and all other property required in fully carrying out the provisions of the act, is a public use, subject to the regulation and control of the state in the manner prescribed by law. By section 13 it is provided that the legal title to all property acquired under the provisions of the act shall vest in such irrigation district, and shall be held by such district in trust for the uses and purposes therein set forth; and the board of directors is authorized to hold, use, acquire, manage, occupy, and possess the property as provided in the act. By section 15 of the amendatory act of March 20, 1891, it is provided that for the purpose of constructing necessary irrigating canals and works, and acquiring the necessary property and rights therefor, and otherwise carrying out the provisions of the act, the board of directors of such district must, as soon after such district has been organized as may be practicable, and whenever thereafter the construction fund has been exhausted by expenditures authorized therefrom, and the board deem it necessary or expedient to raise additional money for such purposes, estimate and determine the amount of money necessary to be raised, and shall immediately thereafter call a special election at which shall be submitted to the electors of the district possessing the qualifications prescribed by the act, the question whether or not the bonds of the district shall be issued in the amount so determined. Notice of such election is required to be given, and such notices are required to specify the time of holding the election and the amount of bonds proposed to be issued; and, in the event a majority of the votes cast at the election are favorable to the issuance of the bonds, the board of directors are required to immediately cause them to be issued, such bonds to be payable in gold coin of the United States, in 10 series, as follows, to wit: At the expiration of 11 years, 5 per cent. of the whole number of said bonds; at the expiration of 12 years, 6 per cent.; at the expiration of 13 years, 7 per cent. ; at the expiration of 14 years, 8 per cent.; at the expiration of 15 years, 9 per cent.; at the expiration of 16 years, 10 per cent.; at the expiration of 17 years, 11 per cent.; at the expiration of 18 years, 13 per cent. ; at the expiration of 19 years, 15 per cent. ; at the expiration of 20 years, 16 per cent.-all of which bonds shall bear interest at the rate of 6 per cent. per annum, payable semiannually on the 1st days of January and July of each year. Section 16 provides for the sale of the bonds by the board of directors from time to time, in such quantities as may be necessary and most advantageous, to raise money for the construction of the canals and works, the acquisition of property and rights, and otherwise to fully carry out the objects and purposes of the act. Notice of such sale is required to be given, and bids therefor received, but with the provision that in no event shall the board sell the bonds for less than 90 per cent. of the face value thereof. By section 17 it is provided that the bonds and interest thereon shall be paid by revenue derived from an annual assessment upon the real property of the district; and all the real property in the district, it is declared, shall be and remain liable to be assessed for such payment, as provided in the act. Provision is made for the assessment of all such real property annually by the assessor. By section 20 it is