« AnteriorContinuar »
by vote of the qualified voters of the district, at an election duly called and held, to issue certain bonds of the district; and that thereafter, and before the issuance of the bonds, to wit, on the 6th day of May, 1892, the board of directors of the defendant corporation instituted proceedings under the act of March 16, 1889, in the superior court of the county of San Diego, state of California (that being the county in which the district was at that time situated), for the purpose of obtaining a judicial examination, approval, and confirmation of the proceedings providing for and authorizing the issue and sale of the bonds; and that such proceedings resulted in a decree of the superior court of San Diego county, entered on the 22d day of June, 1892, adjudging "that said San Jacinto & Pleasant Valley Irrigation District was duly organized by and under the direction of the board of supervisors of the said county of San Diego; that the first board of directors of said irrigation district, consisting of the said petitioners, was duly elected and duly qualified as such, and that all of the proceedings of said board of supervisors of said county under and by virtue of which the said irrigation district was organized and the said first board of directors of said irrigation district was elected be, and the same is hereby, approved and confirmed"; and further decreeing "that all the proceedings had by or under the authority of the said board of directors for the issuance of the bonds of said irrigation district to the amount of three hundred and fifty thousand dollars ($350,000.00), including in said proceedings the estimate made by the said board of directors mentioned in said petition of the amount of money necessary to be raised for the purpose of constructing the necessary irrigation canals and works and the acquisition of the necessary rights and property_therefor, and otherwise carrying out the provisions of the act of the Legislature under which said irrigation district is organized; and also including in said proceedings the election mentioned in said petition, which was called and held upon the question whether the bonds of said irrigation district in the amount aforesaid should be issued by said irrigation district; and also including in said proceedings the order of the board of directors that the bonds of said irrigation district in the amount aforesaid be issued by the said board of directors in the manner and form as in said order provided and as prescribed by law be, and the same are hereby, approved and confirmed"; and further adjudging "that the San Jacinto & Pleasant Valley Irrigation District ever since its organization as aforesaid has been, and now is, a duly and legally organized irrigation district, and that it has and possesses full power and authority to issue and sell from time to time the bonds of said irrigation district to the aforesaid amount of $350,000." The bill alleges that that decree has never been appealed from, vacated, or set aside, and is in full force and effect.
It is next alleged that certain of the bonds were sold by the irrigation district, and that the money derived therefrom was by the board of directors of the district used in the construction of canals, ditches, rights of way, and other necessary and proper works within the boundaries of the district, in order that the lands therein might be irrigated, and also for the purchase of water rights, lands, rights of way, waterbearing lands, flumes, pipe lines, and interests in other corporations
owning and possessing water rights, water-bearing lands, flumes, pipe lines, and ditches, without the boundaries of the district; all of which were necessary and essential to the proper carrying out of the purposes for which the district was organized. It is alleged that the complainant is a creditor of the defendant district, being the owner of a certain judgment rendered against it in this court for the sum of $2,937.14, which judgment remains wholly unpaid, and upon which execution was duly issued and returned by the marshal wholly unsatisfied; that the judgment was obtained upon unpaid and past-due coupons upon certain of the said bonds held and owned by the complainant. It is alleged upon information and belief that the defendant corporation is the owner of a large amount of real and personal property, canals, ditches, rights of way, water-bearing lands, and other lands, canals, pipe lines, interests in other corporations owning and possessing water-bearing lands, flumes, pipe lines, and ditches. outside of the boundaries of the district, the exact description of which the complainant is unable to give for reasons afterward set out. It is alleged that from the date of its organization until the early part of the year 1899 the defendant corporation carried on its business of acquiring water and water rights, and supplying the same to lands within the district, on which last-mentioned date it became, and has since been, insolvent; that for several years prior to 1899 the defendant corporation failed and neglected to raise by assessment upon the lands of the district the full amount of money required for the purposes of paying interest upon the bonds and for the general and operating expenses of the district, and prior to that year it issued a large number of warrants, and promises to pay on demand, which warrants were issued for the purpose of paying the running and operating expenses of the district, salaries of officers, and other debts contracted by the district, and which it authorized and directed to be used and received by the district in payment for the use of water furnished by it to irrigators therein, for which reason, it is averred, the corporation defendant did not receive money for the use of the water, "and because thereof, and because of the failure of the said corporation to levy the assessments aforesaid, the said corporation defendant and the officers thereof, failed to pay the interest on said bonds, and failed to pay the coupons attached to the bond owned and held by your orator aforesaid." It is alleged that the amount of land embraced within the boundaries of the district is 18,000 acres, the assessed value of which upon the last assessment roll of the county of Riverside, Cal., does not exceed the total sum of $100,000, and that the market value of such lands does not exceed $125,000; that the bonded indebtedness of the district for bonds issued and outstanding amounts to $225,750; that the accrued interest thereon, represented by the coupons, amounts to about $60,000; that there is further and other outstanding indebtedness of the defendant corporation amounting to the sum of $10,000; and that, if all the lands embraced within the district were sold at their full market value, there would be realized therefrom a sum wholly insufficient to pay the indebtedness of the defendant corporation. Ít is next averred that in July, 1899, the board of directors, the treasurer, assessor, and collector of the defendant district, abandoned their duties
and responsibilities as such officers, and permitted adverse parties to seize, take hold of, and appropriate to their own use, fraudulently, and without any consideration, all the lands, water rights, ditches, flumes, and other property of the district lying without its boundaries, and to hold the same adversely, and to convert the same to their own use, to the detriment of the residents of the district, and to the irreparable injury of the complainant and other bondholders similarly. situated; that all of said land, water rights, ditches, flumes, and other property owned and possessed by the district, and lying without the boundaries thereof, have been and now are wrongfully appropriated and held adversely by strangers who have wrongfully and unlawfully seized and appropriated the same to their own use, and are selling the waters to consumers thereof outside of the boundaries of the district, and wrongfully appropriating and converting to their own use all the moneys collected as tolls therefrom; that such parties so wrongfully appropriating and converting the assets of the defendant district without its boundaries have so collected in excess of $50,000, and that the board of directors of the district have never at any time since July, 1899, demanded the payment of the same, or made any attempt to collect it; that ever since July, 1899, the board of directors of the district have failed in the performance of all of their duties, have held no meetings, have failed to levy or cause to be levied any assessments for the purpose of paying the interest on the bonds issued by the district, or any part thereof; that they have failed to collect and keep any assets of the district, and have permitted and do still permit strangers and hostile interests to wrongfully appropriate and convert the property of the district, and to collect the tolls from the sale of water belonging thereto, and to destroy and render valueless its ditches and flumes; that a majority of the board of directors of the defendant district have removed their residences therefrom; that the secretary, treasurer, assessor, and collector, have removed their residences and that the board of directors ever since July, 1899, have failed to keep any office or place for the transaction of business in the district, and have allowed and do now allow all the papers, files, books, maps, stock, deeds, evidences of title, and other memoranda and records pertaining to the district to remain in the hands of strangers and parties having no interest in the same, and have taken no steps to take possession thereof, or preserve the same from loss; that the books, maps, papers, and contracts necessary to enable the complainant to ascertain what real and personal property belongs to the defendant corporation, to give a description thereof, are locked in the safe of the defendant corporation, which safe is in the hands of strangers, and the complainant is unable to obtain access thereto; that he has demanded of the president of the board of directors of the defendant corporation that the vacancies upon the board of directors be filled, and meetings be held, and that steps be taken to recover possession of the real and personal property of the district, and that an assessment upon the real property of the district to pay the coupons of the complainant be levied -all of which demands have been refused; that the last assessment levied was paid only by a small portion of the landowners of the
district, and that a considerable portion of the land assessed was sold for nonpayment thereof, and, there being no bidders therefor, was bid in and sold to said district, and that the assessment and sale thereof failed to bring money into the treasury sufficient to pay the indebtedness thereof; that, if an assessment should be levied upon the real property within said district, the same would not be paid, and would not bring any money into the treasury of the said corporation, and would not result in the raising of any money to pay the said indebtedness of the district, or any part thereof.
It was shown in opposition to the application for the appointment of a receiver, among other things, that subsequent to the aforesaid confirmatory decree of the superior court of San Diego county, the superior court of Riverside county (then embracing the lands covered by the irrigation district in question), in an action brought by the state of California upon the relation of a taxpayer, entered a judgment declaring that the defendant district was never legally organized, and adjudging each and all of the bonds issued by it illegal and of no effect. It is not necessary at this time to consider the effect of these contrary judgments. It will be seen from the provisions of the statute under which the bonds upon which the complainant's judgment was obtained were issued, as well as from the averments of the bill itself, that assessments upon the lands embraced by the district was the mode provided by law for the payment of both principal and interest of the bonds. The complainant acquired his bonds with that knowledge, for it was a matter of public law. If, as claimed on his behalf, the bonds held by him are valid, they were payable in the mode provided by the law under which they were issued, and, if the proper officers refused or neglected to levy the proper and necessary assessments, the remedy provided by law was mandamus to compel them to do so. In Heine v. The Levee Commissioners, 19 Wall. 655, 657, 22 L. Ed. 223, the Supreme Court said:
"It has been decided in numerous cases founded on the refusal to pay corporation bonds that the appropriate proceeding was to sue at law, and by a judgment of the court establish the validity of the claim and the amount due, and by the return of an ordinary execution ascertain that no property of the corporation could be found liable to such execution and sufficient to satisfy the judgment. Then, if the corporation had authority to levy and collect taxes for the payment of that debt, a mandamus would issue to compel them to raise by taxation the amount necessary to satisfy the debt. Unless, then, there is some difficulty or obstruction in the way of this common-law remedy, chancery can have no jurisdiction."
But neither the fact that the remedy at law by mandamus for levying and collecting taxes, if resorted to, has proved ineffectual, nor the fact that no officers can be found to perform the duty of levying and collecting them, can justify a court of equity in undertaking to do so by means of a receiver. Thompson v. Allen County, 115 U. S. 550, 6 Sup. Ct. 140, 29 L. Ed. 472, and cases there cited. Nor does the mere fact that a party finds himself unable to collect his debt by proceedings at law make it the duty of a court of equity to devise some mode by which it can be done. The case of Heine v. The Levee Commissioners, supra, was a bill in equity to enforce collection of taxes where no officers could be found whose duty could be enforced by mandamus.
“There does not,” said the court, “appear to be any authority founded on the recognized principles of a court of equity on which this bill can be sustained. If sustained at all, it must be on the very broad ground that, because the plaintiff finds himself unable to collect his debt by proceedings at law, it is the duty of a court of equity to devise some mode by which it can be done. It is, however, the experience of every day and of all men that debts are created which are never paid, though the creditor has exhausted all the resources of the law. It is a misfortune, which, in the imperfection of human nature, often admits of no redress. The holder of a corporation bond must, in common with other men, submit to this calamity, when the law affords no relief."
The court added that the exercise of the power of taxation belonged to the Legislature, and not to the judiciary. There the Legislature had delegated the power to the levee commissioners, and the court. said:
"If that body has ceased to exist, the remedy is in the Legislature either to assess the tax by special statute, or to vest the power in some other tribunal. It certainly is not vested, as in the exercise of an original jurisdiction, in any federal court. * * * It is not only not one of the inherent powers of the court to levy and collect taxes, but it is an invasion by the judiciary of the federal government of the legislative functions of the state government." Page 661, 19 Wall., 22 L. Ed. 223.
In Barkley v. Levee Commissioners, 93 U. S. 258, 23 L. Ed. 893, in speaking of the power to compel by mandamus municipal officers to perform the ministerial duty of levying proper taxes, where there were no such officers, it was said:
"The truth is that a party situated like the present petitioner is forced to rely on the public faith of the Legislature to supply him a proper remedy. The ordinary means of legal redress having failed by lapse of time, and the operation of unavoidable contingencies, it is to be presumed that the Legislature will do what is equitable and just; and in this case legislative action seems to be absolutely requisite."
In the case of Walkley v. City of Muscatine, 6 Wall. 481, 18 L. Ed. 930, the complainant, Walkley, had procured judgment against the city of Muscatine for interest on bonds of the city, execution had been returned nulla bona, the mayor and aldermen had refused to levy a tax for the payment of the judgments, and had used the annual tax for other purposes, and paid nothing to the plaintiff. Walkley then filed his bill in equity praying a decree that the mayor and aldermen be compelled to levy a tax and appropriate so much of the proceeds as might be necessary to pay his judgments. The Supreme Court held that the remedy was by mandamus at law, and said, among other things: "We have been furnished with no authority for the substitution of a bill in equity and injunction for the writ of mandamus;" and added that "a court of equity is invoked as auxiliary to a court of law in the enforcement of its judgments in cases only where the latter is inadequate to afford the proper remedy." 6 Wall. 483, 484, 18 L. Ed. 930. By such inadequacy of the remedy at law, the same court said in the subsequent case of Thompson v. Allen County, 115 U. S. 554, 6 Sup. Ct. 142, 29 L. Ed. 472, is meant "not that it fails to produce the money-that is a very usual result in the use of all remedies— but that in its nature or character it is not fitted or adapted to the end in view."