Breckenridge v. Johnston

108 P.2d 833, 62 Idaho 121, 1940 Ida. LEXIS 69

• Court: Idaho Supreme Court
• Decided: December 12, 1940
• Docket: No. 6802.
• Status: Published

Opinions

HOLDEN, J.

In 1913 the legislature enacted a complete drainage district code (1913 Sess. Laws, p. 58, now chap. 25, Tit. 41, secs. 41-2501 to 41 — 2564, inclusive, I. C. A.), providing “for the establishment of drainage districts, and the construction and maintenance of a system of drainage,” and for an assessment of benefits against each tract of land within the district, issuance of bonds,, levy of assessments to pay the same and interest coupons. Some ten years later, to wit, March 2, 1923, Drainage District No. 3 of Ada County was regularly organized under the provisions of this drainage district code. Since its organization the district has been entitled to exercise all of the powers and privileges conferred upon drainage districts. Por the purpose of paying costs, etc., and construction of the drainage system, an original assessment was made and approved in the sum of $291,337.29. Bonds were issued and sold amounting to $68,000, each in the amount of $500 and bearing interest at 6% per annum, interest payable semi-annually. The district obligated itself to pay the principal sum of each bond on a definite date (specified in the bond) together

“with interest hereon from the date hereof at the rate of six per cent (6%) per annum, payable semi-annually on the first days of' February and August upon presentation and surrender of the annexed interest coupons as they respectfully [clearly a typographical error made in-printing the bond] become due. ’ ’

It further provided that:

. “This bond is subject to redemption in numerical order by the Treasurer of Ada County whenever said Treasurer has on hand $5,000.00 of the special fund for the payment of said bonds after said bonds shall have run for a period of three years, upon the giving of notice thereof in the manner provided by law,5 ’

in conformity with the terms of Session Laws 1913, chapter 16, section 29, page 75, now section 41-2557, I. C. A. The bond concludes with the following paragraph: '

“For the faithful performance of all covenants, recitals and stipulations herein contained, for the proper application of the proceeds of the taxes heretofore or hereafter levied and for the faithful performance in apt time and manner of each official act required and necessary to provide for the prompt payment of interest and principal of this bond after the same matures the full faith, credit and resources of said Drainage District are hereby irrevocably pledged.”

Bonds 1 to 81, inclusive, have been paid. There was then outstanding, past due and unpaid ■ $27,000 represented by bonds numbered 82 to 136, inclusive; all interest coupons up to and including bond numbered 94 have been paid. Appellant Johnston purchased and became the owner of bonds 23 to 42, 49 to 68, 74 to 94, and 100 to 109, all-inclusive.

Interest was paid on certain bonds after maturity of the principal thereof, the last payment of after-maturity interest being made in August, 1937, after which the drainage district refused to pay further after-maturity interest. Payments of after-maturity interest, extending from February, 1932, to August 2, 1937, amounting to the sum of $2,819.32, were made, without protest, from levies against the lands of the district. No assessment, however, was ever levied for the express purpose of paying after-maturity interest.

The prayer of the amended complaint was for a declaratory judgment on the first cause of action to determine whether the bonds of the district drew interest after maturity. On the second cause of action, a declaratory judgment was sought to determine whether the payments of after-maturity interest received by Johnston could be offset and credited against the payment of principal of the bonds now owned and held by him.

The case was tried to the court and judgment was entered on the first cause of action, that appellant Johnston is not entitled to receive or collect interest on the principal of the bonds owned by him after the date of their maturity. On the second cause of action, it was adjudged and decreed that appellant is not legally liable for repayments of interest on matured bonds of tbe district voluntarily made to bim by tbe district; and that the payments of such interest cannot be legally offset against payment of principal of the bonds owned by him. From this judgment two appeals have been taken: one by Johnston from the judgment entered on the first cause of action; the other by J.' G. Breckenridge et al., as commissioners of Drainage District No. 3, and Margaret Gilbert, as county treasurer, from the judgment entered on the second cause of action.

The first question to be determined on this appeal is: May interest be collected on past due drainage district bonds after all attached interest coupons have been paid?

At the outset it must be conceded interest cannot be collected on past due drainage district bonds (after all attached interest coupons have been paid), unless tbe law provides for tbe payment of interest. Whether interest may be collected depends upon the construction of sections 41-2552, 41-2554, 41-2556, 41-2557, 41-2558 and 41-2562, I. C. A., in force at the time the bonds in question were issued and sold. These sections provide:

That bonds may be issued and sold to pay the costs of construction of a “system of drainage”; that the bonds shall be “payable at a time not less than five years nor longer than twenty years from tbe date thereof” (sec. 41-2552, supra) ; that they must be “numbered from one upward, consecutively, and be in denominations of not less than $100 nor more than $1000. They shall bear tbe date of issue, shall be made payable to the bearer and bear interest at a rate not exceeding seven per cent per annum, payable semiannually, with coupons attached for each interest payment”; “the board of directors shall fix the maturities of said bonds, not exceeding twenty years from the date of their issuance and an amortization period which shall not be less than three-fourths of the maximum maturity. During the first fourth of the period covered by the last maturity, provision may be made, in the discretion of the board, for the payment of interest only. Maturities shall be so arranged that during at least the latter three-fourths of the period covered' by the last maturity the principal shall be amortized by payments thereof in annual or semi-annual instalments so arranged as to maturities that the combined principal and interest payments during the amortization period shall be approximately the same each year” (sec. 41-2554, supra) ; that a district “at least five years before” the maturity of its bonds shall annually “levy an assessment sufficient to liquidate said bonds at maturity”; the assessment so levied must be “kept as a separate fund for the sole purpose of liquidating said bonds” (sec. 41-2556, supra); the duty is imposed on the treasurer of the county “in which there may be a district issuing bonds under the provisions of this chapter whenever he has upon hand $5000 of the special fund for the payment of said bonds, and when said bonds shall have run for a period of three years, to advertise in the newspaper doing the county printing, for the presentation to him for payment of as many of the bonds issued under the provisions of this chapter as he is able to pay with the funds in his hands, to be paid in numerical order of said bonds, ■ beginning with the bond number one, until all of said bonds are paid: provided, that thirty days after the first publication of said notice of the treasurer calling in any of said bonds, said bonds shall cease to bear interest” (sec. 41-2557, supra); that “it shall be the duty of such drainage commissioners annually to levy an assessment sufficient for the payment of the coupons herein-before mentioned as they fall due. Said coupons shall be considered for all purposes as 'warrants drawn upon the funds of the district issuing- bonds under the provisions of this chapter, and, when presented to the county treasurer, and no funds are in the treasury to pay said coupons, it shall be his duty to indorse said coupons as presented for payment in the same manner as other warrants upon the funds of said district are indorsed, and thereafter said coupons shall bear interest at the same rate as other warrants so presented and unpaid” (sec. 41-2558, supra); that “the commissioners may also levy assessments for any expense necessarily incurred by them for [italics ours] construction, maintenance, repair, or any extraordinary reasons, and also may add to said assessment sufficient to pay any deficiency occurring the preceding year of any other unpaid warrant indebtedness, if any, or to pay any outstanding warrants” (sec. 41-2562, supra).

The only method by which a drainage district could obtain money with which to pay interest on past due bonds would be by levying assessments, and, of course, it could not levy assessments for that purpose unless authorized to do so by law. It appears a drainage district may (in addition to levying an assessment of benefits and an assessment to complete the drainage system in the event the amount originally levied proves insufficient) levy assessments for the following purposes: an assessment, annually, to pay interest coupons attached to construction bonds “as they fall due”; an assessment, annually, sufficient to liquidate construction bonds at maturity, which assessments must be levied commencing at least five years before the bonds become due; assessments to pay “outstanding warrants”; assessments for “any expense necessarily incurred by them [the commissioners] for construction, maintenance, l’epair, or any extraordinary reasons, and also may add to said assessment sufficient to pay any deficiency occurring the preceding year or any other unpaid warrant indebtedness, if any.”

That a drainage district cannot levy an assessment to pay interest on past due bonds, unless the law authorizes it to do so, seems to be conceded in that it is contended “drainage districts possess ample power to make levies for after-maturity interest and extraordinary expenses of every necessary kind.” In other words, as we understand appellant Johnston,' he contends drainage districts have power under section 41-2562, supra, to levy assessments to pay “extraordinary expenses,” and that that confers “ample power to make levies for after-maturity interest.” We cannot accept that interpretation.

What the legislature intended by the phrase “any extraordinary reasons,” to illustrate, was simply this: To authorize drainage districts to levy an assessment to pay the expense of repairing damage done to a drainage system by some unusual occurrence, for instance, a destructive flood — a flood being an extraordinary, and not a common, occurrence, the reason for levying an assessment to make repairs would likewise be extraordinary, within the meaning of the statute (sec. 41-2562, supra).. The power to levy such an.assessment assures the continued operation and maintenance of a drain age system, but it does not authorize the levying of an assessment to pay interest on past due bonds after all interest coupons have been paid.

It is further contended section 41-2557, supra, also authorizes the levy of assessments to pay interest on past due bonds. In substance that section provides when a county treasurer has drainage district money in his hands to the amount of $5,000 of the special funds for the payment of said bonds, and, further, when the bonds of a district have been running for a period of three years, the county treasurer shall call (by advertising in the newspaper doing the county printing) as many bonds as he is able to pay with the funds in his hands, and that the bonds so called shall be paid in numerical order beginning with bond number one “until all of said bonds [those called] are paid,” and that “said bonds shall cease to bear interest” thirty days after the first publication of the call. It must not be forgotten in this connection that section 41-2552, supra, expressly provides that construction bonds shall be “payable at a time not less than five years nor longer than twenty years from the date thereof.” Section 41-2557, supra, is elearly, then, what is generally termed an “acceleration statute,” in that it authorizes a county treasurer (under the circumstances above related) to call and pay bonds before, not after, maturity, to stop the payment of interest (after thirty days), not to authorise its payment, either on past due bonds or any bonds other than the bonds called.

It is also urged the payment of interest is authorized by section 26-1904, I. C. A., providing that

“When there is no express contract in writing fixing a different rate of interest, interest is allowed .... on:

1.....

2. Money after the same becomes due.

3.....

4.....

5.....

6.....

7.....”

The drainage district statute (sees. 41-2501 to 41-2564, supra), deals particularly and minutely with drainage dis triets. Hence it is a special statute. Section 26-1904, supra, is obviously a general statute. It provides for the payment of interest on money after it becomes due. Under the special drainage district statute, as herein pointed out, interest cannot be collected on . past due bonds, even though such bonds evidence past due money. It is well settled in this jurisdiction that where, as here, there is a conflict between a general and special statute, the special statute prevails (Oregon Short Line Railroad Company v. Minidoka County School District et al., 28 Ida. 214, 218, 153 Pac. 424; Berg v. Carey, 40 Ida. 278, 282, 232 Pac. 904; State v. Jones, 34 Ida. 83, 86, 199 Pac. 645; State v. Taylor, 58 Ida. 656, 667, 78 Pac. (2d) 125).

Furthermore, drainage districts are special improvement districts of limited liability — their bonds are limited, not general, obligations — the assessments authorized to be levied run ‘ ‘ against each specific tract or parcel of land to be benefited, and the amount thereof is ascertained, determined and assessed in advance, so that every property owner can know just how much he is to pay and the bondholder can ascertain just the extent of the claim he has against each tract of land. In such case, there is no municipal liability and no municipality to be rendered liable for the payment of the indebtedness.” (Elliott v. McCrea, 23 Ida. 524, 530, 130 Pac. 785; Straus v. Ketchen, 54 Ida. 56, 79, 28 Pac. (2d) 824; McDonald v. Pritzl, 60 Ida. 354, 359, 93 Pac. (2d) 11.) When a special improvement district levies an assessment against a particular, separate piece of property and the assessment is paid, its share or proportion of the bonded indebtedness is liquidated and such piece of property is discharged from any further liability or obligation (Oregon Short Line Railroad Company v. Berg, 52 Ida. 499, 502, 16 Pac. (2d) 373). A drainage district being a special improvement district, it follows that when it levies an assessment against a particular, separate piece of property and' the assessment is paid, its share or proportion of the bonded indebtedness is liquidated and such piece of property is discharged from any further liability or obligation.

We conclude the power to levy assessments for the payment of drainage district bonds — interest as well as prin eipal — is limited (except as provided by secs. 41-2530 and 41-2531, I. C. A.) to the original assessment of benefits (secs. 41-2552, 41-2554, 41-2556, 41-2558 and 41-2562, I. C. A.).

But appellant contends these bonds continue to draw interest after maturity by reason of the uniform construction placed upon the statute, ever since its enactment, by the administrative and executive officers of the various counties and drainage districts of the state. It was alleged in the answer and stipulated at the trial:

“That by a contemporaneous construction that was placed upon the provisions of Chapter 179, Title 32 of the Compiled Statutes of the State of Idaho (now, as amended, Title 41, Chapter 25, I. C. A.), by all of the county treasurers of Idaho charged with the payment of interest and principal of said bonds, and by all other officers in the State of Idaho charged by law with the duty of carrying out the provisions of the law relative to the payment of said bonds, principal and interest, it was held to be the law that if said bonds shall not be paid at maturity they shall continue to draw interest at the rate provided for in the bonds until they are paid or until 30 days after the first notice of call made as provided by law. ’ ’

We have uniformly held the construction given a statute by the executive and administrative officers of the state is entitled to great weight and' will be followed unless there are cogent reasons for a change. (State v. Omaechevviaria, 27 Ida. 797, 803, 152 Pac. 280; Bashore v. Adolf, 41 Ida. 84, 91, 238 Pac. 534, 41 A. L. R. 932; City of Pocatello v. Ross, 51 Ida. 395, 408, 6 Pac. (2d) 481; United Pacific Ins. Co. v. Bakes, 57 Ida. 537, 67 Pac. (2d) 1024; Ada County v. Bottolfsen, 61 Ida. 363, 102 Pac. (2d) 287, 293.) In other words, and as stated in Industrial Com. v. Brown, 92 Ohio St. 309, 110 N. E. 774, L. R. A. 1916B, 1277, approved by this court in City of Pocatello v. Ross, supra, page 408, “Administrative interpretation of a given law, while not conclusive, is, if long continued, to be reckoned with most seriously and is not to be disregarded and set aside unless judicial construction makes it imperative to do so.”

Where, as here, it is clear, as hereinbefore pointed out, the drainage district statute (secs. 41-2552, 41-2554, 41-2556, 41-2557, 41-2558 and 41-2562, supra), confers no power whatever upon drainage districts to either pay or levy assessments for the payment of after-maturity interest, then, but in harmony with the cases above cited, administrative construction must, and will be disregarded.

We come now to the second question: May after-maturity interest paid to a bondholder be recovered back or offset against the principal of his bonds?

The functions of a drainage district are business and economic, rather than political or governmental. No question of taxation for governmental purposes or for the maintenance of governmental functions is involved. Assessments are made in proportion to the benefits received and are intended primarily to serve and advance the proprietary interests of the landowners within the district (Elliott v. McCrea, supra, p. 529 ; Booth v. Clark, 42 Ida. 284, 290, 244 Pac. 1099; Straus v. Ketchen, supra, p. 65). It is a well settled general rule (except where otherwise provided by statute), that a person cannot, either by way of set-off or counterclaim, or by direct action, recover back money which he has voluntarily paid with full knowledge of all the facts, and without any fraud, duress or extortion, although no obligation to make such payment existed (48 C. J., sec. 280, pp. 73A-736). Where a party voluntarily and without mistake of fact pays interest in excess of what is legally due, it is governed by the rule applicable to any other voluntary payment and cannot be recovered back. In accordance with this rule one who makes a voluntary payment of interest is not entitled to have the excess over the amount due applied on the principal, since to do so would be equivalent to holding that it could be recovered back (48 C. J., sec. 288, p. 739). And this court, in Kimpton v. Studebaker Bros. Company, 14 Ida. 552, 560, 94 Pac. 1039, 125 Am. St. 185, 14 Ann. Cas. 1126, approved the general rule that money voluntarily paid in satisfaction of an unjust or illegal demand with full knowledge of the facts, and without any mistake, fraud, duress or extortion, cannot be recovered by the payor.

In Lundy et al. v. Pioneer Irrigation District, 52 Ida. 683, 692, 19 Pac. (2d) 624, this court had under consideration the question as to whether property owners in an irrigation district who had not protested when paying irrigation district assessments, could recover excess payments. We held that “payment under a proper protest to the proper board or official is an essential prerequisite to entitle the party protesting to repayment of the excess (Asp v. Canyon County, 43 Ida. 560, 563, 256 Pac. 92; Howell v. Board of Commrs., 6 Ida. 154, 53 Pac. 542).”

In the ease at bar the trial court found:

“That all assessments levied for the payment of after-maturity interest were paid by the landowners within the said drainage district to the county treasurer, and by the ■ county treasurer to the defendant [Johnston], .... without any protest or objection, and with full knowledge of the facts, without fraud, duress or extortion. ’ ’

It follows, therefore, from what has been said, that the drainage district may not recover back or offset against the principal of appellant’s bonds, the after-maturity interest paid by it to appellant.

Judgment affirmed. Costs of transcript will be equally borne by the respective parties and no other costs will be taxed.

Budge and Morgan, JJ., concur.