City of Carbon Hill v. Merchants Bank & Trust Co.

185 So. 387, 237 Ala. 55, 1938 Ala. LEXIS 465
CourtSupreme Court of Alabama
DecidedDecember 22, 1938
Docket6 Div. 389.
StatusPublished
Cited by9 cases

This text of 185 So. 387 (City of Carbon Hill v. Merchants Bank & Trust Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Carbon Hill v. Merchants Bank & Trust Co., 185 So. 387, 237 Ala. 55, 1938 Ala. LEXIS 465 (Ala. 1938).

Opinion

KNIGHT, Justice.

The complainant, .the owner and holder of six (6) street improvement bonds of the City of Carbon Hill, Alabama, (each of said bonds being in the sum of One Thousand Dollars, and bearing interest from date at six per cent per annum, payable semi-annually), filed this bill against the said City of Carbon Hi.ll, and others, for foreclosure of the lien upon the improved property, also for an accounting and other incidental relief.

It- appears from the averments of the bill that the bonds in question were issued and sold under the provisions of a certain street improvement ordinance, duly and legally adopted by the City of Carbon Hill, acting by and through its duly and legally constituted governing body. Said bonds were dated and issued on the first day of June, 1927, and were payable, each, ten years after date of issuance. It further appears that at the. time of the filing of the bill the said bonds had all matured, and that, in addition to the principal sum represented by the bonds, there had accumulated a’ large amount of interest, which remained unpaid on each of said bonds.

The bonds, it is averred, were issued under the provisions of Sections 2223 to 2227, inclusive, of the Code of 1923, and *57 each contained the following provision: “For the payment of the principal and interest of this bond, the full faith and credit of said City of Carbon Hill are hereby irrevocably pledged. As additional security for the payment of the series of bonds, of which this is one, the proceeds of the assessments to be made against the property to be benefited by the improvements ordered by Street Improvement Ordinance No. 2 have been pledged, and the liens of the City of Carbon Hill thereon, transferred and assigned for the benefit of the holders of said series of bonds, with power to enforce the same, either at law or equity * * *The bonds further recited that every requirement of law relating to the issue thereof had been duly complied with, and that the bonds were within “every debt and other limit prescribed by the constitution and laws of the State of Alabama.” The bill also specifically averred that each and all of said bonds were within every debt and other limit prescribed by the Constitution and laws of the State of Alabama.

The bill also avers that the respondent A. C. Ramsey, as city clerk and treasurer, improperly diverted funds that should have been applied to the payment of said bonds to other indebtednesses of the city; and that the respondents Gilder, Kelley and McDonald, Commissioners of the City of Carbon Hill “caused, aided or encouraged” the diversion, use or payment of funds which should have come to complainant and other bondholders to some other use and purpose than that authorized by law, and further charged the said officials with gross negligence in the collection of the assessment and in the enforcement of the liens for the payment of the assessments. There are other averments in the bill charging dereliction of duty to these officials and to the clerk and treasurer not necessary to be here stated.

In addition to the foreclosure of complainant’s lien on properties benefited by the local improvements, the bill seeks to hold, as for any deficit, the respondent A. C. Ramsey, city clerk and treasurer, and the respondents Gilder, Kelley and McDonald, Commissioners of said City, personally liable to the extent of any loss that was occasioned by their misuse or diversion of funds that should have been applied to the payment and discharge of complainant’s said bonds, and other bonds issued under said Improvement Ordinance; Discovery and an accounting are also sought.

The respondents, who are appellants here, separately demurred to the bill and to several of its aspects. The court overruled their demurrers, and they prosecute this appeal from that interlocutory decree.

The only grounds of demurrer here really argued take the points: that the bill is multifarious, that there is a misjoinder of parties defendant and that the bill fails to make a case against the city officials authorizing relief against them personally.

The equity of a bill, such as the one here exhibited, was fully sustained in the cases of City of Marion v. Underwood, 231 Ala. 225, 164 So. 296; Lamar v. Rivers et al., 235 Ala. 130, 178 So. 16; Wade v. Kay, 210 Ala. 122, 97 So. 129; Wilkins v. Folsom, 208 Ala. 24, 93 So. 547; McLendon v. Truckee Land Co., 216 Ala. 586, 114 So. 3; Code, § 8935.

In the case of City of Marion v. Underwood, supra, we held that a bill by the owner of improvements bonds, for foreclosure of lien on property benefited by the local improvements, was not rendered multifarious by reason of the joinder of the owners of all the improved property in a single proceeding, where the municipality had exercised its statutory authority to group improvements and to make single issue of bonds.

In the case of City of Mobile v. Smith, 223 Ala. 480, 136 So. 851, it was observed by Brown, J.,' in writing for the court [page 854] : “The bonds issued, according to the recitals therein, were made ‘a lien upon the property abutting on the streets and alleys in the City included in the area known as the 23rd Paving Venture or Improvement,’ and in addition thereto are ‘a direct and primary obligation of the City of Mobile,’ and, if the lien against the abutting property fails or is declared void, the liability of the City will be increased pro tanto. Therefore the city, in addition to its relation as statutory trustee for the collection (Code, § 2217), preservation, and application (sections 2226, 2230, 2231, Code) of the bonds, if the lien is-sustained, stands as quasi surety for the payment of the indebtedness created for the betterment of the abutting property, to the extent of the resulting benefit, and is entitled, *58 in equity, to compel payment in discharge of its liability. Tillis v. Folmar, 145 Ala. 176, 39 So. 913, 117 Am.St.Rep. 31, 8 Ann. Cas. 78; Segall et al. v. Loeb et al., 218 Ala. 433, 118 So. 633.”

It is to be here noted that the bonds in question pledged the full faith and credit of the City of Carbon Hill to their payment, and the bill avers that this city was within the debt limit prescribed by the Constitution and laws of the State of Alabama. Section 2227 did not, under these circumstances, inhibit the said municipality from pledging its faith and credit to the payment of the bonds.

The holding in the Smith Case, supra, was reaffirmed and approved in the more recent case of Moore v. Howard, 227 Ala. 219, 149 So. 249.

The Supreme Court of Florida, in case of City of Winter Haven et al. v. Summerlin et al., 114 Fla. 727, 154 So. 863, held [page 865] :

“It is well settled that, where a municipal corporation is charged by law with the duty of collecting special assessments and making proper payment thereof to bondholders to whom the assessments have been pledged as part of their security, the duty amounts to a trust that is cognizable in equity for the purpose of calling to account the municipality and its officers for the manner in which that trust has been performed. Vickrey v. City of Sioux City (C.C.) 104 F. 164. It is also well settled that, where a trust is involved, those who have undertaken the management of the trust, such as municipal officers, as well as the municipality itself, are proper patties to the bill in order that the relief when granted may be full, complete and efiectlVC ^

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Hill v. Rice
67 So. 2d 789 (Supreme Court of Alabama, 1953)
McGowin v. Robinson
39 So. 2d 237 (Supreme Court of Alabama, 1949)
Brantley v. Brantley
38 So. 2d 8 (Supreme Court of Alabama, 1948)
Gaines v. Stevens
28 So. 2d 789 (Supreme Court of Alabama, 1946)
Allgood v. Bains
26 So. 2d 98 (Supreme Court of Alabama, 1946)
Lynn v. City of Longview
131 P.2d 164 (Washington Supreme Court, 1942)
Van Antwerp v. Van Antwerp
5 So. 2d 73 (Supreme Court of Alabama, 1941)
Hawkins v. Holman
195 So. 880 (Supreme Court of Alabama, 1940)
Fife v. Pioneer Lumber Co.
185 So. 759 (Supreme Court of Alabama, 1939)

Cite This Page — Counsel Stack

Bluebook (online)
185 So. 387, 237 Ala. 55, 1938 Ala. LEXIS 465, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-carbon-hill-v-merchants-bank-trust-co-ala-1938.