Judith Basin Irr. Dist. v. Malott

73 F.2d 142, 97 A.L.R. 504, 1934 U.S. App. LEXIS 2621
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 15, 1934
DocketNo. 6878
StatusPublished
Cited by3 cases

This text of 73 F.2d 142 (Judith Basin Irr. Dist. v. Malott) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Judith Basin Irr. Dist. v. Malott, 73 F.2d 142, 97 A.L.R. 504, 1934 U.S. App. LEXIS 2621 (9th Cir. 1934).

Opinion

_WILBUR, Circuit Judge.

This is an appeal from an order of the District Court of the United States directing the issuance of a writ of mandate. An aetion had been brought in that conrt to secure judgment against the Judith Basin Irrigation [144]*144Distriet upon certain outstanding bonds issued by the district which were issued and sold in 1921. A judgment had been rendered in that action. The petition for writ of mandamus was filed in that action for the purpose of enforcing the judgment which was rendered on the 19th of October, 1931 in the sum of $77,716. It is alleged in the petition that the distriet had no property subject to execution and that there are no funds in the county treasury of Fergus county in which the irrigation distriet is situated applicable to the payment of the judgment. It is alleged that the petitioners and judgment creditors are the owners of all the bonds of the district ex-™m^;red f ’ 27i 39’ a*d ]}9 for $1,000 each. The judgment was for the principal of the first 40 bonds, to wit, $40,-000 and for the unpaid coupons excepting bonds numbered 21, 27, and 391. The judgment does not cover bonds to 160, which the petitioners alleged they now own. The bonds, by their terms, accrue at different times, ten or twelve bonds, as the casé may be, being payable annually until January 1, 1940'. It would follow that since the rendition of the judgment other bonds now owned by the plaintiff in that action have matured and other interest coupons have matured upon the bonds whieh are not yet due. The county commissioners are acting ex officio as commissioners for the irrigation distriet. All the property within the limits of the irrigation district, amounting to 4,253.35 acres, has been sold at tax sales by the county treasurer of said county to Fergus county for

« * * * delinquent taxes or assessments levied by said irrigation distriet and dp-li-ngnerit general taxes, together with penalties and interest, constituting liens thereon, and certificates of tax sales were issued to said county by said treasurer and filed in his office.

“13. That .the time for redemption from said tax sales and all thereof having expired, and no part of said lands having been redeemed, tax deeds were issued by said county treasurer to said Fergus County, conveying to said county all of said lands, and said county is now in possession and holding title to all of .said lands by virtue of said tax deeds.”

. ,, . , It is alleged that the board. of county commissioners have fixed the * fair market value of said land and parcels thereof for the purpose of such sale upon the assumption that said lands are not subject to future irrigation district taxes or assessments for the payment of any part of the principal or interest of said bonds, and threaten to and will, unless otherwise commanded by this court, notify and advise the purchaser, or purchasers, of the lands at said sale that the said lands will be sold and conveyed by said county free and clear from any and all liability to future taxation for the payment of any part of the principal or interest of said bonds.”

It is further alleged that the price fixed by the county commissioners is less than the amount due and to become due upon the bonds by over $50,006.

n ig d tbat tbe e0lmt commissi(m_ erg bave advertised aíld offered said lands £or gale ag ^ b seeticm 223ñ o£ tbe ^ vised Codes of Montana of 1921, as amended b seetkm g e gg ^ o£ Mont 1927< T]mt seeti(m ^ tbat tbe sale sball not be made &r legg than ^ maxkgb ^

, _ It is further alleged that the county comraissidners “ * * * claim and assert that the purchaser, ^ or purchasers, of said lands when so sold will obtain title thereto free and °tear from any and all liability for future taxes or assessments to pay the principal and interest said bonds which may remain unPaid after tke distribution and application of the proceeds of said sale as provided in said section 2235 as amended.”

That section (2285) was subsequently amended by the Legislature of Montana in 1929 (chapter 162) by providing that the sale should be made to the highest bidder, but the Supreme Court of Montana, in State ex rel. Malott v. Board of County Commissioners, 89 Mont. 37, 296 P. 1, held that this amendment was unconstitutional, in that it violated the contract rights of the bondholders of irrigation districts because it impaired the obligation of the contract between the distriet and the bondholders. They are further “cornmanded, in the event a levy of the taxes or assessments shall not be made for said Irrigation District by the Commissioners of said Distriet for any year, to ascertain the total amount necessary to be raised for all purposes °I sai^ distriet, and make a levy for that year for said distriet as provided in chapter 59 of the Laws of Montana, 1931, and furnisR the county clerk and recorder of said county with a list of said lands and the am0lmt o£ ^ t£m;s Qr assessmellte, as re_ quired by section 7246 of the Revised Codes q£ Montana; 1921 until tbe judgment in this actkm and gaid ^ fuUy id „

The basic question in this case is as to the nature of the obligation of the distriet upon the bonds issued and sold by it. At the [145]*145time of the issuance of the bonds there were* no decisions by tlie Supreme Court of Montana as to whether or not the bonds wore the’ general obligation of the district. Later the matter came before that court in Cosman v. Chestnut Valley Irr. Dist., 74 Mont. 111, 238, P. 879, 40 A. L. R. 1344, and in Clark v. Demers, 78 Mont. 287, 254 P. 162, and the case of Drake v. Schoregge, 85 Mont. 94, 277 P. 627. In these eases it was held that the bonds of the irrigation district were general obligations of the district. Later, however, the matter was again presented to the Supreme Court of Montana in State ex rel. Malott v. Board of County Commissioners, 89 Mont. 37, 296 P. 1, supra. The Supreme Court of Montana expressly overruled its previous decisions and decided the bonds were not the general obligation of the district, but merely a charge against the lands within the district, and that each tract of land was only liable for its proportion of the entire bonded indebtedness. It wa,s also held in that case that when the land ... had been sold for taxes and conveyed to tlie . , . . . . .. ... county by tax deed and subsequently sold to the county, as provided by law, that the purchaser acquired the lands free and clear from any lien of the bonds or any future taxation for the payment thereof. Ordinarily, it is the duty of the federal court to follow the deeisions of the state court with reference to state legislation. But one of the exceptions to this rale is that when there is no decision of the state court interpreiing a statute and that statute has been the basis for the issua.nee of obligations the statute becomes a part of the contract between the purchaser of the bond and the political corporation issuing the same and the federal courts will exercise their independent judgment in determining the proper construction of the state statute regardless of subsequent decisions of the Supreme Court of the state upon the question, leaning strongly, however, to the adoption of such interpretation if reasonably possible, This case presents a situation of that nature. At the time the bonds involved in this action were issued and sold there was no interpretation of the statute by the Supreme Court of Montana. Under these circumstances this court must exercise its own independent judgment as to the meaning of the statute under which the bonds were issued. Davenport v. Lord, 9 Wall. 409, 19 L. Ed. 704; Bolles v.

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73 F.2d 142, 97 A.L.R. 504, 1934 U.S. App. LEXIS 2621, Counsel Stack Legal Research, https://law.counselstack.com/opinion/judith-basin-irr-dist-v-malott-ca9-1934.