McPhee v. Reclamation Dist. No. 765

119 P. 1077, 161 Cal. 566, 1911 Cal. LEXIS 466

• Court: California Supreme Court
• Decided: December 14, 1911
• Docket: Sac. No. 1930.
• Status: Published

Opinion

SLOSS, J.

Plaintiff is the owner of certain lands in Yolo County. She is seeking to free these lands from the lien of assessments levied by the defendant Reclamation District No. 765. Her contention is that the proceedings leading up to the attempted formation of said district were void for want of jurisdictional prerequisites. A proceeding in quo warranto has been instituted in the name of the people of the state against said district to test its right to corporate existence. The present action is one in equity, and is brought to enjoin the enforcement of the assessment liens until the conclusion of the quo warranto proceedings shall have determined whether or not there is a reclamation district authorized to levy assessments.

The court below sustained a demurrer to the amended complaint, and, the plaintiff declining to amend further, judgment was entered in favor of defendants. Prom this judgment the plaintiff appeals.

The amended complaint begins by setting forth the steps taken in the attempt to form Reclamation District No. 765. We need not undertake to state these matters in detail. It is enough to say that'there was a failure to publish the petition for the organization of the district for the period required by the statute (Pol. Code, see. 3447) and that this failure, as is conceded by the respondents, went to the jurisdiction of the board of supervisors to form the district, and is fatal to the de jure existence of such district.

The pleading then goes on to describe th'e various steps leading up to the levy of an assessment on the lands within the district (including the lands of plaintiff) to pay the cost of reclamation work. All of this was done without the knowledge of the plaintiff. Upon her refusal to pay, an action was begun against her in the name of said Reclamation District No. 765, to enforce said assessment. In that action said defendant (plaintiff herein), attempted to defend by denying the allegation, contained in the complaint therein, that said pretended district was duly organized and existing as a reclamation district and constituted a public corporation and agency, and relied, in support of such denial, upon the facts above stated, showing that there never had been a valid organization of the district. But the superior court refused to entertain the defense, and gave judgment for the plaintiff in said action. On appeal, the judgment was affirmed by the district court of appeal for the third appellate district, on the ground that in that action the corporate existence of the plaintiff therein could not be questioned, but such existence could only be questioned in proceedings in quo warranto, at the suit of the state. A petition to have the cause heard in the supreme court was denied and the judgment in favor of the district became final. Thereafter the defendant in that action and plaintiff herein, Anna McPhee, applied to the attorney-general for leave to institute proceedings in quo warranto against the said district. Such leave was granted and an action entitled the People of the State of California, on. the relation of Anna McPhee v. Reclamation District No. 765 et al., was instituted 'and is now- pending. In that action the right of the defendant to exist as a corporation or .public agency is involved. After the commencement of such proceedings in the name of the People, and notwithstanding the pendency thereof, the defendants caused execution to be issued upon the judgment, theretofore obtained against the plaintiff, and pursuant thereto the sheriff of Yolo County gave notice that plaintiff’s lands would be sold on such execution on the fourteenth day of January, 1911. This action was commenced on the thirteenth day of January, 1911, for the purpose of obtaining an injunction restraining the district and the sheriff from selling plaintiff’s lands under said execution until the proceeding in quo warranto could be heard and final judgment therein be rendered. The court below denied a temporary restraining order and on the day set for the sale the sheriff offered plaintiff’s lands for sale under the execution and said property was struck off to Lizzie H. Glide, one of the defendants herein, for the amount of the judgment, interest, and costs. A certificate of sale was executed and delivered by the sheriff to said purchaser. After such sale, the plaintiff, with leave of court, filed her amended complaint, in which she set forth, in addition to the foregoing facts, the commencement of a second action against her by the defendants to enforce a second assessment against her lands. The prayer of the amended complaint is for an injunction restraining the execution of a sheriff’s deed under the sale made, and the prosecution of the action on the second assessment, until the determination of the proceeding in quo warramto.

The position of appellant is that inasmuch as she was, in the litigation instituted by the district to foreclose the alleged lien, precluded from showing in defense that the district was never legally organized, but was remitted to the remedy of quo warranto, she should in equity and justice be entitled to protect her land from forced sale under such assessment until the question of the legality of the existence of the district can be determined in the only proceeding by which she' may have it tested. The effect of the decision in the action brought by the district against the plaintiff was, it is argued, to hold that any set of persons acting without authority of the statute may assume to be a reclamation district, may levy assessments upon land, and then enforce such assessments by actions in which their want of power.to proceed cannot be questioned. Unless the property-owner can, by some other form of proceeding, litigate the question of the right of such persons to so proceed, he is, says the appellant, deprived of his property without due process of law. If the only opportunity of the landowner to raise this question is in quo warranto and he diligently proceeds to seek this remedy, he must be protected in the possession of his land until the quo warranto proceedings can be brought to a determination.

The opinion of the district court of appeal affirming the judgment against plaintiff is reported in 13 Cal. App. 382, [109 Pac. 1106], under the title of Reclamation District No. 765 v. Anna McPhee. 'If it were true that, in that case, the court of appeal had held that, in an action brought in the name of a pretended reclamation district, the landowner could not defend upon the ground that there was no such district, and that the only way in which the existence of the district could be questioned was by quo warranto, the position of the appellant would be unanswerable. For certainly, as was said in Piper v. Rhodes, 30 Ind. 309, “there must be a corporation to authorize the collection of assessments,” and the law must, in some form of proceeding, give to such appellant an opportunity to deny the existence of a district authorized to levy assessments before her land is finally taken from her. If her only remedy against an attempt to burden her land with assessments levied by unauthorized persons assuming without right to act as a reclamation district, is by quo warranto, and she is proceeding as diligently as may be to assert this remedy, she is entitled in the interim to the protection of a court of equity. The fact that the judgment foreclosing the lien has gone against her would not affect her right, if the facts entitling her to attack the assessment were of such a nature that she was, by reason of some rule of law, precluded from asserting them in defense to the foreclosure suit. Where a defense existed in favor of a party defendant, but could not be interposed in the action in which the judgment complained of was rendered, equity will restrain the enforcement of that judg ment. New York & N. H. R. R. Co. v. Hawes, 56 N. Y. 175; Scott v. Shreeve, 12 Wheat. 607, [6 L. Ed. 744]; Hubbard v. Eastman, 47 N. H. 507, [93 Am. Dec. 467]; Ferrell v. Allen, 5 W. Va. 43.)

But an examination of the opinion in Reclamation District v. McPhee shows that the court did not lay down the rule as broadly as the appellant claims. What was held was that the validity of the organization of the district could not be questioned by the defendant in an action on the assessment, if at the time of levying the assessment the district had a de facto existence. As appears by that opinion the court decided that the reclamation district, plaintiff herein, although not validly organized, was a de facto corporation, and it was for this reason that it was held that its de jure existence could not be collaterally questioned in a proceeding brought by it to enforce its assessments. It was not held that in an action on an assessment, brought by a pretended reclamation district, the landowner could not show in defense that the body or persons assuming to assess his land and to bring an action to enforce the assessment had no existence, either de jure or de facto, as a corporation. On the contrary, it was stated that, if the pretended corporation had had no de facto existence, its right to exist might have been attacked collaterally in an action on the assessment. But, concluding that the district was shown to have had a de facto existence, the court held that the legality of the steps taken for its formation could not be attacked in the action to enforce the assessment. This was based upon the rule that the validity of an assessment levied by a de facto corporation of this character does not depend upon the fact of the de jure character of the corporation. Anything contrary to this rule that may have been said in Reclamation District v. Burger, 122 Cal. 442, [55 Pac. 156], must be disregarded as conflicting with a long line of earlier and later decisions, many of which are cited by the district court of appeal in its opinion (13 Cal. App. 388, [109 Pac. 1106].)

Under these circumstances it is difficult to see how an injunction restraining the execution of a sheriff’s deed until the determination of the quo warranto proceedings would be of any benefit to plaintiff. If the reclamation district was a de facto corporation, a judgment in quo warranto, even though it should determine that the district had not been legally or ganized, would not annul or affect the acts performed by it before the judgment in quo warranto. (People v. Flint, 64 Cal. 49, [28 Pac. 495]; 23 Am. & Eng. Ency. of Law, 628, 629; Gaff v. Flesher, 33 Ohio St. 115; Schaefer v. People, 20 Ill. App. 605.) “A judgment of ouster is not retroactive so as to affect or destroy acts done or contracts made prior to its rendition.” (23 Am. & Eng. Ency. of Law, 629.) If the assessments -when levied were valid because of the de facto character of the corporation, their validity could not be destroyed by a subsequent adjudication, in an action at the suit of the state, that the alleged district had no legal right to corporate existence.

But, argues the appellant, the facts alleged by her in the present complaint show that the reclamation district never had even a de facto existence. We need not enter into any discussion of this point. The supposed de facto existence of the district' was the only ground upon which this plaintiff as defendant in the action to enforce the assessment was precluded from showing the want of legal authority of the assumed district. Under the law laid down by the court of appeal it was certainly open to her to show in defense that there was neither a de jure nor a de facto corporation. One of two things must then be true. Either she litigated in that action the question of the de facto existence of the district, and, having been defeated on this issue, is estopped by the final judgment from again raising the same question in this action; or else, having had the opportunity to show the want of de facto (in addition to de jure) existence in defense to the former action, she failed to show it. If the court in the suit on the assessment did actually determine that the plaintiff therein was a de facto corporation, and the question was in issue, the plaintiff cannot now urge that the determination on this point was erroneous. When a judgment has once become final, its conclusive effect upon the parties with respect to the matters adjudicated does not depend in any degree upon the correctness of the adjudication. On the other hand, if the plaintiff failed, in the former action, to plead apd show that there was no de facto corporation, she is equally precluded'from raising the point now. Equity will not relieve against a final judgment upon any ground which might have been asserted as a defense in the action in which the judgment complained of was ren dered. (25 Cyc. 1006; Agard v. Valencia, 39 Cal. 292; Ede v. Hazen, 61 Cal. 360.)

In what we have said, we have confined ourselves to a discussion of the plaintiff's prayer for an injunction restraining the enforcement of> the judgment obtained on the first assessment. If the grounds for sustaining the denial of this relief be sound, the plaintiff is in no better position to restrain the prosecution of the action to enforce the second assessment. The want of de facto existence is available to the appellant in defense of that action, unless she is estopped by the judgment in the first action. We express no opinion as to which of these alternatives be correct, but in either view, there is no ground for the interposition of equity. Furthermore, the granting of an injunction to stay proceedings in the pending action on the second assessment would be directly contrary to the provisions' of subdivision 1 of section 3423 of the Civil Code. (Spreckels v. Hawaiian C. & S. Co., 117 Cal. 377, [49 Pac. 353]; Wright v. Superior Court, 139 Cal. 469, [73 Pac. 145].)

It would seem, therefore, that the court below rightly sustained the demurrer.

The judgment is affirmed.

Shaw, J., Angellotti, J., Lorigan, J., Henshaw, J., and Melvin, J., concurred.

Rehearing denied.