Peoples State Bank v. Imperial Irrigation District

101 P.2d 466, 15 Cal. 2d 397, 1940 Cal. LEXIS 226
CourtCalifornia Supreme Court
DecidedApril 16, 1940
DocketL. A. 17248
StatusPublished
Cited by3 cases

This text of 101 P.2d 466 (Peoples State Bank v. Imperial Irrigation District) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Peoples State Bank v. Imperial Irrigation District, 101 P.2d 466, 15 Cal. 2d 397, 1940 Cal. LEXIS 226 (Cal. 1940).

Opinions

CURTIS, J.

This action was instituted by the plaintiff the owner and holder of five one-thousand dollar bonds of the defendant irrigation district, together with attached coupons, for declaratory relief and for an injunction restraining and prohibiting the defendant district from instituting proceedings under chapter X (now chap. IX) of the United States Bankruptcy Act. Chapter X (now chap. IX) of said act comprises sections 81 to 84 of said Bankruptcy Act. Said chapter was enacted as an amendment to the bankruptcy statute on August 16, 1937. (50 U. S. Stats., p. 653.)

Count one of the complaint purports to set forth a cause of action entitling the plaintiff to declaratory relief in an alleged actual controversy between the plaintiff and defendants “as to the right of the defendants to file a petition under the bankruptcy act”, and count two of the complaint is for an injunction directed to the defendants restraining them from filing any proceedings under the bankruptcy laws of the United States. The defendants appeared and filed both a general and special demurrer to said complaint. On the hearing of said demurrer, the trial court sustained the same and dismissed the action. From the judgment following said order of dismissal the plaintiff appealed to this court.

The contentions of the appellant are (1) that an irrigation district organized under the laws of this state is a governmental agency and as such is not subject to said chapter X (now chap. IX) of the United States Bankruptcy Act, and (2) that the state has not given its consent to the filing of a petition for composition of its debts by an irrigation. district under the Bankruptcy Act of the United States, [399]*399as amended by the enactment of said chapter X (now chap IX) thereof.

Bach of these two contentions has been, in our opinion, completely answered adversely to the appellant by the opinion of the Supreme Court of the United States in the case of United States v. Bekins, 304 U. S. 27 [58 Sup. Ct. 811, 82 L. Ed. 1137], The facts in that case show that the Lindsay - Strathmore Irrigation District, organized under the laws of this state, sought to take advantage of the amendment to the United States Bankruptcy Act, being chapter X (now chap. IX) of said Bankruptcy Act (which purports to provide a method of relief for certain taxing agencies by permitting them to file a proceeding for the composition of their debts) and chapter 4 of the 1934, Extra Session Statutes of this state. Chapter 4 of the 1934, Extra Session Statutes, purports to grant permission to “taxing districts as described in Chapter IX” of the United States Bankruptcy Act to file proceedings for the composition of their debts under said act, “or as the same may be modified from time to time”. In other words, the proceeding instituted by the LindsayStrathmore Irrigation District which was considered by the court in the last named case is precisely like that which the appellant alleges the respondents are proposing to institute unless prohibited by order of court. Upon the filing of such a petition in the United States District Court by the LindsayStrathmore Irrigation District, Milo Bekins, and others, holding unpaid bonds of the district, appeared in said action and filed objections to the granting of the district’s petition. The district court sustained the objection of Bekins and associates, and an appeal was taken from the judgment of the district court to the United States Supreme Court. On appeal the appellees laid special stress upon the case of Ashton v. Cameron County etc. District, 298 U. S. 513 [56 Sup. Ct. 892, 80 L. Ed. 1309], wherein the court had declared unconstitutional the original chapter IX of the United States Bankruptcy Act on the ground that said act might materially restrict the state's control over its fiscal affairs. In commenting on that objection to chapter IX of said act, and referring to the amendment as contained in chapter X thereof, the court, in the Bekins case, page 50, explained, “In enacting Chapter X the Congress was especially solicitous to afford no ground for this objection. In the report [400]*400of the Committee on the Judiciary of the House of Representatives, which was adopted by the Senate Committee on the Judiciary, in dealing with the bill proposing to enact Chapter X, the subject was carefully considered”.

The court then quotes portions of the report of the House Judiciary Committee in which it refers “to the sweeping character” of the Ashton case, and expresses its belief that the proposed amendment to the United States Bankruptcy Act “is not invalid or contrary to the reasoning of the majority opinion”.

After its quotation from the report of the House Judiciary Committee, the court in the Bekins case continues (page 51): “We are of the opinion that the Committee’s points are well taken and that Chapter X is a valid enactment. The statute is carefully drawn so as not to impinge upon the sovereignty of the State. The State retains control of its fiscal affairs. The bankruptcy power is exercised in relation to a matter normally within its province and only in a case where the action of the taxing agency in carrying out a plan of composition approved by the bankruptcy court is authorized by state law.”

Prior to the foregoing statement the court had given consideration to the effect and validity of chapter 4 of the stat: utes of this state enacted at the 1934 special session. In respect to said statute the court (page 47) stated: “It is unnecessary to consider whether Chapter X would be valid as applied to the irrigation district in the absence of the consent of the State which created it, for the State has given its consent. We think that this sufficiently appears from the statute of California enacted in 1934. (Laws of 1934, Ex. Sess., chap. 4.) This statute (section 1) adopts the definition of ‘taxing districts’ as described in an amendment of the Bankruptcy Act, to-wit, Chapter IX approved May 24, 1934, and further provides that the Bankruptcy Act and ‘acts amendatory and supplementary thereto, as the same may be amended from time to time, are herein referred to as the “Federal Bankruptcy ■ Statute” ’. Chapter .X of the Bankruptcy Act is an amendment and appears to be embraced within the state’s definition. We have not been referred to any decision to the contrary. Section 3 of the state act then provides that any taxing district in the State is authorized to file the petition mentioned in the ‘Federal [401]*401Bankruptcy Statute’. Subsequent sections empower the taxing district upon the conditions stated to consummate a plan of readjustment in the event of its confirmation by the federal court. The statute concludes with a statement of the reasons for its passage. ’ ’

The statement of the reason for the enactment of the statute is contained in section 13 of said chapter 4, and is found on page 10 of the statutes of 1935. This volume of the statutes includes those statutes enacted at the special session of 1934, as well as those of the 1935 regular session. It is not necessary for the purpose of this opinion to set out said statement here.

The opinion concludes (page 53) with the following comprehensive statement, “In the instant case, we have cooperation to provide a remedy for a serious condition in which the States alone were unable to afford relief. Improvement districts, such as the petitioner, were in distress. Economic disaster had made it impossible .for them to meet their obligations.

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Related

Mason v. Banta Carbona Irr. Dist.
149 F.2d 49 (Ninth Circuit, 1945)
In re Summer Lake Irr. Dist.
33 F. Supp. 504 (D. Oregon, 1940)
Peoples State Bank v. Imperial Irrigation District
101 P.2d 466 (California Supreme Court, 1940)

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Bluebook (online)
101 P.2d 466, 15 Cal. 2d 397, 1940 Cal. LEXIS 226, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peoples-state-bank-v-imperial-irrigation-district-cal-1940.