Woodruff v. State

77 Miss. 68

• Court: Mississippi Supreme Court
• Decided: March 15, 1899
• Status: Published

Opinion

WiltuamsoN, Special J.,

delivered the opinion of the court.

The proper decision of the questions raised by the demurrers in this case involves, necessarily, the construction of the act of March 17, 1871, creating the levee board No'. 1, under which act of the legislature the levee bonds sued on were issued, and the construction of the act passed in 1867, known as the “Liquidating Levee Actj” also the construction of the many other acts of the legislature in dealing with the subject of levee taxes and the sales of lands for levee taxes, passed subsequently to the two acts referred to. The object of appellants’ bill is to compel the administration of a trust for the payment of the bonds of the levee board No. 1 held by them, which trust the bill charges has been wasted and mismanaged, under the administration of the trustee, by void sales of the trust property under acts of the legislature, by failure to demand taxes due the trust estate, and by conveying away property belonging to the trust estate without enforcing the collection of the purchase money due the estate. The demurrers to the bill plead the six, seven, and ten years statutes of limitations in bar of appellants’ right to maintain the suit. They also raise the question of the jurisdiction of a court of equity to entertain the bill and grant the relief asked for. Numerous other grounds are assigned against the sufficiency of the bill.

Let us first examine the provisions of the act of March 17, 1871, to see what constitutes the trust fund to which the holders of the Nó. 1 levee bonds may look'for their payment. After creating tbe corporation, declaring its object and purposes, providing for tbe organization of tbe levee board, tbe selection of its officers and members, and prescribing their powers and duties, tbe act fixes the boundaries of tbe Mississippi levee district No. 1, and then uses this language at the close of sec. 7: “And tbe lands embraced and included in said levee district shall be, and are hereby declared to be, and are made chargeable and liable, as hereinafter declared, for all tbe costs, outlays, charges and expenses to be incurred or made for the levees, works, and improvements provided for and contemplated by this act, or in maintaining the same.” Sec. 8 contains the following language: “That for the purpose of building, repaying, constructing and maintaining the levees and works aforesaid, and for carrying into effect the purposes of this act, a uniform charge and assessment of two per centum per annum on the value of every acre of unimproved and improved land and cultivated lands in said levee district is hereby fixed, levied, and made, which shall continue for twelve successive years from the date of this act, and shall be due and payable the first day of September, in each year, for said period.” The remainder of the section provides for fixing the value of the several kinds of land, in the several counties embraced in the district. Sec. 9 provides for the issuance and sale of $1,000,000 of bonds, to enable the board of levee commissioners to carry out the purposes of the act. Sec. 10 provides: “That the.charges and assessments levied and made as aforesaid by this act shall be, as they are from time to time collected, and they are hereby constituted a special fund and trust, to be used by said board, first, in payment of any bonds that may be sold or used as before provided under this act, and of any money that may be borrowed under its provisions; secondly, for the payment of any other debts and liabilities of said board, and when collected the same shall be paid into the treasury of said board for the purposes aforesaid.” It is clear, from the language used in sec. 7, that the lands in the. district were made chargeable and liable for costs, outlays, and expenses as thereinafter declared- — that is, to the extent and in the manner provided in the sections which followed. By sec. 8 the charges and assessments levied on the lands were fixed at 2 per centum per annum for a period of twelve years on the value of each acre of land in the district. To this extent only were the lands in the district made liable for the costs, outlays, and expenses mentioned in sec. 1. The charges and assessments levied and made by see. 8 of the act are the charges and assessments which, by sec. 8, are, as they are from time to time collected, constituted a special fund and trust, to be used by the board to pay bonds, borrowed money, etc. Until they were collected, the charges and assessments were not a trust fund, but existed only as a tax levied on the land; a charge against it, which the levee board had a right to collect under the law, and which the creditors of the board had a right under the law to compel it to collect. When collected, the taxes became a fund which the act declared should be a trust fund, and pledged to creditors. Shotwell v. Louisville, etc., Ry. Co., 39 Miss., 542 (11 So. Rep., 455). The lands struck off to the treasurer at a sale for levee taxes, and not redeemed, were declared by sec. 13 of the act to be a part of the levee fund, subject to sale, as the board should order, but this vesting in the board of the title to the lands purchased for taxes was simply a means-to secure the collection of the charges and assessments imposed by sec. 8 of the act, which charges and assessments, when collected, constituted the trust for the benefit of creditors. The lands themselves were not the trust fund, nor a part of the trust fund, that was by the act pledged to the creditors of the board. The lands were held by the board, charged with state and county taxes, which had to be accounted for with interest, their collection being suspended only during the time the No. 1 board held the lands. Not only were these lands held by the board subject to the suspended state and county taxes, but they were subject also to accrued and accruing liquidating levee taxes, which must b.e paid by the No. 1 board during its holding. Only state and county taxes, not liquidating levee taxes, were suspended. The right to have collected No. 1 levee taxes due on lands purchased by the board at tax sales, and held by it, after the expiration of the period of redemption expired, is the full extent of the rights and interests the creditors of the No. 1 levee board had in the lands.

The subject-matter of this suit being a trust, it comes especially within the jurisdiction of a court of equity, and we think the chancery court of Hinds county has territorial juris diction, since the state and its officers are sued, and the Delta & Pine Land Company, one of the defendants, is domiciled at Jackson. Gibbs v. Green, 54 Miss., 592. But the chancery court of TIinds county has no jurisdiction to assess and collect taxes in levee district JSE o. 1. The legislature provided the scheme for collecting the taxes in the very act which imposed them, and jurisdiction over this subject was given the courts in that district. If the proper officers in the several counties .embraced in levee district No. 1 have not assessed and collected the levee taxes imposed by the act of 1871 on any of the lands therein, or have failed to sell any of the lands, when delinquent, at the time and within the period required by said act, the chancery court of Hinds county is without jurisdiction to have said taxes assessed and collected by sale of the lands or other - Avise. If the Hinds county chancery court had jurisdiction to assess and collect said taxes, the relief could not be granted in this proceeding. Complainants’ right to apply to the court, and compel the collection of the taxes, is provided for in section 10 of the act of 1871. The remedy provided was either mandamus against the leA^ee board to have the taxes collected, or the appointment of special commissioners by the court, with full powei's to assess, collect, and pay OA'er the taxes. The six years statute of limitations bars these remedies. It may be urged against this that the act of 1884 abolished the levee board, and repealed the act of 1871, so that there was no one to sue. We reply that this provision was a part of complainants’ contract. The holders of the levee bonds could not enjoy the benefit of the trust fund without the means of collecting it, hence the attempt of the legislature to repeal the only remedy for compelling collection of the taxes was tantamount to a repeal of that part of the act which imposed the charges and assessments upon the lands, and was therefore null and void. The act of 1884 was no obstacle to -complainants’ right to apply to the courts of the district for a speedy enforcement pf the remedy, guaranteed to them by the very act and contract under which their bonds ■were issued. 'Hiere ivas always a trustee to >be proceeded against, and the courts were open.. The levee board, the auditor and treasurer of the state, and the state itself were successively trustees, and could have been proceeded against. The right to sue for trust funds is controlled by the ten years statute of limitations, and as against all the lands held by defendants the Delta & Pine Land Company, the Louisville, New Orleans & Texas Railway Company, N. T. Burroughs, and other purchasers holding and claiming in their own right, complainants are barred of their right to sue on all bonds which fell due ten years or more prior to the filing of this suit, but on all bonds which fell due within the ten years suit may be maintained. ' As to No. 1 levee taxes due on all. lands held by the state at the time this suit was filed, which bad been sold to the state for district No. 1 taxes, in whole or in part, and as to No. 1 levee taxes due on all the lands held by the state at that time, title to which had been transferred to the state under operation of the act of IS'?6, and as to any taxes, moneys, or funds that may, at that time, have been in the state treasury to the credit of district No. 1 levee board, or that belonged to it, the state was trustee in possession, and must account to the cedui que trust for the fund; and as to these matters the appellants are entitled to report from the trustee, and a discovery as to the true amount of the trust estate on hand. Such funds collected will be applied to the payment of bonds not barred.

It is alleged in tlie bill, and earnestly contended in the briefs for appellants, that the lands held by the liquidating levee board under titles acquired at sales for liquidating levee taxes, made in accordance with the provisions of the acts of 1866-67, were subject to the levee taxes of the No. 1 board, levied by the act of March 17, 1871. We cannot assent to this proposition. Under the provision contained in section 13 of the act of 1867, the lands purchased by the liquidating levee board at tax sales, and not redeemed, were not subject to state taxation for levee purposes, or otherwise. During the time they were owned by the liquidating levee board, such lands were exempt from state taxation for levee purposes. This is a most valuable provision in the legislative contract made with the holders of the liquidating levee boaid, and doubtless was most potential in persuading them to sacrifice a large part of their claims against the old board, and to accept, in lieu thereof, the new bonds for a much less amount. Being a material part of the contract, the legislature was without authority to repeal or modify it; nor did the legislature repeal or modify this clause by any of the provisions of the act of 1871 creating district No. 1. This was the law at the time the act of 1871 was passed and the bonds now sued on were sold. The holders purchased the bonds of the No. 1 board while this exemption was in force, and they took the bonds with full notice that no revenue from this source could he realized for their payment. It was not necessary lo specify in the act of 1871 the exemption of lands held by the liquidating levee board from the charges and assessments therein imposed and levied. . Such lands stood exempted by an ir-repealable law. Tt follows that sales of lands embraced in levee district No. 1, legally made to the liquidating levee board for liquidating levee taxes due thereon prior to the act of 1871, and even subsequently thereto, conveyed valid titles to the liquidating levee board; and while held by the liquidating levee board said lands were not subject to any state, county, or No. 1 levee taxes, and could not be sold therefor. Void sales to the liquidating levee board Avould, of course, not exempt the lands from state, county, and No. 1 levee taxes while such lands were claimed by the liquidating levee board under such void title ; and a legal sale oí lands thus held by the liquidating levee board under void titles for levee taxes due the No. 1 board would pass title, and such lands purchased by levee board No. 1, or by the state for it, would be held as a part of the levee fund of the No. 1 board, and to the extent of the taxes due thereon to the No. 1 board would be a trust fund held for the benefit of the holders of district No. 1 bonds.

The sales to the liquidating levee board are not void for the reasons assigned in appellants’ bill of complaint, to wit: (1) That they were not sold on the proper day; (2) that bonds were not duly executed by the tax collectors before making the sale; (3) that deeds, as required by law, were not executed by the tax collectors. These irregularities would not avoid the sales to the liquidating levee board. It is not averred in the bill that no liquidating levee taxes were due, nor is it averred that the taxes due were paid before the sale, that no deed of any kind was made, nor that any fundamental or constitutional requirement had been dispensed with in the assessment of the lands, the levy of the taxes, or in the sales for taxes. Besides, the acts of February 10, 1860, the act of April 10, 1873, and the provisions of the code of 1811, were curative statutes in force during the time the titles were held by the liquidating levee board, and perfected the titles, after the expiration of the several limitations fixed, in the law, as to all irregularities in the sales.

We do not think the extension by the legislature of the time for the registration of debts, as required in the liquidating levee act, rendered void the bonds issued to pay debts registered within the time fixed; nor would any defective registration, as charged in the bill, avoid the liquidating bonds issued to pay said debts. The legislature could not abate any taxes legally due the No. 1 levee board on any of the lands embraced in levee district No. 1, and any act of the legislature which attempted to abate any such legally due taxes, or to release any portion of the lands embraced in §aid district by the act of 1871, is unconstitutional, null and void. Hence we hold the act approved April 11, 1S76, being an act to relieve the lower part of Coahoma county and the counties of DeSoto and Tal-lahatchie from levee taxes of district No. 1 to be unconstitutional, null and void, and it was the duty of the tax collectors of levee board No. 1 to have proceeded to collect the levee taxes due on the lands attempted to be exempted by this act; but if this was not done, and if the holders of the bonds have stood by. and have not resorted to the remedies prescribed in their contract to enforce the collection of said taxes, or to have the lands sold, it is now too late. Complainants were barred of their rights and remedies to collect said taxes at the time this proceeding was begun.'

The abatement act of 1875 was null and void in so far as it undertook to abate any taxes legally due levee board No. 1. The levee taxes legally due the No. 1 levee hoard on any lands which had heen legally sold to the No. 1 hoard or to the state after the law required the title to he made to the state, must have heen paid when said lands were purchased from the state, else the lands are still liable for such taxes as were legally due said No. 1 levee hoard at the time of the purchase

* None of these levee taxes was abated by the act of 1875; and the acts of the legislature approved March 14-, 1884, and March 2, 1888, which dealt solely with levee lands held by purchasers under the decree of the Hinds county chancery court in the case of Gibbs v. Green, 54 Miss., 592, did not attempt, to abate any No. 1 levee taxes that- may have been due at the time of the quitclaim of the state’s title. The act of 1884 distinctly required that all state, county, and levee taxes due on tbe lands up to tbe date of tbe execution of tbe quitclaim deed should have been paid before tbe deed could be executed. By section 2 of the act of 1888 it is expressly provided that tbe deed to be executed by tbe auditor in pursuance of that act “shall have the effect of passing the title of the state to the lands embraced therein, whensoever the same may have been acquired, and of releasing all taxes, state, county and municipal, which may have accrued prior to the date of the purchase from said commissioners, notwithstanding any error or miscalculation by the auditor of the amount of taxes to be paid under the provisions of this section, and no such error or miscalculation shall be held to invalidate such conveyance or impair the effect herein-before declared, but the land conveyed shall, nevertheless, be liable for any deficiency in the amount stated or demanded.” Jt will be perceived that the lands were relieved only from state, county and municipal taxes which may have accrued prior to the date of the purchase from the. commissioners. No clause in the act undertakes to release the lands from levee taxes. The law required levee taxes legally due the No. 1 board to be paid before a quitclaim could be obtained under either of the acts, and, if any taxes legally due levee board No. 1 were omitted to be collected at the time of making said quitclaims by the auditor*, the lands are still liable for them. Bow, the bill alleges generally, that these lands were quitclaimed to defendants without collecting the taxes due levee board No. 1, and complains further that for the levee taxes which were paid in the purchase the bonds were accepted instead of requiring cash. We cannot agree with counsel for appellants that it was a violation of the contractual rights of complainants that the act'approved March 5, 1884-, by its third section, permitted the auditor to receive the bonds and coupons of levee board No. 1 in the redemption of lands sold for nonpayment of its taxes. The very act under which complainants hold their bonds and assert all their rights stipulates, in so many words, that “said bonds or coupons shall be receivable alter maturity, at par, in payment of any charge or' assessment fixed, levied or made by this act.” If at the time the quitclaims were executed to defendants under the acts of 1884 or 1888. taxes due levee board No. 1 were paid in bonds or coupons issued under the act of 1871, it was a legal payment and satisfaction of said taxes, and the holders of other levee bonds may not complain.

We do not think the bill of complaint is sufficiently specific in some respects. It should more specifically describe the lands claimed by the several defendants against which relief is sought. It should more specifically state the amount of taxes claimed to be due on the lands held and claimed by the several defendants respectively. It should state more specifically what lands were sold to and held by the levee board No. 1. These matters are disclosed by the public records, which are open alike to complainants and defendants, and as to them the bill does not make showing sufficient to call for discovery. If the bill stood confessed in its present shape, no specific relief could be decreed against any particular lands. As we stated above, complainants may properly call upon the state, as trustee in possession, to report and discover any funds on hand at the time of commencing this suit which belonged to the trust estate. It follows, from the views of the court expressed above, that the decree of the lower court sustaining the demurrers of defendants must be affirmed, but the bill will not be dismissed. Leave to amend their bill within ninety days from the filing of mandate in lower court will be granted the complainants, and the cause will be remanded to be proceeded with in accordance with this opinion.

A suggestion of error was filed by Calhoon & Qreen, for appellant, to which the following response wras made:

Wilx-iamsoN, Sp. I., delivered the opinion of the court, responding to the suggestion of error.

We have carefully, and with much painstaking, examined the suggestions of error filed in tbis cause, but find nothing that leads us to tbe conclusion that a rehearing in this cause should be granted. A reargument is therefore denied.

We will, however, modify the language used in one sentence of the former opinion for the purpose of perspicuity and clearness of meaning. This language is used in the former opinion, to wit: “The levee taxes legally due the No. 1 levee board on any lands which had been legally sold to the No. 1 board or to the state after the law required the title to be made to the state, must have been paid when said lands were purchased from, the state, else the lands are still, liable for such taxes as Avere legally due said No. 1 levee board' at the time of the purchase.” We make that sentence read as íoIIoaa^s : “The leA’-ee taxes legally due the No.-1 leA^ee-iboard on any lands which had been struck off or sold to the No. 1 leA^ee board, or to the state after the law. required the title to be made to the state, must haAre been paid Avhen said -lands Avere purchased from the state, else the lands are still liable for such taxes as were legally due levee board No. 1 at 'the time of the purchase.”

With this modification we adhere, to the former opinion in the case.

The sentence in italics is modified in the opinion delivered on suggestion of error. Infra, p. 115.