Opinion
No. 33730.
September 25, 1939. Suggestion of Error Overruled November 6, 1939.
DRAINS.
Interest is recoverable on bonds and interest coupons of a drainage district after maturity and until paid.
APPEAL from the chancery court of Calhoun county; HON. L.A. SMITH, SR., Chancellor.
C.R. Bolton, of Tupelo, for appellant.
The appellant was entitled to recover interest on past due bonds and coupons. It has been argued that municipal and public corporate bonds, which have attached thereto coupons for the payment of interest bear no interest after maturity because no coupons are attached for interest after maturity. This position has been thoroughly refuted by decisions both of this court and the Supreme Court of the United States, in holding that bonds and coupons bear interest after maturity.
Town of Walnut v. Wade, 26 L.Ed. 526 (530); Town of Ohio v. Augustus Frank, 26 L.Ed. 531; Town of Lexington v. Union Nat. Bank, 22 So. 291, 75 Miss. 1; City of Indianola v. Gates, 179 So. 284; Sections 4450 and 4478, Code 1930; Waits v. Black Bayou Drainage District, 189 So. 103; Teoc Sub-Drainage Dist. v. Halliwell, 178 So. 84, 180 Mont. 720.
The district cannot take advantage of its own deliberate default and thereby escape paying the interest it had contracted to pay.
The action of the court below denied to appellant equal protection of the law and rights and privileges under the constitution of the United States.
W.J. Evans, of Calhoun City, and W.I. Stone, of Coffeeville, for appellee.
We contend that under this particular law which is Chapter 195, Laws of 1912 and Amendments thereto, the appellant was not entitled to any kind of judgment in this suit or any other kind of suit that could have been filed, for the reason that when this district was created and the bonds sold, the owners and holders of the bonds already had a judgment against the district and a lien on all of the assets of the district to secure the payment of that judgment and that their exclusive remedy, if any, was by mandamus proceedings. See Section 4469, 4492, Code of 1930. And this court specifically held in the case of Johnson v. Bruce et al., 177 Miss. 581, that it was not necessary to secure a judgment on bonds and coupons in a drainage district and that the holders already had a lien and that their remedy was by mandamus. If the appellant should have any right to interest on bonds or coupons after their maturity, then certainly such rights must be based upon their contract made in compliance with the law and if such be the case, this interest would be a part of the contract just the same as the bond and the coupons and the collection of which could be enforced and should be the same way as the bonds.
We contend that the question of interest on bonds and coupons after maturity under Chapter 195, Laws of 1912 and Amendments thereto, will depend entirely on a construction of this particular statute and the intention of the Legislature when they enacted the same. There is a vast difference between a municipality and a drainage district created under this law.
We here desire to refer to several sections of the law under which these bonds were issued and which we think settles this matter against the contention of the appellant.
Section 15, Laws of 1912 as Amended by Laws of 1914; Laws of 1914, page 343, and sec. 25, page 345.
We think these two sections alone show conclusively that the Legislature did not intend for a drainage bond to bear any interest after the maturity date thereof. For in these two sections mentioned it is stated specifically that for the prompt payment of said bonds and coupons that the board of commissioners may pledge the assets of the district for the payment of the bonds and coupons only and this is the extent of the commissioners' authority under the law. The assets of the district are the assessed benefits. It would not be said that the Legislature intended for these bonds to bear interest after maturity and not provide a way for the collection of the same as the only authority they gave the board to pledge the assets of the district was for the payment of the bonds and coupons. We also desire to refer to the following section of the Code of 1930 in order to show that all the provisions of the law with reference to the issuance of bonds and the collection of taxes under this particular law bear out our contention that bonds issued thereunder did not bear interest after their maturity.
Code of 1930, Sections 4463, 4469, 4470, 4472, 4478, 4479, 4493.
This court has held that the amount of the assessed benefits or betterments against the lands of the drainage district is the measure of liability both for the land and land owners and no indebtedness of any character whatever can be incurred by such district, the principal and interest of which exceeds the amount of such betterments.
Clark v. Pearman et al., 88 So. 716.
Tax laws are to be strictly construed against the tax powers. This power cannot be implied and all doubt must be resolved in favor of the tax payer.
Town of Utica v. State ex rel. Rice, 166 Miss. 573; Zeigler v. Zeigler, 174 Miss. 310.
We would like here to cite the California case on Public Improvements, the same being the case of Albert Meyer v. City and County of San Francisco reported in 88 P. 722 and 10 L.R.A. (N.S.) 110. This case makes a distinction between a special taxing district for some public improvements and bonds issued generally by a municipality and holds that bonds issued by such a special taxing district for public improvements do not bear interest after maturity. This case is nearer in point than any other case that we have been able to find. However, in our opinion, the facts and law in this case are not over half as strong as are the facts and law governing the case at bar that is for the upholding of the Chancellor's decree in this cause.
10 L.R.A. (N.S.) 110; 42 A.L.R. 1021 and 1028; 230 P. 406.
The appellant admits that the assessment benefits are the extent of the resources of the district, but claims a distinction between the limit of a corporation liability and the extent of district resources. This claim is made in the face of the holding in the case of Clark v. Pearman, 88 So. 716, wherein the court held that there was no liability whatever with the district or land owners where the indebtedness of the bond issue and interest coupons exceeded the benefits. Also in the face of the holding of the court in the case of Anderson v. McKee et al., 179 So. 858, 182 Miss. 858.
Argued orally by C.R. Bolton, for appellant, and W.I. Stone, and W.J. Evans, for appellee.
The sole question for determination in this case, as stated by both sides in the trial court and as recited in the decree, is whether interest is recoverable on the bonds and interest coupons of the drainage district after maturity and until paid. This question was answered in the affirmative in the recent decision in City of Indianola v. Gates, 181 Miss. 145, 179 So. 284, in respect to municipal bonds, and we see no sound reason for any distinction between municipal bonds and those of other political or taxing districts of the State, such as drainage districts.
If it could be supposed that as to any of the subdivisions of the State, whether of counties, municipalities or districts, no interest after maturity could be recovered on their bonds issued for borrowed money, such bonds would be unsalable at any advantageous price; and we must assume that the legislature never for a moment thought that the statutes would be fairly capable of any such an interpretation as would bring about that self-destructive result.
Reversed and remanded.
This is not a case in which the drainage district has exhausted its assessed benefits in payment of bonds and interest coupons. The indebtedness of the district, including interest coupons and interest on same, is well within the limits of the assessed benefits. The total assessed benefits are $185,543. Authority was given to issue bonds in the amount of $70,000. Only $50,000 of bonds were issued.
Suggestion of error overruled.