Case ID: la_196/html/0317-01.html
Source: Caselaw Access Project
Author: {"author": "HIGGINS, Justice. PER CURIAM.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

199 So. 133
    BROCK, State Bank Com’r, v. TOWN OF KENTWOOD.
    No. 35401.
    Nov. 4, 1940.
    Rehearing Denied Dec. 2, 1940.
    
      Shelby S. Reid, of Amite, for appellant.
    Ponder & Ponder, of Amite, for appellee.
   HIGGINS, Justice.

The State Bank Commissioner, as liquidator of the Tangipahoa Bank & Trust Company, instituted suit against the Town of Kentwood on its note for the sum of $3,500, dated June 16, 1933, payable six months after date, bearing 8% interest and 10% attorney’s fees for collection. The note was signed by the Town of Kent-wood, through its Mayor, C. A. Kent, and upon the back of the note is the following endorsement: “Secured by the taxes and other revenues accruing to the general fund of the Town of Kentwood, Louisiana, for the year of 1933, as per certified copy o;f the ordinance hereto attached. (Signed) Town of Kentwood, C. A. Kent, Mayor.” Attached to the note is a certified copy of the ordinance of the Mayor and Board of Aldermen of -the Town of Kentwood, dated March 8, 1932, authorizing the Mayor to borrow $3,500 for the account of the Town, and pledging to the Bank all of the taxes and other revenues of the municipality accruing to the general fund thereof for the year 1932.

The defendant filed exceptions of no right and no cause of action on the following grounds: (1) That the mayor was without authority, under the ordinance of March 8, 1932, to execute the note of June 16, 1933, during a subsequent fiscal year of the town; (2) that the mayor was not authorized by the ordinance to pledge the revenues for the year 1933 but only had the authority to pledge the revenues for the year 1932; and (3) that as no means were provided by the town for the payment of the note, it is invalid under Dart’s Revised Statute, § 6662 (Rev.St. § 2448), and the jurisprudence of this State.

The exceptions were overruled by the court and the defendant, reserving all of its rights under them, answered, reiterating the same defenses but admitting the execution of the note and the receipt and expenditure by the town of the money received from the bank therefor, and in recorivention prayed for judgment against the plaintiff for the sum of $719.88, representing the cash liquidating dividend of 13%% on the town’s general deposit of $517.47, and on its deposit in the waterworks and sewerage bond sinking account of $4,814.96, the plaintiff having credited the sum of $719.88, as a payment on account of the $3,500 note. Defendant also pleaded that in no event could the plaintiff withhold the dividend on the waterworks and sewerage bond sinking fund, as this fund was realized from taxes levied and collected under the constitution and laws of this State for the sole purpose of paying the principal and interest on those bonds. Defendant further pleaded that if the court should hold that the pledge of the revenues of the town for the year 1933 was legal, then, in that event, the judgment should be restricted to those revenues only and a general judgment should not be rendered against the defendant.

There was judgment in favor of the plaintiff as prayed for with the allowance of a credit of $719.88, under date of February 25, 1935, this being the 13%% cash liquidating dividend paid on account of the combined deposits above described. Defendant has appealed.

It appears that the taxes for the year 1932 were not collected and deposited until during the ’year 1933. Therefore, the alleged variation between the note and the town ordinance is without foundation. But conceding that there was a departure from his authority by the mayor in pledging the revenues of 1933 instead of 1932, the best that can be said for the defendant is that the mayor had committed a clerical error in putting 1933 on the note instead of 1932 as was authorized by the ordinance and, of course, the ordinance would prevail.

Plaintiff has invoked the jurisprudence which has developed under Article 1965 of the Revised Civil Code to the effect that no one should be permitted to enrich himself at the expense of another. The party to a contract who has obtained and retained all of the benefits granted to him thereby cannot subsequently successfully urge that the contract is void and by some legal technicality defeat the contractual rights of the party who has performed his part of the agreement. Consequently, a municipal corporation, as any other political subdivision, cannot on the one hand enrich itself by receiving the benefits .of a loan and retaining all of the advantages gained thereby and on the other urge that the note or contract is void. Burk v. Livingston Parish School Board, 190 La. 504, 182 So. 656; Turfitt v. Police Jury of Tangipahoa Parish, 191 La. 635, 186 So. 52; Reconstruction Finance Corporation v. Tangipahoa Parish School Board, 192 La. 1059, 190 So. 217; City of Monroe et al. v. Ouachita Parish School Board, 172 La. 861, 135 So. 657; Busch-Everett Company v. Vivian Oil Company, 128 La. 886, 55 So. 564, and Article 1965, Revised Civil Code.

The bank commissioner applied the cash liquidating dividend against the note. Clearly, he had the right to do this insofar as the general deposit fund of the town was concerned. As to the special sinking fund, the town itself has no lien or privilege thereon and in fact claims none. If the,alleged bondholders have a claim, interest or privilege against the sinking fund, they are not before the court and the town cannot assert such a • right in their behalf without their authority. There is no showing of such authorization.

For the reasons assigned, the judgment appealed from is affirmed at the appellant’s costs.

FOURNET, J., absent.

PONDER, J., recused.

On Rehearing.

PER CURIAM.

The defendant in its application for a rehearing complains that we erroneously allowed the State Bank Commissioner to apply against the note, as an offset, the cash liquidating dividend of $650.02 realized on the sewerage bond sinking fund which was said to have been set aside out of the special taxes levied and collected to, retire these bonds and dedicated solely for that .purpose under the Constitution and the laws of this State, and particularly “Act 256 of 1910, Act 46 of 1921, Ex.Sess. and Section 14 of Article 14 of the Constitution of 1921.”

In our original opinion, we pointed out that none of the bondholders were either before the court or had authorized the Town to make an appearance for them. The record shows that the note was dated June 16, 1933; that the bank went on a restricted basis on August 23, 1933, and that the liquidating dividend was credited on the note on February 25, 1935. This suit was filed on December 16, 1938, and the defendant’s answer and a reconventional demand was filed on March 20, 1939. Nowhere in the defendant’s answer or re-conventional demand does it allege that on March 20, 1939, there were any unpaid waterworks and sewerage bonds. On the trial of the case on April 14, 1939, the defendant did not offer any testimony or documentary evidence to show that any of the waterworks and sewerage bonds were outstanding. In order for the respondent to recover on its reconventional demand, it was necessary for it to allege and prove that there were unliquidated or outstanding waterworks and sewerage bonds. This it failed to do. If there were no outstanding or unliquidated bonds, then the funds in the waterworks and sewerage bond account with the bank belonged to the Town of Kentwood and, of course, the liquidating dividend likewise belonged to it, free of any dedication to retire bonds. Since a period of nearly six years elapsed from the time the bank went on a restricted basis until the time the judgment was rendered in the. lower court, it is quite possible that the waterworks and sewerage bonds have all been paid. In any event, the basis of the Town’s claim to the $650.02 liquidating dividend is that the sinking fund was- specially dedicated to retire outstanding bonds. Since the Town neither alleged nor proved there were any unretired bonds for the payment of which these funds were dedicated, the reconventional demand of the Town must be denied.

Rehearing refused.

O’NIELL, C. J., dissents from the refusal to grant a rehearing.

PONDER, J., recused.