Opinion ID: 1727196
Heading Depth: 1
Heading Rank: 3

Heading: Nature and Scope of The Actions

Text: Of considerable importance is the scope of these proceedings, both in the trial court and on appeal. We begin with the fact that these are two separate actions  a bond validation action and separate civil action for declaratory judgment. The trial court ordered these actions consolidated for all purposes, see Rule 42(a), Miss.R.Civ.P., albeit with the full acquiescence and consent of each interested party. In such posture any matter is properly presented, litigated and decided if it lies within the scope of either action had there been no consolidation.
First, we have a bond validation proceeding instituted in accordance with Miss. Code Ann. §§ 31-13-5 et seq. (1972). The purpose of such hearing is to consider all juridical questions of law or fact, or both, touching the legality and validity of the bonds. Legislative questions preceding the issuance of the bonds are beyond judicial review, either in the validation action or otherwise. The chancery court is charged with considering all legal papers pertaining to the issuance of said bonds emanating from the issuing district, together with the written opinion of the State's bond attorney. Beyond that the chancery court may hear additional competent, relevant and material evidence under the rules applicable to such evidence in the chancery court, so as to inquire into the validity of the bonds or other obligations proposed to be issued, ... . Miss. Code Ann. § 31-13-5 (1972) The statute contemplates that any valid objection to the issuance of the bonds may be considered. Mills v. Richton Municipal Separate School District, 236 Miss. 273, 277, 110 So.2d 349, 351 (1959); Lee v. Hancock County, 181 Miss. 847, 855-856, 178 So. 790, 791 (1938). The purpose of the hearing is to lay at rest all questions regarding the legality of the bonds. All matters which, if litigated with results adverse to the issuing district, could upset the bonds must as a matter of common prudence be resolved before the bonds are validated. On this assumption, the significance of the hearing has been legislatively declared in Miss. Code Ann. § 31-13-7 (1972), which provides that a decree validating bonds shall be forever conclusive against the county, municipality, or district issuing same; and the validity of said bonds or other written obligations shall never be called in question in any court in this state. The effectiveness of this statute in achieving its avowed end turns on the conclusive effect of the decree. A decree may not foreclose litigation of questions which as a matter of law were beyond the scope of the hearing. Therefore, the scope of the hearing must be sufficiently broad to consider all questions that need to be resolved before the bonds are sold. By statute or otherwise this state has no power to cut off from litigation secured due process rights merely by restricting the scope of the bond validation proceeding. See In re Savannah Special Consolidated School District, 208 Miss. 460, 471-472, 44 So.2d 545, 548 (1950). The folly of such an attempt is obvious. Several of our prior cases are instructive. Von Zondt v. Town of Braxton, 149 Miss. 461, 115 So. 557 (1928), holds that a taxpayer may not, once the bond validation decree becomes final, maintain, on grounds that the order creating the taxing district is infirm, an action to enjoin the collection of taxes with which the political subdivision intends to meet its bond obligation. 149 Miss. at 464-65, 115 So. at 558-59. City of West Point v. Hawkins, 164 Miss. 591, 145 So. 345 (1933), is to like effect, holding that it is incumbent upon a dissenting taxpayer to present such objections as he has at the bond validation hearing and not thereafter. 164 Miss. at 597, 145 So. at 346. The issues tendered in the subsequent action to enjoin assessment are precluded under notions of collateral estoppel. Love v. Mayor and Board of Alderman of Yazoo City, 162 Miss. 65, 138 So. 600 (1932), was an action for an injunction to restrain city officials from issuing bonds on grounds that the legislation under the authority of which the city purported to issue the bonds violated a number of provisions of this state's constitution. The action in Love was commenced after the decree in the bond validation proceedings had become final. This Court squarely and correctly held that the time for presentation of objectors' constitutional claims was at the bond validation hearing and not thereafter. The above cases  Von Zondt, Hawkins and particularly Love  are predicated upon statute. Miss. Code Ann. §§ 31-13-7 (1972). Collectively, they hold that, subsequent to the bond validation decree becoming final, taxpayers may not be heard to complain of the legality or constitutionality of any facet of the bond issue or the project to be funded. Section 31-13-7 coupled with common law notions of res judicata and collateral estoppel preclude such re-litigation. For these holdings to make sense, we must recognize as a corollary that the issues tendered in Von Zondt, Hawkins, and Love could have been presented and fully heard at the bond validation hearing. That which could not have been presented (because of the limited scope of the hearing or whatever) certainly may not be precluded from subsequent litigation consistent with due process. [3] The matter of the constitutionality of the statute under which the district has been organized and purports to exist may be considered at the validation hearing, although not thereafter. Love v. Mayor and Board of Aldermen, 162 Miss. 65, 71-72, 138 So. 600, 601 (1932). If the district has been organized under an unconstitutional act, it has no authority to do anything, much less issue bonds. The validation proceedings seek to establish both for the benefit of the bond purchaser(s) and the citizens of the district that the bonds constitute a valid and subsisting obligation according to their tenor and that there are down the road no surprises in store for those who in good faith have made investments or commitments in reliance thereon. Obviously, if the statutory basis for the issuing district's existence is subject to doubt, such doubt needs to be resolved before the bonds are validated and sold, not after. On the other hand, whether the organization of the district was lawful in the sense that, in accordance with the enabling legislation, all of the i's were dotted and the t's crossed is ordinarily regarded as collateral and may not be inquired into, provided there has been an adequate opportunity to litigate such questions at some earlier point in time. See Von Zondt v. Town of Braxton, 149 Miss. 461, 463, 115 So. 557, 558 (1928); Lincoln County v. Wilson, 125 Miss. 837, 839-841, 88 So. 516, 517 (1921). By the time of the bond validation hearing, such matters, as here, have invariably become time barred. See Section 1(f) of the local and private act of 1966. No matter within the legislative authority of the district may be considered at a bond validation proceeding. The wisdom vel non of the construction and operation within the district of a new combined utility system is a matter within the district's legislative authority and was wholly beyond the scope of the proceedings below. Such matters are beyond the scope of our review here. Of course, if the district were attempting to issue a $7,800,000 bond to fund the operation of a railroad, the point could be presented and the court might indeed refuse to validate the bond, not because no railroad was needed or the plans were too extravagant, but because the district has no authority in law to operate a railroad. See In re Validation of $175,000 General County Funding Bonds, 185 So.2d 420, 425 (Miss. 1966); Sykes v. Mayor and Aldermen of Columbus, 55 Miss. 115, 140 (1877). In the context of the case at bar, there were well within the scope of the bond validation hearing the questions tendered by Objectors whether rights secured by Article 3, Section 14 and by Article 4, Sections 87-90 of the Mississippi Constitution had been violated. On the other hand, matters having nothing to do with the validity of the bonds in issue should not be considered. Both below and here Objectors have fired a broadside of extraneous charges against the District. That the District and its Board may on other occasions have made default in the keeping of minutes, in the filing of official bonds, and in other like matters is of no concern here. These are matters which occurred prior to and are unrelated to the issuance of the bond and were accordingly beyond the scope of the validation hearing. In re Validation of $175,000 General County Funding Bonds, 185 So.2d 420, 424-425 (Miss. 1966).
Our recently inaugurated declaratory judgment procedure is well suited for the hearing and determination of claims such as those Objectors tender under Sections 14, 87 and 90 of the Mississippi Constitution of 1890. Even if those claims were beyond the scope of the bond validation action  which they are not  they would have been well within the competence of the trial court to hear and adjudge under Rule 57, Miss.R.Civ.P. No advance determination that the plaintiff is likely entitled to the declaratory judgment he seeks is necessary before the trial court may with propriety proceed under Rule 57. We no more pre-judge the outcome of Rule 57 cases than any others. That a plaintiff is entitled to no relief whatsoever in no way vitiates the jurisdictional or procedural components of a declaratory judgment action. Peterson v. Sandoz, 451 So.2d 216, 217, 219 (Miss. 1984). Among the cases where a proceeding for declaratory judgment is most needed are those where there exists an actual dispute with respect to which the parties have a compelling need to know where they stand before entering a substantial financial undertaking. This is such a case. At all relevant times there has existed a live controversy regarding the legality of the Gautier Utility District and its authority to issue bonds. This controversy needs to be resolved authoritatively and conclusively before the $7,800,000 bond is sold. Rule 57 provides that the trial court may refuse to render or enter a declaratory judgment where such judgment, if entered, would not terminate the uncertainty or controversy giving rise to the proceeding. The rule thus vests a certain discretion in the trial court. The trial judge below held that this was not a proper case for consideration under Rule 57 because all controversy would not thereby be terminated. In this he misperceived the import of the rule. We have heretofore approved a declaratory judgment in a case where all controversy did not thereupon cease. Alexander v. State ex rel. Allain, 441 So.2d 1329, 1346-1347 (Miss. 1983). As long as one or more legal issues vital to the controversy is susceptible of authoritative resolution, the trial judge may and generally ought hear and adjudicate the case under Rule 57. This case is well suited to the rule. The questions raised by Objectors under Sections 14, 87 and 90 of our Constitution need to be resolved before matters go any further. These matters can be authoritatively decided here. A final judgment will terminate the uncertainty or controversy on those issues. That there remain federal issues to be litigated elsewhere, or other areas of controversy beyond that, generally ought not furnish an excuse for the trial court's refusal to do what it can do to lay to rest what part of the controversy it can.