Court Opinion

ID: 3395124
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:00:54.846255+00
Date Added: 2024-06-11T14:02:55.149052
License: Public Domain

This is a mandamus proceeding in which the contention is made by respondents that where a city or town has voluntarily (without being compelled by mandamus so to do) made a special appropriation and earmarked tax levy for the claim of the certain designated bondholder out of many others equally entitled to the same consideration, that the resulting fund is beyond the reach of a creditor seeking by mandamus to appropriate the same to the satisfaction of his own claim under the "first come, first served" rule that prevails in mandamus cases in this state to enforce payment of defaulted public bonds.
The answer to the proposition contended for is found in the nature of the claim asserted by respondents. That insistence is, in legal effect, the assertion of a right on the part of a defaulting municipal corporation to particularly single out and prefer one class of creditors or one individual creditor out of its total number of creditors by specially appropriating, earmarking and making a special tax levy for the specially favored creditor's benefit to the prejudice of other creditors equally entitled to whom no such consideration is offered or extended. *Page 628 
The basic concept of the "first come, first served" rule that prevails in this state is that when a public debtor, such as a municipality, becomes in default on its payable obligations, the creditor who first sues acquires a precedent right to the satisfaction of his claim that no voluntary action of the municipality asserted for the benefit of, or on behalf of non litigating creditors, can hinder, embarrass, defeat or delay, whether taken before or after the institution of the particular suit in question.
Mandamus when employed against a defaulting public corporation debtor is in the nature of an execution against the funds and resources that the defaulter has on hand applicable to the payment of the obligation sued on in the mandamus suit. Not until a writ of mandamus is served on the defaulting corporation is a special lien created against the fund, or other source at which it is directed, sufficient to outweigh all other liens and claims subsequently acquired. In such an instance as last mentioned, there is a real exception to the ordinary rule that mandamus creates no right but merely enforces one. This is so because in cases where mandamus is used as an execution, its service does
create a specific right in the form of an execution lien against the funds and resources of the debtor described in and made the object of the writ of mandamus when served. Therefore the use of mandamus as an execution not only enforces existing legal rights to payment on relator's behalf but creates for him, by way of security for that payment, a specific lien on the objective fund or resource mentioned and described in the writ, from and after the time of its service upon the defaulting debtor public corporation.
Where a special tax levy is made by a defaulting municipality pursuant to a peremptory writ of mandamus, the lien created by the service of the writ by which the special *Page 629 
levy is ordered becomes impressed in due course upon the resultant fund ex proprio vigore the peremptory writ so served.
But where a special tax levy is voluntarily made by a defaulting municipality absent any writ of mandamus requiring it to be done, the effort to put it out of the control of the courts by "earmarking" it for a particular creditor in a general class, to the prejudice of the rights of creditors generally in that same class, is void as against a subsequently litigating creditor of such class suing in mandamus under the "first come, first served" rule to sequester and apply the "earmarked" fund to his own claim. This is so, although such "earmarking" may be altogether good as between the parties to the transaction, viz.: the claimant and the defaulting municipality, and as such becomes so binding upon the municipality as to prevent its voluntary diversion or reappropriation of same to other purposes after such "earmarking," unless the particular beneficiary consents thereto.
A necessary corollary to the "first come, first served" rule in mandamus cases is that a mandamus, when issued and served, becomes effective as a lien against any moneys or resources in the hands of the defaulting debtor respondent raised and on hand as the result of the complete or partial exercise of the legal duty whose performance, if it had been one hundred per cent perfected, would have avoided a default altogether.
Demurrer to alternative writ of mandamus overruled with leave to file return within ten days.
WHITFIELD, C.J., and TERRELL, and BUFORD, J.J., concur.
ELLIS, P.J., concurs specially.
  BROWN, J., dissents. *Page 630