Court Opinion

ID: 3474832
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:46:14.167728+00
Date Added: 2024-06-11T12:49:12.644821
License: Public Domain

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 *Page 325 
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 reconventional 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 *Page 326 
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.