Court Opinion

ID: 3542166
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:53:43.845727+00
Date Added: 2024-06-11T14:21:55.083268
License: Public Domain

I dissent with respect to the second subdivision of the opinion, holding that the bonds do not constitute general obligations of the district. The statute requires that "all thelands in the district at the time said bonds are issued, and all lands subsequently included which are so chargeable under the provisions of this Act, shall be and remain liable to be taxed and assessed for the payment of said bonds and interest. * * * In the event that for any reason any special tax or assessment hereinabove provided for cannot or shall not be levied and collected in time to meet any interest falling due on any bonds issued hereunder, then the board of commissioners shall have the power and authority, and it shall be their duty, to provide for and pay such interest when due, either out of any of the funds in hand in the treasury of the district not otherwise appropriated, or by warrants (which may bear interest at a rate not to exceed six per centum per annum) drawn against the next district tax or assessment levied or to be levied." (Sec. 7232, Rev. Codes 1921.) The statute in itself is clear in the language employed, which unmistakably indicates a legislative intent that lands embraced in an irrigation district *Page 99 
are sequestered and held to meet the obligation of the bonds until fully discharged. (Secs. 7213, 7232, 7250, 7251, Rev. Codes 1921. And such has heretofore been the holding of this court, in line with the decisions of other courts construing like statutes. The case of Cosman v. Chestnut Valley Irr. Dist., 74 Mont. 111, 40 A.L.R. 1344, 238 P. 879, involving the identical bonds now under consideration, was decided July 14, 1925, more than five years ago, and, if not res adjudicata, should be reaffirmed on the doctrine of stare decisis. It is difficult to estimate to what extent bonds have been sold and money parted with on the strength of such decision. Furthermore, it must be remembered that on the only other occasions when this court was called upon to pass on the question the holding in the CosmanCase was reaffirmed. (Clark v. Demers, 78 Mont. 287,254 P. 162; Drake v. Schoregge, 85 Mont. 94, 277 P. 627,631.)
This court, in the case of Cosman v. Chestnut Valley Irr.Dist., supra, decided that the very bonds involved in this case are general obligations of the Chestnut Valley irrigation district. The plaintiff, a land owner within the district, sought to enjoin the commissioners of the district from including in the levy for the payment of interest on the bonds any amount on account of delinquencies in the payment of the taxes or assessments against other land owners. In the opinion this court said:
"Do the bonds of an irrigation district create a general obligation against the district in the sense that all the lands within the district are taxable for the payment of the said bonds and interest until the entire indebtedness is paid?
"Plaintiff contends * * * that since the tax is a special assessment, it therefore follows that each landowner within the district is taxable for the payment of only such proportion of the bonded indebtedness as his land bears to the entire irrigable area within the district and that when such proportional payment is made his lands are fully and finally released from any further lien of the bonded indebtedness." *Page 100 
The court then, after quoting from the irrigation district law of Montana, further said:
"It will be noted from the foregoing that it is reiterated in the several sections of the Act that payment of bonds is secured by a lien upon all the lands in the district, and that the duty is enjoined upon the commissioners to levy an annual tax or assessment sufficient in amount to meet the interest on said bonds promptly, and to discharge the principal at maturity. Now, the commissioners, if they are to make a levy sufficient in amount to meet the maturing obligations of said bonds, must of necessity take into consideration the delinquencies which inevitably occur in every system of taxation; hence the levy must always be for an amount somewhat larger than the payments which the law says must be made, the necessary margin depending upon an estimate of the amount of the delinquencies. (Hughson v.Crane, 115 Cal. 404, 47 P. 120.) But it will be noted from the provisions of section 7232 that if from any reason any assessment cannot or shall not be collected in time to meet any interest payments falling due, it is the duty of the commissioners to pay the interest out of any funds in the treasury of the district not otherwise appropriated or by interest-bearing warrants drawn against the next district tax or assessment.
"The foregoing and other provisions of the statute clearly indicate an intention that the bonded indebtedness shall be a charge against all the lands in the district, and that all the lands in the district shall be taxed pro rata by irrigable acreage until the bonded indebtedness is fully discharged, regardless of delinquencies. That this is a correct interpretation of the legislative intent is fully confirmed when we recall that in 1917 an amendment was added to section 7213, which provided, in substance, that the lien of the bond issue should be specifically apportioned to each 40-acre tract, and each parcel of land separately owned, and that on the payment of the assessment levied against any particular tract or parcel of land, `thereupon said tract or tracts of land so paid upon in full shall be discharged *Page 101 
from the lien of said bonds and further assessments or interest thereon.' (Sec. 8, Chap. 153, Laws of the Fifteenth Legislative Assembly.) As thus amended, the statute clearly provided in specific terms the very thing which plaintiff now contends is in the law; but in 1919 the legislature saw fit to repeal the amendment of 1917 so that as it now stands, and as it stood prior to the enactment of the amendment, it contains no provision whereby a land owner can, by paying his pro rata share of the assessment for his lands, be released from the lien of the bonded indebtedness, as is the case with drainage districts and city improvement districts. (Sec. 6, Chap. 116, Laws of the Sixteenth Legislative Assembly.) By repealing the amendment of 1917, the legislature showed clearly its intention that no lands be released from the lien until the bonded indebtedness is discharged in full."
In that case we held, correctly, that the provisions of the statute "clearly indicate an intention that the bonded indebtedness shall be a charge against all the lands in the district, and that all the lands in the district shall be taxedpro rata by irrigable acreage until the bonded indebtedness is fully discharged, regardless of delinquencies." And the rule with reference to the effect of such a decision is aptly stated in 34 C.J., page 1028, as follows: "In the absence of fraud or collusion, a judgment for or against a municipal corporation, county, town, school or irrigation district, or other local governmental agency or district, or a board or officers properly representing it, is binding and conclusive on all residents, citizens, and taxpayers in respect to matters adjudicated which are of general and public interest, such as questions relating to public property, contracts, or other obligations. The rule is frequently applied to judgments rendered in an action between certain residents or taxpayers and a municipality, county or district, or board or officer representing it, it being held that all other citizens and taxpayers similarly situated are represented in the litigation and bound by the judgment, in the absence of fraud or collusion." *Page 102 
In Clark v. Demers we said: "The bond issue is a general obligation resting upon all lands within the district," reaffirming the holding in the Cosman Case; and in the later case of Drake v. Schoregge we held that the "bonds issued create a general indebtedness against the district, in the sense that all lands therein are taxable for the payment thereof with interest, until the entire indebtedness is fully paid" — citing the Cosman Case and again reaffirming it.
In 15 Corpus Juris, 916, it is said: "It is a well established general rule that, where a principle of law has become settled by a series of decisions, it is binding on the courts and should be followed. This rule, which is usually known and referred to as the rule of stare decisis, is founded largely upon considerations of expediency and sound principles of public policy, it being indispensable to the due administration of justice, especially by a court of last resort, that a question once deliberately examined and decided should be considered as settled and closed to further argument; and the courts are slow to interfere with the principle announced by the decision, and it may be upheld, even though they would decide otherwise were the question a new one."
In the case of Fisher v. Horicon etc. Mfg. Co.,10 Wis. 351, the court said: "It is the duty of this branch of the government to pass finally upon the construction of a law, and determine whether the legislature in its action has transcended its constitutional limits, and the community has a right to expect, with confidence, we will adhere to decisions made after full argument and upon due consideration. The members of the court may change totally every six years, and if each change in the organization produces a change in the decisions, and a different construction of laws, under which important rights and interests have become vested, it is easy to see that the consequences will be most pernicious."
An examination of the authorities discloses the fact that our conclusion reached in the Cosman Case, that the bonds constitute a general obligation against all of the lands embraced in *Page 103 
the district, is the view generally expressed by the courts which have had occasion to construe and apply like statutory provisions. In the case of Rialto Irr. Dist. v. Stowell, 246 Fed. 294, 305, the circuit court of appeals of this (the ninth) circuit, in construing like provisions of the irrigation district laws of California, known as the "Wright Act" (October 15, 1917), said: "We regard it as clear that the bonds here in question constitute a general obligation of the irrigation district to pay the principal and interest thereof as therein provided for."
A late decision upon the subject (December 2, 1925) is that ofNoble v. Yancey, 116 Or. 356, 42 A.L.R. 1178, 241 P. 335, wherein Mr. Justice Bean, speaking for the supreme court of Oregon, reviews the authorities, and declares such bonds to be general obligations of the district. Among other cases to like effect are: State ex rel. Clancy v. Columbia Irr. Dist.,121 Wash. 79, 208 P. 27; State v. Hartung, 150 Wash. 590,274 P. 181; American Falls Reservoir District v. Thrall,39 Idaho, 105, 228 P. 236, 243; In re Lovelock Irr. Dist.,51 Nev. 215, 273 P. 983.
In the case of American Falls Reservoir Dist. v. Thrall, supra, the supreme court of Idaho well said, by way of differentiation: "It will be noted that there is a wide difference between the method pointed out by the statute for the payment of special district improvement bonds such as paving, sewer, sidewalk, and the like, wherein the amount of such bonds is specifically segregated and apportioned to each separate subdivision, and the owner of any land within such district has the option to pay the entire assessment against his property and upon doing so to have it released from further liability under such bond issue. No similar provision is found in the irrigation district law, but on the contrary it is expressly provided that `all the land in the district shall be and remain liable to be assessed for such payment.'" It is clear to me that all of the lands in the district are held in common to meet and pay the obligation of the bonds as much as are the lands of a county or of a school district to meet like character of indebtedness. *Page 104 
An irrigation district is declared to be a public corporation. (Sec. 7169.)
In the case of Fallbrook Irr. Dist. v. Bradley,164 U.S. 112, 41 L. Ed. 369, 17 Sup. Ct. Rep. 56, 65, in which the constitutionality of the Wright Law of California was determined, the court said: "Statutes authorizing drainage of swamp lands have frequently been upheld independently of any effect upon the public health, as reasonable regulations for the general advantage of those who are treated for this purpose as owners of a common property. (Head v. Amoskeag Manufacturing Co.,113 U.S. 9, 22, 5 S. Ct. 441, 446 [28 L. Ed. 889]; Wurts v.Hoagland, 114 U.S. 606, 611, 5 S. Ct. 1086, 1089 [29 L. Ed. 229]; Cooley, Tax'n (2d Ed.), p. 617.) If it be essential or material for the prosperity of the community, and if the improvement be one in which all the landowners have to a certain extent a common interest, and the improvement cannot be accomplished without the concurrence of all or nearly all of such owners by reason of the peculiar natural condition of the tract sought to be reclaimed, then such reclamation may be made, and the land rendered useful to all, and at their joint expense. In such case the absolute right of each individual owner of land must yield to a certain extent, or be modified by corresponding rights on the part of other owners for what is declared upon the whole to be for the public benefit."
By reason of the fact that the land owners are treated as "owners of a common property," and the irrigation of their lands may be accomplished at their "joint expense," the bonds should be and are regarded as general obligations against all the lands in the district. In other words, so far as the creation of an indebtedness for the irrigation of the lands and the benefits which will accrue from such benefits are concerned, all of the lands are treated as a single tract in which the owners are tenants in common. I therefore submit that the Fallbrook Case
is of itself an authority supporting the conclusion that the bonds are general obligations. As a matter of contract, the *Page 105 
bonds themselves indicate on their face that they constitute general obligations of the district, one of which appears in the petition and reads in part as follows: "The Chestnut Valley Irrigation District, a public corporation of the state of Montana, organized and existing under the laws of the state of Montana, for value received, promises to pay the bearer the sum of One Thousand Dollars," etc.
Section 7211, Revised Codes 1921, relating to the issuance of the bonds, provides: "The board of commissioners shall file a petition in the district court of the judicial district wherein is located the office of said board, to determine the validity of the proceedings had relative to the issuance of said bonds, and to the levy of said special tax or assessment. * * * Upon the hearing the district court * * * shall have power and jurisdiction to examine and determine the regularity, legality, and validity of the proceedings had preliminary and relative to the issuance of the bonds, and the levy of the special tax or assessment in the petition mentioned, and the legality and validity of said bonds, and special tax or assessment. * * * The court may ratify, approve, and confirm said proceedings in whole or in part, and may ratify, approve, and confirm said bonds and special tax or assessment, and enter its judgment or decree accordingly." Provision is then made for appeal from the judgment, and "if no such appeal be taken * * * or if taken and the judgment or decree of the district court be affirmed by the supreme court, such judgment or decree shall be forever conclusive upon all the world as to the validity of said bonds and said special tax or assessment, and the same shall never be called into question in any court in the state."
Here it appears from the admitted facts that prior to July 1, 1920, the date of the issuance of the bonds, the district court by its "judgment duly given, made and entered, ratified, approved and confirmed said bonds, the proceedings of said Board of Commissioners authorizing the issuance thereof, and said special tax or assessment, from which judgment or decree no appeal was taken to the supreme court of the state." *Page 106 
Thus the validity of the bonds is decreed, and authority to levy an annual tax or assessment upon the lands in the district until the bonds and interest are fully paid is confirmed by a judgment which is declared to be "conclusive upon all the world," never to be "called into question in any court in this state." No condition is attached to such levy and no limitation of time is prescribed, except the payment of the bonds in full. In view of these considerations, I ask, is not the question of the liability of the lands for future taxes or assessments to pay the principal and interest of the bonds absolutely foreclosed by the judgment?
Further, indicative of the substantial character of the general obligations and adequacy of the security, as viewed by the lawmakers, it is provided: "All bonds certified in accordance with the terms of this Act shall be legal investments for all trust funds, and for the funds of all insurance companies, banks, both commercial and savings, and trust companies, and for the state school funds, and whenever any money or funds may, by law now or hereafter enacted, be invested in bonds of cities, cities and counties, counties, school districts, or municipalities in the state of Montana, such money or funds may be invested in the said bonds of irrigation districts, and whenever bonds of cities, cities and counties, counties, school districts, or municipalities may, by any law now or hereafter enacted, be used as security for the performance of any act, bonds of irrigation districts under the limitations in this Act provided may be so used." (Sec. 7225, Rev. Codes 1921.)
The declaration made by the statute that the bonds constitute a lien upon all the lands in the district and the further declaration that all of the lands shall be and remain liable to be taxed and assessed for the payment of the bonds and interest and the requirement of an annual levy upon all the lands sufficient in amount to pay the interest and principal of the bonds promptly, can have no other meaning than that the bonds are general obligations. If, however, there could be any doubt, that doubt is removed by the provision requiring the issuance *Page 107 
of warrants against the next district tax or assessment levied or to be levied, for unpaid interest because of the failure to collect the taxes or assessments levied to pay the same. In other words, the law thus expressly requires a levy against the lands.
The requirement of the law that all of the lands of the district "shall be and remain liable to be taxed and assessed for the payment of said bonds and interest," with the provision requiring the annual levy of a tax or assessment upon all the lands included in the district sufficient in amount to pay the principal and interest of the bonds promptly, should be sufficient evidence of intention on the part of the lawmakers that the lands conveyed by tax deed are still subject to taxation for the payment of the principal and interest of the bonds. However, apparently, in order to remove all possible doubt, it is provided by section 7250 that "where any lands in any district are sold or transferred either by deed, mortgage, foreclosure sale, or otherwise such sale or transfer shall include the water belonging to and appurtenant to the land, whether or not the same is expressly stated in the deed, instrument or transfer, or decree, and such land shall be liable to special tax or assessment the same as if such sale or transfer had not been made."
It is suggested in the majority opinion that, if the bonds are general obligations, and the lands conveyed by tax deed to the county do not sell for sufficient to pay the irrigation district taxes or assessments levied for the payment of the principal and interest on the bonds, the effect would be to impose upon the land owners who have paid their taxes or assessments a tax in excess of benefits. This may be true, but, as said in the CosmanCase: "In the very nature of things delinquencies will occur in any scheme of taxation, and the power to make levies sufficient to meet these delinquencies is a necessary incident to the power to impose a tax or assessment." The same argument against making the bonds general obligations was advanced in the case ofNorris v. Montezuma Valley Irr. Dist., *Page 108 
(C.C.A.) 248 Fed. 369, in which it was held that the bonds are general obligations. And it is worthy of note that application made to the supreme court of the United States for a writ of certiorari to review the decision was denied. (248 U.S. 569,63 L. Ed. 425, 39 Sup. Ct. Rep. 10.) And it may be presumed that, if the supreme court of the United States had not considered the case correctly decided, the writ would have issued.
The correct rule of statutory construction, as stated by Professor Sutherland in his work on Statutory Construction, second edition, volume 2, paragraph 487, is as follows: "A result which may follow from one construction or another of a statute is always a potent factor and is sometimes in and of itself conclusive as to the correct solution of the question as to its meaning. * * * Considerations of what is reasonable, convenient, or causes hardship and injustice have a potent influence in many cases. It is always assumed that the legislature aims to promote convenience, to enact only what is reasonable and just. Therefore, when any suggested construction necessarily involves a flagrant departure from this aim, it will not be adopted if any other is possible by which such pernicious consequences can be avoided. * * * In such a matter as the construction of a statute if the apparent logical construction of its language leads to results which it is impossible to believe that those who framed or those who passed the statute contemplated, and from which one's own judgment recoils, there is in my opinion good reason for believing that the construction which leads to such results cannot be the true construction of the statute. * * * A construction which must necessarily occasion great public and private mischief must never be preferred to a construction which will occasion neither. * * * Statutes will be construed in the most beneficial way which their language will permit to prevent absurdity, hardship or injustice; to favor public convenience, and to oppose all prejudice to public interests." *Page 109 
The decision in this case is of far-reaching importance, and is calculated to materially affect the faith and credit of the state in future business. When, as here, the sovereignty of the state has made enactment calculated to interest and protect investors, they should, if possible, be given the full protection intended by the statutes without destruction or impairment of the security, thus upholding and maintaining the state's integrity. (State ex rel. Malott v. Board of County Commrs., 86 Mont. 595,285 P. 932.) To my mind, the statutes are consistent and in harmony, and lead to but one conclusion and that is, that it was the intent from the beginning that all the lands in the district should be held and remain liable for the payment of the indebtedness, with interest and the cost of maintenance, until the bonds are fully paid. The doctrine of the Cosman Case is a correct statement of the law and should not be disturbed.