Comrs. of Washington v. . Gaines

WinborNE, J. The question, sufficient for purposes of determining this appeal, is this: May plaintiffs, under the facts agreed, convey the lands in-question, freed of liability to further assessment for purpose of raising funds with which to pay indebtedness of the drainage districts in which the lands lie? The answer is No. A sufficient reason for such answer appears upon the face of the records in the foreclosure proceedings, Numbers 52 and 54, under which Washington County acquired title to said lands, that is, that the court did, not acquire jurisdiction over the holders of the outstanding bonds of the drainage districts in which the lands lie, who have the statutory right, under prescribed conditions, C. S., 5356, Bank v. Watt, 207 N. C., 577, 178 S. E., 228; Wilkinson v. Boomer, 217 N. C., 217, 7 S. E. (2d), 491, to require the levying and collection of special assessments. Consequently, such bondholders are not bound by the judgments in those proceedings. While in actions for foreclosure of mortgages on real estate, in the nature of which are tax foreclosure proceedings, under C. S., 7990, “if any party having an interest in, or lien upon, such mortgaged premises, is unknown to the plaintiff, and his residence cannot, with reasonable diligence, be ascertained, and such fact is made to appear by affidavit,” the court may order that service be made by publication of a notice of the action. C. S., 484, subsection 7. But, in accordance with the rulé that notice to a party defendant is required in order to give the court jurisdiction, the process, here the notice, must correctly name the parties. This requirement is mandatory. 21 R. C. L., 1267, Process, section 7. Applying this principle to the case in hand there is in the published notices no sufficient denomination of the bondholders sought to be served to apprise any holder of bonds of any of the districts involved that the actions affected lands in the districts which issued the bonds held by such bondholders. Hence, there is a failure of notice to them. In this connection, it is a basic principle that the legislation by authority of which bonds of a municipal corporation or other political subdivision of the State are issued, and their payment provided for, becomes a constituent part of the contract with the bondholders. So the provi *329 sions of the statutes regarding the issuance of drainage bonds, and the levying, assessing and collecting of assessments, as well as remedies generally existing for the enforcement of such assessments, in effect at the time the bonds are issued, become a part of the contract between the district and the bondholders. Jones on Bonds and Bond Securities, section 257, Vol. 1, page 590. Wilkinson v. Boomer, supra. The plaintiffs here, as did the plaintiff in Bank v. Watt, supra, rely upon the provisions of section 1 of chapter 504, Public Laws 1933, Michie’s North Carolina Code of 1939, section 5373 (g). In the Watt case, supra, which relates to drainage district bonds issued in 1913, the court, speaking thereto, said: “This act was passed in 1933, and is not deemed to affect the rights of the parties as disclosed by the record in the present case.” In the case at bar similar factual situation is apparent. Applying the provisions of C. S., 5354, as to maturity of bonds issued, and of C. S., 5360, as to maturity of installments of assessments, it is manifest, from facts agreed as to maturity of the last assessments, that the bonds of the drainage districts here referred to were issued prior to the enactment of the 1933 Act, for which reason, if for no other, the Act is not deemed to affect the rights of the holders of such bonds. Bank v. Watt, supra. In view of the conclusions above, we deem it unnecessary to consider other points debated. The judgment below is Reversed.