McVey v. McWilliams

Bussell, C. J. (After stating the foregoing facts.) The record in this case presents three questions for decision: (1) Whether one whose land has been assessed in accordance with law and subjected to annual assessment and drainage tax for the improvement may discharge this liability to the commissioners of a drainage district by tendering to pay or by paying the assessment against his land in bonds or coupons issued by such drainage district? (2) In the event that any of the land drained under the drainage law (Acts 1911, p. 108, as amended: Acts 1918, p. 147; Acts 1921, p. 185) must be sold in order to pay one of the annual tax assessments, does the title pass unencumbered to the purchaser free from the lien of the assessment tax, or is such land subject to be sold again thereafter in order to pay subsequent drainage tax assessments? (3) May a drainage district as created by the provisions of the drainage law be placed in the hands of a [224] receiver; and if so, under' what circumstances should a receiver be appointed? Our learned brother of the circuit court held, and we think properly, that a drainage assessment levied in accordance with law for the purpose of draining and improving lands for the public benefit and the general good of the community, under the police power, cannot be paid in the bonds of such drainage district or the coupons of such bonds. In other words, the bonds and coupons issued by the drainage district cannot be set off against a liability of a landowner within the district to pay his fair share of the improvements. It has been held by this court (Wayne v. Savannah, 56 Ga. 448; Hawkins v. County of Sumter, 57 Ga. 166) that municipal taxes cannot be paid by obligations of a municipal corporation, which includes, of course, its bonds and coupons on the same. The reason is apparent, because the municipality, as an agency of the government, must continue to function, and for this reason requires the collection of its taxes in money; whereas, were it compelled to accept its.bonds or other obligations in payment of taxes, the municipality might be unable to obtain funds to carry on the municipal government. . For a similar reason the holder of bonds and coupons of a drainage district cannot meet the tax assessment for improvements to his property by tendering or paying the bonds or coupons which were necessarily issued to make the public improvement involved in the drainage of lands included therein. It is true, as argued, that the bonds represent the assessed amount of the cost of the drainage excluding the assessments levied against such landowners as may have preferred to be discharged from liability for the bonds by the payment of their assessments in cash within thirty days after the original assessment. Since each landowner is liable only for the amount assessed against his land, it may seem prima facie that payment of the amount of the general indebtedness equal to the assessment against him, or surrendering in bonds or in coupons an amount equal to the assessment for which his land is liable, would be just and equitable; but a similar case for the application of equitable principles would seem to be that a stockholder of a bank, whose deposits exceeded the assessment upon the stock for which he was liable, might well set off this indebtedness of the bank against his liability on the assessment, and yet it has been held by this court that such is not the [225] law. Though the bank may be indebted to the stockholder as a depositor a sum much larger than the assessment upon the stock, nevertheless, in case of failure of the bank, the assessment must be paid in full. Swicord v. Crawford, 148 Ga. 719 (98 S. E. 343). In the constitution of a drainage district the object is to create a governmental agency in the nature of a corporation (Almand v. Board of Drainage Commissioners, 147 Ga. 532, 94 S. E. 1028) to carry on, under the exercise of the police power, a public improvement for the benefit of the public health, as well as to increase values in the community and additional productiveness to the lands involved. But while the agency is governmental and the benefit is supposed to be public, the landowners who are included within the drainage district are supposed to pay equally pro rata in all of the cost and expense and liability which may accrue. The amount of such liability cannot be ascertained, and equality in bearing the burdens cannot be determined, until all of the liabilities are paid. Where bonds running for ten years are issued, it certainly cannot be known until the conclusion of that period, and all collectible assessments have been paid, how the equality can be maintained. In any case there is a possibility that a drainage project may not succeed to such an extent that the entire amount of the bonds issued may be collectible. The bonds are based upon no security except the lands sought to be improved by the drainage; and this land, in the event of various contingencies, might sell under the levy provided by law at far less than the face value of the bonds. In such a case it would be impossible for the holders of the bonds to receive par, and the bonds would not be worth par. Had holders of bonds prior to that time been permitted to set off their bonds at their face value against their liability for assessments, it is plain that a marked inequality in favor of these bondholders would have been created. It is sufficient to say that a very good reason why the decision of the trial court is correct is that there is no provision in the statute authorizing acceptance of the bonds or coupons in payment of assessments; and another good reason is based upon the analogous decision of this court to which we have referred; while a third reason may be found in the nature and character of the governmental agency known as the drainage district created by the act of 1911, supra. 2. We differ in opinion from the lower court in his ruling that [226] the land can be more than once sold under the ten several assessments or judgments for drainage assessment taxes. It is provided in section 3 of the original act of 1911, supra, that a sale to satisfy any of the several assessments shall be conducted by the same rules and proceed in the same manner as sales to satisfy State and county taxes. If so, the sale when had is complete, and all of the title of the taxpayer, whatever it may be, passes to the purchaser free from any lien or incumbrance. To subject the land to sale for an assessment for one year and leave the land liable to be sold each following year for subsequent assessments would in fact be nothing more than a sale of the use of the land for one year; and of course nothing more could be derived from the sale than such an amount as represented the rental value of the land for one year; for a purchaser at such a sale, knowing the liability to resale, could not afford to give more than this. If in fact the sale is to be governed by the same rules as govern sales for State and county taxes, then the entire title passes, and not merely the right of possession for one year. Construing thus the statute, we are of the opinion that the sale of the land in a drainage, district for the collection of the tax assessment against it for any one year conveys to the purchaser title free from lien just as in the case of other sales for taxes. Where sales are had to collect State and county taxes, it does not necessarily follow that the purchaser will not have to pay a far greater sum than the amount assessed for taxes, nor that the land will not bring its full value; and likewise in sales had to collect the annual tax assessment of a drainage district it is within the power of those interested in the common project to protect themselves by seeing that the land subject to the drainage assessment brings its full market value. The levy upon the judgment for drainage tax shows that there has been a failure on the part of one of the landowners liable to comply with his undertaking in which all of the landowners in the drainage district are concerned, and by which the rights of all may be affected. Common prudence and self-interest would dictate to each and all of the other landowners to see that any tract in the drainage district should be sold for as much as possible, in order that at the conclusion of the ten years the undertaking as a whole would have resulted as successfully as possible. 3. Inasmuch as there is no provision in the drainage law for [227] the application of any surplus resulting from such a sale as heretofore mentioned, and since under the rules applicable to tax sales in general any surplus accruing from the sale made to collect one of the tax assessments would be the property of the defendant in fi. fa. (in a drainage-tax sale a defaulting landowner whose land had been improved), who would have a right to demand it from the sheriff, we think that the prayer of the petition in this case that a receiver be appointed should have been granted. Not for this reason alone, but also upon other grounds, we are of the opinion that in a proper case a receiver may be appointed to take charge of the affairs of a drainage district upon the failure of the drainage commissioners, tax-collector, or treasurer to proceed to collect all past-due drainage assessments, or to sell all lands in the drainage district liable to sale, or otherwise, under the direction of the judge of the superior court, to collect any or all of the indebtedness due for the improvement and pay it to the bondholders as directed. Judgment reversed. All the Justices concur.