Board of Com'rs of Iowa Drainage Dist. No. 1. v. Wilkins Co.

MONROE, J. Plaintiff seeks to compel defendant to comply with a contract whereby it agreed to do certain dredging in consideration of the delivery to it of bonds, to be issued by plaintiff, of the par value of $19,000. Defendant admits the contract, and alleges its willingness to comply therewith, provided that the bonds which it is to receive are found to be valid; but it alleges that, for a variety of reasons, which are stated,' the bonds are invalid, and, in that contention, it is joined by the Orange Land Company, Limited, which has intervened for that purpose. The suit is, frankly, an amicable one, in which all the parties before the court are interested in having a judgment rendered in favor of plaintiff, and yet it is expected that such judgment will establish a basis for stare decisis, which will be binding on this court with respect to the rights of persons who have adverse interests, but who are not here represented. Moreover, the judgment, whether it is so expected or not, will be regarded as establishing a precedent for other drainage districts, 'created and to be created, and for the public at large in its dealings with such districts, and with other organizations similar in character. The court is not, therefore, at liberty to deal with the matter as though it were one involving private interests, alone, which might be regulated by consent of the parties. Plaintiff is a public corporation which moves and has its being'solely within the limits of the law of its creation, and, by conferring upon it the power to incur debt and to levy and collect taxes for the payment of the same, the state has imposed upon the courts the obligation of seeing to it (so far as the matter may fall within their jurisdiction), for the protection of its own credit and of the rights of its citizens, that its creature does not travel beyond the limits thus fixed. The Constitution (article 281, as amended, pursuant to Act No. 122, p. 207, of 1900) provides that:" “Drainage districts, through the boards of commissioners thereof, may incur indebtedness and issue negotiable bonds therefor, payable, in principal and interest, out of, and not to exceed, in principal and interest, the aggregate amount to be raised by said annual contributions during the period for which the same are levied.” In the instant case, the board of commissioners submitted to the qualified voters a proposition to vote a specified fax, of 25 cents per acre, upon the land lying in the district, for 13 years, and to authorize the incurring of an indebtedness of $30,000, to be represented by bonds, bearing interest at 5 per cent, per annum. The taxpayers were informed that the funds to be derived from the tax would be used, exclusively: (1) For the' extinguishment of the debt; (2) in paying “the expenses of organization, and the running and operating expenses of said board, * * * and of operating the drainage canals, ditches, or machinery, owned, operated, or controlled by said drainage district * * * ; (3) in providing such additional works, or extension canals, ditches, or drainage conduits as, in the judgment of said board, * * * may be necessary and proper, economically, to drain the property included within the limits thereof; (4) in paying the interest upon said bonded indebtedness.” The proclamation, calling the election, was issued in January, 1908, the election was held March 10, 1908, and the return of the election recites that: “The votes cast at said election, to wit, four in number, cast by persons owning property in said district, or their proxies, of an assessed [131] valuation of $5,750, were cast in favor of the proposition, * ® * to authorize the creation of a bonded indebtedness, of $30,000, and ■ the levying of a special tax, of 25 cents per acre, on all the property in said district for a period of 13 years.” Thereafter the tax was levied for the year 1908, and up to May, 1909, had produced about $1,500. It is said, however, tjiat it will produce annually $2,200 and hence that there will be collected during the 13 years $28,600. On the other hand, it appears that the amount required for the payment, with interest, of the $19,000 of bonds which it is proposed to deliver to the defendant, will be $25,750, so that not only will the proceeds of the proposed tax be insufficient to pay the debt of $30,-000, which plaintiff was authorized to incur, but, after providing for the $19,000 of bonds to be delivered to defendant, it will furnish but $2,850 wherewith to maintain, for 13 years, the ditch, which defendant is to dig, pay the organization and operating expenses of the board, and provide the additional canals that may be found necessary. In view of the situation as thus presented, the plaintiff board, at a meeting held on May 6, 1909, adopted a resolution devoting the entire proceeds of the tax to the payment of the bonds to be delivered to defendant. So that, as the matter stands, after announcing to the taxpayers that, with $30,000 payable, with Interest, in 13 years, from the proceeds of a specific tax of 25 cents per acre, it would be able to establish and maintain a system of drainage, and pay its organization and operating expenses, and, after being authorized to incur debt to that amount and impose the tax, upon the condition that the proceeds of the tax would be used in the manner stated in its announcement, the board finds that the amount to be realized will be insufficient for the purposes declared in its announcement, and now proposes to use the proceeds of the tax only so far as they will go in that direction. There are, however, several objections to the adoption of this course. In the first place, the board has been authorized, by the vote of the four taxpayers, to incur a debt in excess of the amount that the tax, which it was, at the same time, authorized to impose, will pay, which' is in contravention of the law under which it proceeded. In the next place, and as, perhaps, included in the reason stated, if, hereafter, a person should present himself as the innocent holder of one of the $30,000 of bonds authorized to be issued, but not included in the $19,000, to be delivered to defendant, it would be difficult to find a reason for denying him the right to participate in the distribution of the fund derived from the tax voted for the payment of the whole issue of bonds. In the third place, it would be grossly unfair, and, as we think, illegal, to force upon the taxpayers a system, or supposed system, of drainage, for which they voted, or allowed to be established without their votes upon the faith of representations which cannot be made good, and which supposed system cannot be made effective for lack of the funds necessary to its establishment and maintenance. Our conclusion on this subject being sufficient for the purposes of the present case, we shall not undertake to pass upon the other questions which are presented. It is therefore ordered, adjudged, and decreed that the judgment appealed from be annulled, avoided, and reversed, and that there now be judgment in favor of defendant, and of the intervener, rejecting plaintiff’s demand, at its cost in both courts.