Rose v. Springfield & Brookline Special Road District

WALKER, P. J. This is a suit in equity, instituted the circuit court of Greene County, to restrain the collection of tax bills, and to declare invalid and cancel certain road bonds for the payment of which the tax bills were issued. Upon a hearing, there was a judgment for — 599 — appellant. Respondents moved for a new trial. Prom the interlocutory order granting same an appeal has been perfected to this court. Stripped of formal verbiage, the specific allegations of the petition are as follows: 1. That the plans for the road adopted at the landowners’ meeting called for a road sixteen feet wide, while the specifications on which the bids were made and which were embraced in the contract called for a road fourteen feet wide. 2. That the specifications 'provided for rolling the road, while the contract made omitted the rolling. 3. That the work was not completed within the time required by the contract. A That the contract was made in the name of the commissioners of the road district instead of the name of the district. 5. That the bond given by the contractor for the faithful performance of the contract did not run to the road district but to the commissioners. 6. That the commissioners failed to certify to the county clerk the amount of the bond issue. 7. That the contract was not performed according to the specifications in that the crushed stone was spread on the road to a depth of only three inches, while the specifications called for an average depth of 6y2 inches. 8. That the contractor abandoned the work before its completion. The separate answer of the sole appellant, Eisenmayer, was first a general denial. This was followed by admissions as to the organization of the road district and the appointment, qualifications and acts of the commissioners. To these was added a specific denial that the commissioners had failed to execute, acknowledge and file with the county clerk a certificate showing the issue of the bonds, the amount of same, the time they were to run, the rate of interest, and the date of their maturity; and a further denial that the certificate made by the commissioners to the county clerk did not contain — 600 — a description of the land chargeable with the taxes levied for the payment of the bonds, together with the relative locations of the land and the road to be constructed. On the contrary, it is affirmatively alleged that said certificate was made and filed as required by law, and that the issue of the bonds and the other requirements of the statute in regard thereto were complied with. To this answer was interposed a general denial. The admissions of the parties and the testimony of witnesses disclose that the respondents brought this action as owners of land subject to taxation in the Springfield & Brookline Road District, one of the defendants below, and being the district in which the road bonds in controversy were issued. Of the other defendants, W. B. Cloud was, during a part of the time of these proceedings, county clerk of Greene County, until he was succeeded by the defendant, J. L. Likins, who was thereafter and is now such clerk. J. E. Potter, another defendant, is the collector of the revenue of said county. All of the other defendants, except A. J. Eisenmayer, who alone appeals, were during some part of the transaction out of which this suit arises, or are n'ow, commissioners of said road district. Eisenmayer, the appellant, is the owner of a part of the bonds sought to be declared invalid. This district was established by an order of the county court of Greene County, April 10, 1912, under Article 7, Chapter 102, Revised Statutes 1909, and the amendments thereto. Upon the appointment of the commissioners for the road district by the county court, they employed, in conformity with Section 10615, Revised Statutes 1909, the county surveyor of Greene County to prepare, and he did so prepare in July, 1912, plans, specifications, maps and profiles in which provision was made for the construction of a rock road sixteen feet in width. In these plans it was provided, among other things, that the rock used in the construction of the road was to he harrowed and rolled until the surface had been rendered smooth. Upon the filing of the report of.the county surveyor, the commissioners called a general meeting of — 601 — the landowners of said district, under Section 10616, Revised Statutes 1909, as amended, Laws 1911, p. 373, and the plans, as submitted, were adopted. After ■ compliance with other requirements of the statute, the commissioners requested bids for the construction of the road, in conformity with the plans, etc., adopted by the landowners, except that it was proposed to let the contract for a road fourteen feet in width, instead of sixteen feet. Upon an - examination of the- bids, it appeared-that the one submitted by D. Gr. Hendrix was the lowest. He was, thereupon, awarded the contract. Before the same was signed, it was discovered that his bid did not' conform to the plans, in that it omitted the' requirement that the rock when placed on the road was to be rolled. Upon discovering, this omission, the commissioners refused to award the contract to him, and the difference was adjusted by their agreeing to furnish him with a roller and to allow him .$10 per mile in addition to his bid for the rolling. This modification was made by the commissioners and the contractor alone, and the contract was thereupon, on the 25th day of-January, 1913, signed, and the work commenced. This contract called for the- construction of eight miles of road. About two miles of the same were constructed as required, when, in May, 1913, the contractor abandoned the work. About the time of this abandonment, acting under Section 10620, Revised Statutes 1909, as. -amended by Laws 1911, p. 374, the commissioners issued bonds of the district for the payment of the cost of improving the road, of the total par value of $18,000.- On May 14, 1914, the commissioners sold a portion of these bonds of the par value of $8000 to the appellant, Eisenmayer, and out of the proceeds, paid the contractor $4962.12 in satisfaction of his account for the work claimed to have been performed by him under his contract. The bonds not sold, of the par value of $10,000, are in the hands óf the commissioners. Under the contract, Hendrix was required to complete the same within 365 days after January 25, 1913. Upon his failure so to do, he was to be subjected to a penalty of five dollars per day for — 602 — each, day’s failure thereafter, which was to he deducted from the amount due him. So far as the formal compliance with the law is concerned regulating the issuance of bonds of this character, there is no contention. They indicate on their face' that they are the Tmnds of the road district, to' be paid by the annual levy and collection of a direct tax; upon all the taxable property in the district, and that provision for such revenues had been made before their issue. It was admitted that the taxes have been assessed against the respective properties of these plaintiffs on account of building 'this road, and the bonds purporting to have been issued on account thereof, in the amount set forth in the petition for the year 1913 and for the year 1914; and that taxes were extended in a similar .manner for the year 1913, for a similar purpose, against the other lands similarly situated. It was also admitted that the Collector of the Revenue of Greene County will proceed to enforce the taxes if not restrained by order of court in this proceeding. Consideration I. The only matters before the court on the motion for new trial were the admission and rejection of evidence, and that the judgment was for the wrong party. The motion does not allege that ^ie caurt improperly found any fact or designate any other error. The judgment of the court being for the defendants below, the disputed facts must have been found in their favor. The question on a motion for a new trial, excepting as to the admission and exclusion of evidence, was, therefore, one of law, i. e. whether on the facts as found, the judgment was against the law. In sustaining the motion for a new trial, the order for which is general in its terms, the court, therefore, must have concluded that on the facts- as found, the judgment for defendants could not stand. ■ We are sustained in this conclusion as to the reasons for the trial court’s ruling on the motion for a new — 603 — trial, by tlie petition. The analysis of same, above set forth, shows that its 1st, 2nd, 4th and 5th allegations relate to irregularities in the execution of the contract with Hendrix; that its 3rd, 7th and 8th relate to irregularities in the perfomance of the contract by him; and the 6th relates to the certificate of the amount of the bond issue which the commissioners are required to make to the county clerk as a basis for computing the taxes to be levied for the purpose of paying off the bonds. Bondsty °f In determining the validity of the bonds in controversy the purchaser of same for value before maturity, in the usual course of business, need not concern himself with matters of detail as to their issuance. What he is required to do is to ascertain, at his peril, if the commissioners were clothed with power to issue them. When issued, he has a right to trust to their decision as to the regularity of the proceedings. Familiarity with the statute authorizing the issue being a prerequisite, if the bonds show upon their face to have been issued in conformity therewith, the purchaser will not be chargeable with notice of collateral facts as to whether the contract has been properly ■entered into or fully and faithfully performed. We so held in Catron v. Lafayette Co., 106 Mo. 659. In Steines v. Franklin County, 48 Mo. 167, a suit in equity to cancel bonds issued by the county court for the improvement of roads, in which misconduct on the part of the county officers and the contractor was alleged as a ground for canceling the bonds, we said: “What has been said in argument as to the bad faith and dishonest conduct of the officers and contractors can have no weight against the defendants, who innocently invested their money, provided the authority to issue the bonds actually existed. . . . The folly of county officers, and the arrant knavery of contractors and speculators, ate considerations which might have application in a proceeding to restrain the issue or negotiation of the bonds, but ought not to be allowed — 604 — to authorize their repudiation when they have come into the possession of bona-fide holders.” In Carpenter v. Lathrop, 51 Mo. 483, a suit on the interest coupons of bonds issufed by the town of Lathrop in aid of a railroad, as a defense the town urged that the railroad company had not complied with its duties in completing the road in the time agreed, or in building a depot at a certain place, we held that these defenses were not available against the bona-fide holder of the bonds, employing this language: “It is not necessary to examine the question whether the railroad company [in whose aid the bonds were issued] complied with its duties under the subscription of stock, in completing the road in the time named, or in erecting a depot at the place named, or any of these collateral facts. These are matters that need not concern the holder of a bond or coupon purchased in good faith. If the power was conferred upon the trustees of the town to take the stock and execute the bonds, any irregularity in the exercise of the power conferred . . . could not be relied on to defeat the bonds in a collateral way.” The bonds were held invalid because there was no proof that an election had been held, and that the voters thereat had authorized the issue of the bonds. In Heard v. School District, 45 Mo. App. 660, it was held that the authority to issue municipal bonds is conferred by law and by the decision of the voters, and when an election has been held and the will of the voters ascertained, the bonds are valid in the hands of a bona-fide purchaser, notwithstanding irregularities in the proceedings. In the present case, the appellant Eisenmayer is a bona-fide holder of $8000 worth of the bonds. He paid full value for them, took them before maturity, and he was without knowledge of any irregularities in their issuance. Of what then, is he bound to take notice? Much has been admitted in regard to the regularity of the issuance of the bonds. Disregarding for the moment these admissions, the statute will furnish the — 605 — answer as to the measure of the bondholders’ duties. The review of same is therefore pertinent. r An absence of allegations from the petition of any irregularities in the organization of the road district renders a consideration of Sections 1Ó611 to 10614, Revised Statutes 1909, relative thereto, unnecessary. Nor is any point raised as to a failure of the commissioners to comply with Section 10615 in regard to the valuation of the tracts of land to be effected by the proceeding. That the required landholders’ meeting was held after proper notice, and that the matters there to be determined were submitted, voted upon, and the result reported to the county clerk, as required by Sections 10616 and 10617, are shown by the record. Section 10618 prescribing the duties of the commissioners in employing an engineer to draw plans, etc., advertise for bids, and enter into a contract for the construction of the road, are, from their nature, preliminary and collateral, and as a consequence, are matters over which the bondholder has no control; and, as affecting' the validity of- the bonds, they are of no concern to him, as we have held in the cases cited. Irregularities in the performance of the duties required by these sections are consequently not such as will affect the validity of the bonds in the hands of a holder, as in. the case at bar. They are, therefore, such as are included in the 1st, 2nd, 4th and 5th allegations of the petition, as shown by the analysis we have made of same. Section 10619, providing for the payment of tax bills, and when costs are to be paid, has no application to bonds issued under the conditions here existing. The 3rd, 7th and 8th allegations of the petition relate to the performance of the contract by Hendrix, the contractor. The latter was not made a party to the suit. The bondholder cannot be held responsible for derelictions of the contractor, over whom he has no control, with whom he has no contract and is not in privity. The district makes a contract with the bondholder that it will pay the bonds at maturity; and with the contractor it makes an entirely different contract. — 606 — If the contractor is derelict, the district has its remedy by suit on his bond, or by withholding payments; bnt the bondholder has no power to interfere,. even though he knows the contractor is violating his agreement. These matters, therefore,' are, under the authorities cited above, irrelevant to the question of the validity of the bonds. ■ Section 10620, as amended, Laws 1911, p. 374, provides that when the landowners direct, the cost of the contemplated improvement shall be distributed over a number of years; that the commissioners shall issue bonds as thereafter directed for the payment .of the expense to be incurred; and that the bonds of the district shall be issued for the length of - time that has been directed, for an amount not exceeding the estimated expense of the construction, plus ten per cent in excess of same; and that a contract shall be entered into ‘as provided in Sections 10618 and 10619; that the bonds shall run- in the name of the road district, shall bear not exceeding six per cent interest, and shall be payable as directed, with the proviso that they may be paid at any time after one year on call, and how they shall be signed and attested. The section further prescribes how the bonds shall be sold, and what shall be done with the money raised therefrom. This is followed by the provision that “the board of commissioners shall make out and certify to th.e county clerk a statement of the amount of the bond issue, and a description of each tract of land, within a certain distance of 'the proposed road, etc., and acknowledge and file same with the county clerk.” It is urged that the portion of the section quoted has not been complied with, no question being raised as to any other part of same. After a careful examination of the testimony, we have reached the conclusion that there is ample proof of a compliance by the commissioners with the requirements of Section 10620 quoted. If this did not affirmatively appear, the nature of the duty enjoined is such that it cannot constitute a condition precedent to the issuance of the bonds. The certificate is required to — 607 — state the amount of the bonds that have been issued; involving, as this requirement does, the statement of a past transaction, it can only be made after the bonds have been issued. No power, therefore, as to the issuance of the bonds could arise from the making of the certificate, for the evident reason that at the time the same is required to be made, the bonds have already been issued. In our opinion, therefore, the contention made in the 6th allegation of the petition, as analyzed, as to the effect of the failure of the commissioners to make the certificate does not affect the validity of the bonds. • Prom all of which it follows that the trial court erred in granting the new trial. The order for same is, therefore, reversed, and the cause is remanded with directions that the original finding of the trial court be reinstated and that a judgment be entered in conformitv with same. All concur.