Opinion
No. 38502.
December 6, 1943.
MANDAMUS: Drains: Taxation: Ralph Sewer Act: Liquidator Not Authorized To Levy Additional Taxes. The decision in State ex rel. Hotchkiss v. Lemay Ferry Sewer District, 338 Mo. 653, holding that there is no authority for a tax levy beyond the original ten cent levy under the Ralph Sewer Act, was not overruled in Jacoby v. Missouri Valley Drainage District, 349 Mo. 818. But warrants in excess of the total funds under the ten cent levy should not be held void. It was not the intent of the 1933 Liquidator Act that additional taxes be levied by the liquidator, but such act contemplated compromise of indebtedness and proportionate payment.
WRIT QUASHED.
Charles Claflin Allen, Jr., and Williams, Nelson English for relators.
(1) Mandamus is the proper remedy to enforce a sewer district to levy the taxes required to meet the payments due to warrant holders. State ex rel. Nolan v. Nelson, 310 Mo. 526; State ex rel. Boatmen's Natl. Bank v. Webster Groves Sewer District, 37 S.W.2d 905. (2) It is the duty of sewer districts organized pursuant to Chapter 65, R.S. 1929, to levy taxes for the payment of organization expenses and other expenses lawfully incurred, which duty remains after the repeal of the act as to all districts which were incorporated under the act. Jacoby v. Missouri Valley Drain. District, 349 Mo. 818, 163 S.W.2d 930; State ex rel. Boatmen's Natl. Bank v. Webster Groves Sewer District, 37 S.W.2d 905; State ex rel. Stoecker v. Jennings Sewer District, 63 S.W.2d 133. (3) The sewer districts organized pursuant to Chapter 65, R.S. 1929, were not dissolved by the Repealing Act of 1931, but still have an existence, with all the duties and powers prescribed by that chapter, which remain until all of the costs and obligations of such sewer districts are paid. Laws 1931, p. 355; Jacoby v. Missouri Valley Drain. District, 349 Mo. 818, 163 S.W.2d 930; State ex rel. Becker v. Wellston Sewer District, 58 S.W.2d 988; State ex rel. Stoecker v. Jennings Sewer District, 63 S.W.2d 133. (4) The amount of organization expenses of sewer districts incorporated pursuant to Chapter 65, R.S. 1929, is not limited to the amount of tax to be raised by Section 11037, R.S. 1929, but the levy of additional taxes is mandatory upon the district; likewise, where the district is required to be dissolved after the incurring of the expenses. R.S. 1929, sec. 11062; Laws 1931, p. 355; Jacoby v. Missouri Valley Drain. District, 349 Mo. 818, 163 S.W.2d 930; State ex rel. Becker v. Wellston Sewer District, 58 S.W.2d 988; State ex rel. Stoecker v. Jennings Sewer District, 63 S.W.2d 133. (5) Under the act passed by the Special Legislative Session of 1933-1934 (Special Session 1933-1934, page 117), the respondent Liquidator succeeded to all the rights and duties of the Board of Supervisors of the sewer district, and the levying of these taxes, being mandatory upon the Board, is likewise mandatory upon the Liquidator. State ex rel. Gentry v. Curtis, 4 S.W.2d 467; Thompson v. Abbott, 61 Mo. 176. (6) As the Jacoby case expressly overruled State ex rel. Hotchkiss et al. v. Lemay Ferry Sewer District, the latter case never was the law, and the case at bar should be decided as though such overruled case had never been written. Koebel v. Tieman Coal Material Co., 85 S.W.2d 519, 337 Mo. 561; Harke v. Haase, 335 Mo. 1104, 75 S.W.2d 1001. (7) As the principle of law upon which the Jacoby case overrules the Hotchkiss case is substantive, and not merely procedural, the effect of the Jacoby decision is retroactive, and not merely prospective, and relators' motion to strike should be sustained. Koebel v. Tieman Coal Material Co., 85 S.W.2d 519, 337 Mo. 561; Harke v. Haase, 335 Mo. 1104, 75 S.W.2d 1001.
T. Douglas Moore for Liquidator of Sewer Districts, Overland Sewer District and Walter R. Mayne, Liquidator, respondents; Fordyce, White, Mayne, Williams Hartman of counsel.
(1) The alternative writ of mandamus should be quashed, the relators' petition dismissed and the respondents discharged, because the respondents cannot be required in this mandamus action to make an illegal second levy. State ex rel. Kent v. Olenhouse, 23 S.W.2d 83, l.c. 86; Bushnell v. Miss. Fox River Drain. District, 111 S.W.2d 946. (2) It is not the duty of sewer districts authorized pursuant to Chapter 65, R.S. Mo. 1929, to make a levy in excess of 10c per square of 100 square feet, nor is it the sewer district's duty to cause such an illegal levy to be made after the repeal of the Sewer Law of 1927. R.S. 1929, sec. 11037; Laws 1931, p. 355. (3) The respondents are not estopped to deny that they have no authority to levy the additional tax sought by the relators. Bushnell v. Mississippi Fox River Drain. Dist., 111 S.W.2d 946. (4) The Sewer District Law of 1927 was repealed by the Legislature of Missouri, and the effect of such repeal was the same as if the circuit court had found that the estimated cost of work and improvements exceeded the estimated benefits. R.S. 1929, sec. 11062; Laws 1931, p. 355. (5) The amount of tax to be raised by the Sewer Districts for preliminary expenses cannot exceed 10c per square of 100 square feet, nor can the Sewer Districts or the Liquidator be compelled to levy a greater tax. R.S. 1929, secs. 11037, 11062; State ex rel. Hotchkiss v. Lemay Ferry Sewer District, 92 S.W.2d 704; Bushnell v. Miss. Fox River Drainage Dist., 111 S.W.2d 946. (6) The facts in the case of Hotchkiss v. Lemay Ferry Sewer District and the case of Jacoby v. Mo. Valley Drainage District are dissimilar, and the same rule of law should not apply to both cases. (7) Even though the Jacoby case overruled the Hotchkiss case, the decision in the former case is prospective only, and the rule in the latter case is still the law and is an effective bar to relators' cause of action. Douglass v. County of Pike, 101 U.S. 677, 687, 25 L.Ed. 968; Klocke v. Klocke, 208 S.W. 825; 1 C.J. 1197; 36 C.J. 963, sec. 27; Barker v. St. Louis Co., 104 S.W.2d 371. (8) The courts of final decision may define and declare the effect of its decision overruling a former decision. Great Northern Ry. Co. v. Sunburst Oil Co., 287 U.S. 358, 53 S.Ct. 145; Koebel v. Tieman Coal Material Co., 85 S.W.2d 519; Jones v. Woodstock Iron Co., 10 So. 635; People v. Maughs, 86 P. 187; 85 A.L.R. 262. (9) The proposition of law overruled in the Hotchkiss case being one of procedure or adjective law, the decision in the Jacoby case is prospective only, and does not give life to relators' warrants. Hotchkiss v. Lemay Ferry Sewer Dist., 92 S.W.2d 704; Jacoby v. Mo. Valley Drain. District, 163 S.W.2d 930. (10) The relators purchased these warrants issued by the Sewer Districts and are charged with the knowledge that they were dealing with public agents, whose authority and power were strictly limited and prescribed by law, outside of which such public agents are utterly powerless to act. Bushnell v. Miss. Fox River Drainage District, 111 S.W.2d 946, l.c. 952; State ex rel. Watkins v. Macon County Court, 68 Mo. 29, l.c. 37; Cheeney v. Inhabitants of the Town of Brookfield, 60 Mo. 53. (11) Even though this court should determine that a substantive rule of law was overruled in the Jacoby case, the decision in that case must be prospective only in effect, and the relators' warrants are void because contracts have been made, titles to real estate vested, and rights acquired under and in accordance with the rule of law as set out by this court in the Hotchkiss case. 7 R.C.L. 1010; State ex rel. May Dept. Stores Co. v. Haid, 38 S.W.2d 44; Reed v. Ownby, 44 Mo. 204; Dobbins v. Sutterfield, 54 Mo. 391; Regan v. Dickmann, 207 S.W. 792. A.E.L. Gardner and Julius T. Muench for St. Louis County Chamber of Commerce, amicus curiae.
(1) There is a wide difference between the preliminary assessment authorized under the Drainage Law and that provided for under the Sewer Law, one being at the rate of 50 cents an acre, while the other is at the rate of approximately $42.00 an acre. Secs. 11037, 12333, R.S. 1929; Jacoby v. Mo. Valley Drain. District, 163 S.W.2d l.c. 933. (2) The facts in the case of Hotchkiss v. Lemay Ferry District and those in the case of Jacoby v. Missouri Valley Drainage District are not alike, and therefore the decision in the latter case should not apply here, where the facts are practically identical with those in the Hotchkiss case. Hotchkiss v. Lemay Ferry Sewer District, 92 S.W.2d 704; Jacoby v. Mo. Valley Drainage District, 163 S.W.2d 930. (3) There is a distinct difference between the right of a claimant against a drainage or a sewer district to obtain a money judgment against the district, and his right to compel the levy of an additional tax over and above the limit fixed for preliminary expenses. Bushnell v. Miss. Fox River Drain. District, 111 S.W.2d 946; Hotchkiss v. Lemay Ferry Sewer District, supra; Jacoby v. Mo. Valley Drainage District, supra. (4) There is nothing before this court to show that the warrants in controversy were issued for services, actually performed, or that such services, if performed, were reasonably worth the amount the warrants represent. (5) Contracts having been made, titles to real estate transferred, and rights acquired and vested in reliance on the decision in the Hotchkiss case, the decision in the Jacoby case should be held to be prospective only in effect. 7 R.C.L. 1010; State ex rel. May Dept. Stores Co. v. Haid, 38 S.W.2d 44; Douglass v. County of Pike, 101 U.S. 677, 687, 25 Law Ed. 968; Klocke v. Klocke, 208 S.W. 825; 1 C.J. 1197; 36 C.J. 963, sec. 27; Barker v. St. Louis County, 104 S.W.2d 371.
G. Carroll Stribling for Samuel W. Forder and W.C. Forder, amici curiae.
(1) The rule of construction adopted by this court in Jacoby v. Missouri Valley Drainage District, 163 S.W.2d 930, 349 Mo. 818, has no application to the rights of relators as holders of warrants of the Overland Sewer District or to the obligations of owners of property within that district. This court has already finally and conclusively determined that under the Ralph Sewer Law (Chap. 65, R.S. 1929) no assessment in excess of 10c per 100 square feet is authorized in order to make payment of preliminary expenses, such as those for which relators' warrants were issued. State ex rel. Hotchkiss v. Lemay Ferry Sewer District, 92 S.W.2d 704, 338 Mo. 653; R.S. 1939, Chap. 80, Art. IV, entitled "Historical Note." (2) To the extent that the decision in State ex rel. Hotchkiss v. Lemay Ferry Sewer District was overruled by the opinion in Jacoby v. Missouri Valley Drainage District, the effect of the latter decision is prospective only, and the rule established thereby is not applicable to the rights or liabilities of property owners in the Overland District which had vested and become fixed in reliance upon the rule of property laid down in the Hotchkiss case. Barker v. St. Louis County, 104 S.W.2d 371, 340 Mo. 986; Klocke v. Klocke, 208 S.W. 825, 276 Mo. 572; Douglass v. County of Pike, 101 U.S. 677, 25 L.Ed. 968; Gelpke v. Dubuque, 1 Wall. 175, 17 L.Ed. 520; Anderson v. Santa Anna Twp., 116 U.S. 356, 29 L.Ed. 633; Wilkinson v. Wallace, 134 S.E. 401, 192 N.C. 156; Threadgill v. Town of Waynesboro, 97 S.E. 521, 170 N.C. 641; Haskett v. Maxey, 134 Ind. 182, 33 N.E. 358; Continental Auto Supply Co. v. Abell, 24 P.2d 133, 95 Mont. 148; Thomas v. State of Ohio, 76 Ohio St. 341, 81 N.E. 437; City of Clinton Oklahoma ex rel. Schuetter v. First Natl. Bank, 39 F. Supp. 909; 21 C.J.S., sec. 194, p. 326; 14 Am. Jur., sec. 130, p. 346; "Limited Retroactivity of Overruling Decisions, A Doctrine of Justice" — 25 Va. Law Review 210; "The Protection Afforded Against Retroactive Operation of an Overruling Decision," 18 Columbia Law Rev. 231; 35 Ill. Law Rev. 121; 37 Harvard Law Rev. 424. (3) Even in the case of decisions upon questions of substantive law, where the overruled decision established a rule of property, or where contract rights or titles to property have become fixed and vested in reliance upon the rule of substantive law established by the earlier decision, as in the present case the overruling decision is uniformly held to be merely prospective in its application. Barker v. St. Louis County, supra; Klocke v. Klocke, supra. (4) The court which overrules an earlier authority has the right to determine whether the rule announced by the new decision shall be retrospective, or merely prospective in its application. Great Northern Railway Co. v. Sunburst Oil Refining Co., 77 L.Ed. 360, 287 U.S. 358; Barker v. St. Louis County, supra. (5) This court has uniformly refused to give retroactive effect to overruling decisions upon questions affecting title to real estate or other property rights based on contract which have become fixed and vested in reliance upon the rule of law established by the earlier decision. Barker v. St. Louis County, supra; Klocke v. Klocke, supra; Mountain Grove Bank v. Douglas County, 146 Mo. 42. (6) If, contrary to our belief, the rule of construction applied in the Jacoby case is retrospective in effect, so as to be applicable to the present controversy, we submit that, as applied to the Ralph Sewer Law, Chap. 65, R.S. 1929, the construction adopted in the Hotchkiss case is correct, and the decision in Jacoby v. Missouri Valley Drainage District should be overruled in so far as the opinion applies to the rights and obligations of the parties under the Ralph Sewer Law. Chap. 65, R.S. 1929, secs. 11031-11071 (Ralph Sewer Law); R.S. 1929, secs. 11037, 11042, 11044, 11050, 11062; State ex rel. Hotchkiss v. Lamay Ferry Sewer District, supra; State ex rel. Ford Motor Co. v. Gehner, 27 S.W.2d 1, 325 Mo. 24; Artophone Corp. v. Coale, 133 S.W.2d 343, 345 Mo. 344.
Original proceeding by mandamus to compel the levy and collection of additional uniform taxes against all lands in the Overland Sewer District of St. Louis [829] County, sufficient to pay all outstanding debts, warrants and costs of liquidating the district.
The district was incorporated in 1928 under the 1927 Act (Laws 1927, p. 439) which became Chapter 65, R.S. 1929. (Sec's. 11031-11071). These sections were repealed in 1931 (Laws 1931, p. 355); and in 1933 appointment of a liquidator was provided (Laws 1933-34 Extra Session, p. 117) to liquidate all of the districts in the county. The Board of Supervisors of the Overland District had levied a uniform tax of ten cents per square of one hundred square feet (amounting to $43.56 per acre), employed an engineer and attorney, proceeded to have surveys and plans made including assessments of benefits and damages, and incurred other organization expenses for which warrants were issued. The uniform tax levied (even if fully collected) was insufficient to pay these warrants (8% has been paid them by the liquidator) and relators (warrant holders) seek to compel an additional levy sufficient to pay all warrants in full.
Respondents' position is that there is no authority for any additional levy and that this was settled by the decision of this court in State ex rel. Hotchkiss v. Lemay Ferry Sewer District, 338 Mo. 653, 92 S.W.2d 704. Relators contend that the Hotchkiss case was overruled in Jacoby v. Missouri Valley Drainage District, 349 Mo. 818, 163 S.W.2d 930, and that under our ruling in the Jacoby case they are entitled to the relief sought. (Because of the view we take on the merits, motions to quash returns or portions thereof are overruled.)
It is true that the majority opinion in the Jacoby case criticised the reasoning of the majority opinion in the Hotchkiss case and refused to apply it to the construction of similar sections of the Circuit Court Drainage District Act [Art. 1, Chap. 64, R.S. 1929; Secs. 12324-12389 (R.S. 1939) Mo. R.S. Ann.] However, the exact question herein presented was not actually before the court in that case. The Jacoby case was not mandamus to compel a levy in connection with the liquidation of a dissolved district, but plaintiff there sought a general judgment upon warrants issued for engineer's services against a district which was still a going concern. The plan of reclamation of the Missouri Valley Drainage District, therein involved, had previously been approved by final decree of the Circuit Court of Holt County which had found the estimated cost of the proposed improvements to be less than the benefits assessed. Thus that district had passed beyond the stage of preliminary organization where it could be dissolved by adverse decree of the circuit court disapproving its plan, and had reached the status where it could exercise its full powers to build its planned improvements and to levy sufficient assessments to pay for them. Before it did do so, this was made impossible by intervention of a higher authority, the United States Government, which condemned a great part of the lands included in that district for use as a game refuge so that these lands were to be kept flooded instead of being drained. Of course, while that situation greatly affected the ability of that district to pay its debts (by not being able to tax the lands of the United States Government), it in no way affected the liability of that district on its lawfully incurred debts. Furthermore, as pointed out in that opinion, that district had taken no steps toward dissolution and, in that status of its organization, another section (different from those considered in the Hotchkiss case) was applicable for that purpose, namely: Sec. 12361, (R.S. 1939) Mo. R.S. Ann. providing for dissolution upon petition of the landowners. (The possibility of taking in new territory under Sec. 12365 (R.S. 1939) Mo. R.S. Ann., or of readjustment of assessment of benefits under Sec. 12371 (R.S. 1939) Mo. R.S. Ann. might also be suggested.) Certainly, if the Missouri Valley District was liable on its warrants for services of its engineer in preparing the plan of reclamation already approved by final decree of the circuit court, the question of how it might ultimately pay this debt was not material on the matter of the right of the engineer to a judgment fixing such liability [State ex rel. Emerson v. City of Mound City, 335 Mo. 702, 73 S.W.2d 1017, Coleman v. Kansas City, 351 Mo. 254, 173 S.W.2d 572, l.c. 579]. Thus the fact that Jacoby was entitled to a general judgment against the Missouri Valley District does not settle the question involved here of the liquidator's authority to levy this additional tax on the lands in the Overland Sewer District.
In fact, the situation here is just the opposite of that in the Jacoby case. Here the status of this district was that it never [830] had anything but a preliminary interlocutory decree of incorporation, and also that its plan of improvement had been disapproved and its dissolution ordered on the ground that the cost thereof was greater than the amount of the benefits. [Laws 1931, p. 355; State ex rel. Becker v. Wellston Sewer District, 332 Mo. 547, 58 S.W.2d 988, l.c. 994.] In that situation, this court in the Hotchkiss case decided there was no authority under Chapter 65, R.S. 1929 to levy taxes which in total with prior levies would amount to more than ten cents per one hundred square feet. That ruling was sufficient to dispose of the Hotchkiss case, as of this case; and it was not affected by the Jacoby case because a ruling on that question was not essential to the decision of this court in the latter case.
However, in the Hotchkiss case, this court went further and held void all warrants issued after the issuance of a total amount of warrants equal to the total amount of funds that such a ten cent levy would produce. To this extent of its holding, it was overruled, and we think rightly so, by the Jacoby case. That is, if warrants issued to Jacoby (those issued after the total outstanding equaled the amount of the organization levy), before the decree approving the plan for reclamation, were void, he would not have been entitled even to a general judgment on them against the district. Certainly, it is not impossible, or even as unusual as it should be, for valid obligations to exceed the funds which are available for their payment. Of course, warrants are void when political subdivisions of the state, or municipal corporations, exceed constitutional limitations in issuing them; but we know of no good reason why an insolvent sewer district in liquidation should not apply its available funds pro rata on all its outstanding warrants, issued for bona fide expenses, regardless of the time when such warrants were issued. That is the procedure apparently followed by the liquidator in this case (which ought not to be done if such warrants are void); and in so far as the Hotchkiss case held to the contrary it should not be followed. Nevertheless, the Hotchkiss case is still the law, and we think it should be reaffirmed, in its holding that a sewer district, which was only in the preliminary, interlocutory state of incorporation under the provisions of the 1927 Act (Chapter 65, R.S. 1929) when required to be dissolved under the 1931 repeal act, can levy no assessment which in total with prior levies would amount to more than ten cents per one hundred square feet.
There is another reason, not mentioned in the Hotchkiss case, why we think we should still follow the rule there established in the liquidation of districts so attempted to be organized under the repealed 1927 act. That is because (whatever may have been the situation at the time the 1931 repeal act went into effect) the 1933 liquidator act clearly contemplated liquidation without additional taxes (at least above the ten cent levy) sufficient to pay all issued warrants in full. It provided (Sec. 1): "Such liquidator . . . shall have power by and with the approval of the Circuit Court to compromise any or all outstanding indebtedness of the sewer district; . . . and he shall likewise have power, subject to the same approval, where the total uncollected taxes levied by such sewer district exceed the outstanding indebtedness with interest, to compromise such taxes upon such basis as will provide for the payment of the outstanding debts, with interest, taking into account the cost of liquidation and, if a compromise of any indebtedness of the district shall have been made, such compromise of taxes shall take into account the reduction in the indebtedness made by reason of such compromise." Surely this meant compromise valid debts, and not void debts, because specific authority was given "to contest the validity of any claim", and likewise this is coupled with authority to compromise taxes which must have meant valid taxes. It was also considered so urgent, in 1933, to commence final liquidation of these districts immediately upon the basis of the existing situation that the Act carried an emergency clause which recited: ". . . said sewer districts being now in process of liquidation pursuant to law and in connection therewith many thousands of law suits have been and are being filed in the state courts . . . the title to the homes of several thousand citizens being clouded by reason of the claims pending against such sewer districts and by reason of said law suits, . . ."
Why would so much of the Act be taken up with such provisions if it were intended that further assessments be levied until all obligations were fully paid? In fact, why have such a statutory liquidator at [831] all, to immediately wind up all such districts, if that were the intent? Why not continue with the Board of Supervisors in charge as the 1931 Act did? Certainly there was no specific authority in this for the liquidator, for which this Act provided, to begin levying further assessments, and the provisions for compromising assessments already levied and reducing obligations by compromise is such a clear indication of a different intent that none should be implied. On the contrary, we think it is apparent that the Legislature intended liquidation by paying whatever proportion of outstanding liabilities the available assets would pay; and, in fact, to reduce claims by compromise wherever possible so that uncollected assessments already made might be compromised and reduced.
The alternative writ of mandamus heretofore issued is quashed. Gantt, Tipton, Clark, JJ., and Douglas, C.J., concur; Leedy, J., concurs in result only; Ellison, J., dissents.