Opinion
Nos. 2041-2043
January 25, 1938
DRAINAGE DISTRICTS — TAXES — PLEADINGS — AGREED STATEMENT OF FACTS — PARTIES — MISJOINDER — WAIVER — ITEMIZED CLAIM PENALTY AND INTEREST — BURDEN OF PROOF — ACTION — PRESUMPTION — DIVERSION OF FUNDS.
1. In action by drainage district for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, petition alleging that treasurers pursuant to duty collected sum belonging to drainage district and wrongfully transferred it to general fund of county to damage of the district sufficiently alleged ownership of funds. 2. In action by drainage district for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, where counsel agreed to statement of facts which showed ownership of funds in drainage district, defect, if any, in petition alleging that fund belonged to drainage district would be supplied by statement of facts. 3. In action by drainage district against county treasurer and county commissioners for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, where objection of misjoinder of parties defendant was not taken by demurrer or answer, defect of misjoinder, if any, was waived (Rev. St. 1931, § 89-1008). 4. In action by drainage district for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, stipulation that claim presented to county commissioners correctly set forth itemized statement of amount transferred from drainage district fund to general fund of county showed that claim was sufficiently itemized to support judgment. 5. A drainage district is entitled to the amount of assessments collected by county treasurer together with the penalty and interest on any assessments not paid within the time provided by law. 6. In action by drainage district against county treasurer and county commissioners for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, where counsel stipulated that items transferred were composed of collection charges and advertisement deducted from funds collected for drainage district, funds presumably belonged to drainage district and placed on defendants burden to show the contrary. 7. Drainage districts, being public or quasi public corporations, are the owners of funds collected by taxation for their benefit, and may sue to recover them (Rev. St. 1931, § 122-836). 8. Where county treasurers diverted taxes and assessments collected for drainage district to county funds, drainage district had sufficient interest to maintain an action to prevent diversion of money set apart for bondholders to the use of county (Rev. St. 1931, § 122-836). 9. In action by drainage district for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, in absence of showing that any bonds were outstanding, court could not presume that money was diverted for payment upon bonds and interest and would, on the contrary, presume that county treasurer performed his duty and did not put into general fund money which belonged to bondholders (Rev. St. 1931, § 122-887). 10. In action by drainage district for taxes and assessments collected by county treasurer for drainage district and diverted into county funds, which trial court found were deducted from maintenance fund of drainage district, which finding was not sustained by allegation nor evidence, judgment would be affirmed subject to right of county to show in further proceedings that part of funds retained should be retained for benefit of bondholders (Rev. St. 1931, § 122-887).
APPEALS from the District Court, Big Horn County; P.W. METZ, Judge.
The causes were submitted for the plaintiffs in error upon the brief of Thos. M. Hyde of Basin, and Wm. C. Snow of Cheyenne, as associate counsel.
The cases were consolidated for purposes of this appeal. This brief is on behalf of plaintiffs in error in each of the cases. The court is without jurisdiction because the petition fails to state a cause of action. It is the duty of the county treasurer to collect drainage district taxes and account to the commissioners of the districts for money so collected. To paraphrase the petition, it would be accurate to say, that the plaintiff alleges that the treasurers converted or turned over to the county $1,333.23 belonging to the plaintiff, for which it prays judgment. No issue can be joined as no allegation is made in the petition as to the ownership of the money. We are unable to understand the grounds upon which the plaintiffs base their right to recovery. There is a misjoinder of parties defendant. The counties are not charged with conversion. Only the treasurers are so charged. The judgment is for conversion as to the treasurer for money had and received by the county. This cannot be done. Pomeroy's Code Remedies, 6th Ed. No. 208. Objection to a petition for failure to state a cause of action is never waived. Pomeroy's Code Remedies, 695. The only relation between the county treasurer and county commissioners in drainage district matters, is that the commissioners approve the assessment roll of the drainage district. The treasurer acts independently of the commissioners. The judgment against Dungan, treasurer, adds nothing to the judgment against the county. Counties are not liable for torts of officers. 19 R.C.L. 368; Houtz v. Commissioners, 11 Wyo. 152; Richardson v. Hannible, (Mo.) 50 S.W.2d 648; Caspary v. Portland, (Ore.) 24 P. 1036. The requirement that a fully itemized bill be first presented cannot be waived by the county. Houtz v. Commissioners, 11 Wyo. 152. There was a stipulation as to the facts. It was not intended by stipulation of counsel to impose upon the court as final and binding what counsel may stipulate as constituting "the material facts." There was also a supplemental stipulation as to agreed facts. We contend that the court had no jurisdiction because no itemized account was presented prior to suit. Houtz v. Commissioner, 11 Wyo. 152. The facts submitted were insufficient to enable the court to reach any conclusion, or make any finding on whether or not, the transfer of the funds in question, were or were not authorized. It is impossible to determine on the law of the case until we know the facts material to the issues. Sections 122-866 and 887, R.S. 1931, make no reference to costs but only to interest and penalties. Section 115-2305 makes a distinction between costs and fees. As to penalties and costs collected by the county treasurer in connection with an assessment for bonded indebtedness, plaintiff is not entitled to them until the bonded indebtedness has been paid. Until that time they are a fund for the payment of the bonds. Section 122-887, R.S. 1931. The county is entitled to $3.00 out of every redemption made of lands sold for drainage assessments. Section 115-2305, R.S. 1931. The advertising is chargeable to the drainage district. Section 122-883; Commissioners v. Featherstone, 26 Wyo. 1. This is an additional charge over and above the penalty of ten per cent. Procedure under revenue laws applies to drainage districts. Section 122-866, R.S. 1931; Commissioners v. Featherstone, supra. No facts are alleged in the petition which would entitle plaintiff district to an accounting. Commissioners v. Featherstone, 26 Wyo. 1. The court was without jurisdiction to consider the petition of the drainage district. The commissioners without authority of the court have no power to sue. Sections 122-835, 836, 824, 816. Money paid under mistake of law cannot be recovered. 10 R.C.L. 313; Hathaway v. Delaware County, 185 N.Y. 368; Houtz v. Commissioners, 11 Wyo. 152. The making of a stipulation on agreed state of facts can not bring before the court matters not within the issues covered by the pleadings. Union Coal Company v. LaSalle, 136 Ill. 119. Nor does it supersede the pleadings and is not binding on the court when the conclusions are not warranted by the facts stated. Company v. King, (Wash.) 165 P. 70; Classon v. Mako, 32 S.Ct. 392; Wells v. Mutual Benefit Association, 126 Mo. 630.
The cause was submitted for defendants in error upon the brief of C.A. Zaring of Basin and L.A. Bowman of Lovell.
The brief of plaintiff in error consists of glittering generalties and a discussion of matters dehors the record. It is complained that there is no allegation of ownership of the money in question. The words "belonging to" mean "owned by, being the property of." 7 C.J. 1040. The objection that there is a misjoinder of parties cannot be made for the first time on appeal. 3 C.J. 767. Dungan was acting as an officer and agent of the county, and it is submitted that he and his predecessors transferred the funds belonging to the drainage district to the general fund of the county. The question of jurisdiction was not raised in the trial court. As to the agreed statement of facts, it seems sufficient to say that it was admitted at the trial court that the statement was correct and that they were the facts material to the issue. The attempt of counsel to discuss the law governing the case seems unimportant, since none of the facts were disputed, and no law was involved, except in a general way. The obligation of the county authorities is fixed by the legislature. Sections 122-887 and 115-1006, R.S. 1931. The rule is stated in Mayor v. Mudgett, (Wash.) 57 P. 351, and again in The Best Foods, Inc. v. Christensen, (Utah) 285 P. 1001. As to paragraphs X, XI, XII and XIII of defendants' brief, we submit that the matters therein mentioned are not material to the issues in this case. We believe the decision of the trial court is sustained by the evidence and should be affirmed.
The Byron Drainage District, the Lovell Drainage District, and the Sunlight Drainage District, in separate suits, brought action against the Board of County Commissioners of Big Horn County, Wyoming, and the Treasurer of the county, to recover certain drainage district taxes collected by the county treasurer and turned into the general fund of the county. The facts in each of the cases are identical except as to the amounts involved, and the cases were consolidated in this court for the purposes of the appeal herein, and the result in one of the cases will be the result in the others. For the purpose of simplicity, we shall mention only the facts which appear in the Byron Drainage District case. The petition alleges that the plaintiff is a corporation organized and doing business as a drainage district; that it is the duty of the county treasurer to collect all drainage district taxes and assessments; that between April 21, 1928 and April 30, 1934, inclusive, the treasurers of Big Horn County collected the sum of $1,333.23 belonging to the plaintiff, and during said period the county treasurers wrongfully and unlawfully and without authority of law converted said sum for the use and benefit of Big Horn County and transferred it to the general fund of said county; that by reason of said wrongful conversion, plaintiff has been damaged in the sum of $1,333.23, for which judgment is prayed; that the plaintiff duly presented to the board a claim against Big Horn County, but that the claim was disallowed by the board. Attached to the petition is a copy of the claim presented to the board, which is as follows, to-wit:
"Comes now Byron Drainage District and respectfully represents to the Board of County Commissioners of Big Horn County that the County Treasurers of Big Horn County, from the 21st day of April, 1928, to the 30th day of April, 1934, inclusive, wrongfully and illegally transferred the sum of $1333.23 from the funds belonging to said Drainage District to the general fund of Big Horn County, thereby converting said money to the use and benefit of said Big Horn County; and a statement of the amounts so transferred and converted, together with the dates of such transfers, is as follows:
April 21st, 1928 _____________________ $ 155.12 Jan. 15th, 1929 ______________________ 223.76 July 31st, 1929 ______________________ 312.76 March 1st, 1931 ______________________ 87.40 April 15th, 1932 _____________________ 75.00 May 31st, 1932 _______________________ 67.10 April 17th, 1933 _____________________ 327.33 April 30th, 1934 _____________________ 84.75 ________ Total, $1333.23
"That there is now due and owing from Big Horn County to said Byron Drainage District the sum of $1333.23, no part of which has been paid."
The defendants filed a demurrer, but subsequently withdrew it, and then filed separate answers denying each and every allegation contained in the petition. On August 8, 1935, the parties entered into a stipulation which reads as follows, to-wit:
"It is hereby stipulated and agreed, by and between the parties hereto, that the facts material to the issues in said cause are as follows:
"That between the 21st day of April, 1928, and the 30th day of April, 1934, inclusive, the county treasurers of Big Horn County, including the defendant D.C. Dungan, deducted from the funds collected by the said treasurer and his predecessors for said district the sum of Thirteen Hundred Thirty-three and 23/100 ($1,333.23) Dollars, and transferred said amount into the general fund of Big Horn County, Wyoming.
"That said amount was transferred for the purpose of charging said drainage district for advertising delinquent drainage taxes and assessments during said period, and for the further purpose of reimbursing said County of Big Horn, Wyoming, for the money expended by it for advertising said delinquent drainage taxes and assessments of said drainage district for said period of time.
"That Exhibit `A' attached to plaintiff's petition, the same being a copy of the claim presented by said drainage district to Big Horn County, correctly sets forth an itemized statement of the amounts transferred from the said drainage district fund to the general fund of Big Horn County by the respective county treasurers each year during said period, for the purposes above mentioned."
On May 21, 1936, the court entered a judgment in favor of the defendants. A motion for a new trial was filed, which was granted. Thereupon the parties entered into a supplemental stipulation, to-wit:
"It is hereby stipulated and agreed by and between the parties hereto, that in addition to the facts set forth in the stipulation of counsel, heretofore filed herein, that the following are facts which exist with reference to the said controversy, to-wit:
"That for a number of years preceding the filing of the petition in said cause, the said plaintiff drainage district submitted its yearly assessments rolls to the County Commissioners of Big Horn County, who in turn certified to the same, delivered the roll to the assessor, and the same was thereafter extended on the tax roll of the county, and said drainage assessments collected by the County Treasurer, in the same manner as State and County Taxes were collected. That the said County Treasurer, in all cases where the said drainage assessments were not paid, listed the same on the delinquent tax roll and advertised the said list in the same manner and at the same time as for delinquent state and county taxes. That at the time and place of sale of real property for State and County taxes, the County Treasurer, during said years also separately sold the various parcels of land as listed for delinquent drainage assessments, and issued separate certificates of sale therefor. That in all instances during the past several years, there being no purchasers appearing to purchase the lands offered for sale for delinquent drainage assessments, the said County Treasurer would and did make an entry on his delinquent tax roll of `Sold to Byron Drainage District of Big Horn County, Wyoming' and issued certificates of purchase to said district on said sale.
"That for a number of years prior to the year 1928, the said advertising and sale of lands for delinquent drainage taxes was conducted by the County Treasurer of said county without charge to said District, but that beginning in the year of 1928, and continuing during the years of 1929, 1930, 1931, 1932, 1933 and 1934, The County Treasurer of Big Horn County, Wyoming, without authority from said District, and over the protest of said District, took various sums of money out of the collection of drainage assessments, which were kept in a separate drainage account in said County Treasurer's office, and transferred the same into the general funds of the County of Big Horn, presumably to cover advertising and collection charges on behalf of said drainage District. That the deductions and transfers from said Drainage account to the general fund of said County, as made by said County Treasurer, are as follows:
April 21, 1928, Transferred to general fund, county bill, $155.12 July 31, 1929, Adv. 312.76 Jan. 15, 1929, transferred to general fund, 223.76 March 1, 1931, Adv. Col. July 30, 87.40 April 15, 1932, Adv. and Collection 75.00 May 31, 1932, Adv. Col. to Jan. 1, 1932, 67.10 April 17, 1933, Adv. Col. to Jan. 1, 1933, 327.33 April 30, 1934, Advertising, 84.76 ________ $1333.23 Less Credit of 75.00
"That the total amounts of said transfer from the drainage funds to the general county fund, as made by said County Treasurer, and as alleged in the petition filed herein, was $1258.23.
"That the affidavit of P.P. Anderson, publisher of the Basin Republican Rustler, attached hereto, and by reference made a part hereof, showing the actual publication fee charged to and paid by Big Horn County for the publication of delinquent drainage taxes in Byron Drainage District for the years as stated is correct, and that the proportionate part of the cost to Big Horn County of the publication of the delinquent tax list represented by the delinquent drainage assessments in the Byron Drainage District and on said tax list for the various years is as shown in said affidavit."
The affidavit of the publisher of the tax list, stated to be correct as above mentioned, shows that the county of Big Horn paid for publishing the delinquent tax list of the district during 1929 to 1936 inclusive, each year for the delinquencies of the previous year, the sum of $345.54, the amount paid for 1929 being $28.56. It appears that in addition to the foregoing amount paid for publication, Big Horn County paid the sum of $75. Credit for that amount was allowed. The court entered judgment in favor of the drainage district in the sum of $913.00, together with interest thereon. A motion for a new trial was filed but overruled, and the defendants have brought this case here by petition in error. The term "defendants" as used in this opinion will designate the defendants in the court below, plaintiffs in error here.
1. It is contended that the petition does not state facts sufficient to constitute a cause of action. This is apparently on the ground that the allegation that the money in question belongs to the district is not a sufficient allegation of ownership of the money. We think counsel are in error. If, however, there was any defect in the petition, it was supplied by the agreed statements of facts. Counsel seem to think that the petition cannot thus be supplied. They have evidently overlooked our decisions in Claughton v. Johnson (on rehearing), 47 Wyo. 537, 548, 41 P.2d 527, and Marcante v. Hein, (Wyo.) 67 P.2d 196.
2. It is further contended that there was a misjoinder of parties defendant; that the county is not responsible for the torts of its officers; that it did not participate in the action of the county treasurer in diverting the funds of the drainage district into the general fund of the county. It is certain, however, that either one or the other of the defendants are liable herein. Counsel for defendants seems to think that only the county treasurer is responsible. No demurrer was filed on the ground of misjoinder, nor was the objection raised by answer. The defect, therefore, if defect it is, was waived. Section 89-1008, Rev. St. 1931; Gilland v. Ry. Co., 6 Wyo. 185, 43 P. 508; Becker v. Hopper, 22 Wyo. 237, 138 P. 179. We might, however, say in this connection that the courts are not altogether harmonious in their holding as to what course should be followed in a case similar to that at bar. It is held that in collecting drainage district and similar taxes, the county treasurer acts for the district and not as a county officer. 15 C.J. 511; Dewey v. Niagara Co., 62 N.Y. 294; Vigo Twp. v. Knox County, 11 Ind. 170, 12 N.E. 305. Upon that theory it has been held that he diverts such taxes into the wrong channel at his peril, and may even be compelled to pay such taxes to the proper authorities under a writ of mandamus. 19 C.J. 761; cases cited in State v. McNamar, 62 Mont. 490, 205 P. 951, 955; Calhoun v. Maricopa etc. Dist., 37 Ariz. 506, 295 P. 785; City of Bisbee v. Cochise County, (Ariz.) 36 P.2d 559. In other cases it is held that when the county treasurer has paid the money into the general fund of the county, he is not liable, but that the county is. Fargo v. Cass County, 35 N.D. 372, 160 N.W. 75; Newbold v. Douglas, 123 Wisc. 28, 100 N.W. 1040; Cumming Twp. v. Ogemaw County, 100 Mich. 567, 59 N.W. 240; see also Kittanning Borough v. Mast, 15 Pa. Super. 51; State v. McFarlin, 78 Mont. 156, 252 P. 805; 18 R.C.L. 139. As already indicated, it is not necessary to decide which party or parties should be sued in such cases since the point was not raised in the court below.
3. It is further contended that the claim against the county was not sufficiently itemized when presented to the board of county commissioners, and that, accordingly, the court had no jurisdiction to enter any judgment herein. We are not at all certain that it was necessary to present any claim to the board of commissioners in this case, in view of the fact that the statute directs what shall be done with the money collected on drainage assessments. It was held in Bisbee v. Cochise County, (Ariz.) 36 P.2d 559, 561, that it is not necessary. But we need not decide the point. Counsel has cited us to no case holding that the claim presented in this case was not sufficiently itemized. In the first stipulation entered into by the parties hereto it was stated that the claim presented "correctly sets forth an itemized statement of the amounts transferred from the said drainage district fund to the general fund of Big Horn County." Counsel for defendants at that time evidently thought that the claim was sufficiently itemized. And we think we should agree with their position then taken. They did not mention the point in the motion for a new trial, and it evidently presents a new contention, first taken in this court. If the defendants desired any information in addition to that given by the claim presented, they had that within their own control.
It is argued on behalf of the defendants, if we understand counsel correctly, that, according to Section 115-2305, Rev. St. 1931, which relates to the collection of general taxes, Big Horn County was entitled to charge any delinquent taxpayer, who failed to pay his drainage taxes, the sum of $3.00 for advertising such taxpayer's property; that the aggregate of the items of $3.00 each may have been greater than the actual cost of the advertising; again, that the record is uncertain on other points — for instance, that the item transferred to the general fund in 1928 may have been entirely composed of cost of advertising in previous years. Hence it is argued that there were not sufficient facts before the court upon which it could base its judgment. The drainage district was entitled to the principal amount of the assessments, together with the penalty and interest on any assessments not paid within the time provided by law. Riverton Valley Irr. Dist. v. Board of County Commissioners of Fremont County, decided Dec. 23, 1937 ( 74 P.2d 871). It was not entitled to more. And it is possible that the conjectures of counsel are correct. But they seem to assume that there were no duties whatever incumbent upon their clients in this connection. If the case had been regularly tried and evidence introduced as to the amounts due and not due, and the defendants had introduced evidence that they had paid out a certain amount for advertisement, without making any other claim, the court would have had a right to assume that this amount, so shown, was all the amount so paid out and due and owing them. That is substantially the situation here. The parties entered into stipulations. Defendants were just as much parties thereto as the plaintiffs. They claimed therein that the items transferred were composed of collection charges and advertisements. They were not certain; it was, according to the stipulation, true only "presumably," except that they definitely stated the items actually paid out for advertisement. If any greater amounts were collected for that item, or if the defendant believed that more than the amount stated was due them, it would seem that they would have made a claim to that effect. That would be in accordance with the action of ordinary men. In the absence of making such claim, the court would naturally assume that no greater claim than asserted was made. We think that the court was justified in acting upon that natural assumption, and conclude that the facts stipulated were, in the absence of a statement to the contrary, all the facts having a material bearing in the case. Indeed, a statement to that effect was made in the first stipulation. The second stipulation was but amendatory thereof. Moreover, we find in the first stipulation the statement that the county treasurer "deducted from the funds collected * * * for said district the sum of $1333.23." In the second stipulation it is stated that the county treasurer during 1929 to 1934 inclusive took various sums (a total of $1333.23) out of the collection of drainage assessments. Presumably, then, the funds belonging to the district, making it incumbent upon the defendants to show the contrary. If the county treasurer collected any money which belonged to the county and not to the district, he should not have mingled it with the funds of the district. If he did, the least that could be required of the defendants would be for them to show the mistake. See 22 C.J. 81.
5. It is contended that the district is not entitled to a general judgment herein, until its bonded indebtedness is paid. In that connection counsel state, in an offhand manner, that only the bondholders can complain and the district cannot sue, and that it does not have the capacity to sue. Drainage districts, however, are public or quasi-public corporations; they are the owners of the funds collected by taxation for their benefit, and may sue to recover them. 19 C.J. 761; Sec. 122-836, Rev. St. 1931. Bondholders, of course, must be protected in the manner in which the statute provides, but the district has sufficient interest to see that money which is to be set apart for the bondholders is not diverted by the county treasurer to the use of the county, for the taxpayers in the district are ultimately responsible for the payment of the bonds. Section 122-887, Rev. St. 1931, provides that drainage assessments shall be collected in the same manner and at the same time as state and county taxes, and when collected shall be paid to the treasurer of the drainage district, except that the money collected upon assessments levied for the payment of principal and interest of bonded indebtedness shall be retained by the county treasurer and paid upon the bonds and interest thereon, as long as any bonds are outstanding. But it does not appear herein that any bonds are outstanding. Counsel for defendants contend that we should presume that fact. It is difficult to see upon what principle we can do so. On the contrary, we must presume, in the absence of a contrary showing that the county treasurer performed his duty. 22 C.J. 136. Hence we must presume that he retained in his hands, and did not put into the general fund of the county, money which belongs to bondholders.
We do not, however, like to leave this decision at that point, in view of the clear command of the legislature that the bondholders shall be protected, even though none of the parties hereto have thought fit to show the facts. The trial court found that the sums in question were deducted from the maintenance fund of the drainage district. If that finding is correct, the judgment is right. But it is sustained neither by any allegation in any pleading herein nor by any evidence. The interest of bondholders — third parties herein — as well as the defendants, might be prejudiced by an unconditional affirmance of the judgment herein. We think, accordingly, that the judgment herein should be affirmed, subject to the right of the defendants to show, if they desire, in further proceedings herein, that the sums involved herein, or some part thereof, should be retained for the benefit of, and paid to, bondholders of the district, and that upon such showing, the court enter such further judgment herein as may be required. See Riverton Valley Irr. Dist. v. Board, supra. It is so ordered.
Affirmed.
RINER and KIMBALL, JJ., concur.