Peoples Loan & Savings Bank v. King, 212 N.C. 349 (1937)

Nov. 3, 1937 · Supreme Court of North Carolina

212 N.C. 349

PEOPLES LOAN AND SAVINGS BANK v. MRS. J. A. KING.

(Filed 3 November, 1937.)

1. Drainage Districts § 2—

Where one of three drainage commissioners dies, the two surviving have authority, until the election and qualification of their successors, to levy an additional assessment against the lands of the district necessary to discharge the obligations of the district, O. S., 5339 (4).

2. Drainage Districts § 9 — Lands of drainage district are liable to assessments necessary to repay money properly used for benefit of district.

An additional levy of assessments against lands in a drainage district is valid when necessary to repay money borrowed by the district and properly used by it in draining the lands within the district, and it is immaterial that the district borrowed money in excess of the amount of the authorized bond issue when the balance of the debt necessitating the levy of the additional assessments is less than the amount borrowed in excess of the authorized bond issue, and the court finds that part of the money borrowed was used to pay interest on the indebtedness of the district, and that all amounts borrowed were properly used for the benefit of the district.

Appeal by defendant from Pless, J., at May Term, 1931, of Ikgdell.

Judgment affirmed.

Action to foreclose certificate of sale of land for drainage assessment.

At the trial certain facts were agreed upon, and it was further agreed that the court, without the intervention of the jury, should find such additional facts as were necessary for the determination of the controversy. The material facts agreed to and found by the court may be concisely stated as follows:

The Fourth Creek Drainage District of Iredell County was duly organized, under applicable statutes, in 1911, and a bond issue of $25,000 authorized. The drainage commissioners being unable to sell the bonds at their face value, borrowed from the First National Bank of States-ville $25,000 and later increased the debt to $32,500, and placed the $25,000 of bonds with the bank as collateral. All of the proceeds of the loan were used by the commissioners for draining and ditching the lands in the district and for the payment of interest from time to time.

The present indebtedness to the plaintiff, Peoples Loan and Savings Bank, is in the principal sum of $6,960.06, and constitutes the balance due for money borrowed by the drainage commissioners to pay the debt to the First National Bank. The original bonds are .now held by the plaintiff. The debt of plaintiff was reduced to judgment in January, 1933. To discharge the judgment the two surviving commissioners in 1934 levied an assessment upon the lands embraced in the district. The defendant owns 23.86 acres of land within the district and the assessment levied on her land was $68.29.

At the time of the organization of the district the three commissioners elected were qualified to act. Since then there has been no election of commissioners to replace them, and one of the commissioners has died, and the other two had ceased to own land in the district at the time the assessment was levied by them as commissioners.

It was admitted that the assessment roll was filed with the clerk of the Superior Court, the treasurer of Iredell County and the sheriff, and that the sheriff notified the defendant of the assessment. No written notice was given by the county treasurer to the drainage commissioners or to the clerk of the court.

Tbe trial judge beld tbat under C. S., 5339 (4) tbe surviving commissioners were authorized to discharge tbe necessary duties of tbe board until tbe vacancy caused by tbe death of a member was filled, and tbat their acts were valid and binding on tbe district; tbat tbe borrowing of money from tbe banks and tbe use of tbe bonds as collateral was irregular, “but tbe proceeds of tbe loans were used for tbe valid objectives contemplated by tbe Drainage Act, and tbat no question having been raised as to the validity of said obligation for a period of some twenty years, and no action brought to invalidate tbe transaction, and judgment having been procured more than two years prior to tbe institution of this action, it would constitute an inequity and injustice to tbe plaintiff to permit tbe defendant and other landowners to obtain and accept tbe benefit of said loans without liability therefor.”

It was thereupon adjudged tbat tbe assessment against tbe land of defendant for tbe purpose therein set out constituted a specific lien on said land in tbe amount of $68.29, and tbat plaintiff was entitled to foreclose its certificate of sale made pursuant thereto. Defendant appealed.

P. P. Dulin and Robert A. Qoilier for plaintiff, appellee.

Jack Joyner, W. R. Battley and Lewis & Lewis for defendant, appellant.

Devin, J.

Tbe ruling of tbe court below must be affirmed. Tbe action of tbe two surviving drainage commissioners, until their successors were elected and qualified, was within tbe powers conferred by tbe Drainage Act. C. S., 5339 (4).

There was no suggestion of lack of good faith on tbe part of tbe commissioners, or tbat tbe plaintiff’s debt was otherwise than for money which bad been borrowed and properly used for tbe draining of tbe lands within tbe district. Tbe obligation was incurred for tbe benefit of tbe lands embraced in tbe district, and upon these lands tbe law imposed liability therefor.

Tbe fact tbat $7,500, in addition to tbe amount of tbe authorized bond issue, was borrowed by tbe district for drainage purposes, becomes immaterial in view of tbe fact tbat tbe total indebtedness has been reduced, as assessments were collected, to $6,960.06, and tbe finding by tbe court tbat a part of tbe loan was used for tbe payment of interest from time to time (Carter v. Comrs., 156 N. C., 183, 72 S. E., 380), and tbat all of tbe proceeds of tbe loans were used for draining and ditching tbe lands in tbe district.

In Bank v. Watt, 207 N. C., 577, 178 S. E., 228, tbe question of tbe liability of lands within this same drainage district to further assessment was considered, in connection with the present plaintiff’s judgment for the balance due on its loan to the drainage commissioners, and it was there said, “It is obvious that the drainage statutes impose liability upon land within the district until the original bond issue for making the improvements or indebtedness incurred therefor has been paid.”

Judgment affirmed.