This was a bill filed by Mrs. M. M. Fisher, joined and authorized and authorized by her husband, John Fisher, citizens of the Kingdom of Spain, May 11, 1896, against the city of New Orleans, in the circuit court of the United States for the eastern district of Louisiana, which alleged--
The prayer was that the city school board and the city answer, and 'give a full, fair, and perfect account of all the school taxes collected by the city of New Orleans for the years 1873, 1874, 1875, 1876, 1877, and 1878; of all the interest received thereon by said city and never accounted for; of all the taxes which were not collected for want of proper enforcement, and which have since been canceled both by sales made by the state tax collectors and by ordinance adopted by the city council;' and for general relief. [180 U.S. 185, 188] Subsequently a supplemental bill was filed in respect of property alleged to have been acquired by the city through seizures for taxes.
The bill was taken as confessed as against the school board, and general demurrers were filed by the city, and overruled.
The city thereupon, March 12, 1897, answered, admitting 'that oratrix recovered judgments against the board of school directors, a corporation of the state of Louisiana, and a citizen thereof, both in this honorable court and in the civil district court for the parish of Orleans, as is set forth in oratrix's bill of complaint and records annexed thereto and referred to therein; . . . that all of said judgments are now final and are payable as decreed and provided for in the said judgments;' but denying 'that the school taxes out of which said judgments have been made payable is a trust fund levied by the city of New Orleans for the purpose of paying the expenses of the public schools of said city;' and 'that it has ever failed to collect said taxes punctually, and denies that any of the same remain uncollected, and denies that if any of the same remain uncollected they so remain by reason of any negligence on the part of this defendant, and denies that defendant is liable at all for the amount of any such taxes yet remaining uncollected, if any such there be.'
Also admitting 'that the city of New Orleans had never paid to the school board any interest which she may have collected on any back taxes, and defendant denies that any such interest, if same has ever been collected, was due to the school board, and defendant denies that she has ever misapplied or diverted to unlawful uses any interest that she may have collected from delinquent taxpayers or back taxes, and defendant avers and shows that by express provision of law all interest which she may collect on any back taxes is especially set aside for certain purposes, and cannot by her be used for school purposes or for any other purpose than that commanded by law;' and denying 'that the school board created the obligation against the school taxes, set forth in oratrix's bill of complaint, by virtue of any contracts legally entered into, and denies that the oratrix has any right to invoke the protection of the Constitution of the United [180 U.S. 185, 189] States herein, and denies that the provisions of the same regarding impairment of contracts have been in any manner violated by this defendant ; . . . that act No. 82 of 1884 was passed in violation of any constitutional rights of oratrix in the premises, and defendant declares that whatever was done by the state of Louisiana in passing the said act, if it was done, was within the legislative authority, and the said taxes and legislative provisions were subject to change, amendment, and repeal by the same authority which created them; and defendant shows and avers that the city of New Orleans had no authority or control over the action of the legislature in the premises; . . . that the city of New Orleans allowed any property on which school taxes were due, to be sold for said taxes, and denies that she caused the city taxes, including the school taxes, to be canceled; . . . that she has been or is guilty as a delinquent trustee for not having enforced the collection of said taxes; denies that she ever was a trustee in the matter; denies that she ever failed to enforce the collection of any taxes which it was her duty to enforce; denies that it ever was her duty to protect the interests, if any she had, of oratrix, at said tax sales; denies that oratrix had any such interest, and denies that there were any such tax sales; . . . that any cancelations amounting to many thousands of dollars, or to any amount, were made by reason of said sales as set forth in oratrix's bill of complaint; . . . that the city of New Orleans passed ordinances canceling and annulling any taxes, or remitting any interest thereon, but if any taxes were so canceled or remitted, defendant avers the same was done by authority of law or by judgment of a competent court. Defendant denies that there was or is any obligation on the part of the city to account either to the school board or to the oratrix for any taxes, moneys, or appropriations such as are set forth in oratrix's bill of complaint.'
The answer further denied 'that it was the duty of the school board to call this defendant to account, and denies that the school board or the oratrix herein has any cause of action against this defendant for such an account. Defendant denies that there was any privity between the school board and this defendant, or between Mrs. Fisher and this defendant. And [180 U.S. 185, 190] further answering defendant says that if any such cause of action for an accounting ever did exist in favor of said school board or of said oratrix, the same was effective and executory in the year 1880, and became actionable and exigent in the year 1880, and in the years following the year 1873 up to 1879 inclusive; that said action of accounting was personal to said school board, and could only be exercised and availed of by the said school board, which action is prescribed by the lapse of ten years from and after each of the said years, and that oratrix has no right or cause of action in the premises;' and 'that there is any fund now administered, or which ever was administered, by the city of New Orleans, derived either from appropriations, taxes, or moneys said to be due said school board, and denies that if there is or was any such fund, that the said school board or oratrix has any rights in the premises.'
It was admitted 'that the judgments of oratrix are payable as stipulated in said judgments,' but denied 'that oratrix has any equitable lien enforceable against the city of New Orleans before a court of equity by reason thereof;' and also 'that under the law were the certificates which she alleges have been merged in her judgments ever received by the city of New Orleans directly in payment of the school taxes without the intervention of the board of school directors.'
The city further denied the purchase of property 'for the taxes due for the years during which oratrix's claim is alleged to have arisen;' any resulting trust if purchases had been made; any statutory lien; and 'that the oratrix has any right or reason to invoke the equitable jurisdiction of this honorable court.'
Replication was filed, and the cause referred to a master 'to take a full, true, fair, and perfect account of all the funds, principal and interest, received by the city of New Orleans from the school taxes levied in 1871, 1873, 1874, 1875, 1876, 1877, and 1878, of all interest remitted illegally, of all properties purchased for said taxes as more fully prayed in the bill and supplemental bill filed herein, and to that effect the parties shall produce before said master all books, papers, documents to be examined and which may be necessary or proper in the premises.' [180 U.S. 185, 191] Numerous persons claiming to have judgments against the school board, similar to the judgments of Mrs. Fisher, intervened and asked to share in the proceeds of any amount found to be due by the city of New Orleans on the accounting. May 22, 1897, the master reported:
That complainant had abandoned the attempt to show that the city owed anything on account of properties purchased for taxes. That the city was not chargeable 'with the calculated amount of interest not collected.' And 'that the following parties have proved their claims against the fund herein, by judgments rendered in their favor against the school board, in the civil district court for the parish of Orleans, namely:
M. M. Fisher $11,094 87 " 8,802 39 " 5,864 64 T. J. Gasquet 57,059 69 Jose Venta 21,297 72
Complainants with several interveners filed exceptions to the master's report, and on June 7, 1897, the city of New Orleans filed exceptions as follows:
June 29, 1897, the city filed an exception to the jurisdiction of the court ratione materioe et personoe, averring 'that plaintiff's petition contains no averment that the suit could have been maintained by the assignors of the claim sued upon by Mrs. M. M. Fisher in the suit which forms the basis of this action;' and on July 1 a plea in abatement 'that plaintiff, Mrs. M. M. Fisher, and defendant are both citizens of the state of Louisiana, and that by reason thereof this court is without jurisdiction ratione personoe.' This exception and plea were afterwards stricken from the files as irregular and not filed in accordance with the rules. The city then offered in open court to file a motion and a plea further attacking the jurisdiction of the court, but leave was refused; and thereafter the case came on for final hearing on the bill, answer, replication, exhibits, proofs, and testimony, and master's report.
Included in the evidence offered on behalf of complainant were the pleadings and judgment in the cause of Mrs. Fisher against the school board, in which judgment was rendered in the circuit court, May 19, 1892. The petition in that case alleged that Mrs. Fisher and her husband were 'both citizens of the Kingdom of Spain residing in the island of Cuba;' counted [180 U.S. 185, 193] upon a judgment against the school board rendered by the civil district court of the parish of Orleans; and stated that the claim which formed the basis of the judgment was for salary due petitioner as a school teacher of the public schools of the city, and for the salary of other teachers whose claims had been transferred to petitioner. The defendant filed an exception to the effect that the court was without jurisdiction, as the rights, credits, and school warrants proceeded on were held by petitioner under assignments, and that the assignors were all citizens of the state of Louisiana and without right to sue defendant in the circuit court. This exception was tried before a jury and a verdict rendered in favor of petitioner, whereupon the exception was overruled, and judgment was thereupon rendered in favor of petitioner for $8,097.17, the amount of the judgment rendered in the state court. It appeared that on this judgment garnishee process had been served on the city treasurer and ex officio treasurer of the school board, and the sums of $1,893.09 and of $312.56, less costs, realized in 1894 and in 1895.
On February 21, 1898, the court gave judgment in favor of plaintiffs and interveners, and, among other things, decreed: 'That the city of New Orleans, trustee of the special school taxes levied and collected for the years 1871 to 1878 inclusive, be condemned to pay plaintiff and interveners the said taxes, received and collected by her, as follows: $71, 938.78 with 5 per cent interest per annum om $71,139.60 from January 24th, 1881, and on $799.18 from May 11th, 1896, until paid. And it is further ordered that this bill be retained for a further accounting and such orders and decrees as may be necessary.'
Mrs. Fisher died February 25, 1898, and on April 22, 1898, John Fisher was made party complainant as natural tutor of his minor children. April 23, 1898, the city filed a petition for rehearing, which was denied, but the court directed the final decree to be amended so as to only allow interest on the amount recovered, to wit, $71,139.60 from February 21, 1898, the date of said decree, instead of from January 24, 1881, as theretofore allowed. On the same day, April 23, and prior to the decision on the rehearing, a plea in abatement was put in by the city to the effect that John Fisher, being a citizen of Spain, was unable [180 U.S. 185, 194] to prosecute the suit, and that it should be abated because a state of war existed between Spain and the United States and the subjects and citizens thereof. On the proofs the court was satisfied that complainant was a citizen of Great Britain, whereupon the plea was overruled. From the decree of the circuit court both parties appealed to the circuit court of appeals for the fifth circuit, which modified the decree so as to allow 5 per cent interest on the sum of $71,139.60 from January 24, 1881, and on the sum of $799.18 from May 8, 1897, and as so modified the decree was affirmed, with costs. 34 C. C. A. 15, 63 U. S. App. 455, 91 Fed. Rep. 574.
The city applied to this court for the writ of certiorari, which was granted.
[Messrs. J. J. McLaughlin, Branch K. Miller, and Samuel L. Gilmore for petitioner.
Messrs. Charles Louque and E. H. McCaleb for respondents.
Mr. Chief Justice Fuller delivered the opinion of the court:
Fourteen errors were assigned in the circuit court of appeals, which were considered and disposed of seriatim. Many of these alleged errors raised questions not within the exceptions to the master's report, and, in any view, we think the case may be determined without minutely retraversing the ground.
Mrs. Fisher and her husband recovered judgment against the board of school directors in the state district court May 22, 1890, which, on appeal, was affirmed by the supreme court. Fisher v. New Orleans Directors of City Schools, 44 La. Ann. 184, 10 So. 494.
February 23, 1892, Mrs. Fisher and husband brought an action against the school board on the judgment so recovered, in the circuit court of the United States for the eastern district of Louisiana. The petition set forth that Mr. and Mrs. Fisher were citizens of the Kingdom of Spain, and that the judgment sued on was recovered on certain claims for school teachers' salaries, including Mrs. Fisher herself. An exception was filed to the jurisdiction of the court on the ground that the assignors [180 U.S. 185, 195] of the school warrants held by Mrs. Fisher as assignee could not have sued in that court. The matter was submitted to a jury, and a verdict returned in plaintiffs' favor, whereupon the exception was overruled, and afterwards the case went to judgment payable out of the school taxes levied prior to 1879. This judgment was rendered May 19, 1892, and on May 11, 1896, the present bill, in the nature of a creditors' bill, was filed on behalf of Mrs. Fisher, joined and authorized by her husband (setting up that judgment and others), and of all others similarly situated, to compel an accounting for their benefit by the city in respect of the school taxes levied prior to 1879, and the interest thereon, collected and not paid over to the school board, as a trust fund for the payment of the expenses of the public schools, it being averred that the school board had refused to require such accounting.
After demurrer filed and overruled, the city answered, admitting the recovery of the judgments as alleged; that they had become final; and that they were payable as provided therein; and denying that the school taxes collected constituted a trust fund; any liability for interest collected; any privity between Mrs. Fisher and the city; and pleading prescription by the lapse of ten years.
The cause was referred to a master, who reported certain amounts of school taxes, and of interest on school taxes, collected by the city. The city filed exceptions to the conclusions of the master that the city was indebted to the school board for interest collected; and that the amount reported as collected out of the school taxes from 1871 to 1878 inclusive was due by the city to the school board 'at any time since its collection.'
The facts are not in controversy, and the questions raised, or attempted to be raised, are questions of law.
The bill invoked the ordinary exercise of equity jurisdiction in this class of cases. The school taxes collected were held in trust by the city, and, as the school board declined to require an accounting, these creditors, whose claims were payable out of the taxes, were entitled to the interposition of a court of equity to reach the fund. The suggestion of want of privity between complainants and the city, as defeating the jurisdiction, [180 U.S. 185, 196] is without merit. Nor is the defense of the statute of limitations well founded.
The judgments were rendered since 1890, and were made payable out of these taxes; the school certificates were merged in these judgments; and this bill was filed within ten years.
As between the city and the school board, the city did not hold these collections in her own right. The possession of the one was the possession of the other; the possession of the city was precarious, and not animo domini; and being trustee she could not acquire the trust fund by lapse of time. There was no adverse possession in repudiation of the fiduciary relation. Oliver v. Piatt, 3 How. 411, 11 L. ed. 657; New Orleans v. Warner, 175 U.S. 130 , 44 L. ed. 102, 20 Sup. Ct. Rep. 44.
After the master's report and the exceptions thereto had been filed, the city undertook to raise the question of the jurisdiction of the circuit court on the ground of the want of competency in the assignors of Mrs. Fisher to sue in that court, and of want of diversity of citizenship between Mrs. Fisher and the city. The first of these objections had been made and, after trial, overruled in the proceedings which resulted in the judgment of May 19, 1892. The petition in that case also alleged that Mrs. Fisher and her husband were citizens of Spain. The judgment was conclusive on both points, and not open to impeachment as to either collaterally or on a creditors' bill. Mattingly v. Nye, 8 Wall. 373, 19 L. ed. 381; Evers v. Watson, 156 U.S. 533 , 39 L. ed. 522, 15 Sup. Ct. Rep. 430; Laing v. Rigney, 160 U.S. 539 , 40 L. ed. 527, 16 Sup. Ct. Rep. 366.
On July 1, 1897, a plea to the jurisdiction of the court in this case because Mrs. Fisher was a citizen of Louisiana was put upon the files without leave of court, and was stricken off as irregular on December 20. This action of the court is not open to review, and as this bill was merely ancillary the plea was immaterial. Root v. Woolworth, 150 U.S. 413 , 37 L. ed. 1126, 14 Sup. Ct. Rep. 136.
The city on the same day, December 20, applied for leave to file a plea alleging that Mrs. Fisher was a citizen of Louisiana at the time the original action was brought in the circuit court, and had so continued down to the filing of the bill; that she had fraudulently otherwise represented; and that the city had no information of the facts until after the exceptions to the master's [180 U.S. 185, 197] report were filed, which was on the 7th of June. This application was denied by the circuit court, and it is impossible for us to say that in this ruling the court abused its discretion.
This was not the proper way to attack the original judgment on the ground of fraud; nothing was said in the proposed plea as to the citizenship of Mr. Fisher, who was a party plaintiff, and a necessary or at least proper party, if the choses in action sued on were community property, and even if paraphernal (La. Civil. Code, 2402, 2404, 2385); and the record, so far from indicating fraud, showed that Mr. Fisher was an alien, being a subject of the British Crown residing at Cuba, which had led to a mistake of counsel in framing the pleadings.
It may be added that there was nothing in the case bringing it within the exceptional rule applied in Lawrence Mfg. Co. v. Jamesville Cotton Mills, 138 U.S. 552 , 34 L. ed. 1005, 11 Sup. Ct. Rep. 402, relied on by counsel.
The city excepted to the inclusion of the interest on school taxes collected by the city with the school taxes collected, as part of the amount for which the city was liable.
The circuit court of appeals disposed of this point in these words:
We concur in this view, and are, moreover, of opinion that the city, having made such collections, cannot now be permitted to escape liability therefor on the suggestion that school taxes are [180 U.S. 185, 198] not within the terms of the statute inflicting the penalty on 'all taxes imposed by the city of New Orleans.' Acts La. 1871, No. 48, 9.
The only other matter necessary to be referred to is the allowance of interest. The circuit court by its amended decree gave interest on the larger sum found due from the date of the decree. The circuit court of appeals modified that decree so as to award interest on the sum of $71,139. 60, collected prior to January 24, 1881, from the latter date, and on the item of $799.18, reported by the master May 8, 1897, as having been collected after January 24, 1881, from the date of the report.
The bill did not charge the city with any wilful default, nor did it appear therefrom when the school board was requested to demand an accounting. The bringing of the bill amounted to such demand, and it was filed May 11, 1896, and the appearance of the city entered June 1.
The city occupied the position of agent of the school board to collect and pay over school taxes, as held in Labatt v. New Orleans, 38 La. Ann. 283, yet it may fairly be said that, under the legislation upon the subject, it was not the duty of the city to pay the money over immediately, but only as occasion might arise, and that, as no charge of fraudulent conversion was made, interest would not commence to run until after failure to pay when required to do so, or failure to account on demand.
Where interest is sought by way of damages for delay, courts of equity exercise a certain discretion as to its allowance.
In view of the acquiescence of the school board in the retention by the city of the interest collected on school taxes, an acquiescence in good faith so far as appears; the attitude of the city as a public corporation; and the lack of averment or evidence of demand prior to the filing of the bill, or of effort to compel an accounting-we think that interest should not be allowed in this case prior to May 11, 1896.
The decree of the circuit court of appeals eals, rendered May 1, 1900, affirming a decree of the circuit interest on the sum of $71,139.60 from May 11, 1896, and on the sum of $799.18 from May 8, 1897, and as so modified is affirmed with costs; and the cause is remanded to the circuit court with a direction [180 U.S. 185, 199] to amend its decree in the particulars above specified, it being affirmed as so modified.
Mr. Justice Peckham and Mr. Justice McKenna took no part in the consideration and disposition of the case.