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District Court of Appeal, Third District, California.


Civ. 5858

Decided: September 22, 1939

Louis Bartlett, of San Francisco, for appellant. George R. Freeman, of Willows, for respondents. Elmer Laine, of Willows, for interveners and respondents.

Subsequent to the filing of our opinion of May 4, 1939, interveners and respondents asked that the matter be again reopened that they might submit further authorities dealing with the effect of redemption in good faith under section 52a of the Irrigation District Act (Stats.1933, p. 532) prior to the time that section was declared unconstitutional. A rehearing was granted and the matter is again before us.

We readopt the opinion heretofore given, together with certain additions, as follows:

This action was instituted by Provident Land Corporation to compel, by mandate, the collector of the Provident Irrigation District to execute and deliver to the district a deed of conveyance of some 900 acres of land. Originally some 5400 acres were involved, but by order of the superior court a writ of mandate was directed to issue as to some 4500 acres, but excepted the 900 acres herein involved, upon which there had been an attempt to pay the irrigation district assessment with bonds and coupons under section 52a of the Irrigation District Act as added in 1933, before this section had been declared unconstitutional, in the case of Shouse v. Quinley, 3 Cal.2d 357, 45 P.2d 701.

Upon a prior hearing upon this matter, this court, basing its holding upon the invalid sale in 1931, held that the petition for the writ of mandate upon its face showed want of jurisdiction on the part of the court to issue any such writ. This rehearing was granted when it was called to our attention that a subsequent sale had been made to the district for nonpayment of assessments in 1932.

An examination of the sale held in 1932 convinces us that the publication therein was in compliance with the statute and that the sale was valid. Respondents contend that the 1932 sale was invalid for two reasons, first, that the publication of the delinquent list and notice of sale was not made as provided by section 41c of the California Irrigation District Laws in that said publication was not made on or before the first day of August; and, secondly, that the alleged sale to the district was contrary to the provisions of section 44 of the Irrigation District Laws (St.1929, p. 1171), in that said sale was made on the first day that the property was offered for sale.

In regard to the publication of the delinquent notice, the court found in substance that the notice was published three times, to-wit: once a week for three successive weeks in certain newspapers on the 20th and 27th days of July, and on the 3d day of August, 1932. Section 41c of the Irrigation District Act as it read at the time in question provided as follows: “* the publication of the delinquent list provided for in this act, shall not be made before the first day of July, but must be made on or before the first day of August *.” (Stats.1927, p. 614.) By “publication”, according to the theory of respondents, is meant the appearance of the notice the required number of times, and therefore the publication of the delinquent list was not complete until the 3d of August, 1932, three days later than required by the statute, thus rendering the sale void. With this construction we are not in accord. Publication is here used in its ordinary sense. In 1935, section 41c of the Irrigation District Act was amended (St.1935, p. 361) to read: “* the first publication thereof must be made on or before the first day of August”. This charge in phraseology does not indicate necessarily an intention to change the meaning of the provision but was to remove any “uncertainty and ambiguity * by expressing the point involved * in language that cannot be misunderstood”. McNutt v. City of Los Angeles, 187 Cal. 245, 201 P. 592, 595. Furthermore a delayed publication of a tax list does not of itself invalidate the tax sale or a deed based thereon. Adams v. Slee, 92 Cal.App. 708, 268 P. 959.

We believe that the foregoing disposes of the objection to the validity of the 1932 sale. The 1932 sale being valid, the next question for determination is whether or not redemptions from tax sales with matured bonds and coupons of the district, under section 52a of the Irrigation District Act, constitute a valid redemption. In 1935 the Supreme Court in Shouse v. Quinley, supra, held that the attempt to abrogate the order of payment of irrigation bonds (sec. 52a of the act) was unconstitutional, and that it impaired the constitutional rights of bondholders.

In Islais v. Matheson, 3 Cal.2d 657, 45 P.2d 326, a statute which amended section 3480 of the Political Code, by reducing the penalties in effect at the time the district's bonds were issued, was held unconstitutional. It was there determined that the law in effect at the time the contract was made fixed the rights of all parties thereto. When these irrigation district bonds were issued in 1918 and 1921, the Irrigation District Act provided gold and silver coin as the mode of payment, which medium was by later amendment fixed as lawful money. The attempt therefore to redeem the property here in question from the 1931 and 1932 assessments with matured bonds and coupons of the district, under section 52a of the act did not constitute a valid redemption from said sales, as payment was not made in the medium specified in the act creating the bonds. No discretion remained in the directors of the district, and they were in duty bound to direct the execution of the deed.

In Hershey v. Cole, 130 Cal.App. 683, 20 P.2d 972, bonds issued by an irrigation district were held to be contracts between the district and the bondholders; and in Rivers Farm Co. v. Gibson, 4 Cal.App.2d 731, 42 P.2d 95, such bonds were held also to be contracts between the landowner and the bondholder. One of the provisions of such bonds was that they were payable in lawful money in the order of registration after default (Bates v. McHenry, 123 Cal.App. 81, 10 P.2d 1038), and as held in Shouse v. Quinley, supra, the payment of irrigation district taxes with bonds and coupons impairs the obligation of the contract with the other bondholders.

Article I, section 16, of our state Constitution declares: “No * law impairing the obligations of contracts shall ever be passed.” There is no exception to this rule. The state, by virtue of its police power, can override a contract, as may be done by the railroad commission under its power to regulate rates, for example, but the exercise of such power is not an impairment of a contract, as all contracts are entered into subject to the right of the state, through the exercise of its police power, to abrogate them.

Another rule, more broad in scope, covering not only the impairment of a contract, but also a statute, is thus stated in 5 California Jurisprudence 641:

“A statute which conflicts with either the federal or the state Constitution, or which deprives a person of a constitutional right, is to that extent void. A void act is not a law. * It is, in legal contemplation, as inoperative as though it had never been passed.”

It is to be observed that the rule stated in the Constitution concerning a law impairing the obligation of a contract is subject to no exception. As to the second rule, concerning a statute in conflict with a constitutional provision one exception, at least, is recognized, that is, that an act duly passed and approved has the force of law to protect citizens dealing with public officers under its provisions up to the time that it is declared unconstitutional.

Nowhere among the authorities cited by respondent do they cite a case involving the impairment of the obligation of a contract between the governing body and a third person, nor have we been able to find one. Miller v. Dunn, 72 Cal. 462, 14 P. 27, 1 Am.St.Rep. 67; Cooley v. County of Calaveras, 121 Cal. 482, 53 P. 1075; Wingerter v. City and County of San Francisco, 134 Cal. 547, 66 P. 730, 86 Am.St.Rep. 294.

Where a taxpayer has paid taxes to a municipality (not an irrigation district) under a law subsequently declared unconstitutional, the status created by the payment of these taxes was confirmed. Philadelphia v. Ridge Ave. Ry. Co., 142 Pa. 484, 21 A. 982, 24 Am.St.Rep. 512; Estate of Knowles, 295 Pa. 571, 145 A. 797, 63 A.L.R. 1086; see, also, 61 C.J. 1288; Darrow v. Union County, 87 Iowa 164, 54 N.W. 149.

From the foregoing the distinction becomes clear that in the case of a municipality there is no contract between a bond creditor of the city and the taxpayer. The contract is with the city only. In an irrigation district, on the other hand, the district bonds are contracts between the landowners and the bondholders (Rivers Farm Co. v. Gibson, supra), as well as between the district and the bondholders. In the case of the city no contract with third parties is impaired by legislation changing for instance the salary of any of its officials or providing for payment of work done without sufficient authority, but in the case of an irrigation district a change in the order of payment of bonds by permitting any bonds, irrespective of their order of presentation and registration, to be accepted in redemption of delinquent taxes does affect the contractual rights of the remaining bondholders, in that if the redemptions were paid in cash, such money could be applied to the payment of the bonds in the order of presentation. Shouse v. Quinley, supra.

An examination of the record shows that interveners, two being directors of the district and the other the secretary, assessor and collector thereof, made the purported redemptions with bonds and coupons after the Supreme Court had held that redemptions so made under section 52a of the Irrigation District Act were invalid, but while the matter was pending upon rehearing. Their official connection with the irrigation district and their opportune presentation of the bonds and coupons for redemption make it quite apparent they were acting with knowledge of the legal status of the issue then before the court. It cannot be held they acted in good faith.

The judgment is reversed.