PEOPLES STATE BANK v. IMPERIAL IRR DIST

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District Court of Appeal, Fourth District, California.

PEOPLES STATE BANK v. IMPERIAL IRR. DIST. et al.*

Civ. 2319

Decided: September 11, 1939

W. Coburn Cook, of Turlock, for appellant. Harry W. Horton and George R. Kirk, both of El Centro, for respondents.

On May 27, 1938, appellant instituted the present action for declaratory relief and sought an injunction against the Imperial Irrigation District and its board of directors, alleging that it was the owner of certain refunding bonds issued by the district; that all of the bonds fall due in 1983; that certain interest coupons were past due and had been presented for payment but that payment was refused and respondents had failed to levy the amount of the annual assessments required by law for the payment of bond obligations. The complaint further alleges: “That defendants have threatened, intend to, have undertaken preliminary steps and negotiations therefor, and are about to file a petition in bankruptcy and for composition and readjustment of debts of Imperial Irrigation District under the provisions of chapter X of the United States Bankruptcy Act [11 U.S.C.A. § 401 et seq.] and under the purported or alleged consent of chapter 4, California Statutes of 1934 (Extra Sessions). * That said chapter 4, California Statutes 1934 (Extra Sessions), is unconstitutional and void * That by undertaking a proceeding under said chapter 4, California Statutes 1934 (Extra Sessions), or under chapter X of the Bankruptcy Act, defendants would engage in unconstitutional acts and proceedings detrimental to and with irreparable injury to plaintiff.” The complaint prayed for declaratory relief, for a temporary restraining order and injunction enjoining the respondents from filing a petition in bankruptcy under chapter X of the Bankruptcy Act, and that chapter 4, Statutes 1934 (Extra Sessions) be adjudged unconstitutional and void. The trial court sustained a demurrer to the complaint without leave to amend and rendered a judgment of dismissal. From this judgment dated July 28, 1938, appellant has appealed.

Appellant points out and argues that it is entitled (1) to a declaration of its rights as a holder of bond obligations of respondent district; (2) that a California irrigation district is a governmental agency of the state of California and as such is not subject to bankruptcy; (3) that the state of California has not given its consent to bankruptcy proceedings by its irrigation districts; (4) that the purported consent of the state of California as contained in chapter 4, Statutes of 1934 (Extra Sessions) is in fact not such consent and is unconstitutional and void.

Disposing of the first point, it is quite apparent that appellant's rights as a holder of the bond obligations are fixed and determined by the instruments themselves and the law applicable thereto. The court may not enlarge or diminish those rights. The bonds and interest coupons are general obligations of the district and are payable from revenue derived from an annual assessment upon the land within the district. Annual assessments must be levied for the payment of matured and maturing bond obligations. If not levied as the result of the neglect or refusal of the board of directors to cause such assessment and levies to be made, adequate provision is made for the protection of the bondholders' rights. California Irrigation District Act, Deering's Gen.Laws 1937, act 3854, §§ 33, 39, 39a, 39b, 39c, 39d and 52. See, also, Provident Land Corp. v. Zumwalt, 12 Cal.2d 365, 85 P.2d 116; United States ex rel. Concord Sav. Bank v. Mayor etc. of Fort Scott, 99 U.S. 152, 25 L.Ed. 348. It is only in case of actual controversy relating to the legal rights and duties of the respective parties that an action for declaratory relief can be maintained (Blakeslee v. Wilson, 190 Cal. 479, 213 P. 495), and the court may refuse to exercise the power granted in any case where its declaration or determination is not necessary or proper at the time under all the circumstances. Section 1061, Code Civ.Proc. This determination, however, should not be construed as restricting any remedy, provisional or otherwise, provided by law for the benefit of any party to such action and no judgment of dismissal under the instant case should preclude any party from obtaining additional relief based on the same facts. Section 1062, Code Civ.Proc. Until the remedies provided by law for the enforcement of the rights of appellant have been applied, we see no urgency for a declaration of those rights, especially, where existing forms of action are reasonably adequate. San Joaquin & K.R. Canal & Irr. Co. v. County of Stanislaus, 155 Cal. 21, 99 P. 365; Newburger v. Lubell, 257 N.Y. 383, 178 N.E. 669. Under the provisions of section 1061, Code of Civil Procedure, the trial court is vested with discretionary power in entertaining an action for declaratory relief and its refusal so to do is not reviewable upon an appeal, except for abuse of discretion, and it is the duty of appellant to present a record which shows that relief was improperly refused. In the absence of a showing to the contrary, the appellate court will assume that the trial court properly exercised its discretion. Cutting v. Bryan, 206 Cal. 254, 274 P. 326; Sunset Scavenger Corp. v. Oddou, 11 Cal.App.2d 92, 53 P.2d 188.

In appellant's second cause of action an injunction is sought preventing respondents “from undertaking any proceedings whatever under the terms of chapter X of the United States Bankruptcy Act, or under or in reference to chapter 4, California Statutes, 1934, (Extra Sessions)” and “that said chapter 4, Statutes 1934, (Extra Sessions) of California be adjudged unconstitutional and void”.

It now appears that since the rendition of judgment and before this opinion was filed the legislature in its 1939 session repealed chapter 4, Statutes of 1934 (Extra Sessions), the constitutionality of which is questioned by appellant, and has now adopted chapter 72 (Stats.1939), entitled “An act authorizing taxing agencies and instrumentalities to prosecute proceedings under sections 81, 82, 83 and 84 of the act of congress entitled ‘An act to establish uniform system of bankruptcy throughout the United States,’ approved July 1, 1898, as amended, consenting to the adoption of the sections by the congress, validating proceedings under or in contemplation of proceedings under the sections, and repealing chapter 4 of the Statutes of the Extra Session of 1934, and declaring the urgency hereof”. Approved by the governor April 30, 1939, and filed with the secretary of state April 21, 1939. This act became effective immediately and purportedly gives consent to bankruptcy proceedings by California taxing agencies and further purports to validate proceedings theretofore commenced.

It also appears from the record that respondents have in fact filed proceedings in the federal court under the Bankruptcy Act, subsequent to the effective date of chapter 72, 1939 Statutes above cited. It has been clearly determined in Tulare Irr. District v. Lindsay–Strathmore District, 3 Cal.2d 489, 45 P.2d 972, that an injunction decree, by its very nature, acts on the rights of the parties in the future, and, whatever may be the law applicable to appeals generally, on appeals involving injunction decrees, the law in effect and applicable when the appellate court renders its opinion must be applied; and in an action, which involves an appeal from an injunction decree, although the judgment was entered and the appeal was perfected before the passage of the new enactment, the law in existence and applicable at the time of the decision of the case on appeal governs and not the law at the time of entry of the judgment. Although both appellant and respondents are insistent that this court should now construe the constitutionality of the new enactment (chapter 72, Stats.1939), we would only be deciding an academic question, not applicable to the instant case, for the proceedings have already been instituted in federal court under the present existing law and the writ could not and should not issue restraining respondent from doing that which has already been done. Wright v. Board of Public Works, 163 Cal. 328, 125 P. 353; Bernard v. Weaber, 23 Cal.App. 532, 138 P. 941; Cohen v. Gray, 70 Cal. 85, 11 P. 508. An injunction is a writ or order requiring a person to refrain from a particular act. Section 525 Code Civ.Proc. By express statutory mandate, a state court cannot enjoin the proceedings of a federal court. Civ.Code, § 3423, subd. 2; Code Civ.Proc. § 526, second subd. 2; Phelan v. Smith, 8 Cal. 520; Morgan v. State, 154 Ark. 273, 242 S.W. 384, 387; Union National Bank v. Lehmann–Higginson Grocer Co., 10 Cir., 82 F.2d 969; In re Forty–One Thirty–Six Wilcox Building Corporation, 7 Cir., 86 F.2d 667.

In the instant case, then, the question presented has become moot. An appellate court will not review questions which are moot and which are only of academic importance. It will not undertake to determine abstract questions of law at the request of a party who shows that no substantial rights could be affected, in the case pending, by a decision either way. Adams v. Prather, 176 Cal. 164, 167 P. 867; 2 Cal.Jur., sec. 472, p. 803; Keefer v. Keefer, 31 Cal.App.2d 335, 87 P.2d 856; Illinois Trust & Sav. Bank v. Pacific Railway Co., 115 Cal. 285, 47 P. 60; 2 Cal.Jur., sec. 13, p. 125.

The right under the Bankruptcy Act, of irrigation districts in California, where the state has given its consent, to file a voluntary application or petition for confirmation of a plan for composition and readjustment of its debts under the act, has been definitely set at rest by the United States Supreme Court in United States v. Bekins, 304 U.S. 27, 58 S.Ct. 811, 82 L.Ed. 1137, decided April 25, 1938; In re Lindsay–Strathmore Irr. Dist., D.C., 21 F.Supp. 129. See, also, In re Corcoran Irr. Dist., D.C., 27 F.Supp. 322; In re Merced Irr. Dist., D.C., 25 F.Supp. 981; In re Lindsay–Strathmore Irr. Dist., D.C., 25 F.Supp. 988.

For the reasons expressed, the judgment of dismissal is affirmed.

GRIFFIN, Justice.

I concur: MARKS, Acting P.J.