Campbellsville Lumber Co. v. Hubbert, 112 F. 718 (6th Cir. 1902)

Under Act Ky. Feb. 27, 1882, amending Act March 18, 1878, authorizing a court in ‘which judgment is recovered on bonds of Taylor county to assess and collect á tax to pay such judgment, making such judgment a lien on realty and personalty, and providing in section 10 that p. 719bonds to be issued thereunder “shall on their face stipulate” that the holders shall be entitled to the remedies for the collection In such acts provided, the holders of such bonds only as contain such stipulation are entitled to such extraordinary remedies.

Marc Hubbert, the defendant in error, recovered a judgment in the court below against the county of Taylor (one of the counties of the state of Kentucky) upon matured interest coupons issued by the county. An execution ui>on this judgment was returned, “No property found.” The judgment plaintiff thereupon sought to avail himself of the extraordinary remedy provided by an act of the Kentucky legislature approved February 27, 1882. The act referred to is an amendment of an act approved March 18, 1878; ■ being a special act for the benefit of Taylor county. By the original act the county was authorized to issue new bonds in settlement and compromise of its existing indebtedness on terms therein named; and such act provided that, if the county should refuse to levy and collect a tax to pay any judgment upon the compromise bonds or coupons after due notice and' demand, it should be the duty of the “circuit court,” or, in vacation, of the “circuit judge of the Seventh judicial circuit,” to make an order based on the last preceding assessment, “levying a tax and appointing a collector, whose duty it shall be to collect from the taxpayers of Taylor county sufficient to pay off such judgment,” etc. This act was so amended by the act of February 27, 1882 (1 Acts 18S1-82, p. 558), as to provide, am ng other things: (1) That any judgment on bonds or coupons issued under the act should constitute “a lien upon all real and personal property in said county, subject to taxation under the revenue laws of this commonwealth”; (2) “that if the court rendering such judgment shall be of opinion that such serious obstruction is likely to be offered to the enforcement of any such judgment as will materially delay it, it shall, on motion of the plaintiff therein, refer the same to a commissioner, with Instructions to ascertairt and report, on a day to be named, the amount which it will be necessary for the holder or owners of any such property to pay in order to raise i>romptly, in proportion to the value of such property owned by each, a sum sufficient to pay the said judgment, and all costs of the said suit, and the costs of collecting the same, making due allowance for probable delinquencies.” By section 5 of this amending act the commissioner is directed to file his report “in the clerk’s office of said court and publish in a newspaper in Taylor county or Marion county, once each week for three weeks, a notice of the filing of said report, and stating that the same will be subject to exceptions, to be filed in said clerk’s office until a day to be mentioned in said notice, which day shall not be less than thirty nor more than forty days from the last day on which the said notice is to be published.” The sixth and seventh sections provide for a hearing on exceptions so filed, and that, upon the approval of the report, “judgment shall be rendered against the parties named in the report for the amounts therein named, and at the expiration of ninety days from tlie date of said judgment several executions shall issue against all persons who have not then paid to the sheriff or other officer who collects executions from said court, for the sums adjudged to be due them respectively,” etc. The eighth section provides that any surplus resulting after paying judgment and costs shall he paid over “to the commissioner of the sinking fund of said county to be used for the payment of the principal and interest of bonds issued under the act,” etc. The tenth and last section of the act is in these words: “The b~nds to be issued under the act to which tills is an amendment, shall, on their face, stipulate that the holders of any of them, or any coupon thereof, shall be entitled to the remedies for the collection for the same herein, and in the act to which this is an amendment, provided for.” To bring himself within the terms of this act, the defendant in error filed an affidavit in which he stated the issuance and return ■ f an execution, the nonpayment of his judgment, and that “the public sentiment of the citizens of Taylor county is. so hostile to the payment of p. 720the bonded debt of the county of which the judgment in affiant's favor forms a part that su'ch serious obstruction' is likely to be afforded to the enforcement of such judgment as will materially delay its collection.” It was further affirmed that the opposition to the payment of the' county debt was,so great that for several years past no person had been found willing to qualify as sheriff,' and that, though the county court had levied a tax for the years 1896 and 1897 “to pay the interest on the bonds referred to in the petition in this case,” the tax had not been collected, because there was no sheriff. ’ Upon this petition a commissioner was appointed, who filed a report, setting out a list of some 2,000 taxpayers, and the amount which each should pay.. Notice was published, as required, of the filing of this report, and that it would remain open for exception 30 days after last publication. The county alone filed exceptions, all of which were overruled. Judgments were thereupon rendered against the several taxpayers, and executions issued. The judgment against the plaintiff in error was rendered on this report January 12, 1901, and execution issued April 23, 1901, for §123.76 and costs, as the proportional sum to be paid by the plaintiff in error.

.. The motion’s ^veye , denied. A biJI of exceptions was allowed, and a writ of érror' from the'judgment in'favor of''Marc Hübbert against the Campbells-p. 721Tille Lumber Company, and from the judgment refusing to set aside said judgment and refusing to quash the execution, was allowed.

Applying the general principles stated to the case in hand, we find this debatable provision to be a part of one of the most stringent and extraordinary acts which has come under our observation. This appears in two respects: (1) A judgment on any bond or coupon is made a lien on all the taxable property of the county; (2) if the court rendering a judgment shall be of opinion that such serious obstruction is likely to be offered to the enforcement of any such judgment in the ordinary methods for collection of a judgment against a public municipality, or by the quite unusual power conferred under the law before this amendment, it is given power, through a commissioner, to make an assessment, in effect, upon all the taxpayers, and compel collection, through individual judgments and executions, of a sum sufficient to pay the judgment and all costs. This extraordinary power of assessing and collecting a tax is one in its nature nonjudicial. The courts, in the absence of express legislative authority, have steadily refused to undertake even the collection of a tax lawfully assessed by the taxing authority. Rees v. City of Watertown, 19 Wall. 116, 117, 22 L. Ed. 72; Thompson v. p. 723Allen Co., 115 U. S. 550, 6 Sup. Ct. 140, 29 L. Ed. 472. For the purpose of modifying the apparent stringency of this enactment, it has been suggested that it has its prototype in the New England rule by which all taxpayers are liable in solido for certain municipal debts. But the New England rule had no common-law origin, and has never been copied elsewhere. It was a rule applicable only to a limited class of organizations, feebly endowed with corporate life. Having no common fund to pay debts, and no mode being provided by which debts could be enforced through the imposition of a tax, there grew up the theory that the inhabitants were individually liable for such corporate debts. The scheme was crude, and has found favor nowhere. Rees v. City of Watertown, 19 Wall. 107, 123, 22 L. Ed. 72; Russel v. Men of Devon Co., 2 Term R. 667; Emeric v. Gilman, 10 Cal. 408, 70 Am. Dec. 742; Cooley, Const. Tim. *246. As observed by judge Cooley, the principle of individual liability for a public debt is not at all applicable where the law makes provision “for compulsory taxation to satisfy any judgment recovered against the corporate body.” The law must, then, be regarded as a wide departure from ordinary methods for enforcing the payment of a judgment against a municipality already armed with full power to assess and collect a tax to meet its obligations. To the novel and summary character of the remedy provided by the act of 1882 must be added the fact that its operation must be attended with unusual harshness and extraordinary expense, growing out of the fact that separate judgments are provided for against taxpayers, upon which separate executions must go. Such an act should be strictly construed, and a case clearly made out before any relief should be extended thereunder. In this general view of the act, shall we be justified in assuming that the general assembly intended that so stringent and expensive a remedy should be awarded to creditors, unless their bonds show on their face, in plain terms, an agreement that this remedy Shall be available? The provision that the bonds should, on their face, stipulate for the special remedies provided by the act authorizing them, was at least a reasonable re-cpiirement. The purpose, doubtless, was to compel the authorities issuing them to recognize the fact that by such stipulation they were consenting to the special and stringent remedies of the act. By this remedy each taxpayer is to be subjected to the liability of having a judgment rendered against him personally for his proportion of the aggregate assessment made by the court rendering judgment against the county. The clause of the act imposing this condition is in terms imperative. It reads:

Undoubtedly, “shall” is often used in a directory sense. But the presumption always is that words used in a statute are used in their ordinary sense, if a different interpretation is sought, it must rest upon something in the character of the legislation or in the context which will justify a different meaning. But what is it that the p. 724provisión requires shall be shown on the face of tlie bonds to be, issued?- The bonds “shall, on their face, stipulate,” etc.; that is,, the bonds,, “on their face,” shall contain the stipulation that any holder shall be entitled.to the benefit of the special and extraordinary remedies provided by the act. To stipulate is to make an agreement; to bargain; to contract; to settle terms, etc. The provision,; then, is that tlie bonds to be issued “shall, on their face,” contain an agreement, bargain, or. contract that the holder shall have the benefit of the special, unusual, and extraordinary remedies provided by the act as amended.- It must be conceded that, if the ioth section of the act had been omitted entirely, holders of bonds issued under the act Of 1878, as amended by this act of 1882, would have been entitled to the remedies therein provided. But, in view of this very peculiar, and imperative provision, are holders of bonds issued by authority of the act entitled to these novel and' drastic remedies, unless they exact bonds which do, on their face, stipulate for them? The answer, in its last analysis, must turn upon the legislative intent. Does it plainly appear that this requirement was one of mere form, and that the intent was that the creditor should be able to enforce-the special remedies provided by the enabling act, whether stipulated for on the face of the .bonds or not? If this “stipulation” appeared on some part of the bond other than its face, we might well say the act was directory in respect to that, and the setting out of the stipulation on some other.part of the bond might be regarded as a substantial compliance. But this stipulation nowhere appears, and the only suggestion is that the recital in the bonds that they are “authorized by an act of the general assembly of the commonwealth of Kentucky approved March 18, 1878,” operates to give to the holder all the remedies provided by the act referred to, as well as those peculiar to the amending act. We are not to be understood as casting doubt upon the validity of the bonds as evidence of a valid county indebtedness. No such question is here involved. We confine ourselves to the question as to whether a holder of bonds purporting to be issued under the act of March 18,1878, is entitled to the special remedies provided by that act and the act of 1882 amending that act. Every purchaser of municipal bonds must take notice of the terms and conditions of the énabling act under which the bonds purport to have issued. Barnett v. City of Denison, 145 U. S. 135, 12 Sup. Ct. 819, 36 L. Ed. 652; Barnum v. Town of Okolona, 148 U. S. 393, 13 Sup. Ct. 638, 37 L. Ed. 495. When these bonds were issued the act of 1878, as amended, required that bonds issued under -that act should show on their face the stipulation in question. These bonds did not comply with this provision, and a purchaser must be held to become such with notice that they did not, in this respect, comply with the enabling act.

An attentive consideration of the principle of statutory construction here involved leads us to conclude that when a statute gives a new and' unusual remedy, and directs how the right to the remedy is to be acquired or enjoyed, and how it is to -be enforced, the act should be strictly construed; and the validity of all acts done under authority. of such ■ an act will depend upon a compliance with- its p. 725terms. In respect to such acts the steps pointed out for the acquisition, preservation, and enforcement of the remedies' provided, should be construed as mandatory, rather than optional. Suth. St. Const. §§ 454, 458, and cases cited; Atkins v. Kinnan, 20 Wend. 241, 249, 32 Am. Dec. 534; Davison v. Gill, 1 East, 64; French v. Edwards, 13 Wall. 506, 20 L. Ed. 702; Lyon v. Alley, 130 U. S. 177, 9 Sup. Ct. 480, 32 L. Ed. 899.