MILLER· V. PERRIS IRRIGATION DIST.
693
8eems reasonable and souIid. It is certainly desirable that the rights of all the stockholders, and the liability of the defendant to them, be settled in one controversy, and it may well be considered that the corporation retains sufficient life to represent its stockholders in such a suit. In any view, it would be unseemly for this court, in a suit upon the same lease, brought by one of the stockholders, to recover part of the same dividends, to hold the contrary. Such a decision might result in two jl1dgmentsagainst the defendants, in different jurisdictions, for the dividends. "Under such circumstances," as was well said by Emmons, J., in Vulcanite Co. v. Willis, 1 Ban. & A. 573,.Fed. Cas. No. 5,603, "every suggestion of propriety and fit public action demands" that the decision of the co-ordinate tribunal "be followed until modified by the appellate court." Judgment is ordered for defendant. MILLER
v.
PERRIS IHRIGATION DIST.
et al.
(Circuit Court, S. D. California.
February 21,
1.
DIl
a
No. 752. FA.CTO PUBLIC CORPORATION-COLLATE1U.L ATTACK ON ORGANIZATION. Where a reputed pubUc corporation Is acting under the forms of iaw, unchalienged by the state, the validity of Its organization cannot be brought In question by priv.ate parties. Neither .the· nature nor the extent of an Ulegallty In Its organization can atl'ect its ·existence, If It be acting unde!.' color of law, and the state makes no complaint. DECREE OF CONFIRMATION RES
ORGANIZATION OF IRRIGATION DISTRIcT JUDICATA.
Where proceedings are had In the proper coun, lIS provided by Act Cal. March 16, 1889,· giving the superior court of the county in wblch the lands of an irrigation district are situated power to determine the lelrality and valldlty 'Of each and all the proceedings for the organization of such district, the decree rendered thereon. declaring said district to have been duly and legally organized, is conclusive against any attack for fraud or illegality In any of the proceedings for such organization. TION. .
S. SUIT AGAINST IRRIGATION DISTRICT - VALIDITY OF ORGANIZATION - LIMITA-
A suit in equity, so far as It seeks rellef on the ground of fraud or lllegallty in proceedings for the organization of an irrigation district, is barred if brought two years after the order is made by the board of county supervisors declaring the district duly organized, under Act Cal. March 7, 1887, fi 3, as amended by Act March 20, 1891. '- INJUNCTION-IRRIGATION DISTRICT-TAX DEED-ACCRUAL 011' CAUSE OF ,AcTION.
to
The right to enjoin the directors of an irrigation district from taking a deed complainant's ia.nd bought in under tax saie, and from making future assessments, accrues with the threatened making .ot the deed and levy of assessment, and not with the issuance and saie of the bonds, for the pay· ment of which such sale was made and ;such assessments are threatened.
Works & Lee, for complainant. L.r,.. Boone and O. A. Trippet, for JEtna Iron & Steel Co. C. C. Wright, for Erskine, Lacy, and. others. WELLBORN, District Judge. This is a suit for a decree declaring the proceedings'fOr the organization of the Perris irrigation district, cancelinl' the bonds issued by laid district, and enJoin-
ing 'the'1 bMrd.:()f! directors, fof said district 'from. taking' a,dli)ed,; to"tAA prbperty iofeotnpiaiulUlt; heretofore: sold' for. taxes, and also enjoining'any: 'further, 'taxes or assessments on complainant's land QiY said'di$tt1et· :(}r' its' officers. The bill,' which' was, filed July .20, W97, existence;of),said'district, and also the validity of; the :prOceedings subsequent· thereto for the issuance and sale ot bonds. . .: . , theaIIegatiOris of the bill, which relate. tOithe·former ground of relief" namel;t, the invalidity of the proceedings for the 'Of. ganization of said· distriotl ate ·ther:folIowjilg: .
.the,defehdant the' Perris IrrigatibiJ. diMrlct ,claims ··to'be 'a! corporation organized and existing under and by vir-rue of the laW'S, of'the 'state, of, Cali. fornia providing for .the organlzation otlrligation districts in flaitJ'S,tatl), and lis, and has been during the times herein m'entioned, acting as, That complainant was at the times P.l.e.ntione" in the bill, aM is'ndw,'theo'wnet in fee simple of a large tract of lana' within the boundaries of said district as claimed to ,w:hich land !Ias and wm to he, to taxation by saId lUleged district,· to meet· the "currenb expenses and the Interest and I1rincipal,ofthehonds Issued,bysald ,district; and that said bonds are, and wlll contltme to be, a' cloud upon complainant'sl:itleto said' lands, unless the relief which complainant prays tor, is granted him. That said alleged district Is not such In fact, and never liAs'been, but the proceedings for its organ· ization' ,are and "werewhQl1; v",ld:arnd llnopera.tl'V.e,hM8IU!le;; for; its ohtanlzlltlon was not signed bY"e1tlliir 50,or'../t majority; :of.-tl!J.e' treeholders within any I/lOUce ever'tiven of place when' anlJ:'wMre said petition 'would,be"pretlented. That a petitlOn was presented to"the boat<d supmteors"of' said district was· proposed to he organized, to wblch 'Were lllfpended: 55 Dames; pur-potting to be names oil freeholderS In, said 'proposed dlst3J1ch ,but otha1i: 2 ,Ule.> freeholders within said proposed district, knOWing that a sufficient numbeJ," of qualified signers 'could' not be obtain'Mto'sald petitlOli is: required by law, fraudulently and In vlotation of law' execiltMto varlouspersons deeds, of conveyance for small tracts of hind wIthin said district, ' upon the agreement and understanding that' the said said deeds, and thereafter sign said petition, 'alld':thitt they' should, 'after said 'dIstrict was ol'ganlzed, reconvey' 'said real estate to the partiesi!xecutlng said conveyances. That deeds were thus executed to 42 persons for the sole and fraudulent purpose''O£ making it appear that they were qualified to sign said, petition, and thats,ai1J perSOns did sign said petition,. and afterwards reconveyed said lands to their grantors, and that, exeluding these 'fraUdUlent signers, said .petitiomwas, not sigI\ed by 50. nor a majority, of,'the freeholders<.twfthlnsald' lil'toposed district. ' That, pursuant to the statutes ()f the state,of' California, 'said, alleged district, purporting to act through Its bbard' of dir ctol'S., petitioned for' and, obtained orders or decrees, In the superior courts of the countie,sof· 'San Diego and San Bernardino, in said state, declaring said to have beenduIy and lega)ly organized as such; but the persons by whom said proceedings for confirmation were instituted and e«rried:on were not the directors of said, to insti· tute or carryon said proceedings, and that said .preteIl,;;l'ed dii;trict was pever organized, and did not existas:such, and no proceedings had,in. its. name could 'be effective.. That said'perS()ns: who assumed to act as directors of said district Md,tull knowledge of the:frauUulentcharacter of :the,petltlon, as alleged, and that the orders confirming the organization of 13aid district were procured by the fraudnlent concealment. on the part:ot' s8ldpersons" in ,said pretended district, of;l:l'll! true fa,\:ts and by the fraudulent and representation that ,said petition, were bona fide and competent signers thereof,and that,'but for saidconeealment anQ fraud"sald of would never have been given. ," . ,';.; ,;.,' ,:::f: '" "", f!._ ':, i :;, ::J , - 'l'
of
s31eof bonds'are<these:::: "
Among the
:,j "
issuance and ;
':,1]',: .' ,'--·.,'
; ! :,,', '
MILUR·V. 'PERRIS IRRIGATION DIBT·
.;That, byl:be'liawsof thestate'ef California;· irrigation districts' ot'gll nizedtJlercunder may, for the 'Purpose: of aequiNng' water and water rights, andcong{hictIng "lIQnds, as provided therein. 'fhat,"before Issuing any !bOiids,' or ,caUmg' ,ah','ele'Ctietl· therefor, ,the' board of direct6rs of the dlstrictarerequfred by and detehtllne the amount of inoneynecessary to 'be' raised. " ThatsalO' districibas Issued and disposed of bonds, purporting to be the bonds' oj! 'said district; in' the aggregate amount of· $442,000, in denominations of $500 That no'estimate or deterntirtationof the amount of money necessary to' lIel; taised by issuing bonds 'was ever 'made or had by Said pretended' district befOre' issuing said bonds. That said bonds, with cer" tain exceptions speclfical1'yset forth, were' not sold for cash, upon bids called for, as provided by law, nor Irtexchangefor property! as provided by the statute, but were exchangedandblfrtere:d aWjlY' to 'Various persona, in various amounts, for labor, salaries and attorneys, and for material used iIi 'the construction of the works of said pretended· district, for less than their face value and In direct violation of lilw. Among the bonds so' Issued' were 5O,dated August 11;'1893, for $25,000: 27, dated1893,for $13,500; 24, dated OctOber 17, 1893, for $3,000: 33, dated May 3,' 1893. for $19,500; and 42, dated' June 7, 1893; for '$21,000,-a11 IsStu!d to the Laey Manufacturing Cornpany;12dltted January'4,1893, for $5,400; 18;,dated Jan'nary 13{ 1893, for $9;000; and 17, ·datEjd"MayOO, 1893, LEtna Iron & SteelComt>any; the Consideration Of all of said ·bonds being laBorlllldmaterlal used In construction of system. 'That the board of directbts ,of saill d1strtcthave sold'the lands of complainant for taxes levied by said dlstrlct,and"t'aused the same to be bought in by district, and are aMtit· to, ahdwlll, if 'nOt enjoined, take a r}eedforsaid lands, continue to levy assessments against the lands of complainant, and enforcetbe collection thereof; and, if· they should fail to do so, the, board of supervisors of the county in Which 'saId' distrIct is situated Is authorized by the laws of the state of California to levy such and. If said board should fall to levy the same, the ,owners and holders, Of said bonds axe authorized by the laws of said state to compel the levy of such assessD'J.entand tM collection of the taxes ne'cessary to pay the Interest and principal of saId' bonds, If valid. That the holders of said bonds, ora part of them, claim that the, same are negotiable Instruments, and that tbeyare .lnnQcent purchaserS aJ1.d holders thereof,lind, lands of ,complaillllnt are bound for the paye mE;lntof saId bonds. whether valid or not. That said bonds are, a cloud. upon complainant's :title 'to said land. and destroy the sale thereof," and ren.der the Slime worthless, to complainant's damage in the sum of $3,000, and that he has no speedy or adequate remedy in a court of law for the injury thus resulting to him.
The bill also sets, out; those of thestatllte of the state of California, approved March 7, 1881, known as the "Wright Act," which" it is claimed, were not complied with in the organization of the district, as follows: !
"Section,1. Whenever fifty or a majority of freeholderS owning lands susceptible of one mode of Irrigation from a common source, and b J' the lilamesystem, of works, desire to provide for the Irrigation of the same, they may propose the organization of an irrigation. dIstrict under the provlsJons of this act, and when So organized such districts shall have 1frIe powers conferred, br that may hereafter be conferrell, by law upon such Jrrlgation distrlct!!_ "Sec. 2. A petition shall first be presented to thebpard of supervIsors of the county In. which the lands, or the greatest portlonthereof, is. situated, .signed by the required number of freeholdera of such proposed district. ... '. ... Such petition shaH be presented' at a regular meeting of said· board and shall be pub. lished for at least two weeks, before the time at which the same Is to be pre· sented, in some newspaper printed and published in. the. county where said: peti. tion Is presented. together with a notice stating the time of the meeting at which' the same will be presented." " ' "
The bill also sets forth certain other of said act, which, it is claimed, were violated in the issuance and sale of said bonds, as follows: ' ' ,
696
85 FEDERAL REPORTER.
"Sec.. 16. The board may sell said bonds from time to time, In ./luch quanti· ties. 11;$ may be necessary and 1U0st advantage!>l1s, to raise money for the construction 1lf .said canals and works, the acqulsltioIl of said property and· rights, and otherwise to fUlly carry out the objectsand.-purp,oses ofj;b,lsact. Before its intenmaking any sale the board sha,ll, at a meeting; bY resolution, tion to sell a specified amount of. the bonds,and the day and hour and place of such sale,and shall cause such resolution to be entered In the minutes, and notice of the sale to be given, by publication thereof at least twenty days, in a daily newspaper published In each of the cIties of San l!'rancisco, Sacramento, and Los Angeles, and In any other newspaper, .at their discretion. The notice shall state that sealed proposals wlll be received by the board at their office, for the purchase of the bonds, till the day and hour named In the resolution. At the time appointed the board shall open the proposals, and award the purchase of the bonds to the highest responsIble bidder, and may reject all bids; but said board shall in no event sell any of the sald ·bonds for less than ninety per cent. of the face value thereof. * * *.. "See. 12. The board and Its agents and employlis shall have the right to enter upon any land In the district to make surveys, and may locate the line for any canal or canals, and the necessary branches for the same, on· any of sald lands which· WIlY be deeJl).ed best for such location. SaId board shall also have the right to acquire, either by purchase or condemnation, all lands and waters and water rights, ,and other property necessary for the construction, use, supply, ,repalr, and improvements of sald canal or canals and works, ilwluding canals and works constructed and being constructed by private owners, lands for reservoirs, for the storage of needful waters, and all necessary appurtenances. In case of purchase, the bonds. of the district, hereinafter provideQ for, may be used at their par value, in payment. * * *.. "Sec. 37. The cost and expense of purchasing and acquiring pT9perty, and constructing the works and improv:ements herein provided for, shall be wholly paid out of ,the construction fund,"
of said court be directed to give such notice, requiring all owners and claimants of the bonds to appear and make defense therein, andth8.t, upon coming in, they be made parties hereto; that it be decreed by this court that the proceedings for the organization of said pretended district, and the issuance and sale of its said bonds, be declared illegal and void, and that such bonds be canceled and declared invalid; that the alleged directors of said pretended district, and the saidbondbolders, and each of them, be perpetually enjoined from levying, orrausing to be levied, any asses13ment upon complainant's land, or the enforcement of the collection of any taxes thereon or therefrom; and that complainant have such other or further relief as may be equitable and just. The statute of Oalifornia referred to in said bill, pursuant to which the decrees of confirmation therein mentioned were obtained, is an act of the legislature of March 16, 1889, supplementary to the act of 1887, and known as the "Confirtnation Act," which, after providing for the filing of a petition by the board of directors of the irrigation district in the superior court of the county in which the lands of the district are situated, and regulating other matters of practice, confers upon the court the following authority: "Sec. 5. Upon the hearing of such special proceeding, the court shall have PQwer and jurisdiction to examine and determine the legality and Yalidity of. and approve and confirm, each and all of the proceedings for the organization of said district under the provisions of the said Act, from and including the peti tlon for the organization of the district, and all other proceedings which may
all holders of bonds to become parties to this suit, and that the clerk
The prayer of the bill is that this court order notice to be given to
XILLERiV;PERRIS IRRIGATION DIST.
697
affect tlielegaUty or validity of said bonds, and the order' for the sale, and the I sale thereof."
One of the holders of the bonds issued by said' district, the lEtna Iron & Steel Company, has appeared and intlfrposed a deJ?urrer to the bill. Said demurrer goes to so much of the bill as' seeks to annul the prdceedings for the. organizatiqn 'of ,the' district, and specifies, as grounds of demurrer, J}1at' it. appears upon. th'e face' of said bill that any action tfor the purpose of ;thepJ;oceeqings for the org-anization of the district is bylaches and delay and the statutes anll further,'tbafsaid distHct'is a de'fado of the fi)tate of and the ofits organization canil6t beinquil'edinto itj. any way except the proper proceeding in the nn,trire ,of, quo I war.ranto; ilistituted by'the state of alid, ftJrther, that the legality of the ha'S been approved and confirmed bY aeouct of . . . .' . 'i,. . " competent The defenuantsWilli!lmLacy, Jr., R. H. and' E. Erskine, and otherS, holders ofthe bonds issueP. Laey tManuf(icturing Company, have also. appeared, an<t demurretI "j'laH the bill, ana pleaded to apl\H. '.?1te demurrer of ants is to that part ofthe bill which seeks't6 arm:ul'saidbondsfor'illegality in their sale, and the demurrer are that 'silid l cl'use f)f 9,ction is barred by .,338 and'also section 343 of the Cbde, of the plea"of'sai4 defendants'reCivil lates to that part of' the'bUl ,thevalidit(Y of the organization of said irrigation' district; ,and l'lets'tlp in bar of the action said sections and 343,andalst:isection3 'of'the aet'ofMarch7, 1887. as amended /lct 181}1,whiclt13ection is asfoUQws: '..'
to.,a
"Sucl:/. electionsha,U be·GQnducted as nearly as practicable in With the general laws of. the 'state: provil1edthat no partiCUlar form of ballr:>t, sha}J be required. The b6ard ofllluPllrvisors shall mee.t on,t:4e next succeeding such election; and to canvass the votes (:ast thereat,' and if upon sllchcanvass it that .at least of all .the vo.tes cast ,are 'Irrigation District-Yt1s,' .the said board shall, by an order enterefl on its declare such territory duly organized as an irrlgationqistrict,. under IJ.ame and ,style theretofore designated, anI! shall declare. the. persons receiving, respectively, the highest nuwher of: ,votes t'or such several offices to be duly elected to such offices, And no. actJonshaU be commenced or majntained, or derense made affecting the validity of the organization, unless. the same shall have bet1n commenced or made within two years after the making and entering of such 1891, p. 142. order."
J'<
TheI;lresent hearing is on said demurrers and plea, and the questions presented are: (1) Can the validity of the of the Perris irrigation district be called. in question in this suit? (2) Are the. orders ur decrees of the superior courts of San Bet-nardinocounty and San Diego county, approving arid confirming the proceedings for the organization of said district, conclusive' as to its corporate existence? (3) Is the present suit,so far as it seeks relief on the ground of illegality in the organization of said'district, barred by section 3 of the act of March 7, 1887, as amended by the act of March 20, 1891? (4) Is said suit, or any part of it, barred by sections' 838 and 343 of said Code of Civil Procedure of California? 1. With referffnce to the first of the above questions, the law has been thu$ stated:
698
.'1'
:r,:·.I Jll,
,,""'Wlhere ;am*ioiPlil cQrporittibn cqlol" Is not questioned by the state, It be collaterally drawn ,rVlfi!!S lliff\!rent ljlthqugh tIll;) constitutiOI\ may p.resCl'lbe:manner of. ib:cofpdrlitlon;i"l'DUl. .Muti. OOrl1.' (4th' Ed:)' § 4311.. . :, '!:.:";J:lf; .', ,'.l;"i r,/u, '.1'· . ,':" r b , , : :.. , ' ' , " I , : ' ''''J,'hei a:tate,' which ,the,. 'the,:wro,w, tq, the. ,1Irnli ,!lot to .the ..llldividuals, gQ'.lollg ..as, the 'the. 'lIidlvidua1s' 'must Moo acquiesce;"
,r:', " , . Slj!e,
'
Stati'!' A".W,private by, tlw supreml1, cOllrt
itlJ,e,
/
,stated (B,ondell y.,
.81...
' I . ";'
'v, Cran,eH 8QOal,_181,22 PliC;,7,6-JuA-!¥3qt:;llltlPI\V·...0hes.t.e. Cal. 101)., and is now a statutory enactment (Civ. Code has also. d:eclared; the ,r»l,e applica.bletQ CQrporatlons.. Oal,. 406.; Disth ,v.: .9.5rpal. (ipl, 30 779 J?ist. Silver, 98 Qal. pol, ,llac., "llIa.rp.lJ1:Qn. v. OountY: of, San 108 Cal. 273,,4;+ Quj.nt,',!,'l iB:9ffman, 103 .Cal. 37 Pac. 514. ''I'' hl Delln fJ. Davis, supra" IIllflYs: : ' :, ,
4il;
often ap32, Cal. 354;
;;,Whe
, "Bul.' contend8c tllat IlWee· ;No.5 waSq not org'!lnized as ,iii corporation,. ,fOr the rea!'On ,tl1a.t the board or ,Ilupervison.s ,n,e>:er,a<;quired juris.diction of that '.the ot ,the boa,r,d ,crell;tlng district was voId. It however, on the' face of the complamt, that the petition .presented to thh \boo..rd ifor:llhe i orgamMtlon of" the· district was' good in:(orm,lUld on:lts r!le!! 'fasa the statute., ,Npr Is it claimed that the.o,rder creating the llistrict \IOOll pn its race. [fhe, complaint, therefpre, states. a ease in which the th.e organt2:atioJi cif the MrporatiOD wetelf,ppatentl;v"'valid, .afid in 'which the. corporation', fStr'a.?sacting business as such.! seekll to impeaeJ;l thevahdUyofth'e procee4lngs by proof boaM in fact. in 'an esselltfal particul,ar'!l'nd was known to tie so; both to the petitioners and the board,and 'that; In thlltrespect, petlli9h' was fa.lse and fraudulent. But it is well rettled that If a cllinpany' has,'lnfQrIn '8: charter author.izing it to act as it body eorp6rate, and in the e:x;erclse of corporate p?wel's at the timeot with theplaintitr;'tllen it was, as to theml\Iida.ll third perS()nl:\, a corppratlon de facti;!, and the corp6rate existence can only by proceedings In behalf' ot We people/onor can if be shown in a collaterlll action ,that the chl1rtl\r'wlls procured through. fraud. 'Jones v. Dana, 24 Barb. 395." To 'the same effect are l\fcP'arlanov. Insurance Cp.,'4 Den!9, 392; Doyle v. Petroleum Co., 44 Barb. 239: Railroad Co. v: Cary, 26 N. Y. 75; 4; Ang., & A. Cory, §§ 63p, 636. Jt is, Wig-htv,> RallJ.lQll(1; 00.', therefOl;e, not c9wpetent 'fQJ; j:he, plaintiff. to attack the vall,dUy ot t)1ecorporatlon in thIS: forlil ' .' " " , . ,
;'It
was
The ,case of Quint v. Hoffman, supraj is especialiyapplicable here, to an ifl'igation district, because therul in question was eho,lderof the dis'organized under the Wright act, in,a sui,t by a fr trict to enjoin the districtfrom selling aqy' ofthe lands of the plaintiff for&ssessDlentl\! levied, ;by said ,district. ,In the last-namEld case, the court says: i: . "The organization ot, the Oentral irrigation distrIct is assailed, and it is 'insisted that the validity of that organization maybe attacked, collaterally In this proet:*dillg',bys?owing that the board of$upervisor1;l wfthout their jurisdiction its· ca:nn'ot be maintain,ed. An irrigation district of this character is a public corporation, formed und'er a gen-
MILLER V. PERRIS IRRIGATION mST.
699
-eral law, and its object is 'the promotion ofi thegeneralwel:fare.People v. Irrigation Dist., 98 Cal, 206, 32 Pac. 1047.; and cases there ,cited. Corporations organized under theaetof the'legislature popularly known as the 'Wright Act' being public corporations, it is immaterial whether they be corporations de jure or de facto. That is a 1IUltter which canndt be inquired into upon a col· lateral attack; and ina case like the present, where the validity of an assess· ment levied by such, a ,corporation is the subject of litigation, the validity of fluch assessment dOe6 in no way rest upon the fact of the de jure character of the corporation. This, principle must be consider'ed settled law in this, state. Dean v. DaVis, 51 Cal. 411'; Reclamation Dist;,v. Gray, 95 Cal. 601, 30 Pac. 779; Swamp Land Dist.:v. ,Silver, 98 Cal. 53,,32 Pac. 860. If appellant's contention goes to the extent that thi/lcorporation is not 'eVen a corporation de facto, thE!, allegations of the compialnt are not' sufficient· to support such contention."
Complaiinant contends that the proceedings for the organization of the Perris irrigation district are wholly void, for the reason that no noticew:;ls ever given of the petition presented to the. board of super· therefore, the existence, of the district may be attacJ.;:ed by private persons; citing Norton v. Sllelby qo., 118 U. S. 426, 6 ,Sup. ,Ct. 1121, and People v. Tool, 85 Cal. 333, 24Pao. 603. I do not under· theruIe that'the existence of, a de stand, however, that,' in facto corporation can be questioned only at ,the suit of the, state which created it, there is any room or place for the distinction sometimes ob· served between things that are void and things that are voidable. The rule, sustained by the overwhelming current of authorities, and based on considerat1ons of public policy, is that,where a reputed corporation is acting, under forms of law, unchallenged by the state, the validity of its'organization cannot be dl'awn in question by private parties. Corporate franchises are grants of sovereignty only, and, if the state usurpation, individuals wilt not be heard to complain. Neither the nature nor extent of in its orgaI).ization can affect the existen.ce of a':reputed corporation, if the requisites stated are present; that is,if corporation be acting under color of law, and the state makes no :complaint.Where these requi· Such ,corporation may sites'concur, 'there is a de facto legally perform every act which the same entity could perform, were it a corporation de jure. People v. La Rue, 67 Cal. 526, 8 Pac. 84. Peoplev. Toal, supra, one of the cases relied on by complainant does not antagonize the rule above stated. If, however, it were so construed, it could not prevail as an authority against ,the great numberof cases in California upholding the rule. Norton v.Shelby Co., supva, the, other case cited by cQmplllinant, was carefully reviewed b:vthe circuit. court of' appeals, Sixthl ' circuit, and the court declared as follows: . "But it is needless to multiply authorities, They are sUbstantially. it not altogether, agreed upon the proposition that when a municipat: body, has assumed unper color Of authority, an,d exercised fOJ; ;!lny 'time, with the consent of the state, the powers of a public corporation of a kind by tlW organic law, neither thecorporatlon, private partr can, in private litigatIon, qnestion the legality of its existenCl!." .
:, FuRheron 'in the opinion, the court sa;ys:, '118 U. S. 426, 6 Sup. Ct.1121, as sumtorting the" app1iC!l.tiqn of the ,ruleihvok;ed to the' 'case; 'But' an' exnniinilt'ltln' wUl' show' tbat' not' Ue'Clareor :indicate· anytbing inconsistent, with:;t!W rtiews:aboiVe JJtated. ,It: was an action
was placed in
upon
case
,9,0.,
700
85
FEDERAL REPORTER.
against the coun'ty upon certain bonds'which had been Issuedtn Its 'name bya board of county commissioners. This, board had been created by a special act of the legislature of Tennessee, and empowered to 'execute'the duties whiCh, by theoonstitution of, the state, were devolved upon the county court, composed of the justices of the peace of the county. Within a month after its passage the justices of the peace assailed the validity of the act by filing a bill in their official character, in the name of the state, against the commissioners, charging them with unlawful usurpation of the power of the justices, and praying that they should be enjoined. The case went to the supreme court of the state, where it was held that the act was void. ThiswRs in conforniitywith a decision which had already been made by that court in another case of the same kind from the salIle county. The board of commissioners was an anomaly in itl! system of administration of county affairs. For the plaintiff it was contended, in the case of Norton v. Shelby Co., that, although tpe commissioners did not hold their offices de jure, they were nevertb:eless officers de facto, and,' being such, their acts were valid. The supreme court held otherwise, upon the ground that the commissioners could not be incumbents of an office which could not exist. They could not fill a place which was unknown to the constitution' of the state, and which was made in the room of a board expressly authorized by that instrument to discharge the duties of the same office. And the court took pains to distinguish such a case by saying, at page 441, 118 U. S., and at page 1125, 6 Sup. Ct.: 'The doctrine which gives validity to acts of officers de facto, whatever defects there may be In the legality of their appointment or elecCion, is founded upon considerations of policy, and necessity for the protection of the public and individuals whose Interests may be affected thereby. Officers are created for the benefit of the public, and private parties are not permitted to inquire into the title of persons clothed with the evidences ot such officers, and in apparent possession of their powers and func:tions. For the good and peace of society, their authority is to be respected and obeyed until, in some regular law, their title is investigated and determined. I t is manimode prescribed fest that endless confu'.3ion would result if,. in every proceeding before such officers, their title could be called in question. But the idea of an officer implies the existence of an office which he holds.' And the court distingUishes the case of State v. Carroll [38 Conn. 449J supra, which Is cited with apparent approbation, by the test which It had Indicated,iLnd by pointing out that In that case there ,was an office to fill. Similar reasons and the like rule apply In the ,case of officers as to that of municipal corporations de facto. Clement v. Everest [29 Mich. 19]." Ashley v. Board of Superyisors, 8 C. C. A. 465, 60 Fed. 63.
It should be further observed, with reference to .Norton v. Shelby Co., supra, that the court, in that case, was dealing with the laws of the state of Tennessee, and the conclusions reached, were in harmony with the previous decisions of the supreme court of that state, whereas, in Oalifornia, as I have already shown, the oYerwhelming current of precedents is to the effect that there may, in that state, be a de facto corporation, and that· the existence of such corporation cannot be collaterally attacked. The organization bya state 'of its domestic corporations is matter of local policy, and upon questions relating solely thereto the federal courts follow. the decisions of the state court of last resort. Tregea v. Board, 164 U.· S. 179, 17 Sup. Ct. 52. Both upon reason and authority, I hold that the validity of t.he tion of the Perris irrigation district, as the same is disclosed by the bill, cannot be called in question in this suit. 2. lam further satisfied that, if the corporate existence of said district were open to complainant's attack, the decrees of the superiorcourts of San Bernardino county and San Diego county, approving the organization of said district, are conclusive against such attack. This question has been so often and expressly decided by the supremecourt of the state of California that it cannot now be considered an
MILLER V; PERRIS
IRnIGA'IioN DIST.
701
open question. Crall v. Board, $7 Cal. 140, 26 Pac. 797 ; Board v. l'regea,88 Cal. 334, 26 Pac. 237; Irrigation Dist. v. Brandon, 103 Cal. 384, 37 Pac. 484 ; In re Central Irrigation Dist., 117 Cal. 382, 49 Pac. 354; Board v. Abila, 106 Cal. 355, 39 Pac. 794. These decisions of the state court are binding, upon the federal courts. Irrigation Dist. v. Bradley, 164 U. S. 112, 17 Sup. Ct. 56; Tregea v. Board, 164 U. S. 179, 17 Sup. Ct. 52; Louisiana v. Pilsbury, 105 U. S. 278; Christy v. Pridgeon, 4 Wall. 196. Among the issues upon which the court passes in confirmation proceedings are the very ones presented by complainant in his bill, namely, whether or not the requisite number of bona fide freeholders signed the petition to the board of supervisors, and also whether or not due notice of such petition was given. These issues the court must necessarily find in the affirmative before any order of confirmation will be reached; and it will be seen that, in some of the cases above cited, these two questions were the identical questions passed upon by the court. If the final order or decree in a proceeding for confirmation were res adjudicata, there would be an estoppel by judwnent against litigating again the issues so adjudicated. Considering, however, such a proceeding but one to secure evidence, as held in Tregea v. Board, supra, still, since, the evidence so secured, the final decree or order, is conclusive, it mast prevail whenever offered. In other words, the ultimate effect of an order of confirmation is the same, whether it operates aa an estoppel by judgment, or as conclusive evideuce. It is decisive of the legality of the existence of the district. The alleged frauds, set Ollt in the bill, in the procurement of signers to the petition, which was presented to the board of supervisors, are not such as will, in a suit of this sort, sustain an attack on the order or decree of confirmation. As already stated, one of the issues before the court, in the, proceedings for confirmation, was whether or not the petition presented to the. board of supervisors was signed by the requisite nUIPper of bona fide freeholders, and it is well settled that: "The frauds for which a bill in will be sustained to set aside a judgment or decree between the same parties rendered bJ' a court of competent jurisdiction are frauds extrinsic or collateral to the matter tried by the first court, and not a fraud which was in issue in that suit." U. S. v. Throckmorton, 98 U. S. 61; Pico v. Cohn, 91 Cal. 129, 25 Pac. 970, and Zj Pac. 537; Zellerbach v. Allenberg, 99 Cal. 57, 33 Pac. 786; Allen v. Currey, 41 Cal. 318; In re Griffith, 84 Cal. 113, 23 Pac. 528, and 24 Pac. 381.
In U. S. v. Throckmorton, supra, after referring to numerous precedents, and quoting from a Massachusetts case as follows: "The maxim that fraud vitiates every proceeding must be taken, like other general maxims, to apply to cases where proof of fraud is admissible. But where the same matter has been actually tried, or so in issue that it might have been tried, it is not again admissible. The party is estopped to set up such fraud, because the judgment is the highest evidence, and cannot be contradicted,"-the court proceeds: "We think these deci9ions establlsh the doctrine on which we decide the present case, namely, that the acts for which a court of equity wlll on account of fraud set aside or annul a jUdgment or decree between the same parties, rendered by a court of competent jurisdiction, have relation to fraUds, extrinsic or cc-Ilatel'al, to the matter tried by the first court, and not to a fraud in the matter 011 whicb
702 the decree was rendered·. That thj:! of retrying evel,'y caseJn which the judgment or' decree was rendered' oil f£llse testimony,' given by perjured' witJieeses, or.on COntracts or documents whose genulfieness or valldJ.ti WllS ,in issue, and afterwards ascertained to be or fraudulent, be grell-ter, by reason of the endle{>s natuJ:e of the strife, than any compensation arisIng 'from doing justice In'individual cases." '
, Arrowsmitllv. Gleason, 129U. S. 86,lfsup. Ct. 237, CitedllY comphiinant, does not conflict with the rule, enun<;iateq in U. ,S. v.. (J,'hrockmorton, supra, but was merely an application of said thetrau(ls enumrule to the faCts then before the erated in U. S. v. Throckmorton, supra,. whicl1 authorize the annulm,ent of a,judgment, is "where the attorney, regularly corruptly sells out his client's interest to the other side."· In Arrowsmith v.' Gleason, supra, the. guardian, of a minor ward entered iI;lto collusion with another person, whereby a corrupt sale of the real ward was confirmed, in probate, and it was esfate in..a suit afterwards brought by the.ward, that this was, ,such !:t. frau!! as. fpr appropriate, equitable. Telief ag-ain.st the c.olf,firmation of th,e. 'glmrdilpl's sale. That this is a correct viewot the decision in Arrows¥1i1:h v. Gleason,' sllpra, is confirmed by one of in the.. opinion, namely, . Johnson v. Waters, 111 U. S. 640, ,4 Sup. Ct. 619, court .says: . ,the question oj) frapQ been before the probate court, In llnr. of these Pl'?ceeding:S. llDd had the compIalnant been apprised of them, the Cllse might have been different. This court would not 'try over' again a case already tried, nor permit the complainant to'lltiga;te',matters which'he had notice of,"and whicbhe had 8jl1 to In proceedings, But one of the grounds of, complalntmade by the bill Is. that the vel'y attorneys whom he,pad.employed to secure his claim acted as attorneys for the succession and heirs" and conducted thereIn, without the proceedings for the sale, and participated as active . giving hIm any notice of what was being done."
it
tb,e organization 'of said district,. is baITed by section 3 of the act of March 7, 1887, as amended by the act Of March 20, 1891; and I am inclined to think that the demuITer of the .LEtna Iron & Steel Comvany on thatglound is also well It is true bIll does precisely or expressly the date c;f the ,order of the board of Iilupervisors declaring the territory withi:p. ,said district duly organized as an irrigation district. The bill, however,does allege that the bonds of the district were some as ear1Jt:asI891, alld others as late as the year 1894. It is' a fair, if not I1ecessary, inference, frmll .these and other allegations oJ the bill, that said order, alleged to be illegal and :void,. was and entered prior to the sale of thebonqs. Indeed, such is, in part, the, theory, of ant's case, and thus it appearsdtbata much longer time than two years has elapsed, since the making and entering of said order. When bar of:thestatute of upon the faceol the bill,· thest!ltlltl:t,. or objections in analpgy to it, UJ?on' the,gtound of laches, may,rbe of by demurrer, as well BusW. Lim.§ "." ..', .' . '.'. , 4. The suit IS riot barned either by section 338 or 343 of the Code of Civil Procedure of California. The bill prays, among other thing-s, for' against the. taking, board of directors of said
3; The! plea of' ErSkine and others shows that the su.it, so 'far as
district, 'of a. de#d..,'Vf .,hll1y':SlHlr:\ais-trict under a tax sale, and 'also li'gMrist future assessments. :¢il,lses of action, or grounds of equitable relief, to which said prayer relates, accrued, noF\vith!tl1e 1iseaahce or 'with 'the threatened making of the deed and levyofassessment. If'taxes or assessments'should be levied or threatened periodicallY,cal1ses of action as ing, of course, the taxes or assessments to be illegal; but, as I have already ruled, such causes of action, liIO far as they affect or conCern the validity of theorganizatiQU. of the be. barned, under section 3 of the aqt 8£ Marfh 7".lSS7,as ,amended \by the ,act of March 20, 189i,. withOut reference fo' the dates of their accrual, by the lapse of two yeanlcfrom the ,making and. entering of the of,der .organizing the distriCt·, " ',' ....',' The demurrer of.' ..Etna It'on, &, Steel Cmnpany will be 1llIoW'ed. The demurrer .of and 'otherS ,overrllled; .and said defendants assign'ed to answer, 'at ,the 'riext"rule day, so much olthe bill as' is. covered 1>Y,$3.l.d demurrer. That part· of thE> plea of', defeD;danhl, whiCh to of said di$trict is' allowed, 'but that'part' of said 'Plea: which relates to the proceedings:hlld for the is,Buance is, overrUled, .and said defendants assigned to answer s6muCh. of the 'bill as is cov:ered by the overruled part of said plea .ftt the 'rule day_,
t)le:
--, \; I ·
HI:LLER
et
l1X.
et aI.
.:,
(Cfrcmt Oourt otAJ)Peals, 'Ninth Circuit. No. 397.
February 14, 1898.)
1. ,
JtrDGMENT OFPR01'l4TE'
OF WILL-RES JbDICATA. ' , Where a will WllSCOlJ,strued by the probate court having jurisdiction, and the estate distributed thereunder, the of who' gave her wdtten consent to ,such cqnstruction, and acquiesced without objection in the distribution, caI,lIlot attack the same after the lapse of 22 years in an action against, her co-executor; It appearing that She knew ail the facts, and that no undue Influence was exercised to obtain her lISsent to the action taken.
2.
EXECUTOlt-LIA13ILITY FOR UNAUTHORIZED SALE OF ASSETS.
An Ilxecutor who withqut authC:lrlty sells corporate Iiltock beionglng to the estate Is liable only for the loss tl;len resulting to the estate, and cannot be held''to 'account as trustee by)egatees for profits made by him some years subsequently in the repurchase alld'sale of' such stock. ' The widow Of a testator, who is, also one of the executors, who knows of and acquiesces in the' saie of property oJ: the estate withoutaq.tqority of the probate court, cannot hol(l her accountable for a loss resulting to her Interest as legatee:
8.
SAME-Es-roPPEL OF CO·EXECUTOR.
4.
SETTLEMENT-IMPEACHMENT OF-LACHES:
Defendant's testator was from 1872 trustee for plaintiff, and managed her estate. In 1830, after· tWo. weeks' spenfby, plaIntiff and her husband,With an in eXll,lqlrj.ing the;!?qoks 8.J;l.daccounts, a settlement was made of all matters, and a release by plaIntiff and her husband. It appeared that plaintiff then had knowledge, or at least the means of knowledge, of all 'the tacts'connected with the mlill9.gemerl.t of her estate. HelJ, that she could