Islais Co., Ltd. v. Matheson ( 1935 )

PRESTON, J.

Dissenting. I dissent.

I am unable to see that the bondholders, under the facts before us, are in anywise injured. On the contrary, to permit the landowner to redeem his property from the sale strengthens instead of weakens the security for the bonds. That the land in the hands of an owner is subject to future calls for future payments of bond interest and principal, seems not to be realized. If, as here, there has been no purchaser at the sale and as a consequence the lands are conveyed to the respondent as trustee and not redeemed, then the full title to the lands vests in the district and is never again assessed but may be sold and the net proceeds paid into the bond fund. In such case, however, the bondholder can get the net value of the property, and no more. No interest item or penalty is present and if the land is not worth the assessment, the bondholder loses. But if the owner is permitted to redeem, the full title of the property becomes liable for future payments of assessment calls and, with the present assessment paid, the likelihood of collecting the next instalments is greatly enhanced. Meanwhile the bondholder has received his full complement of principal and interest. He should, therefore, gladly embrace the opportunity to have the land redeemed as provided in the amended statutes. Of course, if a purchaser is found who will pay the full penalties and interest, to the extent of such penalties the bond fund is increased and the security strengthened. But here we have no purchaser. If the owner does not redeem, there are no penalties or interest for the bond fund. It requires no prophet to predict that in this time of shrinkage in values many of these tracts of land would not sell for the amount of the full assessment. Redemption from an instalment sale without penalties would strengthen the bondholders’ position. I think the impairment, if any, of the obligation of the contract is so slight that it should be treated as negligible. The object of the statute was to secure prompt payment of the calls as made, and not to create a new and additional security for the bond issue. Money received on delinquencies had to be disposed of and the bond fund was the very place to lodge it. How the bondholders are expected to profit in the long run by delinquencies, I cannot discern.

Rehearing denied.

Seawell, J., and Preston, J., voted for a rehearing.