# Respondents Brief — Washington v. Maricopa County

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386416_0484%3A5

## Record

- **Collection:** Supreme Court brief
- **Document type:** Respondents Brief
- **Published:** January 1, 1946
- **Citation:** 327 U.S. 799

## Text

In tpreme Court ofthe ules
FIL=ZD
1ited States MAR 18 1946

CHARLES ELMORE

vrOBER TerM, 1945

No. 878

cae 7
STATHINGTON and EQUITABLE LIFE
INSOMPANY OF IOWA,

Petitioners,

MARIINTY; JOHN A. FOOTE, ED.
OGlh PHIL ISLEY, Constituting the
Boavisors of Maricopa County, Arizona; >
SIDSBORN, Governor, ANA FROHMIL-
LElgitor, and WILLIAM T. BROOKS,
Stat, Constituting the Loan Commis-
sion State of Arizona; WILLIAM T.
BRG Treasurer, and ANA FROHMIL-
LEjitor of the State of Arizona,

Respondents.

ef for Respondents
In to Petition for Writ of Certiorari

JOHN L. SULLIVAN
Attorney General

Attorney for Respondents who
are State Officials
State Capitol, Phoenix, Ariz.

EDWIN BEAUCHAMP
County Attorney of Maricopa
County
County Court House, Phoenix, Ariz.

LESLIE C. HARDY
Special Counsel for Maricopa
County
Luhrs Tower, Phoenix, Ariz.

GEORGE HERRINGTON

ORRICK, DAHLQUIST, NEFF,
BROWN & HERRINGTON

GEORGE HE) 405 Montgomery Street,
LESLIE C. H, San Francisco 4, Calif.
Of Counse Attorneys for Respondents Mari-

copa County and the Officials
of Maricopa County

COMPANY, 845 SANSOME STREET, SAN FRANCISCO

-

Subject Index

IL. There Is No Merit in the First Specification of Error
Which Makes the Contention That the Federal Court
Should Disregard Decisions of the Highest Court of
a State Construing State Statutes in Force at the
Time the Contract Was Made, and Which Have Be-
come a Part Thereof

II. There Is No Merit in the Second Specification of
Error Which Makes the Contention—Contrary to the
Fact—That the Circuit Court of Appeals Failed to
Make an Independent Construction of the Bond
Contract Created Under the Then Existing Arizona
Statutes

III. There Is No Merit in the Third Specification of Error
Which Makes the Contention That Federal Courts
Have Jurisdiction to Disregard Decisions of the
Highest Court of a State Construing State Statutes
in Force at the Time When the Contract Was Made,
Upon the Mere Unsubstantiated Claim That Such De-
cisions Depart from the Rules of Interpretation Pre-
vailing in the State at the Time When the Contract
Was Made

(1) The Unsubstantiated Charge That the Bond Con-
tract Has Been Violated by a Subsequent Stat-
ute Does Not Raise a Federal Question, as Long
as No Subsequent Statute Is Pointed Out as
Causing Impairment ...

(2) The Claim that the Decisions of the Supreme
Court of Arizona in the Two Maricopa Cases De-
part from the Rules of Interpretation Prevail-
ing in the State When the Bonds Were Issued,
Does Not Raise a Federal Question

Page
Opinion of Court Below 1
Jurisdiction of Supreme Court 1
Question Presented 2
Statement of the Case 2
Summary of Argument 5
Argument ll

ll

16

25

25

27

VII.

Sussecr Inpex

Page
IV. There Is No Merit in the Fourth Specification of

Error Which Makes the Contention That the Resolu-
tions of the Board of Supervisors of Maricopa
County and of the Loan Commissioners of the State
of Arizona Providing for the Redemption of the
Bonds Held by Petitioners Are Laws Impairing the
Obligation of the Bond Contract

. There Is No Merit in the Fifth and Sixth Specifica-

tions of Error Which Make the Contention That the
Laws of the State of Arizona in Force 1919-1921
When the Bonds Were Issued (Rev. Stats. 1913,
Title LII, Ch. I, Sees. 5251-5265) Did Not Make the
Bonds Redeemable at the Option of the County...

(1) The Redemption Provisions Contained in Rev.
Code 1928 and Arizona Code 1939 Are Merely
Recodifications of the Same Provisions Originally
Set Forth in Rev. Stats. 1913

(2) The 1928 and 1939 Codes Made No Change What-
soever in the Character of Refunding Bonds to Be
Issued by the Loan Commissioners Under the
1913 Statute for the Purpose of Redeeming Out-
standing County Bonds

. There Is No Merit in the Seventh Specification of

Error Which Makes the Contention That Certain
Acts of the Arizona Legislature Ratifying the Bonds
Issued by Respondent County Constituted a Con-
tract Between Respondent County and the Petition-
ing Bondholders Which Has Been Impaired...................

There Is No Merit in the Eighth and Ninth Specifica-
tions of Error Which Make the Contention That
Respondent County Is Estopped from Redeeming the
Bonds

VIII. There Is No Merit in the Tenth Specification of Error

Conclusion

31

32

33

38

41

45

Table of Authorities Cited

Pages
CASES
Ackley School District v. Hall, 113 U.S. 185, 28 L.ed. 954,

5 S.Ct. 371 44
American Rio Grande Land & Trr. Co., In re (1937), 21

Fed. Supp. 492, p. 494 42
Arnett v. Clack (1921), 22 Ariz. 409, 198 P. 127... . 44
Bacon v. State of Texas, 163 U.S. 207, 41 L.ed. 133, 16 S.Ct.

Lee anne ee ene nnn 9, 37
Bexar County v. Sellers (1944), 142 Tex. 290, 178 S.W.(2d)

505 20
Board of Commissioners of Tlarmon County v. Rawards,

140 Oklahoma 247, 282 Pac. 1090. 20
Board of Regents of the University of Arizona v. Sullivan

(1935), 45 Ariz. 245, 42 P.(2d) 619. 40
Board of Supervisors v. Hawkins (1914), 16 Ariz. 16, 140

Pac. 821 28, 44
Bond & Goodwin v. DuPont, “254 App. Div. 543, 5 N.Y.S.

(2d) 423 .... 44
Boyce v. Pima County (1922), 24 Arts. 259, 208 Pac. 419... 40
Bravin v. Tombstone, 6 Ariz. 212, 66 Pac. ‘719__.._.__._-- 23, 28
Catholic Order of Foresters v. State of North Dakota

(1987), 67 N.D. 228, 271 N.W. 670 10, 20
City of Detroit v. Detroit United Ry. (1909), 156 Mich.

106, 120 N.W. 600 42
Cochran Co. v. Mann (1943), 141 Tex. 398, 172 S.W.(2d)

689 19
Coconino County v. Yavapai County, 5 Ariz. 385, 52 Pae.

, RESO ESR SP Se Oe AS A 42
Cross Lake Shooting and Fishing Club v. Louisiana (1912),

224 U.S. 632, 56 L.ed. 924, 32 S.Ct. 577... 15, 29

Dupont v. Mills, 39 Del. 42, 196 Atl. 168. 20

iv TaBLe OF AUTHORITIES CITED

Pages
Ennis Waterworks v. Ennis (1914), 233 U.S. 652, 58 L.ed.
1139, 34 S.Ct. 767 14
Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L.ed. 1188,
58 S.Ct. 817 5

Evangeline Parish School Board v. Kansas City Life Insur-
ance Co. (C.C.A. 5, January 9, 1946, not yet officially re-

ported) 20, 24
Fullerton v. Spring (1854), 3 Wis. 588 35
Hale v. State Board (1937), 302 U.S. 95, pp. 102, 103, 82

L.ed. 72, 58 S.Ct. 102 8
Hawks v. Hamill (1932), 288 U.S. 52, 77 L.ed. 610, 53 Sup.

Ct. 240 41
Jones v. Brush, 143 F.(2d) 733 4

Kersh Lake Drainage District v. Johnson, 309 U.S. 485, 60
S.Ct. 640, 84 L.ed. 881, 128 A.L.R. 386 45

Knights Templars’ & M. Life Indemnity Co. v. Jarman
(1902), 187 U.S. 197, 47 L.ed. 139, 23 Sup.Ct. 108......... 9, 35, 36.

Lehigh Water Co. v. Easton (1887), 121 U.S. 388, 30 L.ed.

1059, 7 S.Ct. 916 15
Levy, Edgar A., Leasing Co. v. Siegel (1922), 258 U.S. 242,
66 L.ed. 595, 42 Sup.Ct. 289 35

Lewis v. Pima County, 155 U.S. 54, 39 L.ed. 67, 15 S.Ct. 22 27

Maricopa County v. Osborn (1942), 59 Ariz. 244, 125 P.

(2d) 703 4, 11, 12, 17, 18, 20, 22, 27, 29, 40
Maricopa County v. Osborn (1943), 60 Ariz. 290, 136 P.

(2d) 270 4, 11, 13, 19, 20, 27, 29
MeNair v. Knott (1937), 302 U.S. 369, 372, 82 L.ed. 307, 58

S.Ct. 245 42
Melendez v. Johns (1938), 51 Ariz. 331, 76 P.(2d) 1163... 33
Municipal Investors Ass’n v. Birmingham (1942), 316 U.S.

153, 86 L.ed. 1341, 62 S.Ct. 975 8

Murphy v. Utter, 186 U.S. 95, 46 L.ed. 1070, 22 S.Ct.
776 24, 28, 42

TaBLE OF AUTHORITIES CITED v
Pages
National Bank of Republie v. City of St. Joseph, 31 Fed.

216 20
Neighbors of Wooderaft v. Rupert, 51 Idaho 215, 4 Pace.

(2d) 360 20
New Orleans Water Co. v. Louisiana ( 1902), 185 U.S. 336... 15
New Orleans Waterworks v. Louisiana Sugar Co. (1888),

125 U.S. 18, 31 L.ed. 607, 8 Sup.Ct. 741 31
Oklahoma Packing Co. v. Oklahoma Gas and Electrie Co.

(1939), 309 U.S. 4, 84 L.ed. 537, 60 Santt. S16. 41
Oshkosh Waterworks Co. v. Oshkosh (1903), 187 U.S. 437, 47

L.ed. 249, 23 Sup.Ct. 234 15
Pacific Mail $.S. Co. v. Joliffe (1865), 69 U.S. 450, 17 L.ed.

805 35
People ex rel. Durham Realty Corporation v. La Fetra, 230

N.Y. 429, 130 N.E. 604 36
Peterson v. Central Arizona Light & Power Co. (1940), 56

Ariz. 231, 107 P.(2d) 206... 33
Pinney v. Nelson (1901), 183 U.S. 144, 46 L.ed. 125, 22

Sup.Ct. 52 15
Roberts & Co. v. Padueah, 95 Fed. 62 20
Sambor, et al. v. Philadelphia Rapid Transit Co. (1928),

27 Fed.(2d) 406, App. Dism. (1928), 278 U.S. 572, 73

L.ed. 513, 49 Sup. Ct. 93 15
Schuerman v. Territory of Arizona, 184 U.S. 342, 46 L.ed.

580, 22 S.Ct. 406 28
Shriver v. Woodbine Savings Bank (1931), 285 U.S. 467, 76

L.ed. 884, 52 Sup.Ct. 430 41
Smyth v. United States (1937), 302 U.S. 329, 82 L.ed. 294,

58 Sup.Ct. 248 18
Sobey v. Molony (1940), 40 Cal. App.(2d) 381, 104 P.(2d)

868 35
State ex rel. Board of Fund Commissioners v. Smith (1936),

339 Mo. 204, 96 S.W.(2d) 348 22
State v. Prouty (1900), 115 Towa 657, 84 N.W. 670... 35
Stockholders of Peoples Banking Co. v. Sterling (1937), 300

U.S. 175, 81 L.ed. 586, 57 S.Ct. 386 26

vi Taste or AUTHORITIES CITED

Territory v. Vail, 10 Ariz. 138, 85 Pac. 652, at page 653......... 42
Tidal Oil Co. v. Flanagan (1924), 263 U.S. 444, 68 L.ed.

382, 44 S.Ct. 197 29
University v. People (1879), 99 U.S. 309, 25 L.ed. 3$87............. 15
Utter v. Franklin, 172 U.S. 416, 43 L.ed. 498, 19 S.Ct.

183 23, 27, 42
Walker v. Peoples Finance & Thrift Co. (1935), 46 Ariz.

224, 49 P.(2d) 1005 33
Wright v. Oakley (1848), 46 Mass. 400 35
Yavapai County v. McCord (1899), 6 Ariz. 423, 59 Pac.

99 23, 28, 42

CONSTITUTIONS
Ariz. Constitution :

§5 of Art. IX 40
Par, © Of Amt. ‘DO iccessccinccsssroscrccssessesooeeerccseessssccsssvnsoessrotemenseeensserensmnpsssveenssssusnsne 39
STaTUTES

Rev. Stats. Arizona, 1913:

§§5251-5265 a8, 11, 12, 26, 39, 45

§5252 ....... 4 17

§5258 17

§5260 3,17
Session Laws Arizona, 1883, pp. 4, 131, 139, 25D... nm 12
Session Laws Arizona, 1885, pp. 2, 66, 187, 206....ccccomssmnen 12
Session Laws Arizona, 1925, p. 106 33
Ariz. Stats of 1887, Chap. II, Title XXXI, §§2053-2067....... 12
Arizona Code, 1928, §2654 33, 38

Acts of Congress:

Act of June 25, 1890 (26 Stats. at Li. 175) n.cccnccccccnceneenenenn 22
Act of June 6, 1896 (29 Stats. at Ti. 262) cn ncesemmnmenen 27

—

TasLe or AuTuoRITIEs CITED vii
Pages
Judicial Code (28 U.S.C.A. 347(a)), §240(a) 1

Ariz. Code Annotated, 1939, Art. 4, Chap. 10, §§10-401-411 2,3

Text Books
6 McQuillin, Municipal Corporation (2nd Ed.), p. no 42

_

In the Supreme Court of the
United States

Ocroper Term, 1945

No. 878

ee ,

STATE OF WASHINGTON and EQUITABLE LIFE
INSURANCE COMPANY OF IOWA,
Petitioners,

vs.

MARICOPA COUNTY; JOHN A. FOOTE, ED.
OGLESBY and PHIL ISLEY, Constituting the
Board of Supervisors of Maricopa County, Arizona; .
SIDNEY P. OSBORN, Governor, ANA FROHMIL-
LER, State Auditor, and WILLIAM T. BROOKS,
State Treasurer, Constituting the Loan Commis-
sioners of the State of Arizona; WILLIAM T.
BROOKS, State Treasurer, and ANA FROHMIL-
LER, State Auditor of the State of Arizona,

Respondents. 7

Brief for Respondents
In Opposition to Petition for Writ of Certiorari

OPINION OF COURT BELOW
The opinion of the Cireuit Court of Appeals is reported
in 152 Fed. (2d) 556,

JURISDICTION OF SUPREME COURT
The jurisdiction of the Supreme Court is invoked by
petitioners pursuant to Sec. 240(a) of the Judicial Code

(28 U.S.C.A. 347(a)).

2
QUESTION PRESENTED
The question for decision is whether Article 4, Chapter
10, Sections 10-401 to 10-411, inclusive, of the Arizona
Code Annotated, 1939, (recodifying Chapter I, Title LII,
R.S. 1913, relating to the redemption of bonds) constitutes

subsequent legislation of the State of Arizona impairing
the obligation of the contract expressed in the county
highway bonds of Maricopa County which were issued
in 1919 and 1921 under Title LIT, Revised Statutes of
Arizona of 1913, Civil Code."

STATEMENT OF THE CASE

In 1919, Maricopa County, a county of the State of
Arizona, issued its bearer bonds in the total amount of
$4,000,000, in denominations of $1,000 each, maturing
serially from 1930 to 1949, and bearing interest at 514%
per annum (R. 525). In 1921 the county issued additional
bearer bonds in the total amount of $4,500,000, substan-
tially identical in terms and tenure with the 1919 issue
except that the bonds matured serially from 1930 to 1951
and bore interest at 6% per annum (R. 531-2). Each of
these bonds provided on its face that it was issued
*‘pursuant to and in strict compliance with the Consti-
tution of the State of Arizona, and the statutes there-
of, * * °° (R. 526, 532).

1, These sections of the 1939 Code and of the 1913 Revised Statutes
are set in parallel columns in the Appendix to this brief. Thus,
all of the statutory provisions are submitted in their entirety in
substitution for the partial and restricted quotations appearing
in the appendix to Petitioners’ Brief.

2. Emphasis added in all quotations throughout this brief
except where otherwise noted.

3

Ariz. Rev. Stats. 1913, Title LII, Ch. I, Secs. 5251-
5265," which were in force 1919-1921 when the bonds of
Maricopa County were issued, as above stated, provided
generally for the redemption of state bonds. Section
5260' specifically provided for the redemption of county
indebtedness, in substantially the same manner. Under
the statute such redemption is accomplished by the sale
of refunding bonds by the Loan Commissioners **when
the same can be issued at a lower rate of interest,’’ and
by the application of the funds derived from such sale of
refunding bonds issued by the Loan Commissioners to the
redemption of the outstanding county bonds.’ Upon such
sale of refunding bonds the Treasurer is required to pub-
lish notice of redemption of the indebtedness to be re-
deemed, and thereafter interest on all such indebtedness
‘*shall cease.’”*

In July, 1941, Maricopa County commenced proceed-
ings to redeem all of the then issued and outstanding
county highway bonds in accordance with the aforemen-
tioned provisions of Rev. Stats. 1913, which in the mean-
time had been recodified as Ariz. Code 1939, Ch, 10, Art.
4, Sees. 10-401-411 (R. 536-544). The refunding bonds were
authorized by the Loan Commissioners and sold (R. 544-
548), but their issuance and delivery was delayed by
litigation instituted in the Supreme Court of Arizona

3. The complete statute is set forth in the Appendix, pp. ii
to xxviii.

4. Appendix, pp. xviii and xx.

5. R. S. §5252; Appendix, p. ii

6. Appendix, p. xii.

4
(R. 548-551). That court held that the aforementioned
provisions of Rev. Stats. 1913 became a part of the bond
contract and made the bonds redeemable at the option
of the county in accordance with the procedure laid down
in the statutes in effect at the time the bonds were issued.’
Thereafter, a taxpayer’s suit was instituted by J. L.
Gust, one of the counsel for Petitioners in the instant
ease, seeking to restrain the delivery of the refunding
bonds (R. 551-552). This suit was decided against the
plaintiff by the Superior Court of Maricopa County; no
appeal was taken and the judgment of the Superior Court
has long since become final (Defendants’ Original Ex-
hibit B in evidence, R. 668). In addition, a suit was
filed in the United States District Court for the District
of Arizona entitled ‘‘Jones v. Brush,’’ which On appeal
to the Cireuit Court of Appeals was dismissed on July
6, 1944, for want of jurisdiction.* In the instant case
plaintiffs, Petitioners here, sought a declaratory judg-
ment to the effect that they are entitled to the pay-
ment by Maricopa County of interest on the bonds above
mentioned until the dates of maturity specified therein
notwithstanding the earlier redemption of the bonds by
the County (R. 6-69). The District Court after trial
rendered judgment in favor of the County (R. 514, 560),
and the Circuit Court of Appeals affirmed.

7. Maricopa County v. Osborn (1942) 59 Ariz. 244, 125 Pac.
(2d) 703 (hereinafter referred to as the ‘‘ First Maricopa Case’’) ;
Maricopa County v. Osborn (1943) 60 Ariz. 290, 186 Pac. (2d)
270 (hereinafter referred to as the ‘“‘Second Maricopa Case’’).

8. 143 Fed. (2d) 733.

5
There ayMMARY OF ARGUMENT
ew pecial or important reasons warranting
tions “ © case. A review of the ten specifica-
the decisi,ge by the Petitioners will show that
decides all a. .

: he Cireuit Court of Appeals correctly
laid down .
this C ns presented according to the law clearly

a ; ourt ntinuously followed in the decisions of
"1 is -e Supreme Court of the State of Arizona
ot Appe ee ° .

PP a vith the decisions of other Cireuit Courts

whatsoeve .
vill be seen, moreover, that no warrant

the decisi: . oe
; for the suggestion of Petitioners that

kins (193¢ :
the decisi® Court in Erie Railroad Co. v. Tomp-
pS. 64, 82 L.ed. 1188, 58 S. Ct. 817 and
he Cireuit Court of Appeals have raised
pairing t whether investments in municipal bonds
of the ord against subsequent state statutes im-
ones wit} ation of the contract. The decision
long prioourt of Appeals merely holds in accord-
supra, thniform decisions of this Court rendered
bond condecision in Erie Railroad Co. v. Tompkins,
impair it@ Statutes in foree at the time of the
merely aire & part of said contract and do not
of the tridecison of the Cirenit Court of Appeals
The Dhe findings of fact and conclusions of law
of the At on this very point.
provisiorourt found that the pertinent provisions
cluded thd Code of 1939 are an adaptation of the
were conitle 52 of the 1913 statutes (R. 553); con-
the Codeprovisions of Title 52 of the 19138 statutes
in and constitute Article 4, Chapter 10 of

9, and that said provisions of the Code of
.

any doub
are still

6

1939 are an adaptation of the provisions of Title 52 of the
statutes of 1913 (R. 554); and adjudged that Article 4,
Chapter 10 of the Code of 1939 is not different in sub-
stance and effect from all of the provisions of Chapter 52
of the Revised Statutes of 1913 and ‘‘is an adaptation of
said Title 52’’ (R. 562). The District Court found and
concluded that the highway bonds of Maricopa County,
issued in 1919 and 1921, were issued under and subject to
all of the provisions of Title 52, Revised Statutes of Ari-
zona, 1913 (R. 552-553) and further concluded that

and

‘*All of the highway bonds of Maricopa County
issued in 1919 and 1921 and now outstanding, in-
cluding the bonds now held by Plaintiffs herein, are
subject to redemption as provided by Chapter 1, Title
52, Revised Statutes of Arizona of 1913, which was
in full force and effect at the time of the issuance of
said bonds and was incorporated in and constituted
a part of the obligation of each ‘of said bonds.” (R.
554)

in addition concluded that

‘‘The provisions of Chapter 1 of Title 52, Arizona
Revised Statutes of 1913 were incorporated in and
constitute a part of the terms and conditions of the
Highway Bonds of Maricopa County issued in 1919
and 1921 and now outstanding, including the bonds
now held by plaintiffs herein, and by the express
terms of said Chapter 1, Title 52, Revised Statutes
of Arizona, 1913, all of said bonds are subject to re-
demption prior to the respective dates of maturity
specified in said bonds in the manner and upon the
terms provided in said Chapter 1, Title 52, Revised
Statutes of Arizona, 1913; and said provisions of
Chapter 1, Title 52, Revised Statutes of Arizona,

—

7

1913, are now in full force and effect as Article 4,
Chapter 10, Arizona Code Annotated, 1939, which
Article 4, Chapter 10, Arizona Code Annotated, 1939,
is an adaptation of all of the provisions of Title 52,
Revised Statutes of Arizona, 1913, and does not con-
stitute a new or subsequent law of the State of Ari-
zona, and this Court takes judicial notice of the
statutes of said State of Arizona and by reason of
the terms and conditions of said bonds and the pro-
visions of Chapter 1, Title 52, Revised Statutes of
Arizona, 1913, said County of Maricopa is now au-
thorized by law to redeem said Highway Bonds prior
to the respective dates of maturity set forth in said
bonds.’’ (R. 554-555)

The District Court adjudged that the obligation of the
contracts expressed in the Maricopa County Highway
Bonds was fixed and determined by the provisions of the
Revised Statutes of 1913; that the obligation of the con-
tracts has not been impaired and will not be impaired by
any of the provisions of Article 4, Chapter 10 of the Code
of 1939 (R. 562-3); and further adjudged that thirty (30)
days after the first publication of notice of redemption of
the outstanding Maricopa County highway bonds interest
thereon would cease to accrue and that the holders would
be entitled to the payment of the face amount of such
bonds and the interest accrued up to the date of redemp-
tion, and that no further interest would accrue upon any
of said Maricopa County highway bonds from and after
thirty (30) days after the first publication of said notice
of redemption (R. 563-564).

The fundamental fallacy inherent in the Petition is the

claim—based upon mere assertion and contrary to the

8
findings of tle trial court—that the State of Arizona
by subsequent legislation has impaired the obligation of

the statutory ontract expressed in their bonds. Petition-
ers’ basic conention is that the county highway bonds of
Maricopa Couty are non-redeemable prior to their serial
maturity date. This argument assumes the existence of
a ‘‘non-redeetable obligation’? under the laws in effect
when the bonis were issued and thus begs the question—
the question king whether or not the bonds were subject
to call and rdemption under Rev. Stats. 1913. According
to all of the ourts of Arizona—from the Superior Court
of Maricopa ‘ounty to the Supreme Court of that State—
the ‘‘non-redemable obligation,’? which Petitioners say
has been impired, does not exist (Cf. Municipal Investors
Ass’n v. Birrvingham (1942) 316 U.S. 153, 86 L. ed, 1341
62 S. Ct. 975 ‘** * * a contract must exist before it can
be impaired’ * *’’). If it did not exist when the bonds
were issued, t could not be impaired by the mere continu-
ation of the Rev. Stats. 1913, into the Annotated Code of
1939, which constitutes nothing more than a mere re-
compilation £ the 1913 laws. A simple comparison of the
two statutes will demonstrate their identity.® (Cf. Car-
dozo, J., refrring to a similar recodification of the stat-
utes of Iowsin Hale v. State Board, (1937) 302 WF. 8. 95,
pp. 102, 103 82 L. ed. 72, 58 S. Ct. 102: ‘*True, in later
compilations of the statutes, the sections have been re-
arranged, tlough with substance unaffected. Cf. Code,
1935, $6953. In the Code of 1935, subdivision 1 of $1304
is subdivisin 5 of $6944; $1303 is §7171. There can, be

9. Compar the respective sections of each set opposite in
the Appendix

——

9
little doubt that the meaning remains what it was before.
United States v. Ryder, 110 U.S. 729, 740, 28 L. ed. 308,
312, 4 S. Ct. 196; United States v. Sischo, 262 U. S. 165,
168, 169, 67 L. ed. 925, 927, 928, 43 S. Ct. 511; Warner v.
Goltra, 293 U. S. 155, 161, 79 L. ed. 954, 258, 55 S. Ct. 46;
Davis v. Davis, 75 N. Y. 221, 225, 226; Fifth Ave. Bldg.
Co. v. Kernochan, 221 N. Y. 3870, 375, 117 N. E. 579;
Mitchell v. Simpson, L. R. 25 Q. B. Div. 183, 189, 9 Eng.
Rul. Cas. 558-C.A.’’) Nor is it material whether the
Annotated Code of 1939 be considered a mere recompila-

tion or a statutory re-enactment, since even a re-enact-
ment of the same statutory provisions accomplished noth-
ing more than to reinstate the parties to their original
contract under Rev. Stats. 1913. (Knights’ Templar & M.
L. Indemnity Co. v. Jarman (1902) 187 U. S. 197, 47 L.
ed. 139, 23 S. Ct. 108).

Petitioners find themselves on the horns of a dilemma.
They admit—as they must admit to support their claim
of impairment—that the Annotated Code of 1939 ex-
pressly provides for the redemption of county bonds.
That being conceded, it necessarily follows that the bonds
are likewise redeemable under Rev. Stats. 1913 if both
statutes are the same. That both statutes are identical
has been conclusively established by the Supreme Court
of Arizona, which based its decision on the Rev. Stats.
of 1913 and referred only incidentally to the language as
subsequently recodified (Bacon v. Texas (1896) 163 U. S.
207, 41 L. ed. 133, 16 S, Ct. 1023). Thus by their very
contention that their contracts have been impaired by the
1939 Code, Petitioners admit that they never held ‘‘non-
redeemable obligations.’’ On the contrary their bonds

10
were at all times subject to redemption under the identical
Rev. Stats. of 1913. These statutes are still in existence,
except for section numbers, and the usual changes in
phraseology which normally occur in any recodification.

Petitioners’ only real complaint is that their bonds did not
recite in their text—in so many words—that they were re-
deemable on thirty days’ published notice—a mere criticism
of draftsmanship which does not rise to the dignity of a
federal question (Catholic Order of Foresters v. North
Dakota (1937) 67 N. D. 228, 271 N. W. 670; cert. den. and
appeal dismissed 301 U. S. 665, 81 L.ed. 1331, 57 S. Ct.
796).

11
ARGUMENT
ai

THERE IS NO MERIT IN THE FIRST SPECIFICATION OF ERROR
WHICH MAKES THE CONTENTION THAT THE FEDERAL
COURT SHOULD DISREGARD DECISIONS OF THE HIGHEST
COURT OF A STATE CONSTRUING STATE STATUTES IN
FORCE AT THE TIME THE CONTRACT WAS MADE, AND
WHICH HAVE BECOME A PART THEREOF.

The First Specification of Error states that: ‘‘The
decision of the Cireuit Court of Appeals * * * is erroneous
for the reason that it is based upon the assumption that
the federal courts may be deprived of the jurisdiction * * *
to construe a contract entered into pursuant to a state
statute which is a part of said contract by decisions of the
Supreme Court of the state made after rights under the
contract have vested, construing such statute, and the con-

tract of which it is a part.”’

The bonds of respondent county presently held by
petitioners were issued in 1919 and 1921 respectively.
Each of them provided on its face that ‘‘This bond is
issued ** * pursuant to and in strict compliance with the
Constitution of the State of Arizona, and the statutes
thereof * * *’’ (R. 526, 532).

The statutes of the State of Arizona to which refer-
ence was thus made and which were in force 1919-1921
when the bonds were issued, included Rev. Stats. 1913,
Title LII, Ch. 1, Sees. 5251-5265." In the First and Second
Maricopa Cases the Supreme Court of Arizona construed
this statute to provide that bonds of Arizona counties
are redeemable at the option of the county in accordance

10. This statute is fully set forth in the Appendix.

12
with the procedure set forth in this statute."' In the First
Maricopa Case the Court said (125 Pac. (2d) 705):

“Tt is not questioned that paragraph 5252, supra,
made it the duty of the loan commission to issue the
negotiable coupon bonds of the state ‘for the purpose
of paying, redeeming, and refunding all or any part
of the principal and interest’ of the legal indebted-
ness of the state existing at the time that section
was enacted and also any that might thereafter be-
come due or be authorized by law, when such bonds

11. It will be shown in Paragraph III below that these decisions
were consistent with earlier decisions of the Supreme Court of Ari-
zona. It is noted here that throughout the history of the Territory
and the State of Arizona, counties were conceded the right to re-
deem their bonds prior to the dates of maturity stated therein.
Statutes to this effect similar to Rev. Stats. 1913, Title LII, Ch. 1,
Sees. 5251-5265, were enacted by the Territorial Legislature and by
Congress during the Territorial period. Among the early Terri-
torial statutes providing for the redeeming and refunding of county
bonds prior to the dates of maturity specified therein, are Session
Laws 1883, pp. 4, 131, 189, 251; 1885, pp. 2, 66, 187, 206.
Arizona Statutes 1887, p. 361 (Title 31, Ch. 2, Sections 2053-
2067) was the first comprehensive general statute authorizing the
redemption of County Bonds whenever the same could be done at a
lower rate of interest and by Ch. 1 of Title 31 of the same statute,
provision was made for the creation of the Loan Commission of
Arizona for the purpose of redeeming territorial debt. By the Act
of June 25, 1890, Congress provided for the redeeming and refund-
ing of county indebtedness by the Loan Commissioners of the Ter-
ritory subject to future Territorial legislation (26 Stats. at L. 175)
and accordingly consolidated in one statute the separate provisions
of Ch. 1 and Ch. 2 of Title 31 of Arizona Statutes of 1887. After
immaterial intervening amendments, this Act was finally amended
by Congress by Act of June 6, 1896 (29 Stat. at L. 262.) Upon the
admission of the State of Arizona into the United States, the sub-
stance of the Act of Congress of June 25, 1890 (consolidating Ter-
ritorial Statutes of 1887 Title 31 Chs. 1 and 2) was enacted as a
law of the State of Arizona by the First Special Session of the
First Legislature of the State on June 15, 1912 (Session Laws
1912, 1st Spee. Sess., p. 98) and with certain minor changes not
material here, made by the Second Special Session of the First
Legislature (see Rev. Stats. 1913, marginal notes) became Rev.
Stats. 1913, Title LII, Ch. 1, Sees. 5251-5265.

—

13

could be issued at a lower rate of interest than pre-
viously paid on state indebtedness and to the profit
and benefit of the state. This being true, any bonds
of Arizona, issued while this provision was a part of
its statutory law, to take care of the indebtedness
specified therein, were redeemable and refundable
whenever state bonds could be issued at a rate of in-
terest sufficiently lower than that previously paid to
render it profitable and beneficial to the state to
issue them. This portion of 5252, whether contained
in such bonds or not, becomes as much a part of them
when issued as it does if incorporated in them and
is binding upon the holders thereof as well as the
aa 7 or

This decision was confirmed by the Supreme Court of
Arizona in the Second Maricopa Case (136 Pace. (2d) 271).

Thus it appears that the highest court of the state has
twice determined that under the statutes of the state in
force at the time of the making of the bond contract and
which became a part of that contract, the bonds of re-
spondent county are redeemable at its option. These de-
cisions do not give effect to any provision of a statute or
of the constitution of the state enacted subsequent to the

time of the making of the bond contract.” Nor is it con-
tended in the First Specification of Error that there is a

state statute impairing the obligation of the bond contract
enacted subsequent to the time of the making of that con-
tract. On the contrary, the contention is that the state

12. In the words of the Circuit Court of Appeals ‘The court’s
references to the law as subsequently revised were incidental, the
references consisting variously of statements to the effect that the
1913 statutes were carried, in form or substance, into the 1939
code.’’ (R. 685).

14
statute pursuant to which the bond contract was made,
was ‘‘a part of said contract’’ or, as also stated by peti-
tioners’® was ‘‘a previously existing statute.’’ In the
absence of a subsequent statute, there can be no impair-

ment of the bond contract and no federal question is pre-
sented. The Circuit Court of Appeals, therefore, properly
agreed with the construction placed upon these statutes by
the decisions of the Supreme Court of the State of Ari-
zona. Healy, C. J. said:
***

39
Hence, by reason of the substitution of the words
‘“‘bonds of the state’’ for the word ‘‘bonds’’ it became
necessary to qualify the term ‘‘bonds of the state’’ to

speak the truth—namely that such bonds were issued
through an agency of the state but the county re-

mained the debtor. In short under the Rev. Stats.

1913 bonds issued by the Loan Commissioners to re-
deem county bonds remained county debts; bonds issued
to redeem school district bonds, remained school district

debts, and bonds issued to redeem city bonds remained
city debts. (Cf. Board of Supervisors v. Hawkins (May
16, 1914) 16 Ariz. 16, 140 Pac. 821) These bonds were
bonds issued by the Loan Commissioners of the State of
Arizona as the Rev. Stats. 1913 correctly stated. At no
time did they become bonds of the State of Arizona,
except when the Loan Commission issued bonds to
redeem outstanding bonds of the State itself; and except

when the bonds were issued in satisfaction of the State’s
obligation under paragraph Third of Section 20 of the
Enabling Act (Arizona Code Annotated 1939, Vol. 1, p.
39), which required that the debts of the counties should
be assumed and paid by Arizona upon admission to the
Union. This assumption of debt was specifically ratified
by Art. 20, paragraph Sixth, Arizona Constitution (Arizona
Code Annotated 1939, Vol. 1, p. 218) and refunding bonds
of the state issued for that purpose (R. 638).

Bonds issued by the Loan Commissioners to redeem
county bonds never became obligations of the state as the
county alone remained liable for the payment thereof.

The mere issuance of bonds by a state agency—where the
state has no liability thereunder—raises no question under

the Constitution of Arizona and such bonds are not barred

7

40
by Section 5 of Article IX of the Arizona Constitution.

Board of Regents of the University of Arizona v. Sul-
livan (1935) 45 Ariz. 245, 42 P.(2d) 619.

Second: The meaning and effect of Rev. Stats. 1913
have been twice adjudicated by the Supreme Court of
Arizona, once in 1922 and later in 1942. In both cases
the Supreme Court held the county remained the debtor
and obligated to pay the debt.

In Maricopa County v. Osborn, (1942) 59 Ariz. 244, 125
P.(2d) 703, the Supreme Court of Arizona said:

‘‘It will be observed that the state does not pledge
its full faith and credit to the payment of the refund-
ing bonds issued by the loan commission at the request
of the board of supervisors, but that the only obliga-
tions it is required to undertake regarding them are
to see that taxes for the payment of them, principal
and interest, are levied and collected by the county and
paid to the holders thereof by the state treasurer. In
this situation, the state becomes in effect merely the
agent of the bond holders to see that these acts are ac-
complished. ”’

In Boyce v. Pima County (1922) 24 Ariz. 259, 208 Pace.
419, the Supreme Court of Arizona said:

‘¢ «The fact that the territory of Arizona had taken up
such bonds and issued to the holders thereof territorial
bonds did not relieve the counties from the obliga-
tion to care for said indebtedness. As a matter of fact,
the different counties, as they had done before, after
the refunding, continued to levy and collect taxes, to
discharge the interest. The substitution of bonds of the
territory for bonds of the counties did not, in fact, sub-
stitute debtors. The counties were still the debtors, ob-
ligated to pay the debts.

, 99

41
These adjudications by the Supreme Court of Arizona
determine the state law in force at the time when the

county highway bonds of Maricopa County were issued.

Hawks v. Hamill (1932), 288 U.S. 52, 77 L.ed. 610,
53 Sup. Ct. 240;

Oklahoma Packing Co. v. Oklahoma Gas and Elec-
tric Co. (1939), 309 U.S. 4, 84 L.ed. 537, 60 Sup.
Ct. 215;

Shriver v. Woodbine Savings Bank (1931), 285 U.S.
467, 76 L.ed. 884, 52 Sup. Ct. 430.

VI.

THERE IS NO MERIT IN THE SEVENTH SPECIFICATION OF
ERROR WHICH MAKES THE CONTENTION THAT CER-
TAIN ACTS OF THE ARIZONA LEGISLATURE RATIFYING
THE BONDS ISSUED BY RESPONDENT COUNTY CONSTI-
TUTED A CONTRACT BETWEEN RESPONDENT COUNTY
AND THE PETITIONING BONDHOLDERS WHICH HAS
BEEN IMPAIRED.

The Seventh Specification of Error states that ‘‘the
decision of the Circuit Court of Appeals * * *
for the reason that it holds that the ratification acts did

is erroneous

not present a federal question.’’

It appears to be the theory of the petitioners that the
ratification acts created a contract between the respondent
and its bondholders varying from that created by the issue
of the bonds, 1919-21, under the statutes in force at that
time. On this theory it is claimed that the new contract
created by the ratification acts cancelled the right con-
ferred upon the county by the original contract to redeem
the bonds prior to the dates of maturity specified in said
bonds.

42

The ratification acts were designed to put at rest ques-
tions as to the validity of the bonds and to end certain
pending litigation. The effect of ratification acts of this
type is well known. A validating act operates only to cure
defective proceedings, not to change the rights of the tax-

payers or bondholders.
MeNair v. Knott (1937) 302 U.S. 369, 372, 82 L. ed.

307, 58 S. Ct. 245.

See, also:
In re American Rio Grande Land & Irr. Co. (1937)
21 Fed. Supp. 492, p. 494;
City of Detroit v. Detroit United Ry. (1909) 156
Mich. 106, 120 N.W. 600;
6 McQuillin, Municipal Corporations (Rev. 2nd Ed.)
p. 227.

There is no merit in the contention that the ratification
acts cancelled the right of redemption conferred upon the
county by the original bond contract.

Utter v. Franklin (1899) 172 U.S. 416, 43 L.ed. 498,
19 S. Ct. 183;

Murphy v. Utter (1902) 186 U.S. 95, 46 L.ed. 1070,
22 S. Ct. 776;

Yavapai County v. McCord (1899) 6 Ariz. 423, 59
Pac. 99;

Territory v. Vail (1906) 10 Ariz, 138, 85 Pac. 652;

Coconino County v. Yavapai County (1898) 5 Ariz.
385, 52 Pac. 1127.

The contention of the petitioners finds no support in the
decisions of the state court and was fully answered by
the Circuit Court of Appeals, as follows:

_

43

‘‘The purpose of the ratification was to end pending
litigation, and doubtless it was intended to remove
mooted questions as to the validity of the bonds. There
is nothing novel in remedial or curative statutes of this
nature, the aim or effect of which is merely to remove
legal obstacles that may be thought to exist. McNair v.
Knott, 302 U.S. 369, 372. Consult 6 McQuillin Municipal
Corporations §2469, p. 198. To say the most for it, the
claim that the 1921 legislation took away the existing
right to refund is far fetched. Such was not the purpose
of these special acts, and there is no good reason for
supposing that they had that effect. Compare Utter
v. Franklin, 172 U.S. 416, and Yavapai County v. Mc-
Cord, 6 Ariz. 423.’’ (R. 690-691)

VIL.

THERE IS NO MERIT IN THE EIGHTH AND NINTH SPECIFI-
CATIONS OF ERROR WHICH MAKE THE CONTENTION
THAT RESPONDENT COUNTY IS ESTOPPED FROM RE- .
DEEMING THE BONDS.

The Eighth Specification of Error states that ‘‘the de-
cision of the Cireuit Court of Appeals * * * is erroneous
in holding there is no estoppel against the county, for the
reason that * * * the right to refund claimed to exist in
this case is imported from an independent, previously
existing statute’’* and other related reasons. The Ninth
Specification of Error states that ‘‘the Circuit Court of
Appeals, in holding that no estoppel was created against

24. The statement that ‘‘the right to refund claimed to exist
in this case is imported from an independent, previously existing
statute,’’ concedes that the statute conferring upon respondent
county the right to redeem and refund its bonds, is a previously
existing statute and not a subsequent statute.

—

4h
the county * * * made a decision against the local law of
the State of Arizona.’’ These specifications of error are
evidently without merit.

The bonds on their face showed that they were issued
‘tin strict compliance with the Constitution of the State
of Arizona, and the statutes thereof, * * *’’ (R. 526, 532).
Any person interested in the legal effect of the bonds was
able by a cursory examination thereof and of the Constitu-
tion and the statutes of the State of Arizona referred to in
the bonds, particularly Rev. Stats. 1913, Title LI, Ch. I,
Sees. 5251-5265, to inform himself of the right of redemp-
tion vested in the county by the recitals in the bonds. That
Rev. Stats. 1913, Title LIT, Ch. I, Sees. 5251-5265 vested
the right of redemption in the county was well understood
in Arizona prior to and at the time of the issue of the
bonds in question.

Board of Supervisors v. Hawkins (1914) 16 Ariz. 16,
140 Pac. 821.

See, also:
Ackley School District v. Hall (1885), 113 U.S. 135,
28 L.ed. 954, 5 S. Ct. 371;
Bond & Goodwin v. DuPont (1938) 254 App. Div.
543, 5 N.Y.S. (2d) 423;
Arnett v. Clack (1921) 22 Ariz. 409, 198 Pac. 127.

45

VII.
THERE IS NO MERIT IN THE TENTH SPECIFICATION
OF ERROR.

The Tenth Specification of Error (which petitioners con-
cede ‘‘does not appear to be material’’) contends that Gust,
Rosenfeld, Divelbess, Robinette & Coolidge, counsel for
petitioner Equitable Life Insurance Company, did not rep-
resent said petitioner in the filing of amici curiae briefs in
one of the Maricopa Cases although it is conceded that, in
truth and in fact, such briefs were filed by Gust, Rosen-
feld, Divelbess, Robinette & Coolidge.

See:

Kersh Lake Drainage Dist. v. Johnson (1940), 309
U.S. 485, 60 S. Ct. 640, 84 L.ed. 881, 128 A. L. R.
386.

CONCLUSION
It is submitted that the decision of the Circuit Court of
Appeals correctly decides all questions presented accord-
ing to the law clearly laid down and continuously followed
by the decisions of this Court and the Supreme Court of
the State of Arizona and consistent with the decisions
of other Cireuit Courts of Appeals.” There is no merit in

25. The decisions of the Supreme Court of Arizona, the Su-
perior Court of Maricopa County, the District Court and the Cir-
cuit Court of Appeals were rendered in favor of respondents
without any dissent.

+6

any of the specifications of error advanced by the Petition-
ers and the petition for a writ of certiorari should be
denied.

Dated. Phoenix, Arizona, March 11, 1946.
Respectfully submitted

Joun L. SuLLIvAN

Attorney General

Capitol Building

Phoenix, Arizona
Attorney for Respondents Sidney P. Osborn,
Governor, Ana Frohmiller, State Auditor,
and William T. Brooks, State Treasurer,
constituting the Loan Commissioners of
the State of Arizona; William T. Brooks,
State Treasurer, and Ana Frohmiller,
State Auditor of the State of Arizona.

Epwin BeaucHAamMp
County Attorney of
Maricopa County

407 County Courthouse
Phoenix, Arizona

Lesiiz C. Harpy
Special Counsel for
Maricopa County
Luhrs Tower, Phoenix, Ariz.

and
Grorce HERRINGTON
Orrick, Dautauist, NEFF,

Brown & HerrineTon

405 Montgomery Street,

San Francisco 4, Calif.
Attorneys for Respondents Maricopa County,
John A. Foote, Ed Oglesby and Phil Isley,
constituting the Board of Supervisors of
Maricopa County, Arizona.

Lesuie C. Harpy,

Grorce HerrincTon,
Of Counsel.

(APPENDIX FOLLOWS)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386416_0484%3A5. Public record. Not legal advice.