The following opinion was filed April 24, 1944: On motion for rehearing the parties moved to have the opinion clarified in two respects:
(1) As to the application of sec. 89.80, Stats., it is urged that while the district is unable to pay its bonds, it is a going concern and important to those landowners who have paid their assessment in full and that there is no desire on the part of those landowners to wind up the affairs of the district. *Page 614b
The proceeding under sec. 89.80, Stats., is not a winding-up proceeding in the sense in which that term is ordinarily understood. Here it appears in this case that the district has exhausted its ability to pay its obligations; that there remains on hand certain funds applicable to the payment of bonds. The question is, how that fund should be distributed.
It is considered that sec. 89.80, Stats., is the proper procedure to be followed. We are unable to see how the circuit court can get jurisdiction of this matter in any other way. The procedure here prescribed is special, applicable only to drainage districts. The procedure prescribed in sec. 89.80 should be followed in order that a proper decree of distribution can be made.
(2) On behalf of the bank it is contended that because the time of payment of bonds 177 and 178 was extended, those bonds lost their priority by reason of having the earliest maturity. It is considered that both upon general equitable principles and upon the provisions of sec. 1379 — 31b, 6, Stats. 1921, the bonds of earlier maturity do not lose their priority by reason of the extension of time of payment. Under this section, pursuant to which the bonds were issued, it was specially provided that the commissioners might refund any lawful indebtedness of the district and issue in lieu thereof new notes or bonds of such district payable in such longer time as the court shall deem proper.
Sec. 1379 — 10c, 1, Stats. 1921, provides:
"All proceedings under the drainage-district law are equitable in their nature. . . ."
Where the holder of the bond extends the time of payment for the convenience of the district, there would be little equity in requiring him to surrender his priority. To require him to forego his advantage would not only be inequitable but it would defeat the purpose of the statute which was to aid the district in the financing of the project. *Page 615
The case of Peoples Savings Bank of Evansville v. Finney (1878), 63 Ind. 460, 461, is directly in point. In that case it was held that —
"several promissory notes, maturing successively and secured by the same mortgage on real estate, stand as so many successive mortgages, and have priority in the order in which they mature."
It was further held that —
"the fact that the holder of the note first maturing grants to the mortgagor, upon a valuable consideration, an extension of time beyond the maturing of the succeeding notes, does not give the latter priority over the former."
Both upon reason and authority, it is considered that bonds 73 and 74 have the same priority as bonds 177 and 178 in lieu of which they were issued. We think this clarifies the matters discussed in briefs on motion for rehearing.
By the Court. — Motion denied without costs.