REVIEW AND COMMENTS ON THE AUDIT REPORT
May 6, 2005
From: James Bynum
PO Box 682
Smithville, Mo. 64089
(816) 699-3975
Re: April 26, 2005 Audit Report to Clay County Collector
Birmingham Drainage District
As I understand it, Clay County's current Birmingham Drainage District audit report to the Clay
County Collector only addresses the period 2004-2005. However, it is a serious concern when
the audit report indicates the county is unsure if the district even exists. The audit report states, It
is our opinion that the Birmingham Drainage District appears to exist based on a 2004 court case.
As a Clay County taxpayer, I am concerned about the tax liability burden the officials of Clay
County may have placed on the taxpayers county wide by failing to verify legal authority to collect
monies for, and pay out to, a dead drainage district which ceased to exist in 1963. The audit
report states that Clay County paid out $731,855.43 in 2004 and 2005 to unknown persons
claiming to operate the dead district within the city limits of Kansas City. According to references
in the audit report there has been no legal authority to collect or pay out district maintenance
taxes since December 22, 1963 when the district ceased to exist as a legal corporate entity.
The audit report does note the fact that: "A 1923 Supreme Court ruling which notes a state
constitutional prohibition against a drainage district being formed within the city limits of Kansas
City on a petition by landowners."
It would also appear that the audit report factual compiler missed the July 21, 1950 letter in the
Birmingham Drainage District file from the Birmingham Drainage Distinct attorney (Alan Wherritt)
to Corps of Engineer showing the District knew it would not be able to extend its charter if or
when Kansas City extended its city limits:
"In re: East Bottoms Drainage & Levee District Meriweather et al, vs Kansas City,
259 S.W., page 89."
"In the proceedings to get a plan of reclamation the City of Kansas City protested
that it alone had exclusive power to build levees and construct drains within the city
limits and that therefore the prayer of the petition should not be granted. The trial judge
made that finding in accordance with the contentions of Kansas City, Missouri and
dismissed the petition to form a district. The Supreme Court of Missouri in passing on
the matter said that it was their opinion that Kansas City had exclusive jurisdiction
over levees and drainage within the City Limits, --
The audit report does note Clay County is aware that Kansas City extended the city limits to
encompass the District at least a year before the District ceased to exist in December 1963.
1 However, we note the area encompassed by the Birmingham Drainage District
was not annexed by Kansas City until 1962, long after the District had been
formed
The audit report compiler failed to note the fact that as late as 2002, the Secretary of State
carried the Birmingham Drainage District on its records as a dead corporation. This document is
in the County's files on the district.
2002, July 11
Secretary of State - Abstract of Corporate Record
Charter Number D00000049 State of Incorporation Missouri
Name of Corporation Birmingham Drainage District
Date Incorporated Dec. 22, 1913
Status Inactive - Charter expired on Dec. 22, 1963
[Kansas City Court of Appeals ruling in Watts v Gross:
"where a corporate charter expired by the passage of time as limited in such charter, the
corporation is both de jure and de facto dead;"]
The audit report does note the Articles of Association to reorganize the drainage district within
the city limits of Kansas City on a petition of landowners seven years after the district ceased to
exist in spite of the fact the principles had documented the state constitutional prohibition against
a drainage district being formed within the city limits of Kansas City on a petition by landowners."
1 Articles of Association of Reorganized Drainage District (Birmingham
Drainage District) filed 9/29/1970 – This document identified the name of the
district, the length of existence (50 years), and the boundaries. It was signed
by the members of the district with identified parcels of land ownership by
each person.
Furthermore, the audit report does note: A Howard County Circuit Court finding that a levee
district which had gone out of existence due to the expiration of the specified term of corporate
existence would be required to liquidate the district as a public corporation, pay its debts and
return the rest of the money to the taxpayers. (Cause 214, Watts vs Gross, legal file item 27).
The audit report compiler failed to note the Kansas City Court of Appeals ruling on the term of
life for a corporation in the same case and in the same file:
In Watts v. Gross, the Kansas City Court of Appeals ruled that when the specified term of life of a
district authorized by the court ended, "such district ceased to exist" "and after such date action
of those who continue functions of the district was without statutory authority." As a result, "the
land owners within the district were in the same situation as if there had never been a drainage
district and they could not organize a new district by attempting to comply with the reorganization
statutes then in existence." Furthermore, the court states, "As a consequence, the holdings of
meeting of property owners within the district, the election of officers, the levying and collection of
levee district taxes and the expenditure of monies derived therefrom was without legal authority."
Cited as 468 S.W. 2d. 223.
Furthermore, the audit report appears to be based on incomplete information supplied by the
Circuit Clerk's Office and a complete disregard by the court for the "state constitutional
prohibition against a drainage district being formed within the city limits of Kansas City on a
petition by landowners," as well as the federal legal requirement "to liquidate the district as a
public corporation, pay its debts and return the rest of the money to the taxpayers."
:
Reorganization document dated 11/18/1970 – The court decreed that the Birmingham Drainage
District is reorganized as a public corporation of the State of Missouri for a term of 50 years.
Reorganized districts--articles of association.
242.080. 1. Any drainage district heretofore organized and any district that is now
in process of organization or any drainage district that may hereafter be organized
under any previous or existing law of this state may organize under the provisions of
sections 242.010 to 242.690, and after so organized shall be entitled to the benefits of
all of the provisions of said sections and any or all laws
It would appear that the Circuit Clerk failed to inform the compiler of the failure of the court to
follow Missouri statutes, which states that only an existing drainage district may be reorganized.
The Birmingham Drainage District had been dead for seven years.
242.120. When an existing drainage district has been reorganized
under sections 242.010 to 242.690 the board of supervisors will not
be required to follow such steps or requirements of sections 242.010
to 242.690 as are inconsistent with or rendered unnecessary, by the
work that has already been done in the district; -----
Furthermore, the Circuit Clerk failed to inform the compiler that the clerk failed to send the court
decree to the Secretary of State within the 60 day time limit required by state law to create a
legal corporation, since this would cause the court to directly violate the state constitutional
prohibition against a drainage district being formed within the city limits of Kansas City on a
petition by landowners."
242.040.3. Within sixty days after the said district has been declared a
corporation by the court, the clerk thereof shall transmit to the secretary
of state a certified copy of the findings and decree of the court incorporating
said district, and the same shall be filed in the office of the secretary of state
in the same manner as articles of incorporation are now required to be filed
under the general law concerning corporations.
Moreover, it would appear that the Circuit Clerk failed to inform the audit report compiler of the
1970 documents filed in court in an attempt to get the life of the Drainage District extended, eight
years after Kansas City incorporated the district and seven years after district charter expired.
The court would not and could not extend the life of the district at that time.
The report does brings out a surprising fact. Apparently, unknown to the majority of land owners
within the district, and the City of Kansas City, Missouri, a court extended the life of the dead
district for another 80 years.
Finding #6 – It is our opinion that the Birmingham Drainage District appears to exist based on
Case Number CV1012557CC whereby the court overruled all objections to the extension of the
corporate existence of the drainage district, and found that the corporate existence of the
drainage district should be extended in order to meet existing obligations under a lease which
expires 2/26/2085
Case Number CV1012557CC – In the Matter of the extension of the corporate life of the
Birmingham Drainage District – A judgment was rendered by the Honorable James Welsh. A
hearing was held on 12/17/2004 on the petition of the supervisors of the Birmingham Drainage
District for an extension of the corporate existence of the drainage district until 2/16/2085. The
court overruled all objections to the extension of the corporate existence of the drainage district,
and found that the corporate existence of the drainage district should be extended in order to
meet existing obligations under a lease which expires 2/26/2085.
The audit report also makes reference to a court action in which this taxpayer was involved
Kansas City v. James Bynum et al. The audit report writer appears to be misinformed as to the
nature of the court action which only recognized that the Birmingham Drainage district was the
owner of record for the land taken in 1916 to build the levee.
1 we note the Clay County Circuit Court has on several occasions recognized
the legal and ongoing existence of the Birmingham Drainage District and the
taxpayer was a party in at least one of these actions.
A second court action the audit report appears to refer to is a 1995 Circuit Court Order on
readjustment for assessment of benefits for the Birmingham Drainage District. That was a very
strange court action brought by individuals and corporations. It appears the lead petitioner
mentioned in the case to raise taxes didn't have the acre of land necessary to even vote in a
drainage district election.
As I understand, two petitioners who didn't have enough land to vote in drainage
district elections were on the Board of Directors for the Village of Birmingham, two
petitioners have claimed to be on the Board of Supervisors for the dead Birmingham
Drainage District, plus two corporation petitioners have claimed to have
representatives on the dead district Board of Supervisors in spite of state statutes
which prohibited such corporate representatives from serving in that capacity.. (see
Attorney General's Opinion 39-2002)
It is even more interesting to find in the Summary of the Committee Version of the Bill
HB 1085 -- DRAINAGE DISTRICTS. The summary states the only witness before the committee
was the Birmingham Drainage District who testified to get the prohibition against corporate
representatives on a drainage district Board of Supervisors overturned in the legislature.
The documents in the county records confirm:
1 a state constitutional prohibition against a drainage district being formed
within the city limits of Kansas City on a petition by landowners."
2 The Birmingham Drainage District Charter expired on Dec. 22, 1963
3 landowners could not organize a new district by attempting to comply
with the reorganization statutes then in existence
4 a federal requirement to liquidate the district as a public corporation,
pay its debts and return the rest of the money to the taxpayers."
5 the holdings of meeting of property owners within the district, the
election of officers, the levying and collection of levee district taxes
and the expenditure of monies derived therefrom was without legal authority
6 someone acting without legal authority has certified to the county collector
the obligation to collect taxes and pay the taxes out of county funds
to unknown person or persons.
The audit report also confirms the county must ensure there is legal obligation to collect taxes
and that the monies are only paid out for all lawful, true, just and legal accounts, demands and
claims of every kind and character.
Clay County Collectors office
Finding #1 – It is our opinion that the Collector must comply with Missouri Revised Statute
242.490 - Levy of maintenance tax--procedure
The maintenance tax shall be apportioned upon the basis of the net assessments
of benefits accruing for original construction or subsequently adjusted
reassessments, shall not exceed twenty percent thereof in any one year and
shall be
certified to the collector of the revenue of each county in which lands of the district
are situated in the same book in like manner and at the same time as the
annual installment tax is certified, but in a separate column, under the
heading "maintenance tax".
Finding # 5 – In our opinion, we believe that Clay County Collector must comply with Missouri
Revised Statute 52.275 as shown below.
Drainage and levee tax commissions.
52.275. The county and township collectors for collecting taxes for drainage and levee districts
shall collect on behalf of the county and pay into the county general fund the following amounts:
in counties of the first class,---
County Auditor Statute
He shall audit the accounts of all officers of the county annually or upon their retirement from
office. The auditor shall audit, examine and adjust all accounts, demands, and claims of every
kind and character presented for payment against the county, and shall in his discretion approve
to the county commission of the county all lawful, true, just and legal accounts, demands and
claims of every kind and character payable out of the county revenue or out of any county funds
before the same shall be allowed and a warrant issued therefore by the commission.
In Summary
As I understand the audit report, the county intends to continue to collect taxes for a dead
drainage district under a false certification with: 1) a state constitutional prohibition against it
operating in Kansas City; 2) a federal requirement to liquidate the district as a public corporation,
pay its debts and return the rest of the money to the taxpayers; and 3) pay out the monies to
some unknown person or persons without legal authority to spend it.
Meanwhile, the Clay County Collector will continue to comply with those statutes that require her
to collect maintenance taxes for the district until county officials are informed by a court of law or
a vote of the people to do away with the district.
Respectfully submitted,
Jim Bynum