Forest Hills Const. Co. v. City of Florissant

• Citation: 562 S.W.2d 322
• Decision Date: 09 January 1978
• Docket Number: No. 59682,59682
• Parties: FOREST HILLS CONSTRUCTION COMPANY, Plaintiff-Appellant, v. CITY OF FLORISSANT et al., Defendants-Respondents, Northwestern Savings and Loan Association, Cross-Defendant-Appellant.
• Court: United States State Supreme Court of Missouri

Page 322

562 S.W.2d 322

FOREST HILLS CONSTRUCTION COMPANY, Plaintiff-Appellant, v. CITY OF FLORISSANT et al., Defendants-Respondents Northwestern Savings and Loan Association, Cross-Defendant-Appellant.

No. 59682.

Supreme Court of Missouri, En Banc.

Jan. 9, 1978.

Rehearings Denied March 13, 1978.

Robert L. Inman, Joel F. Graziani, Clayton, for plaintiff-appellant.

Shulamith Simon, Wm. Guerri, Edwin D. Akers, Jr., St. Louis, for defendants-respondents.

HENLEY, Judge.

This is a declaratory judgment action involving the ownership of $43,200 held in an escrow account by defendant, Northwestern Savings and Loan Association (Northwestern). This amount represents the total of sewer connection fees paid into the escrow account by and in the name of plaintiff, Forest Hills Construction Company (Forest Hills) pursuant to written agreements with defendants, City of Florissant (City) and Metropolitan St. Louis Sewer District (MSD). Forest Hills sought a judgment declaring that it is entitled to the money deposited in escrow, contending that under the law it is the owner thereof. The City and MSD filed a joint answer and a cross-claim. In their answer to Forest Hills' petition they sought a judgment that the City is entitled to the funds in escrow. They did not seek judgment against Forest Hills for dividends earned by the escrow account and paid to Forest Hills or for interest thereon. In their joint cross-claim they sought (1) an order adding Northwestern as a party defendant; and (2) a judgment against Northwestern that it pay the escrow fund to the City "plus accumulated dividends thereon and interest on each payment made to said fund from the date of each payment." Northwestern made no claim to the money; it sought only an order directing that it be authorized to pay it to whomever the court determined was legally entitled thereto. Trial to the court resulted in a judgment (1) against Forest Hills on its petition; and (2) in favor of the City and against Northwestern on the cross-claim that it pay "the escrow fund to the City * * * and any accumulated dividends thereon and interest on each payment made to such fund from the date of each payment." Upon appeal by Forest Hills and Northwestern to the Court of Appeals, St. Louis district, the judgment was modified to provide that the escrow account bear interest from December 18, 1958, the date of a judgment in another action involving the City and MSD. As modified, the judgment was affirmed. We sustained the separate applications of Forest Hills and Northwestern and ordered the case transferred to this court, primarily to review the award of accumulated dividends and interest.

On January 12, 1953, the City adopted its Ordinance No. 391, requiring, inter alia, the payment of a sanitary sewer connection fee of $200 for each home or building erected on any lands annexed by the City subsequent to that date. This fee, to be paid to the City Clerk as a condition precedent to the issuance of a building permit for each home, was required to be deposited in a special fund and used for the construction or repair of a sewage disposal plant. In the event of construction of a main trunkline sanitary sewer, the fund could be used to pay for such construction or to pay bonds issued for that purpose. The ordinance further required that no annexation request be considered until the owners of any lands to be annexed had executed an agreement with the City providing that they would comply.

On February 9, 1954, the people of the city of St. Louis and St. Louis county by their vote approved a plan for organization of MSD. After organization, MSD adopted a policy governing the procedure for applicants seeking approval of subdivision sanitary sewers where trunkline sewers were not available. It also provided for and required payment of $200 for each home or building erected within an area of MSD not then served by a trunkline sewer, this money to be used for the construction of such sewer.

In 1955, Forest Hills and the owner of certain land located outside the corporate limits of the City of Florissant entered into a contract in which Forest Hills agreed to buy the land for the purpose of developing it into a single-family residential subdivision to be known as "Florland." A condition of the contract was that the land be annexed by the City. The annexation was accomplished and the purchase of the land completed. Forest Hills was aware of the sewer fee requirements of Ordinance 391 when it became involved in the purchase of this land.

Pursuant to an agreement dated February 10, 1956, Forest Hills and another land developer installed a temporary basin for sewage from areas they were developing.

By early 1956 a dispute had developed between the City and MSD concerning their respective rights to collect sewer connection fees from subdivision developers. As stated, the City and MSD were each authorized by action of their respective governing boards to collect a connection fee of $200 for trunkline sewer purposes. This dispute resulted in a declaratory judgment action filed in March, 1956, by the City against MSD to determine which one had a right to collect the connection charge.

Confronted with these circumstances, Forest Hills and the City entered into a written agreement on May 1, 1956, concerning such fees for the first 52 lots in Florland subdivision. This agreement (1) recognized the legal dispute between the City and MSD; (2) recited that Forest Hills "does desire to pay to the City * * * or to whomever the Court directs, the said sum of $200.00" per lot; (3) stated the intention of the parties thereto to be that no person (subdivider-developer) should be required to pay more than "one $200.00 tap-in fee per lot in the City"; and (4) stated that they had agreed that Forest Hills "shall pay $200.00 per lot * * * into escrow with Northwestern * * * before the issuance of each building permit by the City * * * and (Northwestern) shall retain said sums until the present litigation between (the City) and (MSD) shall have been finally determined, either by court action or agreement between (the City) and (MSD)." The agreement further provided that should the court determine (1) that MSD has no authority to collect the $200 per lot fee, then Northwestern was required to pay the escrow account to the City, to be accepted and held by the City in accordance with the provisions of Ordinance 391, as amended; but that should the court determine (2) that MSD has such authority, then Northwestern shall pay the escrow account to Forest Hills. Northwestern accepted the escrow agreement and agreed to hold the money paid to it by Forest Hills "under the provisions of this Agreement." MSD was not a party to this agreement. The agreement made no mention of what disposition should be made of dividends earned by this account.

As development of the several parts of Florland Subdivision progressed, two other similar agreements were executed. The first of these, dated March 11, 1959, was executed by Forest Hills, the City and MSD. It recognized (1) that city Ordinance 391 required the payment of $200 by Forest Hills for each home or building erected on the land annexed "as a consideration for the annexation of all lands annexed by the City after passage of (the) ordinance"; (2) that MSD also requires the payment of $200 for each home or building erected within the district "where trunk sewers are not presently available" to "insure the construction of trunk sewers or treatment facilities"; (3) that a dispute exists between the City and MSD involving the right to require payment of the $200 charge which will be determined by the declaratory judgment action then pending between the City and MSD; and (4) that the City and MSD recognize "that it is unfair and unreasonable to impose both payments on each home erected and (that Forest Hills) is willing to pay to * * * (either of them) * * * $200.00 per unit but is unwilling to make more than a single payment of $200.00 per unit." Based upon these premises the parties agreed (1) that Forest Hills would pay to Northwestern, as escrowee, $200 for each unit erected; and (2) upon final determination of the suit between the City and MSD, "the fund so held in escrow shall be paid over by the escrowee in accordance with the final decision of the court," and (a) if in favor of City, the fund "shall be disbursed in accordance with * * * the ordinance," or (b) if in favor of MSD, it would be disbursed as required by "present existing escrow policy of (MSD) * * * ." The second of these two agreements, dated November 13, 1959, was also executed by Forest Hills, the City and MSD. It recognizes that a declaratory judgment was entered December 18, 1958, in the action brought by the City against MSD ¹ and provides (1) that Forest Hills will pay to the City $200 for each home or building erected in the annexed area then being developed (to be deposited in the City's sewage treatment plant fund as required by Ordinance 391, as amended); (2) that both the City and MSD will issue the necessary permits in consideration of this payment, and (3) that the City and MSD have joint jurisdiction of the money thus paid and will use and disburse the same in accordance with the provisions of Ordinance 391, as amended. Northwestern was not an escrowee party to this agreement.

The collection of sewer connection fees was discontinued shortly after the voters of Coldwater Creek Subdistrict of MSD approved in August, 1960, the issuance of bonds to finance the construction of a trunkline sanitary sewer system and a sewage treatment facility.

The total amount deposited in escrow with Northwestern by Forest Hills for permits for erection of homes in Florland subdivision was $43,200. The dividends thereon, the amount of which is not shown by the record, were paid to Forest Hills.

R. M. Keeney, Jr., president of Forest Hills and of Northwestern, testified that preliminary work in...