Assessment Bond Service, Inc. v. W. R. Johnston & Co.

• Decision Date: 27 March 1956
• Docket Number: No. 36592,36592
• Citation: 296 P.2d 959
• Parties: ASSESSMENT BOND SERVICE, Inc., H. C. Hovenden, The Eton Company, a partnership, Plaintiffs in Error, v. W. R. JOHNSTON & COMPANY, a corporation, et al., Defendants in Error.
• Court: Oklahoma Supreme Court

Page 959

296 P.2d 959

1956 OK 112

ASSESSMENT BOND SERVICE, Inc., H. C. Hovenden, The Eton Company, a partnership, Plaintiffs in Error, v. W. R. JOHNSTON & COMPANY, a corporation, et al., Defendants in Error.

No. 36592.

Supreme Court of Oklahoma.

March 27, 1956.

Rehearing Denied May 2, 1956.

Syllabus by the Court.

1. The provision of 11 O.S.1941 § 242, that the running of the period of limitation therein fixed 'shall be absolute bar to any action or proceeding brought thereafter, whether the same is plead as a defense or not, and the property against which such bonds theretofore represented a lien shall thereafter be, by operation of law, absolved of any lien or liability on account of said bonds', is but a part of, and is intended to make effective, the statute of limitations therein, and the same does not unconstitutionally impair the obligation of the contract, not does it violate the due process clause or the equal protection clause of either the State or Federal Constitution.

2. Where the holders of street improvement bonds commence action to foreclose in the U. S. Cistrict Court but secure only a declaratory judgment holding that the lien securing the bonds is valid and enforceable, despite the fact that the foreclosure action is barred by the applicable statutes of limitations, and secures a decree declaring Section 242, 11 O.S.1941, commonly known as the 1939 Act, invalid, such judgment is not binding upon this Court and owners of properties affected may maintain an action to remove cloud and quiet title against an apparent but barred and unenforceable lien against their properties in the paving district.

3. Where a party has a choice of remedies and elects to pursue a particular remedy, he is barred from pursuing any other than the one selected.

Appeal from District Court of Murray County; W. J. Monroe, Judge.

Action by Guy A. Calame and others against W. R. Johnston & Company and others to remove cloud and quiet title to lots in Paving District No. 16, in the City of Sulphur, Oklahoma. Defendants are holders of paving bonds issued by the City of Sulphur, the last of which matured October 1, 1935, and were secured by special assessment liens against the properties of the plaintiffs. Defendants pled a declaratory judgment by the U. S. District Court for the Eastern District for Oklahoma, holding Section 242, 11 O.S.1941, invalid and decreeing that the lien securing the bonds was a valid and subsisting lien against the properties of the plaintiffs, despite the fact that the Federal court action was not filed until more than 8 years after the maturity date of the bonds. Judgment for plaintiffs and defendants appeal. Affirmed.

Arnold T. Fleig, Oklahoma City, for plaintiffs in error.

T. H. Ottesen, Sulphur, for defendants in error.

HALLEY, Justice.

On November 17, 1952, Guy A. Calame, and others, as owners of lots in Paving District No. 16, in the City of Sulphur, Murray County, Oklahoma, filed this action to quiet title against various defendants as the holders of Street Improvements Bonds issued by the City of Sulphur, March 16, 1926, as authorized by Chapter 173, p. 278, S.L.1923, to be paid by special assessments levied against the various properties in the paving district. The bonds were numbered 1 to 49, inclusive, and only the first 12 had been paid, the last on April 3, 1931. All of the bonds matured October 1, 1935.

Plaintiffs prayed that the lien of the special assessments levied against their respective properties for the years 1926 to 1935, inclusive, be cancelled and their respective titles quieted because the bondholders had failed to commence an action to foreclose delinquent assessments within 3 years after the maturity of the bonds as provided by the 1939 Act of the Legislature, appearing as Section 242, 11 O.S.1941, and because they had not agreed to accept street improvement refunding bonds as provided by the Act last mentioned and had failed to take any action to collect delinquent assessments which had been extinguished by the 1938 Act. Also negligence and laches were pleaded.

The defendant bondholders alleged that the special assessments to pay their bonds were legally levied, due and unpaid. They further alleged that the 1939 Act on which the plaintiffs relied was void and unconstitutional and had been so decreed by a judgment of the United States District Court for the Eastern District of Oklahoma on May 15, 1945, in an action in which the present property owners were defendants and involving the same properties and assessments here involved.

Defendants further alleged that the judgment of the Federal court further decreed the invalidity of the 1939 Act, which left the liens of the bondholders against the various properties in District 16 valid and subsisting liens, in spite of the 1939 Act and plaintiffs' pleas of limitations and laches raised by the property owners in the Federal court action were not applicable and that even if the 1939 Act had not been nullified the attempted sale of the properties by the County Treasurer was sufficient to preserve the lien securing the bonds, despite the fact that the attempted sales included only ad valorem taxes but not the amounts of the special assessments, which remained a valid lien.

It was further contended that by the Federal court action the bondholders had sought to foreclose delinquent special assessments, or in the alternative had prayed for a declaratory judgment declaring the validity of their liens and that the foreclosure being denied, the declaratory judgment was granted decreeing the 1939 Act void and the bondholders' lien valid. It appears that the Federal court denied foreclosure because of the general statutes of limitations as discussed in City of Bristow ex rel. Hedges v. Groom, 194 Okl. 384, 151 P.2d 936. We note that the Federal court judgment suggested that the remedy of the bondholders was by an action of mandamus to compel the County Treasurer to collect the money due to satisfy the bonds.

The trial judge made complete findings of fact and conclusions of law in the case before us. He found that the bondholders had not made any effort to secure refunding bonds, and had made no effort to force the County Treasurer to sell the properties for delinquent paving assessments and had made no effort to enforce the Federal court judgment. The court concluded:

That Sections 242 and 242p, 11 O.S.1951, were not affected by the Federal court judgment wherein Section 242, 11 O.S.1941, was held void '* * * in so far as it purports to extinguish by lapse of time' the liens and assessments and that by Section 23, 42 O.S.1951, the liens for paving assessments and bondholders' liens were extinguished by lapse of time during which an ordinary action to enforce the principal obligation could have been filed, or within 4 years after the bonds became due on October 1, 1935, so that the action was barred when the federal court action was filed.

The trial court further concluded that the statute of limitations and the dormancy statute of Oklahoma, Section 735, 12 O.S.1951, bar any remedy of the bondholders since the Federal court judgment is subject to the dormancy statute of Oklahoma, and that mandamus is the proper remedy to enforce the Federal court judgment, but that such remedy may not now be exercised because that judgment has become dormant and subject to laches and equitable estoppel. The Federal court judgment was never filed in Murray County as required by the law of Oklahoma and the Federal Judiciary Code and hence is not before the Court and that more than 8 years have elapsed since its rendition and the bondholders have done nothing whatever to enforce that judgment.

The court further concluded that the filing of the Federal court case after the action was barred did not toll the operation of the statutes of limitations. The trial court rendered judgment for plaintiffs on February 2, 1954, and defendants have appealed. Only two propositions are submitted. They are as follows:

'1. The trial court erred in its Findings of Fact, Conclusion of Law and in its judgment cancelling the assessment liens and quieting title thereon in the face of the federal court judgment hereinafter described decreeing that the limitations statute, to-wit: Title 11, Sec. 242 to 242-e, O.S.A.1941, was void and unconstitutional.

'2. Even if the 1939 Act had not been nullified, the filing of a foreclosure action in the federal court and/or the unsuccessful attempts of the County Treasurer to sell the properties for the special assessments at tax resale, constitutes a sufficient action to preserve the lien under the 1939 statute.'

Plaintiffs in error point out that immediately prior to enactment of the 1939 limitations Act a special assessments lien, like ad valorem tax liens was not subject to limitations or laches and since it was declared void by the Federal court judgment above referred to with respect to the property here involved, there is no law cancelling the special assessments lien. Under 11 O.S.A.1941, § 103, the special assessment lien was co-equal with the ad valorem tax lien and continued until the special assessments were fully paid.

They claim that Section 23, 42 O.S.A.1941, is not applicable to tax liens but only to contractual liens. That statute is as follows:

'A lien is extinguished by the mere lapse of the time within which, under the provisions of civil procedure, an action can be brought upon the principal obligation.'

It is further contended that reference to the above statute in Board of Education of City of Duncan v. Johnston, 189 Okl. 172, 115 P.2d 132, is mere dictum under the ruling of the court in Bailey v. Oklahoma City, 157 Okl. 96, 11 P.2d 113. This contention appears to be...