Brink v. Kansas City
| Decision Date | 13 June 1949 |
| Docket Number | 40918 |
| Parties | Arthur T. Brink, Trustee, Respondent, v. Kansas City, Missouri, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court; Hon. Ben Terte, Judge.
Reversed and remanded (with directions).
Plaintiff as trustee for a large number of landowners obtained a judgment against Kansas City for the recovery of payments made upon special assessment tax bills issued on account of the construction of the first section of the Brookside sewer. Previous decisions held the tax bills against the second section of the sewer were fraudulent and void. Both sections of the sewer were involved in the same fraudulent conspiracy and plaintiff failed to either plead or prove that the landowners had no knowledge of the fraud until less than five years before the suit was brought. And the evidence indicated that they had such knowledge. The statute of limitations would not be tolled on the theory of duress or that there was a fiduciary relationship. Reversed and remanded.
David M. Proctor, City Counselor, John J. Cosgrove and Benj. M. Powers, Associate City Counselors, for appellant.
(1) The cause of action accrued upon payment of the tax bills. Sec. 1014, R.S. 1939; 54 C.J.S. 9, sec. 108; 54 C.J.S. 280; 54 C.J.S. 11, sec. 109; Coleman v. Kansas City, 353 Mo. 150, 182 S.W.2d 74; Womack v. Callaway County, 159 S.W.2d 630; Ottenad v. Mt. Hope Cemetery, 176 S.W.2d 62. (2) The running of the statute of limitations does not wait until the illegal character of the tax has been judicially determined. Beecher v. County, 2 N.W. 1037; Sioux City & St. P. Ry. Co. v. O'Brien County, 92 N.W. 857; Broadwell v. Board of Commissioners, 211 P. 1040; Sperry v. Mattson, 288 P. 755; Boston Safe Deposit Co. v. Boyd, 32 P.2d 218; Simmons v. Wisconsin Tax Comm., 244 N.W. 610. (3) The property owners could have filed individual actions, or a joint action such as the one at bar, and procured a stay thereof until the decision in the Ruckels case and were therefore not under duress. 1 C.J.S. 1406, sec. 133; State ex rel. U.S. Fire Ins. Co. v. Terte, 351 Mo. 1089, 176 S.W.2d 25; Marlay v. Norman Land Co., 232 S.W. 704; Sharkey v. Kiernan, 97 Mo. 102. (4) The court erred in allowing interest on the respective claims from the date of payment instead of from the date of demand. 47 C.J.S. 59, sec. 147; Coleman v. Kansas City, 353 Mo. 150, 182 S.W.2d 74; Coleman v. Kansas City, 348 Mo. 916, 156 S.W.2d 644; Sherman v. Life Ins. Co., 91 Mo. 139, 236 S.W. 634; Simmons Hdwe. Co. v. St. Louis, 192 S.W. 394.
Donald W. Johnson, Alvin C. Trippe, Hale Houts and Hogsett, Trippe, Depping, Houts & James for respondent.
(1) The causes of action are "for relief on the ground of fraud" and did not accrue so as to start the running of the five-year statute of limitations under Section 1014, R.S. 1939, "until the discovery by the aggrieved party (parties) . . . of the facts constituting the fraud." All or most of the causes of action were sued upon within less than five years from the date the facts constituting the fraud were or could have been discovered and therefore accrued within five years from the date sued upon. The accrual of the causes of action is governed by the fifth clause of Section 1014, R.S. 1939. 53 C.J.S. 1064-6; Ludwig v. Scott, 65 S.W.2d 1034; Fitzpatrick v. Stevens, 114 Mo.App. 497, 89 S.W. 897; Denny v. Guyton, 327 Mo. 1030, 40 S.W.2d 562; Foster v. Petree, 347 Mo. 992, 149 S.W.2d 851; Hyatt v. Wolfe, 22 Mo.App. 191; Selle v. Wrigley, 233 Mo.App. 43, 116 S.W.2d 217. (2) Avoidance of limitation under the fifth clause of Section 1014 was pleaded and proved. Womack v. Callaway County, 156 S.W.2d 630; Monmouth College v. Dockery, 241 Mo. 522, 145 S.W. 785; Civil Code, sec. 82. (3) The facts constituting the fraud were concealed by the City. Monmouth College v. Dockery, 241 Mo. 551; Selle v. Wrigley, 233 Mo.App. 43, 116 S.W.2d 217; Steckard v. City of Saginaw, 22 Mich. 104; Bridgeport Hydraulic Co. v. City of Bridgeport, 103 Conn. 249, 130 A. 164. (4) A fiduciary relation existed. Foster v. Petree, 347 Mo. 992, 149 S.W.2d 851; Ruckels v. Pryor, 174 S.W.2d 199. (5) The taxpayers had no means of discovering the fraud. Osler v. Joplin Life Ins. Co., 164 S.W.2d 295; Denny v. Guyton, 327 Mo. 1030, 40 S.W.2d 562; United States v. Diamond Coal Co., 255 U.S. 323; United States v. Woolley, 262 F. 518; Marbourg v. McCormick, 23 Kan. 38; Civil Code, sec. 114. (6) The statute of limitations was also tolled as to all of the claims by duress. The cost of litigation was such that plaintiff's assignors were individually without remedy and a reasonable opportunity to assign their claims for a single action by plaintiff-trustee first arose within less than five years from the time the last claim involved was joined in the petition. Brink v. Kansas City, 355 Mo. 860, 198 S.W.2d 710; 54 C.J.S. 200; Womack v. Callaway County, 159 S.W.2d 630; Coleman v. Crescent Insulated Wire & Cable Co., 350 Mo. 781, 168 S.W.2d 1060; Brink v. Kansas City, 217 S.W.2d 507. (7) Respondent concedes that by the authority of Brink v. Kansas City, 217 S.W.2d 507, 511, plaintiff is limited to interest from the date of suit.
The defendant Kansas City appeals from a judgment of the circuit court of Jackson County in favor of the plaintiff-respondent Brink as trustee for a large number of realty owners in the city, for $ 64,077.12 and interest. The principal amount is the aggregate of sums long since severally paid by the realty owners in discharge of special assessment taxbills against their respective tracts for the construction of the first section of the Brookside sewer. Recovery of those payments is sought on the theory that the special assessment proceedings were fraudulent and void because of collusive bidding by sewer contractors at the letting and conspiracy between the contractors and the city officials.
The appellant city contends chiefly, that all of the realty owners' claims were and are barred by the five year statute of limitations, Sec. 1014, R.S. 1939, Mo. R.S.A. In addition it asserts that: (1) the evidence of fraud was circumstantial, speculative and insufficient; (2) the trial court erred in allowing interest on the claims from the date of payment instead of the date of demand (by bringing this suit), which point respondent concedes; (3) the suit was not in equity but in assumpsit for money had and received, by reason of which the trial court erred in denying the city a jury trial.
The respondent's chief answering contention is that since the case involves fraud it is covered by the fifth subdivision of Sec. 1014, supra, which provides that "an action for relief on the ground of fraud . . (is) deemed not to have accrued until the discovery by the aggrieved party, at any time within ten years, of the facts constituting the fraud." (Italics ours). Hence he maintains the five year limitation did not begin to run until the fraud was discovered -- which he asserts was less than five years before this suit was brought on August 21, 1944, as to most of the 952 causes of action sued on. He further contends the fraud was concealed by the city; that a fiduciary relation existed between it and the realty owners; that the latter had no means of discovering the fraud; and that the statute of limitations was also tolled by duress (as later explained).
The special assessment proceedings in this case were begun on March 22, 1937. A construction contract was let on September 28, 1937. The sewer was completed on January 15, 1938. The special taxbills were certified and issued on February 11, 1938, and were due in 30 days, or, if not then paid in full they became payable in four equal annual installments bearing 7% interest per annum from date of issue to maturity, and 8% interest thereafter. Nearly 6-1/2 years after the due date of the taxbills the instant action was instituted on August 21, 1944, as stated above, to recover payments theretofore made by the property owners on the taxbills. The third amended petition on which the cause was tried, was filed on February 10, 1947, and was amended by adding 54 new counts and defendants, on December 15, 1947. Of the 952 taxbills involved in that petition, 782 had been paid in full (as we understand) more than five years before the institution of the suit. And on 113 taxbills partial payments were made before that time. Ten counts were dismissed. Thus it appears there were 47 taxbills upon which no payments had been made before the institution of this suit, if our understanding is correct.
Respondent's legal theory that the appellant city is obligated to refund the amounts paid on the taxbills is based mainly on the first two of the three cases cited below; [1] and the city's theory of non-liability is based on the third case. The chronology of these three decisions and their holdings must be kept in mind. The first, or Ruckels, case was a class suit in equity brought on August 14, 1939, by a realty owner (in which 208 others later joined) to cancel the contract for the construction of the second section of the Brookside sewer and the special assessment taxbills therefor, on the same grounds as here -- collusive bidding and fraudulent conspiracy. The decree of the trial court was reversed because of that fraud, and the taxbills were ordered cancelled by the judgment of this court on July 6, 1943.
In the second case cited [1] by respondent, hereinafter called the "first Brink case", the action was brought by the present respondent Brink on February 25, 1944 a little over seven months after the reversal of the Ruckels case by Division I of this court. It was a class action for money had and received in behalf of about 400 realty owners on the same second section of the Brookside...
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