City of Chickasha v. Foster

• Decision Date: 04 June 1935
• Docket Number: Case Number: 24482
• Citation: 48 P.2d 289,1935 OK 625,173 Okla. 217
• Parties: CITY OF CHICKASHA v. FOSTER
• Court: Oklahoma Supreme Court

1935 OK 625

48 P.2d 289

173 Okla. 217

CITY OF CHICKASHA v. FOSTER

Case Number: 24482

Supreme Court of Oklahoma

Decided: June 4, 1935

Syllabus

¶0 1. Municipal Corporations - Power of Municipalities to Issue Bonds or Other Like Securities Dependent upon Legislative Authority.

Municipalities cannot issue bonds or other like securities unless the power to do so is conferred by legislative authority, either expressed or clearly implied, and any doubt as to the existence of such powers is resolved against its existence.

2. Same - Street Improvements by City of Chickasha Under Act of Congress - Improvement Certificates Issued Held not General Obligation of City.

Under section 26, Act of Congress approved April 26, 1906 (34 Stat. at L. 137), the city of Chickasha was authorized and empowered to order improvements of streets and alleys within said city and to make assessments for the whole of such cost against abutting property, which assessments would become liens and be enforceable as liens for taxes. In the alternative the city was empowered to assume only the cost of improving street intersections or crossings as a general obligation of the city. The issuance of interest-bearing installment certificates was authorized. The city did not assume as a general obligation the cost of improving street intersections or crossings, but it appears that the entire cost of improvements was assessed against abutting property. Held, the authorization under which the improvements were made and the certificates were issued did not vest in the city power to assume payment or obligation to pay in any event the expense of such improvements as a general liability and that improvement certificates reciting the authority under which they were issued charged with notice the purchaser of such certificates as to the authority and limitations under which they were issued.

Appeal from District Court, Grady County; Will Linn, Judge.

Action by Albert V. Foster against the City of Chickasha. Judgment for plaintiff, and defendant appeals. Reversed.

J.D. Carmichael and Barefoot & Carmichael, for plaintiff in error.

Bailey & Hammerly, for defendant in error.

RILEY, J.

¶1 Defendant in error, plaintiff below, recovered a judgment against the city of Chickasha in the sum of $2,760.35, and interest from July 25, 1932, based on five street improvement certificates, in default, owned and held by plaintiff and issued by the city of Chickasha, dated February 6, 1908, and delivered to the contractor who constructed the grading, curbing, guttering, and paving in district No. 2 of said city.

¶2 A jury being waived, the cause was tried to the court upon an agreed statement of facts. It thus appears that on January 2, 1908, the defendant city and Cleveland Trinidad Paving Company entered into a contract for the improvement mentioned.

¶3 For and in consideration of the construction by the contractor, the city agreed to pay a stipulated sum, and it was provided that:

"Said payments to first party shall be made in improvement certificates to be issued by said city in anticipation of assessments against the lots and parcels of land abutting upon the portion of said street so improved, under and pursuant to the Act of Congress approved April 26, 1906 entitled 'An act to provide for the final disposition of the affairs of the Five Civilized Tribes in the Indian Territory and for other purposes,' said certificates to be of the form and wording and be authorized by an ordinance of the city council of said city, the same as the form of ordinance hereto attached, including the form of such certificate. * * *"

¶4 An assessing ordinance, No. 266, was subsequently enacted, and thereafter and on March 6, 1908, by ordinance No. 271, provision was made for the issuance of improvement certificates "to pay the cost of street improvements in street improvement district No. 2 in the city of Chickasha," and section 5 of said ordinance was worded to read as follows:

"Section 5. That to provide for the payment of said certificates and the interest thereon collections shall be made by said city, of the several installments of said assessments according to law, and in case of any shortage on the amount of any such assessments collected in any year, the city council shall, at the next annual levy of taxes, levy a tax upon all the taxable property within said city, sufficient to make up any shortage in the collection of said assessments, and collect said tax according to law; provided that the city of Chickasha hereby reserves and does not waive any right to collect any such amounts so paid on account of such shortage."

¶5 The form of the improvement certificate, approved by the ordinance, contained the following statement:

"This certificate is one of a series of like date and tenor issued by said city of Chickasha for the purpose of paying the amount due for cost of construction of street improvements in street improvement district No. 2, legally established in said city under and by authority of and in compliance with the provisions of section 26, of an Act of Congress, entitled, 'An act to provide for the final disposition of the affairs of the Five Civilized Tribes in the Indian Territory and for other purposes', approved April 26, 1906, and in compliance with the Constitution of the State of Oklahoma, and other laws in force in the said state, and in pursuance of ordinances of said city duly passed, approved, recorded, authenticated and published has been duly made for the collection annually of taxes and assessments sufficient to pay the interest to accrue on this certificate, as it falls due, and to constitute a sinking fund for payment of the principal sum at maturity, and that all acts, conditions and things required to be done and to exist precedent to and in the making of said improvements, and in the issuance of this certificate, in order to make the same a legal, valid and binding obligation of said city, have been properly done and performed, and do exist in regular and due form as required by said Constitution and laws."

¶6 It is agreed by the parties that the laws in force in the Indian Territory immediately prior to statehood are controlling under the provisions of sections 1 to 12, inclusive, of the Schedule to the Constitution of the state of Oklahoma.

¶7 The contract, ordinances, and improvement certificates all refer to the Act of Congress, approved April 26, 1906 entitled, "An act to provide for the final disposition of the affairs of the Five Civilized Tribes in the Indian Territory and for other purposes", as authority for the improvement and issuance of certificates in payment therefor. Section 26, as a part thereof, reads:

"That in addition to the powers now conferred by law, all municipalities in the Indian Territory having a population of over 2,000 to be determined by the last census taken under any provision of law or ordinance of the council of such municipality, are hereby authorized and empowered to order improvements of the streets or alleys; * * * and said council is empowered and authorized to make assessments and levy taxes * * * for the purpose of grading, paving, macadamizing, curbing, or guttering streets and alleys or building sidewalks upon and along any street, roadway or alley within the limits of such municipality, and the cost of such grading, paving, macadamizing, curbing, guttering, or sidewalk constructed, or other improvements under authority of this section, shall be so assessed against the abutting property as to require each parcel of land to bear the cost of such grading, paving, macadamizing, curbing, guttering, or sidewalks, as far as it abuts thereon, and in case of streets or alleys to the center thereof; and the cost of street intersections or crossings may be borne by the city or apportioned to the quarter blocks abutting thereon upon the same basis. The special assessments provided for by this section and the amount to be charged against each lot or parcel of land shall be fixed by the city council or under its authority and shall become a lien on such abutting property, which may be enforced as other taxes are enforced under the laws in force in the Indian Territory. The total amount charged against any tract or parcel of land shall not exceed 20 per centum of its assessed value, and there shall not be required to be paid thereon exceeding one per centum per annum on the assessed value and interest at six per centum on the deferred payments.

"For the purpose of paying for such improvements, the city council of such municipalities is hereby authorized to issue improvement script or certificates for the amount due for such improvements, said script or certificates to be payable in annual installments and to bear interest from date at the rate of six per centum per annum but no improvement script shall be issued or sold for less than its par value. All of said municipalities are hereby authorized to pass all ordinances necessary to carry into effect the above provisions and for the purpose of doing so may divide such municipality into improvement districts."

¶8 For reversal of the judgment it is contended that:

(1) The Cleveland Trinidad Paving Company agreed to and did make the improvements in question and agreed to and did accept, at face value, the certificates in anticipation of assessments against the lots and parcels of land abutting upon the streets so improved, in full and complete satisfaction of the contract, and the defendant city did not assume, and it was not intended that it should incur, any direct liability under the contract.

(2) The defendant city of Chickasha was without power to incur an indebtedness payable in 20 years for the purpose of paving its streets, and without authority to issue the improvement certificates and make them a liability of and direct charge against the defendant city.

¶9 We shall consider...