City of Middlesboro v. Terrell

• Decision Date: 11 December 1934
• Citation: 259 Ky. 47,81 S.W.2d 865
• Parties: CITY OF MIDDLESBORO v. TERRELL et ux.
• Court: Kentucky Court of Appeals

81 S.W.2d 865

259 Ky. 47

CITY OF MIDDLESBORO v. TERRELL et ux.

Court of Appeals of Kentucky

December 11, 1934

Rehearing Denied May 28, 1935.

Appeal from Circuit Court, Bell County.

Action by the City of Middlesboro against Charles Terrell and wife. From a judgment in favor of the defendants, the plaintiff appeals.

Judgment reversed for further proceedings in accordance with opinion.

Chas E. Herd, and Robt. J. Watson, both of Middlesboro, for appellant.

Robt. L. Maddox, of Middlesboro, and Jas. S. Golden and Golden, Lay & Golden, all of Pineville, for appellees.

RICHARDSON Justice.

The city of Middlesboro, a city of the third class, in accordance with the authority conferred upon it by section 3458 Kentucky Statutes, adopted ordinances, the regularity of which is not disputed, for the construction of the street, at the expense of the abutting property owners, fronting lots Nos. 31-33, block No. 506, section northeast, owned by "Charles Terrell and wife."

After it was constructed, accepted, and approved by the city's legislative body, within the time fixed by the statute, they exercised the option accorded them by section 3458, and, in consideration of the privilege of paying it by installments agreed not to object to any illegality or irregularity of the taxes, and to pay the same in the manner provided by section 3458 "with specified interest." The city accepted their written proposition. The cost of the construction assessed against their property was $1,611.69, to be paid on the ten-year payment plan, of which they paid $405.33. The installments maturing September 1, 1926, 1927, 1928, 1929 1930, 1931, 1932, and 1933, of $108.82 each were not paid by them as they matured, or at all.

The city paid them out of its general fund as they annually matured and thus acquired title to the bond evidencing the assessment against their property.

On the 2d day of March, 1934, this action was filed by it to enforce the statutory lien on their lots for the satisfaction of the face amount of the bond, with interest, less $405.33, with penalty as authorized by section 3458.

They traversed the petition, in part, and affirmatively pleaded that the first installment for which the city sues matured September 1, 1926, and remained delinquent for more than thirty days; this delinquency for thirty days accelerated the due date of all the other installments for the years 1927, 1928, 1929, 1930, 1931, 1932, 1933, 1934, and 1935, which they averred became due thirty days after September 1, 1926, or October 1, 1926, at which latter date the city's cause of action for all of the installments accrued, and it "did not accrue within five years before the commencement of this action and all the installments were barred by limitation of five years," which they formally pleaded as a bar. In avoidance of the plea of limitation, the city pleaded the agreement of "Terrell and wife" to accept "the ten-year payment plan"; its ownership of the bond and its right of subrogation to that of the original holder.

"Terrell and wife" demurred to its reply which was sustained by the court; the city declined to amend, and elected to stand by its reply. The court decreed that the plea of limitation was a bar to the city's recovery, and dismissed its petition.

Upon this premise, the Terrells earnestly insist the court properly decreed the city's cause of action accrued October 1, 1926, and was barred by the five-year statute of limitation prescribed by section 2515, Kentucky Statutes.

The city concedes that "the right to charge property with the cost of street improvement is purely statutory (Broadway Baptist Church v. McAtee, 8 Bush, 508, 8 Am. Rep. 480)," but contends "that the five year statute of limitation has no application to street assessment liens where by written request of the property owner, arrangements are made to pay the assessment in ten annual installments."

To sustain their respective arguments, the city and "Terrell and wife" cite us to City of Lexington v. Crosthwaite, 78 S.W. 1130, 25 Ky. Law Rep. 1898; City of Lexington v. Wolfolk, 138 Ky. 392, 128 S.W. 104; City of Covington v. Patterson, 191 Ky. 370, 230 S.W. 542; City of Lexington v. Bowman, 119 Ky. 840, 84 S.W. 1161, 85 S.W. 1191, 27 Ky. Law Rep. 286, 651; Jackson's Heirs et al. v. Willson, 226 Ky. 211, 10 S.W.2d 816, 817.

In City of Lexington v. Woolfolk, City of Lexington v. Crosthwaite, and in City of Covington v. Patterson there was no request of, or contract with, the property owner that the assessment be put on a ten-year payment plan. In City of Lexington v. Bowman, the abutting property owners, including Bowman, had requested the cost of the improvement to be paid on the ten-year plan; the lien attached in 1892. Bowman paid two installments and then paid nothing more. In February 1901, he brought an action to have the property declared free of the assessment lien, alleging he had not requested the privilege to pay for the improvement on the ten-year plan; that the lien had attached in 1892 and more than five years had elapsed since the last payment, and consequently the balance was barred by the statute of limitation. The city pleaded as an estoppel the request of the property owners, including Bowman, for the payment of the cost of the improvement on the ten-year plan. We held the plea of estoppel was good and declined to permit Bowman to rely on the five-year statute of limitation. It is apparent that a number of the ten-year installments had not matured five years next before Bowman filed his action. The question was not presented nor determined whether those installments that had matured more than five years before the filing of his action were barred, and those maturing within five years next before the commencement of the actions were not barred by the statute of limitation.

In Jackson's Heirs et al. v. Willson, the installments were payable on the ten-year plan and those sued for had matured within five years next before the commencement of the action; and for this reason a demurrer was sustained to the answer pleading the limitation of five years. In discussing the subject of the statute of limitation, we said: "It is true that, in the absence of request by the property owner for payment on the ten-year bond plan, liability to pay for street improvements accrues on the completion and acceptance of the work, and the cause of action is barred in five years from that time; *** but this rule does not apply where such request is made by the property owner. In such a case the principal and interest are payable in ten installments, and the cause of action does not accrue on these installments until they are due. Hence no installment of principal or interest is barred until after the lapse of five years from the time it is due."

The factual distinction between the Jackson heirs--Willson Case and the pending one, is, in that case the installments sued for had not been due more than five years; whereas, in the pending one, a number of them were due more than five years before the institution of this action. It is conceded that the cited cases do not decide the question here involved, except by analogy.

It seems to be conceded that assessment for street improvements created under section 3458 is not a personal liability, but is imposed only on the property of the abutting owner and is secured by a lien thereon. City of Owensboro v. Hope, 110 S.W. 272, 33 Ky. Law Rep. 426; Meyer v. City of Covington, 103 Ky. 546, 45 S.W. 769, 20 Ky. Law Rep. 239; City of Mt. Sterling v. Montgomery County, 152 Ky. 637, 153 S.W. 952, 44 L. R. A. (N. S.) 57; Cave Hill Cemetery Co. v. Gosnell, 156 Ky. 599, 161 S.W. 980; City of Mt. Sterling v. Bishop, 228 Ky. 529, 15 S.W.2d 416; Moss v. Andrews Asphalt Paving Co., 229 Ky. 419, 17 S.W.2d 255. The parties indulge in a debate in their briefs of the topic of waiving by contract the statute of limitation, a subject which we do not consider material, since the liability of Terrell's property for the cost of the improvement is purely statutory.

Section 3458 contains this language: "In cases where the option to pay in installments is exercised the local tax, with interest at the rate of six per cent. (6%) per annum, shall be payable as follows: One-tenth of the tax, with interest on the entire tax at the time fixed by law for the payment of general city taxes occurring next after the expiration of the thirty days allowed for the payment in cash, and annually thereafter, one-tenth of the entire tax until the whole is paid. At the end of each six months from the time the first installment of the tax becomes due, interest shall be due and payable for such six months on all unpaid installments of the tax; provided, that any person may, at any interest paying period after the fifth annual installment of his tax becomes due, pay the entire assessment of tax against his property with accrued interest. All installments of such special assessments and interest shall be placed upon the tax duplicate with other taxes of...