City of New Bedford v. Lloyd Inv. Associates, Inc.

• Decision Date: 14 February 1973
• Parties: , 79 A.L.R.3d 745 CITY OF NEW BEDFORD v. LLOYD INVESTMENT ASSOCIATES, INC., Francis J. Lawler & Others, third-party defendants.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 688

292 N.E.2d 688

363 Mass. 112, 79 A.L.R.3d 745

CITY OF NEW BEDFORD v. LLOYD INVESTMENT ASSOCIATES, INC., Francis J. Lawler &

Others, third-party defendants.

Supreme Judicial Court of Massachusetts, Bristol.

Argued Dec. 7, 1972.

Decided Feb. 14, 1973.

Barney Papkin, Asst. City Sol., for City of New Bedford.

Stephen A. Hopkins, Boston, for Lloyd Investment Associates, Inc.

Before TAURO, C.J., and BRAUCHER, HENNESSEY, KAPLAN and WILKINS, JJ.

KAPLAN, Justice.

The plaintiff city of New Bedford appeals from an order granting a motion by the defendant Lloyd Investment Associates, Inc., under G.L. c. 231, § 59, for judgment on undisputed facts. The ground of the motion and judgment was that the action was barred by G.L. c. 260, § 2, as appearing in St.1948, c. 274, § 1, the six-year statute of limitations applicable to 'Actions of contract,' as defined.

The plaintiff city's declaration, in two counts, was in substance as follows. In 1956--1957 the city took the necessary steps by means of 'loan orders' Nos. 1 and 2, adopted by the city council and approved by the mayor, to authorize the sale of bonds to borrow amounts for the purposes, respectively, for which the city was empowered to incur debt by G.L. c. 44, § 7(5) (as amended through St.1951, c. 282, § 1), and § 7(1): 'For the original construction of public ways or the extension of widening thereof . . .' and 'For the construction of sewers for sanitary and surface drainage purposes and for sewage disposal . . ..' Within these statutory purposes, the borrowings were intended for the development of the city's new 'industrial park.' Some $1,434,000 was raised by the sale of bonds from 1958 to 1961. The defendant corporation ¹ was organized as a realty and investment company to acquire land in the park from the New Bedford Industrial Foundation and to finance the construction of buildings therein for occupation by firms desiring to locate themselves in the city. From July, 1959, to August, 1960, the city issued five checks, totaling $100,978, against the proceeds of loans Nos. 1 and 2, payable to the defendant, representing reimbursement for expenditures for construction work at the park. It is alleged that these payments were for purposes other than those set out in G.L. c. 44, § 7(1) and (5); that they were made without contractual obligation therefor and for improvements to private property at the park owned by the defendant or by or for the benefit of the defendant's tenants there. The commissioner of public works had not certified the expenditures as required by the loan orders. The declaration alleges that the payments were approved by the mayor and made by the city officials without knowledge that they were for unauthorized purposes and in the mistaken belief that they were authorized as improvements along a city easement adjacent to the public ways constructed at the park. By reason of the mistake, the defendant has received moneys which in equity and good conscience it should repay to the city, wherefore the corporation owes the city the stated sum with interest from the date of the writ. A second count for the same cause of action alleges that the defendant owes the city this amount as money had and received to the city's use as shown in the bill of particulars annexed, itemizing the five checks. The writ in the action was dated January 15, 1970.

The defendant's answer, in addition to denials, pleaded a number of defences including the running of the statute of limitations for actions of contract. After answer, the defendant demurred to the declaration on the grounds, among others, that the declaration did not state a cause of action, and that the statutory period had run before the commencement of the action. ² The judge overruled the demurrer. He said the declaration stated a cause of action; the statute of limitations was not rendered inapplicable because the plaintiff was a municipality; but, as the cause of action was 'equitable in nature,' the statutory period did not begin to run until the illegality was or should have been discovered, which the judge evidently took to be at some date within six years preceding the commencement of the action.

Following the overruling of its demurrer, the defendant took the deposition of one William S. Mahoney, whom the defendant had impleaded in the action as a third-party defendant together with others. ³ See G.L. c. 231, § 4A. Mahoney had served as senior bookkeeper and assistant city auditor at the time of the payments, was familiar with them, and furnished various circumstantial details about the procedures leading to the actual disbursements by the city treasurer. Mahoney said that before the city auditor's office sent in the warrant covering the first payment of $13,500 to the defendant, he had questioned whether it was for an authorized purpose. The particular invoice was in the form of a letter from a contractor to the defendant concerning a named manufacturing plant at the park; the letter presented 'a breakdown of the cost of the Site Development' as follows: clear and grub site, $2,000; site utilities, including plumbing, sptic tank, oil tank, and sanitary drain, $7,500; paving, $4,000. (The $13,500 payment was ultimately charged to 'Streets,' loan No. 1.) Mahoney said he consulted the mayor and was told in effect that the city did not have the manpower to do the work needed to tie the newly constructed plants into the city's streets and sewerage facilities at the park, and accordingly the contractors were doing this work. Mahoney was reassured and did not question the four later invoices. ⁴ Mahoney did not consider certification by the commissioner of public works to be important since the mayor, whose approval of the expenditures was required by the loan orders, did in fact give his formal approval.

Counsel for the defendant moved for judgment on undisputed facts, on the ground that the action was barred by time limitations. He annexed the Mahoney deposition to his supporting affidavit. ⁵ The plaintiff did not submit any affidavit or other material in opposition. The judge--not the same judge who had overruled the demurrer--granted the defendant's motion. He said that, though governed by equitable principles, the action was one at law on a common count for money had and received as paid by mastake. In such a case the period under the 'contract' limitations statute ran from the time the money was received, even though the mistake was not discovered until later. The statute might be tolled for fraudulent concealment (see G.L. c. 260, § 12), but 'it is conceded by the parties in the instant case that there has been no fraud and no concealment of the true facts.' Judgment was entered accordingly for the defendant.

It will be observed that the Mahoney affidavit is consistent with the declaration and furnishes particularized confirmation of its allegations including the dates involved. Read in the strongest light against the city officials, as it should be on the motion for judgment, the deposition shows a course of irregularities or neglects eventuating in payments at least some of which can be taken to have been made for unauthorized purposes. The city officials, however, are not shown to be chargeable with anything graver than a mistake as to the authorization for the payments. Thus, in holding for the defendant, the judge who passed on the motion for judgment was simply declining to follow the first judge on the point of law, as he was entitled to do. ⁶

On its appeal the plaintiff recognizes that it is attempting to recover payments made by mistake without any intimation of fraud on either side. It argues, first, that as a political subdivision of the Commonwealth suing as plaintiff on the present cause of action it is not subject to the statute of limitations. General Laws c. 260, § 18, declares: 'The limitations of the preceding sections of this chapter, and of section thirty-two so far as applicable to personal actions, shall apply to actions brought by or for the commonwealth.' This section has long been understood to expose municipalities as well as the Commonwealth to limitations, on the commonsense view that municipalities were not intended to be favored in this respect over the Commonwealth itself. Boston v. Nielsen, 305 Mass. 429, 430--431, 26 N.E.2d 366. The plaintiff, however, says that this is not a 'personal' action; it is not directed to vindicating a private or proprietary interest of the city, but is rather brought in the city's public or governmental capacity. But 'personal,' as it appears in § 18, means something quite different. That word is related to the first subtitle of c. 260, 'Limitation of Personal Actions,' covering the first twenty sections of the chapter; the first subtitle contrasts with the next, 'Limitation of Real Actions and Rights of Entry,' covering §§ 21--31A; and with another subtitle, 'Limitation of Mortgage Foreclosures,' covering §§ 33--35. ⁷ 'Personal' is here being used in a sense resembling that in which it is used in the classic common-law division of actions into personal, real, and mixed, see Stephen, A Treatise on the Principles of Pleading in Civil Actions (Williston ed. 1895), *3--*6; it has nothing to do with a private-public, or proprietary-governmental dichotomy. The plaintiff has been misled by those cases in some other States, of wich it cites a few examples, ⁸ that do hold to such a distinction for limitations purposes. But the States in question do not have statutes like our § 18; they have evolved the distinction in an effort, at least with respect to 'proprietary' claims of political subdivisions, to restrain and limit the old doctrine that time does not run against the sovereign. See Annotation, 113 A.L.R. 376.

The plaintiff city is thus to be treated as amenable to the statute of limitations. And it is clear that the statute as to actions of contract, more particularly the language about 'implied' contracts, ...