City of San Angelo v. Deutsch

• Decision Date: 05 February 1936
• Docket Number: No. 6805.,6805.
• Citation: 91 S.W.2d 308
• Parties: CITY OF SAN ANGELO v. DEUTSCH.
• Court: Texas Supreme Court

Page 308

91 S.W.2d 308

CITY OF SAN ANGELO v. DEUTSCH.

No. 6805.

Supreme Court of Texas.

February 5, 1936.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Suit by E. P. Deutsch against the City of San Angelo. The district court's judgment dismissing the suit was reversed by the Court of Civil Appeals [73 S.W.(2d) 125], and the City brings error.

Judgment of the Court of Civil Appeals reversed, and judgment of the District Court affirmed.

R. G. Hughes, of San Angelo, and W. A. Keeling, of Austin, for plaintiff in error.

Collins, Jackson & Snodgrass, of San Angelo, Dilworth & Marshall and Moursund, Johnson, Rogers & Slatton, all of San Antonio, and H. A. Cline, of Wharton, for defendant in error.

SMEDLEY, Commissioner.

The question presented for decision is thus concisely stated in the opinion of the Court of Civil Appeals: "Whether the city is estopped to assert a lien for unpaid taxes, to the injury of an innocent mortgagee who lends money on such property as security, on the faith of, and in reliance upon, its assessment rolls showing that such taxes have been paid."

Defendant in error, Deutsch, sued plaintiff in error, the city of San Angelo, to remove from his title to certain improved real estate the cloud cast by the city's claim of a lien on said property to secure the payment of delinquent taxes assessed against the property by the city for the years 1928, 1929, and 1930 to the amount of $5,436.25, together with interest and penalties. The trial court sustained a general demurrer to the petition and entered judgment dismissing the suit. The Court of Civil Appeals reversed the judgment of the trial court and remanded the cause. 73 S.W. (2d) 125, 126.

The material facts alleged in plaintiff's petition are:

Southern Improvement & Securities Corporation became indebted to defendant in error in the sum of $39,000, which was evidenced by a note secured by deed of trust on certain improved property in the city of San Angelo owned by said corporation. Before accepting the note and deed of trust, defendant in error examined the delinquent tax records and rolls of the city, which were the official and formal tax records kept by the city, and found that the said rolls and records showed that taxes on the property had been paid for the years 1928, 1929, and 1930. He relied upon these records and would not have consummated the transaction had they not shown that the taxes were paid. Upon default by the maker of the note, defendant in error foreclosed his lien by suit and bought the property at the foreclosure sale for a sum $16,727.69 less than the amount of the debt. Prior to the time when defendant in error took the note and deed of trust and examined the tax records, the owner of the property undertook to pay the taxes for the years 1928, 1929, and 1930 by delivering to the tax collector of the city a draft drawn on a corporation at Houston, Tex. The tax collector accepted this draft, made the entries on the tax records showing payment of the taxes, and forwarded the draft for collection. The draft was returned unpaid, and the tax collector changed the entries in the records to indicate that the taxes were not paid. This change of the entries was made after defendant in error had accepted the note and deed of trust. The maker of the note is insolvent, as are also all other persons against whom defendant in error might have a claim in the event he should be required to pay the taxes in order to protect his title to the property. It is alleged that by reason of its having represented by the entries in its public records that the taxes were paid and having caused the public and defendant in error to believe that the taxes had been paid the city is now estopped to assert or claim such taxes as a lien upon the property.

We agree with the trial court's conclusion that the petition of defendant in error states no cause of action. The effort on the part of defendant in error is to bind and estop the city by an unauthorized act of one of its officials in the performance of a governmental function, and when the city has received no benefit from the act.

Article 1060, Revised Civil Statutes of 1925, provides that all taxes assessed by a city shall be a lien upon the property against which they are assessed, meaning, of course, that the lien shall exist until the taxes are actually paid or until the lien is foreclosed. Payment by draft was no payment, as a tax collector has no authority to receive anything but cash in settlement of taxes. Austin v. Fox (Tex. Com.App.) 1 S.W.(2d) 601; Scisson v. State, 121 Tex.Cr.R. 71, 51 S.W.(2d) 703; Ward v. Marion County, 26 Tex.Civ.App. 361, 62 S.W. 557, 63 S.W. 155; City National Bank of El Paso v. City of El Paso (C.C.A.) 10 F.(2d) 308.

The collection of taxes is undoubtedly a governmental function. The Supreme Court of Missouri, in Simmons Hardware Company v. City of St. Louis, 192 S.W. 394, 398, declared the power of taxation to be one of the highest and most characteristic of the governmental functions of municipal corporations. Judge Cooley said: "The power of taxation is an essential and inherent attribute of sovereignty belonging as a matter of right to every independent government." Cooley's, The Law of Taxation (4th Ed.) vol. 1, § 57. See, also, Philadelphia Mortgage & Trust Co. v. Omaha, 63 Neb. 280, 88 N.W. 523, 93 Am.St.Rep. 442; Id., 65 Neb. 93, 90 N.W. 1005, 57 L.R.A. 150, 153; McQuillin's Municipal Corporations, vol. 6, § 2644, p. 5458; 43 Corpus Juris, § 1753, p. 973.

Since the action of the tax collector in causing the tax records to show that the taxes were paid when in fact they were not paid was unauthorized, and since the tax collector in collecting taxes and in keeping the records essential to their collection was exercising for the city powers essentially public and governmental, it follows that the city is not estopped by the acts of the tax collector from asserting its lien for the taxes, unless exception is made to the well-settled rule that cities are not liable for the unauthorized or negligent acts of their officials in the performance of the city's governmental functions.

The decisions in this state have consistently protected the public from liability and loss on account of mistakes, negligence, and unauthorized acts of public officials in the performance of public or governmental duties. Mistakes or unauthorized acts of officials charged with the custody and disposition of public land do not estop the state or deprive it of its property. Day Land & Cattle Co. v. State, 68 Tex. 526, 553, 4 S.W. 865; Jones v. Robison, 104 Tex. 70, 133 S.W. 879; Weatherly v. Jackson, 123 Tex. 213, 71 S.W.(2d) 259; Grayburg Oil Co. v. State (Tex.Civ.App.) 50 S.W.(2d) 355 (application for writ of error refused). A city or other public corporation or political subdivision is not estopped by recitals in its nonnegotiable warrants, that all conditions precedent to their issuance have been performed, to assert as against a bona fide purchaser that the warrants were issued without consideration. In so holding, the court said in National Surety Company v. State Trust & Savings Bank, 119 Tex. 353, 363, 29 S.W. (2d) 1027, 1030: "Nor will any negligent or fraudulent conduct or act of any city agent, in respect to the emission of a city warrant, bind the city to any liability, by way of estoppel or otherwise, if the city receives no benefit from the transaction." See, also, Nacogdoches County v. Lafferty (Tex.Com.App.) 61 S.W.(2d) 994; City of Dublin v. H. B. Thornton & Co. (Tex.Civ. App.) 60 S.W.(2d) 302 (application for writ of error refused); City of Weslaco v. Porter (C.C.A.) 56 F.(2d) 6. Many cases hold that a city is not liable for personal injuries to its employees or to others caused by the negligent acts of its officials or agents while discharging governmental functions of the city. Among the cases so holding are: City of Wichita Falls v. Robison, 121 Tex. 133, 46 S.W.(2d) 965; King v. City of San Angelo (Tex.Civ.App.) 66 S.W.(2d) 418.

The cases in which questions of liability are presented are the same in their general nature and in the reasons underlying their decision as are those in which estoppel is invoked. In both, the individual, because of the act of an employee or agent of the city, suffers injury or loss. Estoppel, when applied against a city, imposes loss upon it or deprives it of a right which it would have but for the act constituting the ground of estoppel, and thus is in effect like liability for a negligent act. In both cases conflict arises between the rights or interests of the public and those of the individual. The rule is that when such conflict arises the rights or interests of the individual must yield. This is necessary because the city's public or governmental business must go forward, unimpeded by the fault, negligence, or frailty of those charged with its administration. A court which holds that a city is not liable in damages for injuries suffered from the negligence of its officer or agent engaged in the performance of a governmental function cannot consistently hold that the city is estopped by the act of its officer or agent engaged in the performance of a governmental function, unless there are peculiar facts which give rise to other equities than loss or injury to the individual who has relied upon the act of the officer or agent.

The rule that a city is not estopped by the mistakes or unauthorized or wrongful acts of its officers or agents is thus stated in Ruling Case Law: "No estoppel can grow out of dealings with public officers of limited authority, and the doctrine of equitable estoppel cannot ordinarily be invoked to defeat a municipality in the prosecution of its public affairs because of an error or mistake of, or because of a wrong committed by, one of its officers or agents which has been relied upon by a third party to his detriment. So a municipality is not estopped by the unauthorized...