Cowan Inv. Corporation v. City of Florence

• Decision Date: 28 August 1935
• Docket Number: No. 65.,65.
• Parties: COWAN INV. CORPORATION v. CITY OF FLORENCE.
• Court: U.S. District Court — Northern District of Alabama

11 F. Supp. 973

COWAN INV. CORPORATION v. CITY OF FLORENCE.

No. 65.

District Court, N. D. Alabama, N. W. D.

August 28, 1935.

J. Fred Johnson, Jr., of Florence, Ala., for intervener, Metropolitan Life Ins. Co.

William Alfred Rose, of Birmingham, Ala. (J. Edward Thornton, of Birmingham, Ala., of counsel), for W. S. Lovell, as receiver.

GRUBB, District Judge.

Heretofore, at a time not relevant to this intervention, the city of Florence issued its public improvement bonds for the purpose of raising funds with which to pay for certain public improvements constructed in the said city. Assessments were levied against the properties specially benefited by the improvements constructed with the proceeds of such bonds, which assessments were secured by liens on such properties. As security for the bonds, the city transferred and assigned to the holders thereof the said assessments and liens. The bonds being in default, Cowan Investment Corporation, a Delaware corporation and the holder of some of the bonds, filed its original bill in the nature of a class suit against the city, wherein it was alleged that the city had violated its duties as a statutory trustee for the holders of the bonds in that, among other things, it had diverted for other purposes the collections made from the assessments. A receiver was appointed by this court in order to preserve the security afforded to the holders of the bonds.

On May 1, 1935, Metropolitan Life Insurance Company filed its petition to intervene in these proceedings and, leave of court so to do having been granted, it then filed its bill of intervention in the nature of a common-law bill to quiet title to certain real estate owned by it. The said property was alleged to have been sold by the city in satisfaction of an assessment made against the same for certain street improvements on Sherrod avenue, and at the sale the property had been purchased by the city. It was further alleged that the sale and the assessment on which the same was based were void for the following reasons: The property did not abut Sherrod avenue at the time the improvement was made or the assessment levied and had never abutted that avenue; the property was not at the time the improvement was made and the assessment was levied, and never has been, contiguous to a lot abutting the improvement, but at the time the improvement was made and the assessment was levied, and at all times since then, the property was separated from the improvement by another lot which was not assessed for the improvement; and that no street intersection was improved whereby the property might have been benefited or assessed. There are no allegations that the assessment was not made in accordance with the statutes applicable thereto, other than as stated above, or that any protest was made at the hearing at which the assessment was levied, or, if made, that an appeal was taken. The receiver, having secured leave of court to answer the intervention, filed his answer admitting the facts alleged, but denying their sufficiency to avoid the assessment, and moved to dismiss the intervention.

The enforcement of the assessment liens has been brought into this court by the original bill of Cowan Investment Corporation, with the result that any action questioning the validity of such assessments is properly brought in this court. Of course, the Alabama law will control the decision as to the validity of such assessments.

It is necessary to the validity of an assessment of the nature here involved that the property owner be given an opportunity to be heard and an opportunity to appeal therefrom, otherwise there would be a denial of due process. The Alabama law provides for such a hearing, after notice, and permits appeals to the circuit courts of that state from the actions of the governing body of the city making the assessment. Sections 2192, 2193, 2194, and 2204 of the Code of Alabama of 1923, as amended by Gen. Acts 1927, pp. 764, 765, 767. Code, § 2196, as amended by Gen. Acts 1927, p. 765, declares that in the event a property owner fails to take advantage of such hearing and fails to appeal therefrom, it will be considered as though he had consented to the assessment. The Supreme Court of Alabama, in construing these sections, has declared that such proceedings are an exercise of the judicial function of government and constitute a final judgment. Brock v. City of Decatur (1914) 185 Ala. 146, 64 So. 73.

If the governing body of the city fails to prepare an assessment roll describing the property benefited by the improvement, the names of the owners thereof and the amounts assessed against each parcel of property, or fails to give the notice required by the statute that the same is open for inspection and the date and place for hearing objections thereto, the Alabama court has held that...