Dakota Trust Co. v. City of Hankinson
| Decision Date | 02 November 1925 |
| Docket Number | 4889 |
| Citation | 205 N.W. 990,53 N.D. 356 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Richland County, Wolfe, J.
Affirmed.
J. A Dwyer, and Lauder & Lauder, for appellant.
The holder of a special improvement warrant (that is the warrant involved in this litigation) issued under and in compliance with the provisions of article 20, chapter 44, of the Political Code, being §§ 3697 to 3743b, inclusive Comp. Laws, 1913, may not recover a general judgment against the city issuing the same upon default in the payment thereof where all the special assessments levied for the improvement have not been collected and applied in payment of the warrants and where such default in payment ensued, not by reason of fraud or neglect on the part of the city, but on account of the failure of the owners of the property benefited to pay their special assessments. Bankers Trust & Sav. Bank v. Anamoose, N.D. , 200 N.W. 103; Meyer v. San Francisco, 150 Cal. 131, 10 L.R.A.(N.S.) 110, 88 P. 722; Hamilton, Special Assessments, §§ 674 et seq.; Page & J. Taxn. by Assessment, § 1503; Dill. Mun Corp. 482, § 827.
Lawrence Murphy & Nilles, for respondent.
A city became liable to pay paving warrants where it diverted the proceeds of the assessments when collected in payment of other obligations. Pine Tree Lumber Co. v. Fargo, 12 N.D. 360, 96 N.W. 357.
While courts have been vigilant in their scrutiny of corporate action, and have zealously striven to keep corporations and their agents within the limits of granted powers, they have not favored defenses to honest demand, based upon mere irregularities and informalities. Moore v. Mayor, 72 N.Y. 238, 29 Am. Rep. 134.
It matters not that the promise to pay was in a manner not authorized by law. If payments cannot be made in bonds because their issue is ultra vires, it would be sanctioning rank injustice to hold that payment need not be made at all. Such is not the law. Hitchcock v. Galveston, 96 U.S. 341, 24 L. ed. 659.
A municipality which issues its warrants or bonds and receives the consideration therefor, is liable to make restitution of the money if the proceedings are entirely void or to pay the warrants or bonds as they mature if the proceedings are irregular or there is some defect not going to the question of power or jurisdiction. Bank v. Catawba (Wis.) 197 N.W. 1013; Shepard v. Tulare Irrig. Dist. 94 F. 1; Haskell Co. v. Nat. L. Ins. Co. 90 F. 228; Chilton v. Grattan, 92 F. 873; Independent School Dist. v. Rew, 55 L.R.A. 364, 49 C. C. A. 198, 111 F. 1.
A municipality may be estopped by its own records to deny the validity of its obligations. Its resolutions as to the existence or performance of the conditions precedent are conclusive upon the municipality and estop it to show the contrary. 5 McQuillin, Mun. Corp. § 2312; Society for Sav. v. New London, 29 Conn. 174; Lane v. Schomp, 20 N.J.Eq. 82; Bell v. Waynesboro, 195 Pa. 299, 45 A. 930.
Where a city appoints someone qualified to judge the work and its progress and charges him with the duty of inspecting the work and reporting upon it and requires him to notify the contractor if any of the work or materials fail to comply with the plans and specifications, and such person inspects the work and allows it to proceed and fails to notify the contractor during its progress that the work does not comply with the contract, this operates as an acceptance of the work and is conclusive. Donnelly, Public Contr. § 256; Danville Bridge Co. v. Pomeroy, 15 Pa. 151; Pauly Jail Bldg. & Mfg. Co. v. Hamphill County, 62 F. 698.
Statement of facts.
An action and a special proceeding were tried together in the district court of Richland county. In the action the plaintiff sought a judgment against the defendant on two special improvement warrants for $ 500 each, issued by the defendant and payable out of the funds of sewer improvement districts Nos. 1 and 2, respectively. The special proceeding was an application, on relation of Kistler, for a writ of mandamus directed to the defendant corporation and to the members of the city council, city officers and special assessment commission to compel the levy of special assessments to defray the cost of the improvement, on account of which two warrants, each for the sum of $ 500, payable from the funds of sewer improvement districts Nos. 1 and 2, respectively, had been issued, which were owned by the relator. The proceeding was later amended to include additional warrants, also owned by Kistler. Upon the application an alternative writ or order was issued requiring the levying of special assessments for the total cost of the improvement, on account of which the warrants owned by the relator had been issued. Both the action and the special proceeding came on for trial before the district judge without a jury at the same time, and it was stipulated by counsel that the evidence taken in the one case should be considered as taken in the other so far as material, and upon these appeals there is but one statement of the case.
In the Dakota Trust Company Case, in which judgment is sought on the warrants, judgment was rendered for the plaintiff. A motion for a new trial was made and overruled. The appeal is from the judgment and from the order overruling the motion for a new trial. In the Kistler case a judgment was entered awarding the writ as prayed for, and the appeal is from the judgment.
The facts out of which the controversy arises may be stated as follows: In 1920 the city council of the city of Hankinson undertook to establish a sewer system and a waterworks system, taking all the necessary steps therefor, as will appear from the case of Jones v. Hankinson, 48 N.D. 618, 186 N.W. 276, in which case it was held that the plaintiffs had not sustained the burden of proving irregularities in the proceedings which were alleged as a basis for injunction.
On August 12, 1920, bids were received and opened for the construction of a sewer system, and a resolution was passed for the letting of the contract to the John O'Connor Company of Fargo for $ 82,716.29. Under date of August 13, 1920, a contract was entered into between the city and the O'Connor Company in accordance with the resolution. The contract provided, among other things, for the doing of the work in accordance with a proposed schedule and specifications; that the city of Hankinson assumed and incurred no general liability; that the payments thereunder were to be made by warrants bearing 7 per cent interest; that the work should be subject to the approval of the engineer of the city who should superintend and inspect the work during its progress; and it provided for the completion by July 1, 1921. This date was later extended. Work was begun under this contract in 1921, and it seems that when trenches were dug in which to lay the tile or sewer pipe, there was uncovered throughout a large portion of the trenches a bed or beds of quicksand. It also appears that water seeped into the trenches, thus making the work of laying the pipe difficult; that on account of this condition the joints in the pipe, which were required by the specifications to be laid in Portland cement mortar and to be water tight, were cemented only over the top and not underneath, as the water prevented the cementing operations beneath; that the quicksand did not furnish a good foundation upon which to lay the pipe; that the steps required to be taken to improve the foundation were not taken, and that as a consequence the pipe, when laid, were more or less uneven; that the joints were not sufficiently tight to prevent the infiltration of quicksand and that, due to these conditions, principally the settling of the pipe in the quicksand beds and the infiltration of quicksand, the sewer system when completed worked imperfectly and throughout a large part of the area did not work at all; that it became entirely plugged up in sections and at one place, if not several, it settled so that it did not make a proper connection with the manhole; that attempts to clear the system here and there failed; that at one time--though it seems, this condition was later remedied--the outlet was not properly connected with the septic tank; that a sludge bed had not been properly constructed, due to the failure to supply gravel thereon at the proper thickness; that during the progress of the work the engineers, whose duty it was to make inspections, made only cursory examinations; that there was little, if any, effort made to counteract the adverse physical conditions in order that the sewer when completed might be in more perfect condition; that even though it had been constructed according to plans and specifications, the grade of the sewer was such that it would require attention occasionally, such as flushing, in order to prevent the accumulation of solid matter at various places; that the sewer did not receive this attention on the part of the city, though several permits were given to make connections therewith. The city engineer employed was a corporation known as Dakota Engineering & Construction Company.
From time to time, during the progress of the work, estimates were submitted to the city council and allowed. Among these was the following:
Hankinson, N.D., Feb. 6th, 1922.
Honorable Mayor and City Council,
Hankinson, N. Dak.
Gentlemen:
We submit herewith a partial estimate of the amount due the John O'Connor Co. to date of Feby. 4th, 1922, on their contract covering the construction of a sewer system for the city of...
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