Deutsch v. City of San Angelo
| Decision Date | 23 May 1934 |
| Docket Number | No. 7971.,7971. |
| Citation | 73 S.W.2d 125 |
| Parties | DEUTSCH v. CITY OF SAN ANGELO. |
| Court | Texas Court of Appeals |
Appeal from District Court, Tom Green County; John F. Sutton, Judge.
Suit by E. P. Deutsch against the City of San Angelo. From an order sustaining general demurrer to the petition, the plaintiff appeals.
Reversed and remanded.
Dilworth & Marshall, of San Antonio, Collins, Jackson & Snodgrass, of San Angelo, H. A. Cline, of Wharton, Deutsch, Kerrigan & Burke, of New Orleans, La., and Moursund, Johnson, Rogers & Slatton, of San Antonio, for appellant.
R. G. Hughes, City Atty., of San Angelo, for appellee.
Appeal is from an order of the district court sustaining appellee's general demurrer to appellant's petition. Suit was by appellant against the city of San Angelo to cancel an asserted tax lien claimed by the city on real estate owned by appellant situated in said city, as constituting a cloud upon his title, for unpaid city taxes thereon for the years 1928, 1929, 1930, and to perpetually enjoin the city from asserting such lien in the future. The material facts alleged were:
That appellant had made a loan to the Southern Improvement & Securities corporation of $39,000, on May 14, 1931, evidenced by its note of that date, secured by a deed of trust on the property involved; that in making said loan he examined and relied upon the tax rolls of said city, which showed that all taxes on said property for the years 1928, 1929, and 1930 had been paid; that the maker of said note and deed of trust defaulted in the payment thereof, suit was filed and judgment rendered in the federal court thereon for the sum of $41,197.69, said lien foreclosed, and said property bought in by appellant for the sum of $25,000, leaving a balance due on said debt, after payment of costs, of $16,727.69; that the value of said property was wholly inadequate to secure said debt; that the maker of said note is insolvent; and that appellant cannot protect himself against loss by recovery against any former owner or owners of the land in the event he is compelled to pay such taxes. He also alleged that, when he made said loan, the tax rolls according to the entries made thereon by the duly selected and qualified assessor and collector of taxes for said city showed that taxes for said years aggregating $9,460.58 had been paid, and receipt therefor had been issued to R. Hal Compton, Jr.; that subsequent to the time appellant made said loan, relying in good faith upon said tax rolls, the city of San Angelo caused said rolls to be changed so as to show the taxes for 1928, 1929, and 1930 on said property delinquent, and is now asserting a lien on the property therefor, and threatening to foreclose same. Appellant further alleged that, though unknown to him at the time he made the loan, and not discovered by him until long afterwards, he subsequently learned that the tax collector had made the entry upon the tax rolls showing payment of said taxes upon delivery to her of a draft for the amount of same, drawn by the owner upon a corporation at Houston, Tex., which draft was subsequently dishonored; and that, after notice of such dishonor was received by the tax collector, she altered the tax rolls so as to show that said tax receipts were canceled, and that the city was asserting its claim for taxes and a lien upon said property to secure same.
Other allegations were made which we deem immaterial, because the controlling question of this appeal is presented by the above; that is, 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.
We have reached the conclusion that it is. The case has been ably briefed by both parties. The general rules as to estoppel against the state, county, or municipality are fairly well settled; but they are not without exceptions. The general rule seems to be that a city is not estopped by the unauthorized or negligent acts of its agents and officers in the performance of governmental functions as contradistinguished from industrial or proprietary functions. 21 C. J. 1190; 10 R. C. L. 707; 30 Tex. Jur. 113. It cannot be gainsaid that the levy and collection of taxes is a governmental function, and it is the contention of appellee, and apparently the view taken by the trial court, that the act of the collector in the instant case in causing her records to show that the taxes had been paid upon delivery to her of a draft was illegal and unauthorized, and not binding upon the city in any event; that is, that it was not lawful for her to accept anything except money in payment of taxes, and that any other method of payment was illegal, citing, among others, Austin v. Fox (Tex. Com. App.) 1 S.W.(2d) 601; Scisson v. State, 121 Tex. Cr. R. 71, 51 S.W.(2d) 703, and cases therein cited. This fact, however, is not, we think, determinative of the issue here presented. This controversy goes rather to the question of whether a purchaser, or mortgagee of property, in investing his money, can rely upon the public records of the city as kept by the officer of the city charged with that duty.
While the general rule is that a municipality cannot be estopped by the unauthorized, illegal, or erroneous act of its officers in the performance of a strictly governmental function, that rule is not without exception in Texas. This is expressly stated by the Commission of Appeals in an opinion wherein the holding was approved by the Supreme Court in Cawthorn v. City of Houston, 231 S. W. 701, 705. After discussing the case of Krause v. City of El Paso, 101 Tex. 216, 106 S. W. 121, 14 L. R. A. (N. S.) 582, 130 Am. St. Rep. 831, the following language is used: "It will be seen from the above opinion that in Texas the doctrine of estoppel not only applies generally where the city is acting in its proprietary capacity, but also by reason of the negligence or unauthorized acts of its officers, where the equities of the situation demand it."
We consider first the cases directly in point on the exact issue here presented relied upon by appellee to sustain the trial court's judgment. The first of these, Philadelphia Mtg. & Trust Co. v. City of Omaha, 63 Neb. 280, 88 N. W. 523, 93 Am. St. Rep. 442, is identical with the facts in this case, except that the entry on the tax records in that case appears to have been fraudulently made by the collector, for whose benefit the loan was made, and, after the loan was closed, the records were changed by him to show the taxes delinquent. In the original opinion in that case the Supreme Court of Nebraska held that the city was not estopped to assert its tax lien under the general rule, approved by the court in that state, that estoppel in pais would not apply in the exercise by the city of a strictly governmental function. But upon motion for rehearing (65 Neb. 93, 90 N. W. 1005, 57 L. R. A. 150) the court based its judgment on the ground that plaintiff did not show himself entitled to an injunction against the enforcement of such lien because of an express statute of that state, and apparently receded from its original view and chose to leave the exact question open to future determination when found necessary.
The other case cited by appellee as directly applicable is Farrow v. City of Charleston, 169 S. C. 373, 168 S. E. 852, 87 A. L. R. 981. In that case a paving lien was involved. The attorney examining the title to the property involved inquired orally of the tax...
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