Gagnon v. City of Butte

• Decision Date: 23 February 1926
• Docket Number: No. 5819.,5819.
• Citation: 75 Mont. 279
• Parties: GAGNON v. CITY OF BUTTE.
• Court: Montana Supreme Court

75 Mont. 279

GAGNON

v.CITY OF BUTTE.

No. 5819.

Supreme Court of Montana.

Jan. 28, 1926.

Rehearing Denied Feb. 23, 1926.

Appeal from District Court, Silver Bow County; George Bourquin, Judge.

Action by George L. Gagnon against the City of Butte. Judgment for defendant, and plaintiff appeals. Affirmed.

N. A. Rotering and A. C. McDaniel, both of Butte, for appellant.

John T. Andrew and F. E. Blodgett, both of Butte, for respondent.

GALEN, J.

In the year 1910 Joseph R. Silver, Jr., as contractor, constructed certain concrete sidewalks in accordance with plans and specifications within the confines of special improvement district No. 81 of the city of Butte. His work was approved, and he was paid therefor and accepted improvement district bonds, payable on or before 10 years after January 1, 1910, with interest coupons attached. In this action the plaintiff, as the assignee of the contractor, seeks recovery from the city of Butte on certain of such improvement district bonds.

In the complaint it is alleged that special improvement district No. 81 was duly and regularly created; that the special improvements to be provided consisted of the construction of concrete sidewalks in front of the real property embraced within the district; that a contract for the making of such improvements in accordance with the specifications was regularly awarded to Joseph R. Silver, Jr., and by him accepted; that the contractor duly performed the work to be done in accordance with his contract, which was accepted by the city, and thereupon delivery was made to him of special improvement bonds of the district in payment for the work; that the defendant duly levied an assessment against all the real property within the district for the redemption of the bonds in the year 1911 and subsequent years; that the bonds have not been paid; that the first of the special assessments levied against the property became due in 1911; that the unpaid installments of interest due upon the bonds provided for the payment of interest thereon, and that a large amount of interest became delinquent, and still remains unpaid; that the delinquent assessments are a lien against the real property against which they were levied; that the defendant has failed and neglected to collect the delinquent assessments against the real estate embraced within the district; and that the plaintiff cannot enforce payment thereof; and, further, that the defendant has failed, neglected, and refused to take up the bonds in full, or pay any interest accrued thereon since January 1, 1920. The bonds of the series involved herein are dated August 3, 1910, and, as shown by the plaintiff's complaint, recite:

“The city of Butte, a municipal corporation, of the state of Montana, hereby promises to pay to J. A. Silver, Jr., or bearer, $100, lawful money of the United States, with interest thereon from and after the first day of January, 1910, at the rate of six (6%) per cent. per annum, payable annually, principal and interest payable out of special improvement district No. 81 fund, provided for by Ordinances No. 899 and No. 931 of said city, and not otherwise, at the office of the city treasurer of said city. This bond is payable on or before ten (10) years after the first day of January, 1910, and is subject to call by the city treasurer of said city whenever there shall be sufficient money in said fund to pay the same, together with all unpaid bonds of the same series of which this bond is one, which are prior to this bond in numerical order, over and above sufficient funds for the payment of interest on all unpaid bonds of said series.”

The bonds in suit are 10 in number, aggregating the principal sum of $1,077.63, with interest thereon at the rate of 6 per cent. per annum from January 1, 1920. In the prayer of plaintiff's complaint, he asks judgment against the city for the amount of the bonds sued upon, together with interest. Issue was joined by the defendant's answer containing certain admissions and denials of the allegations of plaintiff's complaint, and affirmatively alleging as reason for the nonpayment of the bonds that “there is not money within special improvement district No. 81 fund with which to pay the same.” The cause was tried before the court without a jury. At the conclusion of the trial the court made its findings in favor of the defendant and against the plaintiff, pursuant to which judgment was regularly entered for the defendant. The appeal is from the judgment.

By testimony introduced upon the trial the plaintiff sustained the allegations of his complaint. It also appears therefrom, without dispute, that the city treasurer now holds to the credit of the improvement district fund the sum of $45.88 available for the payment of the sum due on the plaintiff's bonds.

Neither from the allegations of the complaint nor from the proof does it appear that the plaintiff has ever resorted to mandamus or other appropriate legal proceedings to compel the city authorities to make collection of the delinquent assessments.

The court found:

“That all matters stated in plaintiff's complaint are true as matters of fact, save and except that defendant failed to make a reasonable effort to collect the assessment and could have collected the same, and that plaintiff cannot enforce his lien; and the court further finds that the only reason the bonds were not paid is because there is no money in the fund to pay the same, and therefore the court concludes as a matter of law that the plaintiff is not entitled to the relief prayed for in the complaint; that the plaintiff is entitled to take nothing; and that the defendant is entitled to have judgment entered in its favor.”

The assignments of error require the determination of but one question, viz. the general liability of the city for the payment of these bonds.

It is apparent that special improvement district No. 81 was created pursuant to the provisions of chapter 3 of article 10, sections 3367 to 3429, inclusive, of the Revised Codes of 1907, whereby it is provided, so far as pertinent to this inquiry, as follows:

“3387. Assessments for Curbs, Gutters and Sidewalks.–To defray the cost of curbing, guttering and constructing sidewalks, and keeping the same in repair, the city or town council shall assess the entire cost thereof to the property in front of which said improvement is made. The property occupying a street corner to be assessed for that part of said improvement which is within the street intersection.”

“3399. Levy of Tax.–To defray the cost of making improvements in any special improvement district, the council, shall by resolution, levy and assess a tax upon all property in such district as provided in section 3396 (30) hereof. Such resolution shall contain a description of each lot or parcel of land, with the name of the owner, if known, and the amount of each partial payment, and the date when the same becomes delinquent.”

“3402. Delinquent Assessment.–When one payment becomes delinquent, the whole tax shall become so, and the property shall be sold the same as other property sold for taxes.”

“3411. Tax, When Payable.–The tax, as provided in the preceding sections of this article, must, unless otherwise distinctly specified, be paid within thirty days after its levy, to the city treasurer, who must give a receipt therefor, and in case of nonpayment the treasurer must proceed to collect the same in the same manner as delinquent taxes are collected on other property. If such tax is not paid within said sixty days a penalty of ten per cent. shall be added thereto and collected as a part of the tax.”

“3425. Collection of Delinquent Assessments. Actions by Bondholder.–If the owner of any parcel, lot or lots of land, liable for the payment of any bond issued under the provisions of this act, shall fail to pay any assessment or assessments levied in accordance herewith, when due, the owner of any such unpaid bond or bonds may proceed in his own name to collect such assessments, and foreclose the lien thereof in any court of competent jurisdiction, and shall recover, in addition to the amount of such bonds and interest thereon, five per centum, together with the cost of such suit. Any number of holders of such bonds for any single improvement may join as plaintiffs, and any number of owners of property on which said delinquent assessments are a lien may be joined as defendants in such suit.”

“3427. Extent of Lien.–Neither the holder nor owner of any bond issued under the authority of this act shall have any claim therefor against the city by which the same is issued, except from the special assessments made for the improvement for which said bond was issued.”

The several sections above set forth, excepting the last two, were enacted in 1897 as a part of House Bill No. 204, Laws 1897, p. 212. Sections 3425 and 3427 were adopted by chapter 75 of the Laws of 1907.

The plaintiff predicates the city's liability to pay the bonds upon the failure to collect the assessments levied from the property owners for the benefit of the bond holders, and this, notwithstanding the contractual and statutory provisions expressly requiring the holders of the bonds to look for payment from the special improvement district fund alone, relieving the city from any general liability for their payment.

It is argued that it was the city's duty to collect the assessments under adequate power conferred upon it, and, having failed so to do, it has become liable; and, further, that, if the plaintiff ever did have a right to enforce the liens of the bonds under the provisions of section 3425 of the Revised Codes of 1907, set forth above, it was taken away by chapter 89 of the Laws of 1913; it being urged that, although some of the assessments became delinquent prior to the enactment of the last-mentioned statute, yet the plaintiff's right of action, if any existed, could not accrue until the year 1920, or 10 years from the date of the...