German-American Sav. Bank v. City of Spokane

• Decision Date: 09 July 1897
• Citation: 49 P. 542,17 Wash. 315
• Parties: GERMAN-AMERICAN SAV. BANK OF BURLINGTON, IOWA, v. CITY OF SPOKANE. [1]
• Court: Washington Supreme Court

49 P. 542

17 Wash. 315

GERMAN-AMERICAN SAV. BANK OF BURLINGTON, IOWA, v. CITY OF SPOKANE. ^[1]

Supreme Court of Washington

July 9, 1897

Appeal from superior court, Spokane county; L. H. Prather, Judge.

Action by the German-American Savings Bank of Burlington, Iowa against the city of Spokane. Judgment for plaintiff. Defendant appeals. Reversed.

Dunbar J., dissenting.

Plummer & Thayer, for appellant.

Kennan & Belden, for respondent.

SCOTT C.J.

Plaintiff brought this action to recover the amount due on certain street-grade warrants originally issued to one Massey, and payable out of the Victoria street grade fund, and, having obtained a general judgment against the city therefor, the city has appealed. The foundation of the plaintiff's right of action, as presented in the briefs, was the delay and negligence on the part of the city's officers in providing the fund. The court also found, and that issue seems to have been presented in the pleadings, that the right to enforce collection of the special assessments was lost. The appellant (defendant) contests this finding, but, as the respondent does not seem to rely on it, we will not look into the evidence thereon at this time. It may become material however, in the ultimate disposition of the case, and will be referred to later.

Questions relating to the character and enforcement of such liens have been before the court upon a number of former occasions, and our decisions thereon have in an instance or two been inconsistent and conflicting. It is a matter of common knowledge that most of the cities and towns here are heavily burdened with debt aside from these warrants, and furthermore, that there is a large amount of this class of paper outstanding, and the question of the general liability of such municipalities, therefore, is of the utmost importance. Consequently, the gravest responsibility rests upon the court to settle and determine, as far as possible, the principles governing such liability, if it exists, with certainty and precision, as the questions are presented. Owing to the paramount importance of the subject, and the various decisions thereon heretofore rendered, nearly all of which are in some measure involved in this and one or two other street-warrant cases submitted and now before us for our consideration, we have deemed it advisable at this time to review to some extent some of the cases we have heretofore decided relating thereto, and also some cases from other states on the subject, for the purpose of definitely settling, if possible, a few principles. The matter may also call for a short notice of some other kindred questions discussed in those cases not necessarily involved in this one.

In Baker v. City of Seattle, 2 Wash. 576, 27 P. 462, the court held that such warrants, payable out of a particular fund, could not be considered as a general municipal liability with reference to the constitutional limitation on the amount of indebtedness a city could contract. There was no thought at that time that they ever could become such a liability here. In Soule v. City of Seattle, 6 Wash. 315, 33 P. 384, 1080, the court held that, where a city had reached its constitutional limit of indebtedness, it had no power to render itself liable for the cost of street improvements contracted for subsequent thereto, although the city failed to levy an assessment, and provide a special fund to pay for such improvements, as it had contracted to do. The principle was also recognized that where there was a lack of statutory authority to construct such improvements by a general tax, or from the general funds of the city, or where there was a failure to acquire jurisdiction of the subject-matter, there could be no general liability established against the city in any way. The city of Seattle had power to construct such improvement under its charter by a general tax. The city of Spokane has that power ( Stephens v. City of Spokane, 11 Wash. 41, 39 P. 266); and it seems to be generally, though not universally, true of the various towns and cities of the state. It was also said in Soule v. City of Seattle that an action brought to establish a general liability against the city, where there had been a failure to provide the special fund, was not in the nature of an action ex delicto, but was for a breach of the original contract, or upon an implied agreement on the part of the city to pay in case of a failure to provide the special fund, where there was no express provision in the contract holding the city generally liable. We will next refer to the case of Stephens v. City of Spokane, 11 Wash. 41, 39 P. 266, where a judgment had been rendered in favor of the city, upon a demurrer interposed to the complaint, and the cause was reversed here, the court holding that the delay upon the part of the city to provide the special fund, as alleged, was sufficient to establish a general liability. There was no contention that the city had lost its right to proceed with the assessments. Thereafter, in Thomas & Co. v. City of Olympia, 12 Wash. 465, 41 P. 191, the court discussed and distinguished the cases of Soule v. City of Seattle and Stephens v. City of Spokane, supra, and held that where, in the case of a contract for street improvements to be paid out of a particular fund, the city had undertaken in good faith to collect the assessment, but had been unable to do so, owing to decisions of the courts, and was proceeding to make a new assessment, it could not be held liable for the cost of the improvements out of its general fund, and that where the contract provided, as in that case, that the contractor would look only to the special fund, he had no right at all to proceed against the city generally for the negligence of its officers. When the case of Stephens v. City of Spokane was again before this court (14 Wash. 298, 44 P. 541, and 45 P. 31), where the city had appealed from a judgment rendered against it upon the trial, the court held that delay in providing the fund was not sufficient to enable the plaintiff to recover of the city, but that it must appear that there was a loss of power to further prosecute the assessment, and that the city could not bind itself to create the fund within a certain time. Whatever inconsistency, if any, there may have been between these two cases, is immaterial here. In McEwan v. City of Spokane (Wash.) 47 P. 433, the court held that where the city had contracted to provide the fund in the shortest possible time under its charter and ordinances, and had failed to do so, and had unreasonably delayed enforcing the assessments, it was liable generally, and that the city, and not the contractors, must look after the assessment, and enforce its collection. The right to recover was placed on the ground of delay alone. There was no contention that the statute of limitations had run against all of the special assessments, but the right to recover was sustained as to all of the warrants, regardless of such question. In Bank of British Columbia v. City of Port Townsend (Wash.) 47 P. 896, while it was in effect held that an action would lie against the city where there was a failure to provide the fund, there was no discussion of that question. The case was disposed of on a demurrer to the complaint. Although the complaint alleged that the right to prosecute the assessments was lost, no importance was attached to it. In fact, the mooted questions were other than that, as the opinion shows, and it was held that the complaint stated a cause of action. It was also held that, unless the contract was authorized by an ordinance, there could be no recovery. The most of these decisions were by a majority of the court only. The case of McEwan v. City of Spokane is in straight conflict with the decision rendered in Stephens v. City of Spokane, when it was last before the court, although there was no direct expressed intent to overrule it, and the same is true, but not in so great a degree perhaps, of the case of Bank of British Columbia v. City of Port Townsend.

We will first note some of the propositions upon which there is no conflict in the decisions, and which we think may safely be regarded as settled here. One is that there can be no general liability contracted or established when the municipality has reached the limit of its indebtedness. Baker v. City of Seattle, supra; Soule v. City of Seattle, supra; Winston v. City of Spokane, 12 Wash. 524, 41 P. 888. The first two cases held that indebtedness of that character was not a general indebtedness, and that the constitutional limitation did not apply. If such claims can subsequently become general liabilities against municipalities, serious complications are likely to arise, for in some instances the debt limit would undoubtedly be reached before all of such claims are provided for, and there might be some question as to which of them should be entitled to priority. If the contract in terms purported to bind the city generally, and was lawfully entered into, the question should be determined with reference to the financial condition when such contract was made ( West v. City of Chehalis, 12 Wash. 369, 41 P 171); and the priority of the respective times of execution would be controlling in determining the question as between the various contracts where only a part of them could be made a general charge within the debt limit. Where the contract contained no such provision or no binding provision in that respect, and the right is founded on a breach of the contract in failing to provide the fund, a different question arises, and it must be decided with reference to the time either when the delinquency arose or when it should be judicially determined. Unless the latter time governs, there might be some question...