H. L. Munn Lumber Co. v. City of Ames

• Citation: 176 N.W.2d 813
• Decision Date: 07 May 1970
• Docket Number: No. 53919,53919
• Parties: H. L. MUNN LUMBER COMPANY, Appellant, v. CITY AMES, Iowa, Appellee.
• Court: United States State Supreme Court of Iowa

Page 813

176 N.W.2d 813

H. L. MUNN LUMBER COMPANY, Appellant, v. CITY AMES, Iowa, Appellee.

No. 53919.

Supreme Court of Iowa.

May 7, 1970.

Donald L. Smith, of Reynolds, Gilchrist, Nutty, Smith & Sexton, Ames, for appellant.

Herschel G. Langdon and Robert H. Helmick, of Herrick, Langdon, Belin & Harris, Des Moines, for appellee.

RAWLINGS, Justice.

By action in equity plaintiff challenged a special assessment levied by the Ames City Council relative to acquisition and improvement of land for a central business district parking facility. Trial court upheld validity of the assessment against plaintiff's property but found the amount inequitable and reduced it. Plaintiff appeals. Defendant cross-appeals challenging reduction of the assessment. We find the disputed assessment invalid and accordingly reverse.

The factual situation presented will be set forth in chronological order as best determined from an unavoidably complex record.

The community project here involved first started in 1964, with appointment of a study committee which recommended the program be implemented with cost attendant upon acquisition and improvement to be financed by sale of parking meter revenue bonds.

April 6, 1965, the Ames City Council adopted a resolution authorizing execution of a Memorandum of Agreement with Chicago and North Western Railway Company for acquisition by the City of land to be used for the facility. That agreement was executed April 8, 1965, on behalf of the municipality, and May 19, 1965, by the railway. The City thereby agreed to purchase and pay $716,000, for the land, subject to these conditions, (1) closing of a railroad crossing, and (2) sale of $625,000 parking lot revenue bonds. The first condition was satisfied February 19, 1965.

Subsequently the city council was advised as to enactment of what is now identified as Code chapter 390A, effective July 4, 1965, granting cities and towns the power to levy special assessments in connection with off-street parking improvements.

June 15, 1965 the council determined $340,000 of the project cost should be defrayed by levying special assessments against benefited properties, the balance to be paid from sale of bonds.

July 20, 1965, a resolution was passed by the council fixing August 3, 1965, as the time for hearing on necessity of the improvement.

August 3, 1935, the council, by resolution, found there existed a need for the facility and directed hearing be held September 7, 1965, relative to issuance of $440,000 revenue bonds.

At the September 7th hearing, authority was granted by the council for issuance of these bonds, the proceeds to be deposited in a Construction Fund.

September 23, 1965, the City agreed to deposit $440,000 received from bond sales, plus $107,000 from other City funds, in an escrow account, later to be paid the railway under the Memorandum of Agreement.

October 20, 1965, there was filed a plat and schedule of proposed assessments to be levied. November 16, 1965, objections thereto were filed. That same date the council designated November 30th as the time for an informal meeting to consider these protests. That hearing was not held because of the council's apparent dissatisfaction with the assessment proposal.

December 7, 1965, a resolution was introduced and on December 21st adopted, establishing a benefited district. It provided 38.7% Of the Total project cost be defrayed by revenue derived from special assessments.

Commencing in October 1965, the City began paying the railway company out of the above mentioned escrow account. These payments continued until June of 1967, when the fund had been completely disbursed.

April 26, 1966, at an informal council meeting, the program, as planned, was explained.

May 18, 1966, a plat was filed showing each benefited property and the respective assessments scheduled to be made.

January 17, 1967, the city council adopted a proposed resolution of necessity and established February 21st, 1967, as the time for hearing. Notice was accordingly given.

At that meeting this plaintiff and 43 others protested the assessments. They were overruled and the resolution formally adopted.

In March 1967, the railway company gave the city written permission to start improvements on the land.

July 11, 1967, the railway executed a deed conveying the property to defendant City, but that deed was not delivered to the vendee until November 16th when the final and last payment was made.

The record indicates the facility was completed late in the fall of 1967.

January 2, 1968, the city council passed a resolution making the property assessments in accord with the plat and schedules previously filed.

Total cost of land acquired and improvements thereon was $1,027,950.44. Of that amount $337,985.92 was assessed against properties in the designated benefit area which, though not determinative, exceeded cost of improvements effected on the purchased property.

Brevity dicates we consider only such of plaintiff's 13 propositions urged in support of a reversal as are essential to a determination of this appeal.

I. Our review is de novo. Code sections 390A.38 and 391.88--391.90. See also Buda v. Fulton, Iowa, 157 N.W.2d 336, 338.

II. This is a case of first impression under Code chapter 390A. Some degree of precedent is available, however, by reason of the fact that this legislative enactment incorporates, by reference, numerous provisions of chapter 391, recently considered in Wharton v. City of Oskaloosa, Iowa, 158 N.W.2d 834. Incidentally, we there held, special assessments for a municipal sewer facility could not be legally levied upon properties located in a benefited district on a front foot basis alone. See also in that regard Chicago and Northwestern Railway Co. v. City of Webster City, 256 Iowa 201, 204--205, 127 N.W.2d 115; Village of Norwood v. Baker, 172 U.S. 269, 19 S.Ct. 187, 43 L.Ed. 443; Crampton v. City of Royal Oak, 362 Mich. 503, 108 N.W.2d 16, 20--27; Opinion of the Justices, N.H., 254 A.2d 273, 277; and Wing v. City of Eugene, 249 Or. 367, 437 P.2d 836, 838--843.

The real significance of chapter 391, is probably best demonstrated by section 390A.6, which provides: 'All necessary proceedings, forms and requirements not included in or contemplated or regulated by the provisions hereof shall be in accordance with the provisions of chapter 391 including definitions and regulations relating to valuations, benefited property, estimates, assessments, plans, specifications, schedules, resolutions, protests, objections, remonstrances, bids, deposits and contracts.'

III. Fundamentally plaintiff asserts the resolution of necessity adopted by defendant City relative to the challenged assessment For acquisition and improvement of the parking facility is invalid because the land to be used had been previously acquired.

This first brings into focus the Memorandum of Agreement executed by defendant City and the railway company almost two years prior to adoption of the controverted resolution.

Among other things that instrument provided, as aforesaid, it was subject to closing of a road and issuance of $625,000 revenue bonds by the City. Admittedly the road was closed February 19, 1965, and bonds were sold September 7, 1965, but only in the amount of $440,000.

This sale, in a lesser sum than that specified in the agreement does not, per se, alter the resultant situation.

The qualifications attendant upon closing of the road and sale of bonds were conditions precedent. 17A C.J.S. Contracts § 338, page 318; 17 Am.Jur.2d Contracts, section 321, page 751; 3A Corbin on Contracts, sections 627--636; and Restatement, Contracts, section 250.

But as stated in Locke v. Bort, 10 Wis.2d 585, 103 N.W.2d 555, 558, 81 A.L.R.2d 1331: 'The insertion of a condition precedent in a contract does not render the same void but only delays the enforceability of the contract until the condition precedent has taken place.'

Furthermore any condition precedent upon sale of bonds in a lesser sum than that specified in the Memorandum of Agreement was waived or excused by defendant vendee.

That is probably best demonstrated by this statement in Miracle Construction Company v. Miller, 251 Minn. 320, 87 N.W.2d 665, 670: '* * * a party may waive a condition precedent to his own performance of a contractual duty, when such condition precedent exists for his sole benefit and protection, and compel performance by the other party who has no interest in the performance or nonperformance of such condition.' See also Godfrey Co. v. Crawford, 23 Wis.2d 44, 126 N.W.2d 495, 497; 17 Am.Jur.2d, Contracts, section 392, page 838; 3A Corbin on Contracts, section 761; and Restatement, Contracts, section 294.

IV. What then was the resultant legal effect or status of the Agreement?

That question finds a ready answer in Briley v. Madrid Improvement Co., 255 Iowa 388, 122 N.W.2d 824, where we said in 255 Iowa 394, 122 N.W.2d 827: 'It is well established in this jurisdiction that an executory contract for the sale of land, * * * unless otherwise expressed, works an equitable conversion whereby the interest of the vendor becomes personalty and the vendee, in the contemplation of equity, is actually seized of the estate. (Authorities cited).'

And in the case of In re Estate of Bernhard, 134 Iowa 603, 606, 112 N.W. 86, 87, this court stated: 'Where such conversion is by contract, it is only necessary as a general rule that the contract be enforceable.'

That is followed by these apt statements at 134 Iowa 607, 112 N.W. 87: 'And it is also true that, when the title passes under the terms of the contract, it relates back to the date of the contract, and the vendor is treated as holding the legal title as trustee for the purchaser. This result is said to rest upon the principle that equity regards that as done which is agreed to be done. Story's Eq.Jur. §§ 789, 790, 1212 (12th Ed.); 1 PomEq.Jur. (2d Ed.), § 368, and cases cited. * * * In Kerr v. Day, ...