J. K. Mullen Inv. Co. v. Town of Arvada

• Decision Date: 27 July 1953
• Docket Number: No. 16991,16991
• Citation: 128 Colo. 227,261 P.2d 714
• Parties: J. K. MULLEN INVESTMENT CO. v. TOWN OF ARVADA.
• Court: Colorado Supreme Court

Page 714

261 P.2d 714

128 Colo. 227

J. K. MULLEN INVESTMENT CO. v. TOWN OF ARVADA.

No. 16991.

Supreme Court of Colorado, en Banc.

July 27, 1953.

Rehearing Denied Oct. 5, 1953.

Myles P. Tallmadge, Denver, for plaintiff in error.

Emory L. O'Connell, Denver, for defendant in error.

HOLLAND, Justice.

In the year 1921, the Town of Arvada, a Colorado municipal corporation in Jefferson county, organized and created a paving district within its limits and installed the paving improvements as contemplated, and to defray the cost and expenses thereof issued its paving district negotiable coupon bonds in the principal sum of $22,173.16, dated October 1, 1921, due October 1, 1943, subject however, to call and payment any time prior to maturity from funds available for that purpose.

On January 25, 1922, the town board of trustees adopted, and the mayor approved, an ordinance which was duly published and made a law of said town, levying special assessments against the parcels of real estate within the district for the purpose of paying the bonds. The total amount of such assessments was in the sum of $24,169.17.

Thereafter, the town collected and received substantially all of the proceeds of the special assessments so levied, together with interest on the unpaid installments thereof and penalties, amounting to $30,358.94, minus collection, charges, which was an amount sufficient to pay all of said bonds, together with the interest on the bonds to the maturity date. However, as custodian of said funds, and as trustee for the bondholders, the town failed and neglected to pay said bonds at times and in the manner provided by chapter 151, page 393, Session Laws of Colorado 1899, under which said bonds were issued, and diverted said funds for other purposes, with the result that the bonds numbered 29 to 36 inclusive, and 40 to 44 inclusive, in the denomination of $500.00 each, amounting to $6500.00, together with interest, remain unpaid. The holder of said bonds, The J. K. Mullen Investment Company, plaintiff in error, claims the amount due at the time of the filing of this action was $6,755.00 and interest thereon, for which it filed its complaint on the 13th day of August, 1949, alleging that plaintiff, or its predecessor in interest, had no knowledge or information of the general matters concerning the true condition of the status of these special assessment proceeds until a few days before the filing of the complaint. The status of the somewhat incomplete records of the town as to the receipt by the town of the assessments, interest and penalties is disclosed by plaintiff's exhibit No. 2 and the town's exhibit No. 50. These exhibits disclose, and it is admitted, that the town paid only $14,000 of the bonds issued.

By a bill of particulars furnished by the town, it is shown that the town was unable to state the exact amount received during the years 1923 and 1924, because the assessment book did not correspond with the receipt book that was used, and that the records of the town for 1925 and to May 26, 1926 could not be found; however, the books of the office of county treasurer reveal the exact amount of the assessments received by the town, and these amounts are substantially the same in both exhibits, that of plaintiff and of the town. It is fairly well established by these exhibits that there was an admitted shortage in the special assessment fund in the sum of $2,009.56 on May 27, 1926, for which the town is unable to account and the trial court so found. The exhibits further demonstrate the neglect and failure of the town to call and pay bonds when it had on hand available and sufficient funds therefor, according to the mandate of the statute under which the bonds were issued.

Summarized, the town's defense is that the town had a right to withdraw $1,079.15 to reimburse it for advances made for the improvements; that the action was barred by statutes of limitation, as well as by laches, estoppel and acquiescence as is shown by the separate defenses set out in an amended answer.

Trial was had to the court and on February 11, 1952, the court rendered its opinion and memorandum for findings and decree in which it stated as follows:

'In this case there was testimony showing that the Arvada Fire Department holds a $1500 face value of bonds with unpaid coupons attached, of the Improvement District No. 1, that is the same sort of bonds as held by the plaintiff. However, the Arvada Fire Department is not a party to the suit and we do not know anything we can do about it.'

The then town attorney who represented the town at the trial, on March 14, 1952, withdraw his appearance for the town and filed a petition to intervene on behalf of the Firemen's Pension Fund of the town and filed a complaint for such fund. This application for intervention was resisted on the ground that it was not 'timely.' On April 14, 1952, a hearing was had on objections to plaintiff's proposed findings and on the petition to intervene. On April 24, 1952, the trial court entered its memorandum to attorneys, in part as follows:

'We are not acting on the petition for intervention at this time and in our opinion it should not be necessary for the Firemen's Pension Fund to have to intervene, because it doesn't seem to the Court there can be much question as to the fact that they do have three bonds, that these bonds are outstanding and unpaid and are properly payable out of the fund.'

Without granting the petition for intervention, the trial court entered its final decree on this subject, finding that the defendant town should augment the bond fund in the amount of $2,009.56 with interest, the amount of the admitted shortage, and that such an amount, together with $50.25, the amount then in the fund, should be prorated with the trustees of the Firemen's Pension Fund. The court then made the further finding that to find any deficiency in the bond fund or default on the part of defendant of a sum greater than $2009.56 and interest would be speculative; that defendant was within its rights reimbursing itself in the sum of $1079.15 for advancements; and judgment was entered accordingly on May 17, 1952.

Plaintiff in error specifies as reasons for reversal that the defendant town is liable to plaintiff in the full amount of its bonds and interest in controversy because of the admitted shortage and of the failure to call and pay bonds when funds were available under the mandatory provisions of the statute; that the trial court erred in concluding that a finding of any deficiency in an amount greater than the admitted shortage would be speculative; that it was error to hold that the town was within its rights in reimbursing itself in the sum of $1079.15 for advancements; that it was error to hold that any recovery should be prorated by the plaintiff and the Firemen's Pension Fund, because such fund was not a part of the action; that the petition to intervene was not timely; that the court did not specially grant the petition for intervention; and finally, that the statutes of limitation were not applicable because of the trust relationship between the town and its...