Jewell v. City of Superior

• Decision Date: 06 October 1904
• Citation: 135 F. 19
• Parties: JEWELL v. CITY OF SUPERIOR. [1]
• Court: U.S. Court of Appeals — Seventh Circuit

135 F. 19

JEWELL v. CITY OF SUPERIOR. ^[1]

United States Court of Appeals, Seventh Circuit.

October 6, 1904

The city of Superior, in the years 1890 and 1891, caused the improvement of Tower avenue and of Clough avenue in that city, and levied assessments upon the property benefited to pay the cost of the improvements. These assessments, in accordance with the provisions of the charter, were divided into five equal installments, with interest on the unpaid installments, and were inserted in the tax roll of the city for each of the years 1891 to 1895, inclusive. The total amount of assessments thus extended upon the tax roll were as follows: Tower avenue improvement, $49,906.06; Clough avenue improvement, $16,693.17. In the year 1891, pursuant to the authority of chapter 16 of its charter, the city of Superior issued its bonds, from the sale of which money was derived to pay the cost of the improvements. These were in the usual form of bonds, were payable July 2, 1898, and bore interest at the rate of 6 per cent. per annum, payable semiannually, as evidenced by coupons attached. The bonds recited that they were issued for the purpose of paying the cost of the construction of the improvement and on account of such assessment made upon the property abutting upon such avenues for such improvements as the owners had not elected to pay. Each bond contained a provision that the payment of the principal and interest of the bonds is made chargeable upon the property abutting upon the avenue stated in the bond. The amount of bonds thus issued was: Tower avenue $42,439.60; Clough avenue, $14,129.75. Of these bonds appellant is the owner of Tower avenue bonds, Nos. 943 to 950 and No. 1,003, $4,439.60; Clough avenue bonds Nos. 1,522 to 1,542, $10,129.75. On July 1, 1898, the appellant, by agreement with the city, extended the time of payment of the bonds until July 1, 1908, and reduced the rate of interest to 5 per cent., payable semiannually, as evidenced by coupons then issued to him by the city, agreed to forbear suit until that date, gave the city the option of paying the bonds with accrued interest at any time prior to that date, and reserving to the holder the right to mature the principal of the bonds in case of failure for six months to pay any installment of interest due. All interest coupons due July 2 1900, and prior thereto on all of the bonds were paid as they matured, and all coupons maturing January 2, 1901, upon bonds 1,526, 1,529, 1,542, were also paid, but no later coupons were paid. The appellant, prior to June 11, 1902, because of nonpayment of interest, exercising the option, returned matured the principal of the bonds. There were outstanding at the commencement of this suit of these bonds at face, Tower avenue bonds, $31,939.60; Clough avenue bonds, $12,129.75. The city had paid for the principal of canceled bonds and interest upon all the bonds as follows: Tower avenue bonds $31,706.12; Clough avenue bonds, $9,175.66. During the years 1891 to 1895, both inclusive, of the assessments levied to pay for the improvement of Tower and Clough avenues, and extended upon the tax roll, there was paid to the city treasurer for principal and interest, prior to turning the delinquent tax roll to the county treasurer, Tower avenue $30,432.24; Clough avenue, $7,736.97. There was also paid during those years to the county treasurer of Douglas county on account of principal and interest on such assessments, as follows:

	Tower Avenue.	Clough Avenue.
Paid before tax sale ............................	$ 2,010 62	$ 904 86
After time of payment ...............................	193 90	........
From the tax sales ................................	7,698 35	3,422 89
From assignments of tax certificates by county ....	2,465 50	1,388 90
From redemption of assessments ....................	3,917 67	439 20
	----------	---------
	$16,286 04	$6,155 85

The practice with respect to delinquent taxes under the law was this: The city treasurer returned to the county treasurer all unpaid assessments in connection with the general taxes upon the same property each year in one lump sum, but the tax roll turned over at the time exhibits general taxes and special taxes separately extended thereon. No separate account was kept by the county treasurer of assessments returned delinquent, or of collections made by him. In each case assessments were commingled with the delinquent general tax. The city was charged by the county in the fall of the year with the state and county levies, and was credited in the spring with the amount of the delinquent roll. From time to time the county treasurer paid over moneys to the city treasurer as they were collected, and all such payments were in lump sums, not showing how much were special assessments and how much were general taxes, the payment being made on general account. The total amount of delinquent taxes and assessments returned by the city treasurer to the county treasurer for the years 1891 to 1901, were $3,266,189.85. The total amount paid by the county treasurer to the city treasurer during the same period on account of delinquent taxes and assessments is $1,710,292.31, which includes $70,000 of school moneys received from the state. About $400,000 of the amount of taxes and assessments returned delinquent to Douglas county by the city of Superior were charged off for losses, and $175,000 still remains to the credit of the city on the county's books. The evidence does not disclose that any of the assessments here involved which were returned delinquent to the county, and afterwards collected by it, have been paid over to the city.

In the years stated, and during taxpaying time, moneys received by the treasurer of the city, whether for general tax or for special assessments, were deposited in bank from day to day in one lump sum, and during the same time this fund was drawn against by the city for its current expenses, no special care being taken to prevent encroaching on that part of the fund made up of special assessments; but upon the return of the delinquent roll to the county treasurer in each year the moneys collected by the city upon special assessments were by the city treasurer placed in a separate street improvement fund account; but no separate account was maintained of each particular improvement. Until 1902 the appellant was not advised that the funds were so deposited, and until March, 1900, did not know that the special assessments were not kept in separate accounts. The banks which acted as depositories of the city funds were to pay 4 per cent. interest upon deposits, and by a subsequent agreement of October 20, 1896, the rate was reduced to 1 per cent. Some of these banks failed during the panic, involving the loss of city deposits; but it does not appear that any of the assessments here involved were included in such loss.

In 1898, pursuant to chapter 184, p. 304, of the Laws of Wisconsin for the year 1897, $3,586.37 of the Tower avenue assessments and $1,343.24 of the Clough avenue assessments were divided into five equal installments, and extended and made payable in the years 1904 to 1908. The appellant was not consulted or notified with respect to this extension; but on or prior to July 2, 1898, the time when payment of the bonds was extended by him, he knew of the provision of law authorizing the extension of the assessments and of the practice of the city in extending assessments thereunder. This suit is brought for an accounting with respect to the fund in question, and for a decree against the city of Superior for the assessments collected by it applicable to the payment of appellant's bonds, and for the amounts which have been extended; and also for a decree against the city for the amount of his bonds and coupons, irrespective of any question of collection of the assessments upon the ground of its liability upon them. The latter ground was, however, subsequently waived; he asking no relief except such as he may be entitled to by reason of the acts or omissions of the city with respect to the assessments levied to pay for the improvements in which the bonds in suit were issued.

On March 5, 1904, the court below having found the facts as stated, and which are stipulated by the parties to be correct, decreed that the complainant below is entitled to recover from the city such proportion of the assessments actually received by it as the amount of bonds held by him on such improvement bears to the total amount of bonds issued on such improvements, to be determined by dividing the amount of assessments received by the city each year on account of such improvements, with interest at the rate received from the banks in which such assessments were deposited, namely, 4 per cent. until July 25, 1895, and 1 per cent. thereafter, by the total amount of bonds issued for each of such improvements with interest theretofore paid and still due thereon; that the amount due the complainant is to be determined by multiplying the amount of bonds held by him on each of the improvements with interest to date, by the ratio or percentage thus obtained, and deducting from the product all interest paid on the bonds held by him on each of the...