Jordan v. City of Logansport

• Citation: 99 N.E. 1061,178 Ind. 629
• Decision Date: 05 July 1912
• Docket Number: No. 21,709.,21,709.
• Parties: JORDAN v. CITY OF LOGANSPORT et al.
• Court: Supreme Court of Indiana

178 Ind. 629

99 N.E. 1061

JORDAN

v.CITY OF LOGANSPORT et al.

No. 21,709.¹

Supreme Court of Indiana.

July 5, 1912.

Appeal from Circuit Court, Cass County; Henry J. Paulus, Judge.

Injunction by Michael A. Jordan against the City of Logansport and others. From a judgment for defendants and an order overruling a motion for new trial, plaintiff appeals. Affirmed by divided court under section 701, Burns' Ann. St. 1908, without costs.

See, also, 99 N. E. 1060.

Miller, Shirley & Miller, of Indianapolis, and Long, Yarlott & Souder, of Logansport, for appellant. Lairy & Mahoney and McConnell, Jenkines, Jenkines & Stuart, all of Logansport, for appellees.

MONKS, J.

This action was brought by appellant, as a resident taxpayer of the city of Logansport and the owner of real estate assessed for the construction of a sewer in said city, against said city, its officers and the contractor who constructed said sewer, appellees here, to enjoin said city and its officers from paying any money from the treasury of said city to said contractor or his representatives for the alleged use of said sewer by said city, under an alleged lease of said sewer to said city executed by said contractor, and to enjoin the levy and collection of any tax for the purpose of providing money for the payment under said lease, and asking that said lease be declared void and canceled. A trial of said cause resulted in a finding and judgment against appellant.

It appears from the record that in the years 1905 and 1906 there was constructed in the city of Logansport a large combination storm water and sanitary sewer known as the “west side sewer.” Appellee Uhl was the contractor who constructed said sewer, and the same was constructed under the provisions of an act of the General Assembly approved March 11, 1901 (Acts 1901, pp. 534-539, §§ 3623a-3623h, Burns 1901). Said sewer was completed by said Uhl in February, 1906, and at that time was accepted and approved by the proper officers of said city. That, after the sewer had been accepted by the city, the city at its own expense extended the sewer from the river bank to the water channel. Said sewer was provided with catch basins as inlets for surface water from the streets and alleys, and was so constructed as not to admit water at any other points except through said sanitary inlets. No provision was made for flushing said sewer, except by said surface water from the streets and alleys. The amount due said Uhl under the contract for the construction of said sewer was reported by the civil engineer of said city as being $173,574.39. After the adjustment of appeals from assessments, the total assessment against the real estate benefited was $116,124.92, and against the city of Logansport was $57,449.47. That from the time said sewer proceedings were begun, and at all times since, said city of Logansport has been indebted in excess of 2 per cent. of the taxable property of said city as shown by the tax duplicate, and that no provision has been made by said city at any time for the payment of any portion of the cost of constructing said sewer, assessed against the city. That the said final assessment of $57,449.47, made against the city of Logansport, was, when made, and ever since has been, void by reason of said indebtedness of said city. That at no time since said sewer proceedings were commenced has there been any funds in the treasury of said city or belonging to said city available for paying any part of the cost of said sewer or said assessment against said city. That upon suit by appellant, a taxpayer, against said city, it has been enjoined from paying any part of said assessment of $57,449.47 on the ground that said city was already in debt beyond the constitutional limit in violation of article 13 of our state Constitution, which judgment was, on October 29, 1908, affirmed by this court on appeal soon after the action was commenced. City of Logansport v. Jordan, 171 Ind. 121, 85 N. E. 959, 37 L. R. A. (N. S.) 1036, 17 Ann. Cas. 415.

This court in another appeal involving the same assessment, after this action was commenced, held and determined on November 24, 1908, that said assessment was wholly void for the same reason. Jordan v. City of Logansport, 171 Ind. 280, 86 N. E. 47. At least 500 different pieces of real estate owned by many different persons were assessed as specially benefited by the construction of said sewer, said sewer furnishing an outlet for sanitary sewerage from said lots and parcels of ground; that prior to the 1st day of March, 1908, a large number of said persons had made connections with said sewer from their respective lots and parcels of ground for the purpose of sanitary sewerage. Afterward, and before the commencement of this action, on March 31, 1908, the city of Logansport, a city of the fourth class, under and by virtue of an act of the General Assembly of the state of Indiana, approved March 11, 1907 (Acts 1907, pp. 499, 500), entered into a contract with said contractor, Uhl, which purports to lease said sewer to said city. This lease, after reciting the construction of the sewer and the city's inability to pay the assessment against it for the construction of the sewer, and the consequent ownership of said sewer by the contractor, Uhl, purports to grant to said Uhl a franchise to operate said sewer in the streets and alleys where it was located, and also purports to lease said sewer of and from said Uhl for the drainage of the streets and alleys of said city for a period ending December 1, 1918, unless sooner terminated by the purchase of the sewer by the city from the contractor upon the terms stipulated in the lease. For the use of the sewer, the city by this lease agreed to pay $3,722.21 on the 1st days of June and December in each year, beginning June 1, 1908.

It was provided that the city should have the right to purchase said sewer from Uhl at any time during the term of the lease or at the termination thereof for the sum of $57,449.47, and that any amount paid as rental under the lease should be credited upon such purchase price. That, in case the city failed to pay the stipulated rental or exercise its option to purchase, it should have no right to use said sewer for the drainage of its streets and alleys. That at the expiration of the period of rental, and after all installments of rent had been paid, the title to the sewer should automatically revest in the city without any transfer by or from Uhl. It was further provided that the city should, at its own expense, keep said sewer in repair during the term of the lease.

Said act of 1907 (Acts 1907, pp. 499, 500) reads as follows: “Section 1. Be it enacted by the General Assembly of the state of Indiana, that in all cases where a sewer or drain has been constructed or may be constructed in the future, in any city having a population of more than sixteen thousand and less than twenty thousand inhabitants, according to the last preceding census of the United States, under any law heretofore, now or hereafter in force in this state upon the subject, and such city shall be unable from any cause to pay the assessment which has been made or may hereafter be made against it on account of benefits derived by said city from the construction of such sewer or drain, the title to such sewer or drain shall, as against such city be, and remain, in the contractor who shall have constructed, or may hereafter construct such sewer or drain.

“Sec. 2. That, in all cases as are provided for in section 1 of this act, the city in which such sewer or drain has been or may be constructed, shall have power to grant a franchise to such contractor to operate such sewer or drain in the streets, alleys and public places of said city under such conditions as may be imposed, and shall have power by ordinance or contract to lease said sewer or drain or to otherwise provide for the use of said sewer or drain by said city for the drainage of its streets, alleys and public grounds and for other municipal purposes upon such terms as may be agreed upon between said city and such contractor: Provided, that nothing contained in this act shall affect any pending litigation.”

The construction of said sewer was completed by the contractor and accepted by the city in February, 1906, long before said act was passed in 1907. Appellant first insists that, when said act took effect in 1907, the title to said sewer was vested in said city, and that, in so far as said act of 1907 may be deemed to attempt to take the title to said sewer from the city and vest it in the contractor, it is in violation of section 21 of article 1 of the state Constitution, prohibiting the taking of property without compensation and without due process of law. Appellee contends, however, “that sewers are not private property of cities like waterworks plants, electric light plants, etc., but that a sewer, constructed by assessments under the laws of this state, is property of a public or governmental character; that a city has no vested right in such property; that the city holds it only as a mere instrumentality of government and for the accomplishment of governmental purposes; that, even if the technical title to such sewer vested in the city, it may be taken away by the Legislature.”

The contract for the construction of said sewer was not invalid although the city's part of the expense therefor created an indebtedness beyond the constitutional limit, and was therefore void and could not be collected from the city for that reason. Under such circumstances, the contractor was entitled to recover the part of the cost of said improvement payable by the abutting owners, which was $116,124.02. McGillivray v. Joint School Dist., 112 Wis. 354, 358, 88 N. W. 310, 58 L. R. A. 100, 88 Am. St. Rep. 969, 971. Said contractor was chargeable with notice of the limitation on the power of the city to become indebted beyond the constitutional limit, and, in dealing with...