Peoples Trust & Savings Bank v. Hennessey

• Decision Date: 14 October 1926
• Docket Number: 12,254
• Parties: PEOPLES TRUST & SAVINGS BANK v. HENNESSEY ET AL
• Court: Indiana Appellate Court

153 N.E. 507

106 Ind.App. 257

PEOPLES TRUST & SAVINGS BANK v. HENNESSEY ET AL

No. 12,254

Court of Appeals of Indiana

October 14, 1926

Rehearing denied March 10, 1927. Transfer denied December 17 1930. Petition to Reconsider denied February 20, 1939.

From Porter Circuit Court; H. H. Loring, Judge.

Action by Peoples Trust & Savings Bank against John C. Hennessey and wife to foreclose a street improvement assessment lien and for personal judgment. From a judgment denying the right of foreclosure, plaintiff appealed.

Affirmed.

Sallwasser & Sallwasser, for appellant.

Osborn Osborn & Link, for appellees.

OPINION

MCMAHAN, P. J.

Appellee John C. Hennessey and his wife, Kate Hawley Hennessey, owned a number of lots in the city of LaPorte, which were assessed as benefited on account of a certain street improvement. John C. Hennessey, hereinafter referred to as "appellee," signed an agreement waiving any irregularity in the proceedings, and in consideration of being given the right to pay the assessments in 10 annual installments, agreed to pay the same as the several installments became due. The assessments against the several lots owned by appellee amounted to $ 721. Improvement bonds payable to bearer were issued and delivered by the city to the contractor in an amount equal to the aggregate of all of the assessments for which waivers had been filed. The first installment of the principal and interest on these assessments became due and payable on the first Monday in May, 1913. These bonds were in series, each series being for one-tenth of the amount of the assessments for which waivers had been filed, and were payable in one, two three, four, five, six, seven, eight, nine, and ten years. The interest on each bond was payable semi-annually, and was represented by coupons which were attached to the several bonds. Appellant owned and held certain of said bonds and interest coupons in the aggregate in excess of the amount of the assessments on the lots so owned by appellee. No part of the assessments on appellees' lots, or any interest thereon, has ever been paid.

On March 14, 1923, appellant filed its complaint against appellees, alleging the signing and filing of said agreement by John C. Hennessey, and asking that the lien of said assessments on appellees' lots be foreclosed and for a personal judgment against John C. and Kate Hawley Hennessey. No copy of the agreement was filed with this complaint. On March 5, 1924, an amended complaint was filed, to which a copy of said agreement was attached. Answers in denial, and pleading the five and ten-year statutes of limitations were filed.

The court denied appellant the right of foreclosure, but rendered a personal judgment against appellee for the full amount of the assessments against his lots, with interest thereon; hence this appeal.

Appellant contends the court erred in refusing to foreclose the improvement lien. Appellee has filed a cross-assignment of error, and contends the court erred in rendering the personal judgment against him.

Section 113 of the Municipal Code, Acts 1905, p. 219, was in force when the improvement in question was made and the waiver signed and filed by appellee. This section was copied from an act concerning cities having a population of over 100,000 (Acts 1891, p. 137, § 79), and provided that anyone desiring to pay his assessment in installments should enter into a written agreement that, in consideration of such privilege, he would make no objection to any illegality or irregularity with regards to the assessment against his property and would pay the same as required by law.

Section 115 of the Act of 1905, as amended (Acts 1907, p. 550, § 3), provides that such bonds shall be payable out of the funds actually collected by the city, and gives the contractor or his assigns an option to demand and have issued to him a bond, with coupons against the property of each person who shall have elected to pay in installments. Reference is also made to the privilege of making prepayments, with the provision that, when prepayments are made, the treasurer shall notify the bondholders, when known, or give written notice to those presenting bonds or coupons, and, if the bondholders were not known, to then notify the contractor. If a property owner becomes delinquent in payment of any installment, the treasurer is required to notify the holder of the bonds, if known, of such delinquency. Bondholders who furnish the treasurer with their names and addresses and a description of the bonds held by them are entitled to such notice from the treasurer, who is required to keep a register of bondholders. When a property owner defaults in any payment, the treasurer is required to certify a list of all delinquencies to the county auditor, who, in turn, in making up his list of delinquent lots subject to sale for delinquent taxes, is required to certify all lands on which installments of special assessments for street improvements are delinquent, and such land is to be sold by the treasurer as other lands are sold for delinquent taxes. The bonds authorized by this section may be issued directly to the contractor, or they may be issued and sold as other city bonds, and, when issued, they convey the transfer to the holder all lien, right, title and interest in the assessment and lien on the lot for which the lien stands as security, with power to enforce collection by foreclosure, with a provision that such property shall not be sold for less than the amount of the assessment, attorney's fees and costs, and that the proceeds are to be distributed pro rata in payment of the bonds. All of such bonds are made negotiable as inland bills of exchange, and free from all defenses by any property owner. Acts 1907, p. 550, § 10454 Burns 1926.

Section 116, as originally enacted in 1905, provided, in part: "Failure to pay any installment of principal or interest when the same is due shall bring all installments of principal yet unpaid forthwith due and payable," and gave the owner of the bonds, or in case no bonds had been issued, the person to whom was due and owing the amount of such unpaid assessment, the right to proceed in any court of competent jurisdiction to enforce the liens or unpaid assessments, recovering interest, costs and a reasonable attorney fee, and to have the proceeds of sale applied to his claim. If any person defaulted in the payment of any installment of principal or interest, the treasurer was required to mail a notice of delinquency to such person, who was given 30 days from the date when the same was payable to pay such installment, with a fee to such treasurer of 25 cents for sending such notice. The failure to send such notice to any delinquent did not prevent the foreclosure of such lien after the expiration of such period of grace. This section specifically provided: "No action shall be maintained for such foreclosure which is not commenced within three years from the time when the right of action accrues." (Our italics.)

Said § 116 was amended in 1907, Acts 1907, p. 550, § 3, by omitting therefrom the provision that "failure to pay any installment of principal or interest when due, shall bring all installments of principal yet unpaid forthwith due and payable," and by providing that, if the city should fail to collect any unpaid assessment or installment thereof when due, the owner of the bonds, or the person to whom is due such unpaid assessment, "shall have the right to proceed in any court of competent jurisdiction to enforce the lien of so much of the assessments as is due and unpaid," etc. (our italics), and by extending the time from three years to five years within which the action to foreclose could be commenced. This section was again amended, Acts 1909, p. 412, § 7, § 10455 Burns 1926, by reinserting the provision that "failure to pay any installment of principal or interest where (when) the same is due shall bring all installments of principal yet unpaid forthwith due and payable," and giving the bondholder, or if no bonds are issued, the person to whom is due and owing the amount of such unpaid assessment, the right to enforce the lien or the unpaid assessment, and providing that no action shall be maintained for "such" foreclosure which is not commenced within five years from the time the right of action accrues, and by providing: "If any assessment shall be prepaid after a waiver has been signed, the entire amount of such prepayments, together with all interest prepayments, shall be paid to the bondholder or bondholders on demand, or, in any event, not later than the first day of June or the first day of December thereafter, as the case may be. For the purpose of paying at maturity the bonds and coupons issued pursuant to the provisions of this act, the common council of any city shall have the power to appropriate money out of the general fund of such city for the payment of any delinquent special assessments, and in case any such delinquent assessments are so paid, such city shall be subrogated to the rights of such bond or coupon holder, and whenever thereafter such assessments are collected by voluntary payment or by tax sale or foreclosure, the amount so collected shall belong to the said city."

Sections 5 and 6 of "An act concerning liens upon real estate, the foreclosure and expiration thereof," approved March 6, 1909, Acts 1909, p. 334, are as follows:

Section 5: "No action shall be brought or maintained in any of the courts of this state to foreclose or enforce the liens of any assessment for streets, sewers, sidewalks, ditches or other assessments for public improvements in any case when the last installment of any such assessment has been due and payable over five years, as shown by the record creating and...