Regency Park v. City of Topeka, Ks

• Decision Date: 04 June 1999
• Docket Number: 80-805
• Citation: 981 P.2d 256
• Parties: REGENCY PARK, LP, et al., Plaintiffs/Appellants, v. CITY OF TOPEKA, KANSAS, Defendant/Appellee. TARWATER, INC. et al., Plaintiffs/Appellants, v. CITY OF TOPEKA, KANSAS, Defendant/Appellee.IN THE SUPREME COURT OF THE STATE OF KANSAS Opinion filed
• Court: Kansas Supreme Court

REGENCY PARK, LP, et al., Plaintiffs/Appellants v CITY OF TOPEKA, KANSAS, Defendant/Appellee

TARWATER, INC. et al., Plaintiffs/Appellants v. CITY OF TOPEKA, KANSAS, Defendant/Appellee.

Nos. 80,805, 80,806

IN THE SUPREME COURT OF THE STATE OF KANSAS

Opinion filed June 4, 1999.

Appeal from Shawnee district court; FRED S. JACKSON, judge.

SYLLABUS BY THE COURT

1. The legal effect of a prior judgment of a district court declaring a city ordinance invalid is a question of law over which appellate review is unlimited.

2. One who pays a tax voluntarily, that is, without compulsion or duress, has no valid claim for its repayment. This is what is known as the "volunteer rule," which provides that a party who, without mistake, fraud, or duress, voluntarily pays money on a demand which is not enforceable against the party, cannot recover the amounts paid.

3. Sewer charges and fees imposed by a municipality are not taxes or special assessments but are in the nature of tolls, rents, fees, or charges paid for service furnished or available.

4. When a municipality has power to pass an ordinance for a certain purpose, but exercises that power in an unauthorized manner, the ordinance is valid and binding until set aside by legal proceedings instituted for that purpose.

5. A voidable charge, rent, toll, or fee is one made in good faith but is irregular or unfair. A taxpayer who disputes the legality of such charge, rent, toll, or fee must move in due time and make a full and clear showing of a right to appropriate relief.

6. The necessity of informing an assessing authority of the involuntary nature of a payment serves the important function of providing a municipality with notice of the claimed illegality and the grounds advanced in support of the claimed illegality. The notice affords the municipality the opportunity to fashion budget appropriations, or expenditures, taking into account the magnitude of the claimed tax illegality.

7. On appeal, the record is examined and it is held: Payments made to the stormwater utility system of the City of Topeka before invalidation of the ordinance were voluntarily made and are not subject to refund. .

Robert D. Hecht, of Scott, Quinlan & Hecht, of Topeka, argued the cause, and Deborah L. Hughes, of the same firm, was with him on the briefs for appellants.

Ann L. Hoover, of Topeka, argued the cause, and Linda P. Jeffrey, city attorney, was with her on the brief for appellee.

The opinion of the court was delivered by LARSON, J.:

In this consolidated appeal, plaintiffs, Regency Park, LP, et al., and Tarwater, Inc. et al., paid stormwater utility charges under City of Topeka (City) ordinances which were later declared invalid and appeal the trial court's decision that they are not entitled to be reimbursed by the City for amounts paid under the ordinances.

The facts are not in dispute and reveal the following history of these two cases.

On July 7, 1992, the City adopted Ordinance Nos. 16472 and 16473 (collectively, the ordinance) which established a stormwater utility system deemed necessary to collect, convey, treat, and release stormwater so as to reduce hazards to property and life, enhance health and welfare, and improve water quality in the surface water system. The ordinance established a stormwater drainage fund to be funded by fees to be paid by all property owners or nonowner users in an amount set forth in a monthly rate schedule based on the square footage of impervious area of each property.

The ordinance in question provided that unpaid drainage fees were subject to a 5% per month, not to exceed 25%, late fee. The ordinance further provided that the failure to pay drainage fees would subject a property owner or nonowner user to discontinuance of utility services and also to a lien on the subject property for the amount of unpaid fees.

The ordinance contained an appeal provision which provided that any person disagreeing with the calculation of the stormwater drainage fee could appeal such a determination to the Director of Public Works. It is undisputed that none of the plaintiffs in this case appealed to the Director of Public Works under this provision.

On May 30, 1996, the District Court of Shawnee County, in the case of Mr. & Mrs. E.R. Stadler, et al. v. City of Topeka, No. 94-CV-0108, determined the ordinance was invalid, enjoined the City from further collection of fees, and ordered the City to refund collected charges to the plaintiffs therein. An attempt to certify this case as a class action was denied. Neither party appealed.

The Tarwater case was filed June 20, 1996, and the Regency Park case was filed November 5, 1996. Each suit relied on the result in the Stadler case; requested refund of all stormwater utility fees paid; requested class action certification; asked for an accounting of all funds, fees, or revenue received under the ordinance; and asked for allowance of fees, expenses, and costs.

After discovery, the trial court granted the City's motion for summary judgment based on what is known as the "volunteer rule," holding plaintiffs payments were all made voluntarily and not under protest. The trial court found there were no genuine issues of material facts despite the filing of an affidavit of the principal of numerous Tarwater plaintiffs stating that affiant had opposed the stormwater drainage fees and made such opposition known to City officials. The affiant also claimed the payments had been made to keep the water and sewer systems on the properties operable and the premises habitable.

After a motion for reconsideration filed by the plaintiffs in both cases was denied, the plaintiffs have appealed.

The cases were transferred to us from the Court of Appeals pursuant to K.S.A. 20-3018(c).

Although review of the granting of a motion for summary judgment normally requires that we consider the record in the light most favorable to the parties defending against the motion, Moorhouse v. City of Wichita, 259 Kan. 570, 576, 913 P.2d 172 (1996), the principle question in this appeal is the legal effect of the prior judgment of the district court declaring the ordinance invalid, which is a question of law over which our review is unlimited. See Davis v. City of Leavenworth, 247 Kan. 486, 498, 802 P.2d 494 (1990).

The same trial judge who heard these cases also was the judge who declared the ordinances invalid in the Stadler case. The Stadler decision was based on the failure of the City to comply with K.S.A. 12-3103 of the Kansas Water Pollution Act, K.S.A. 12-3101et seq. This section requires that before a municipality exercises the powers conferred under the act, the Secretary of Health and Environment shall adopt a resolution finding that

"(1) [t]he sewer system of such municipality is inadequate to meet the standards of the secretary of health and environment; and (2) the construction, reconstruction, development or redevelopment of a sewer system of such municipality is necessary in the interest of public health and welfare of the residents of the state." K.S.A. 12-3103.

The Secretary had not issued the required resolution before the ordinance was adopted. In addition, the trial court held 4 of Ordinance No. 16473 provided for a service fee in a manner other than charges based on a "per unit volume of water used and based on the strength and volume of sewage contributed" was in conflict with K.S.A. 12-3104(a).

Based on these findings, the ordinances at issue in Stadler and here were held to be invalid. It is important to note that the decision was not that the ordinances were unconstitutional, that they were void, or that they were not related to a matter of public need and necessity.

Here, the trial court's decision below was based on its finding that prior to the ordinances in issue being declared invalid, fees collected were paid voluntarily. Based on the relevant law of Palmer v. First Nat'l Bank of Kingman, 10 Kan. App. 2d 84, 90, 692 P.2d 386 (1984), the trial court held:

"One who pays a tax voluntarily, that is, without compulsion or duress, has no valid claim for its repayment. This is what is known as the 'volunteer rule,' which provides that a party who, without mistake, fraud, or duress, voluntarily pays money on a demand which is not enforceable against him, cannot recover the amounts paid."

This rule was deemed by the trial court to be the law in most states, citing Spencer v. City of Los Angeles, 180 Cal. 103, 179 P. 163 (1919); City of Louisville v. Belknap Hdw. & Mfg. Co., 145 Ky. 266, 140 S.W. 185 (1911); Central Savings Bank & Trust Co. v. City of Monroe, 194 La. 743, 194 So. 767 (1940); Nat. Bank of Detroit v. Detroit, 272 Mich. 610, 262 N.W. 422 (1935); Brink v. Kansas City, 355 Mo. 860, 198 S.W. 2d 710 (1947); Manufacturer's Casualty Ins. Co. v. Kansas City, 330 S.W. 2d 263 (Mo. App. 1959); Salvaggio v. Houston Independent Sch. Dist., 709 S.W. 2d 306 (Tex. Civ. App. 1986).

The trial court dismissed as meritless the plaintiffs' argument that fee payments were not made voluntarily because their failure to pay would result in a penalty and water service termination. The court stated it was unaware of any tax that does not carry a penalty for nonpayment.

The trial court held it was uncontroverted plaintiffs paid the fees voluntarily despite the affidavit stating that complaints had been made to representatives of the City including the mayor. The trial court found that complaining to city representatives was insufficient to make payment involuntary, particularly where there is an ordinance-provided methodology for appeal, of which the plaintiffs had failed to take advantage.

The plaintiffs on appeal raise two issues: (1) The trial court erred in determining they were not entitled to refund of stormwater drainage fees by holding (a) the fees were required to have been paid "under protest" and (b) they had voluntarily paid the fees; and (2) the trial court failed to determine that its previous...