Severns Paving Co. v. Oklahoma City
| Decision Date | 19 April 1932 |
| Docket Number | 20498. |
| Citation | 13 P.2d 94,158 Okla. 182,1932 OK 307 |
| Parties | SEVERNS PAVING CO. v. OKLAHOMA CITY. |
| Court | Oklahoma Supreme Court |
Withdrawn Corrected and Refiled April 22 and 28, 1932.
Rehearing Denied July 12, 1932.
Syllabus by the Court.
1. The rule under which it was held in Oklahoma City v. Orthwein (C. C. A.) 258 F. 190, that a city might become liable under the Oklahoma statutes on special improvement bonds issued for paving is inapplicable in the determination of the question of liability, for it is premised upon conditions incapable of existence under the Oklahoma statutes, for under those statutes a city has no general power to contract for paving, and lack of primary liability is not dependent merely upon a stipulation, but the statutes, which provide for the contract price being paid from the proceeds of the sale of bonds, or by acceptance of bonds by the contractor, expressly provide that in no event shall such bonds become a liability of the city issuing the same.
2. Durant v. Story, 112 Okl. 110, 240 P. 84, is disapproved, in so far as it intimates that decisions holding a city liable upon the ground that it has power to contract for paving and has stipulated against liability are authorities upon the question of liability on special improvement bonds issued for cost of paving, it being the same rule that was relied upon in Oklahoma City v. Orthwein supra, and assumes a general power to contract not existing under the Oklahoma statutes, and fails to consider that under our statutes a city is not only not primarily liable, and there is not an absence of a prohibition against holding general revenue liable, but, on the contrary, the statutes expressly provide that the bonds issued in the amount of unpaid assessments shall in no event become a liability of the city issuing the same.
3. Under the Oklahoma statutes, paving bonds cannot be enforced against the city issuing the same as a debt, nor as a measure of damages either in an action ex contractu or in an action ex delicto, for neglect, delay, or refusal to assess or reassess any of the property specially benefited by the improvement, the provision in the statutes that such bonds shall in no event become a liability of the city issuing the same requiring the bondholder to resort to proceedings in mandamus in such event to force the making of such assessment or reassessment.
4. Even if it had been the case that a city had under the statutes of Oklahoma a general power to contract for paving and to charge its general revenue with primary liability for the contract price of such improvement, it would still follow that any duty cast upon the city with reference to assessment collection of assessments, and payment over of the proceeds of such collections would be designed only to effect liquidation of the bonds as provided by statute, and there would be no authority for the contracting body to take into consideration or to contemplate what amount of damages, or whether any damages, in the event of its failure to perform its duty with reference to assessment, collection, or payment over, would be suffered by the bondholder in the event of a transfer of title to the bonds, voluntary or involuntary, for the plain reason that it was not the intent that any such loss would become a liability, the Legislature not being concerned, nor authorizing the city or the mayor and council to be concerned, with the desire or ability of the bondholder to retain title to the bonds.
Appeal from District Court, Oklahoma County; Sam Hooker, Judge.
Action by the Severns Paving Company against Oklahoma City. Judgment in favor of the defendant, and the plaintiff appeals.
Affirmed.
Twyford & Smith, Ames, Cochran, Ames & Monnet, and Mason & Hefner all of Oklahoma City, for plaintiff in error.
M. W. McKenzie, Municipal Counselor, of Oklahoma City, for defendant in error.
This action was instituted to recover for breaches of what were alleged to be contractual obligations of the defendant city, and deemed to be capable of supporting liability ex contractu and ex delicto. It involves two paving contracts. Each contract contained the same provisions, and the material facts are the same in each instance.
Each contract contained the following paragraph, which the plaintiff contends created a contractual obligation: "The city further agrees that it will cause the levy and collection of assessments against the property liable to the same under the laws of the State of Oklahoma, and will levy and collect annually, in the manner provided by laws of the State of Oklahoma, a sufficient tax to pay the bonds so to be issued, with the annual interest thereon as they shall become due; and the city agrees to pay out of the funds when collected from such tax levy said bonds and interest promptly when due to the holders of such securities at the office of the city treasurer of Oklahoma City, and the city agrees to cause to be made promptly the annual collections, as provided by law, of a sufficient amount of money to pay the securities so issued, together with all interest charges."
And each contract also contained the following paragraphs, which the plaintiff contends created contractual obligations:
It appears that the Oklahoma Railway Company contested assessments under each of these contracts, which were void for misdescription of the property, and that later the plaintiff instituted mandamus proceedings to cause a reassessment, and a judgment for a peremptory writ was affirmed by this court by an opinion reported in Oklahoma R. Co. v. Severns Paving Co., 67 Okl. 206, 170 P. 216, 10 A. L. R. 157, and affirmed on error to the Supreme Court of the United States, 251 U.S. 104, 40 S.Ct. 73, 64 L.Ed. 168, the latter decision having been rendered December 8, 1919.
In the meantime the plaintiff had used the paving bonds as collateral security for several loans procured in different places, the last loan having been obtained from the American National Bank of Oklahoma City, it having been renewed in various amounts between November, 1912, and March, 1915, when the last note matured, and upon default the bank sold the pledged bonds to one R. A. Vose for 30 per cent. of their face value, which the plaintiff alleged was the market value of the bonds at the time of the sale; and the plaintiff claims that the loss was the result of the failure and refusal to properly assess the property of the railway company, and sues for the alleged depreciation of 70 per cent., claiming that such damage was suffered and was within the contemplation of the parties as a probable result of the breach of the purported contractual provision to so act as to maintain the market value of the bonds. In the meantime, before final judgment in the mandamus proceeding, Vose had settled with the Oklahoma Railway Company and surrendered for cancellation the bonds representing the assessments against its property.
Reduced to figures, the claim of the plaintiff is that the refusal to assess the questioned amount of $24,186.37 under one bond issue of $131,566.04 reduced the market value of the bonds to $39,469.81, causing a loss of $92,097.23, and that the refusal to assess the questioned amount of $12,046.16 under the other bond issue of $56,683.23 reduced the market value of the bonds to $17,604.96, causing a loss of $41,077.25 ($41,078.27 according to our computation).
The trial court denied recovery upon the ground that the agreement was ultra vires.
The plaintiff bases its contention upon two propositions set out in its brief as follows:
The plaintiff seems especially anxious to convince the court that the contract in its entirety was valid, and, since it has cited only cases having to do with liability for the contract price, it seems to be of the opinion such is a premise necessary to recovery for the failure to so perform their duty as to maintain the bonds at the highest market value and that, if it can be successfully contended that there is such a liability (for the contract price), and that it is a contractual liability, then it would follow that the provisions upon which it relies for recovery, to take all steps required to maintain the bonds at the highest possible market value, would be a valid provision, and would entitle it to damages for the breach,...
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