Stanley v. Jeffries

• Decision Date: 27 January 1930
• Docket Number: Nos. 6595,6596.,s. 6595
• Citation: 86 Mont. 114
• Parties: STANLEY v. JEFFRIES, County Treasurer. SAME v. CITY OF GREAT FALLS et al.
• Court: Montana Supreme Court

86 Mont. 114

STANLEY

v.JEFFRIES, County Treasurer.

SAME

v.CITY OF GREAT FALLS et al.

Nos. 6595, 6596.

Supreme Court of Montana.

Nov. 29, 1929.

Rehearing Denied in No. 6596 Jan. 27, 1930.

Appeal from District Court, Cascade County; H. H. Ewing, Judge.

Actions by Howard H. Stanley against W. S. Jeffries, as County Treasurer of Cascade County, and against the City of Great Falls and others. From judgments of dismissal, plaintiff appeals. Judgment in first case affirmed, and judgment in second case reversed, and cause remanded, with directions.

Maddox & Church, of Great Falls, for appellant.

H. R. Eickemeyer and Cooper, Stephenson & Hoover, all of Great Falls, for respondents.

Wm. T. Pigott, of Helena, amicus curiæ.

MATTHEWS, J.

The plaintiff, Howard H. Stanley, appeals from a judgment of dismissal, after demurrer sustained to his complaint, in each of two actions commenced by him as a taxpayer of the city of Great Falls.

In his first action, W. S. Jeffries, as county treasurer of Cascade county, is made defendant, and therein plaintiff sought to enjoin that officer from collecting a tax levied under City Ordinance No. 626 of the city of Great Falls, enacted pursuant to the provisions of chapter 24 of the Session Laws of 1929.

The second action was brought against the city of Great Falls, its clerk and treasurer, to enjoin the holding of an election in conformity with certain provisions of chapter 24, above.

The basis of each action is the alleged unconstitutionality of the statute mentioned, and this question was duly presented to the trial court by demurrer to the complaint in each action. On the sustaining of the demurrers, plaintiff refused to plead further, and suffered judgment of dismissal to be entered. As the one question is presented in the two appeals, they were briefed and argued jointly, and will be so disposed of here.

Under our statutory provisions with relation to special improvements in cities and towns, any special assessment made and levied to defray the cost and expenses of special improvements constitutes a lien upon all property included in an improvement district (section 5247, Rev. Codes, 1921), but, under the provisions of section 2215, Id., such a lien is extinguished by the issuance of a tax deed on sale of the property for delinquent taxes (State ex rel. City of Great Falls v. Jeffries, County Treasurer, 83 Mont. 111, 270 P. 638).

As the cost of an improvement is ordinarily apportioned to the several lots according to area or front footage on the improvement (section 5238, Rev. Codes 1921), it will be seen that, by reason of delinquency of property owners in paying assessments, a certain percentage of the principal and interest on special improvement bonds may never be paid. In order to meet this situation, the Legislature in 1929 enacted chapter 24, Laws of 1929, which provides as follows:

“Section 1. The City or Town Council or Commission of any City or Town which has heretofore created, or may hereafter create, any special improvement district or districts for any purpose, may in its discretion, as to such district or districts heretofore created, and shall, as to such district or districts hereafter created, in order to secure prompt payment of any special improvement district bonds or warrants issued in payment of improvements made therein, and the interest thereon as it becomes due, create, establish, and maintain by ordinance a Fund to be known and designated as ‘Special Improvement District Revolving Fund.’

Section 2. For the purpose of providing funds for such Revolving Fund the City or Town Council (1) may in its discretion, from time to time, transfer to the Revolving Fund from the General Fund of the City or Town such amount or amounts as may be deemed necessary, which amount or amounts so transferred shall be deemed and considered, and shall be, loans from such General Fund to the Revolving Fund; and (2) shall, in addition to such transfer or transfers from the General Fund, or in lieu thereof, levy and collect for such Revolving Fund such a tax, hereby declared to be for a public purpose, on all the taxable property in such City or Town as shall be necessary to meet the financial requirements of such Fund, such levy, together with such transfer, not to exceed in any one year five per centum (5%) of the principal amount of the then outstanding Special Improvement District bonds and warrants.

Section 3. Whenever any Special Improvement District bond or warrant, or any interest thereon, shall be, at the time of the passage of this Act, or shall thereafter become due and payable, and there shall then be either no money or not sufficient money in the appropriate district fund with which to pay the same, an amount sufficient to make up the deficiency may, by order of the Council, be loaned by the Revolving Fund to such district fund, and thereupon such bond or warrant * * * shall be paid from the money so loaned * * * provided, however, that the above provision [s] * * * shall not apply to any district * * * heretofore created, unless and until, at an election * * * a majority of the legal voters who shall be * * * free-holders of property situated in the City or Town, shall authorize the City or Town Council to proceed thereunder, such election to be called and conducted in the manner and under such regulations as the Council may provide.

Section 4. Whenever any loan is made to any Special Improvement District Fund from the Revolving Fund, the Revolving Fund shall have a lien therefor on all unpaid assessments and installments of assessments on such district, whether delinquent or not, and on all moneys thereafter coming into such district fund, to the amount of such loan, together with interest; * * * and whenever there shall be moneys in such district fund which are not required for payment of any bond or warrant * * * or * * * interest * * * so much of such moneys as may be necessary to pay such loan shall, by order of the Council be transferred to the Revolving Fund; and after all the bonds and warrants issued on any Special Improvement District have been fully paid, all moneys remaining in such district Fund shall by order of the Council be transferred to and become part of the Revolving Fund.

Section 5. Whenever there is in the Revolving Fund an amount in excess of the amount which the Council deems necessary for payment or redemption of maturing bonds or warrants or interest thereon, the Council may

(1) by vote of all of its members at a meeting called for that purpose, order such excess or any part thereof transferred to the General Fund of such City of Town, or

(2) use such excess or any part thereof for the purchase of property at sales for delinquent taxes or assessments, or both, or which may have been struck off or sold to the County * * * and against which property there then be any unpaid assessment for special improvements on account whereof there are outstanding special improvement district bonds or warrants of the City or Town.

The Council may sell any tax certificates issued on any such sale or sales. After acquiring title * * * the City or Town may lease such property, or sell the same at public or private sale, * * * or otherwise dispose thereof. * * * All proceeds * * * shall belong to and be paid into the Revolving Fund, and be subject to transfer in whole or in part to the General Fund. * * *”

Pursuant to the provisions of this act, in August, 1929, the city council of Great Falls, by Ordinance No. 626, levied and assessed upon all taxable property within the limits of that city a tax of one and one-half mills on each dollar of the assessed valuation, in addition to the general levy for city purposes, which tax has been duly spread, and, unless he is restrained by the court, the treasurer will collect the amount of such tax from the property holders, and the council will thereafter transfer such amount to the special improvement district revolving fund. In Stanley v. Jeffries, County Treasurer, the plaintiff, as a property owner within the city of Great Falls, seeks to enjoin such collection.

In Stanley v. City of Great Falls, the same plaintiff seeks to enjoin the holding of a city election by which the council is attempting to secure authorization, pursuant to section 3 of chapter 24, to apply the provisions of the law to improvement districts created in that city prior to the enactment of the law. The complaint in this action alleges that the city had, before the enactment of the law, created certain special improvement districts serving only a portion of the city, and had theretofore issued bonds and warrants in payment of the improvements made, due at the time the act was passed, and which cannot be paid because of the delinquency of property holders, whose property has been sold to third persons for county taxes, and for which tax deeds have been issued, and thus the lien of the city for delinquent assessments has been lost and extinguished.

1. Stanley v. Jeffries, County Treasurer, involving the constitutionality of chapter 24, Laws of 1929, as applying to the relief of special improvement districts organized after the passage of the act:

Here the contention of the plaintiff is (a) that the act authorizes a loan of city funds and credit in aid of such districts for the benefit of the holders of bonds and warrants of the district, and is, in effect, a donation to establish a guaranty fund for the protection of individual holders of such bonds or warrants, enabling them to enjoy a privilege and security not shared by the holders of other classes of city bonds and warrants, or other creditors of the city, in violation of section 1, art. 13, of our Constitution; (b) that it denies to the plaintiff the equal protection of the law, in violation of section 1, Amend. art. 14, of the United States Constitution; (c) that it is a special law and offends against section 26, art. 5, of the Constitution, in that it does not provide...