State ex rel. Schilling v. Okla. City

• Decision Date: 09 October 1917
• Docket Number: Case Number: 7198
• Citation: 168 P. 227,67 Okla. 18,1917 OK 501
• Parties: STATE ex rel. SCHILLING v. OKLAHOMA CITY et al.
• Court: Oklahoma Supreme Court

1917 OK 501

168 P. 227

67 Okla. 18

STATE ex rel. SCHILLING v. OKLAHOMA CITY et al.

Case Number: 7198

Supreme Court of Oklahoma

Decided: October 9, 1917

Syllabus

¶0 1. Municipal Corporations -- Payment of Claims--Taxpayers' Action--Liability of Officers.

By reason of sections 6777 and 6778, Rev. Laws 1910, upon performance of the conditions therein prescribed, an action may be maintained in the name of the state on the relation of one or more resident taxpayers of a city against the officers of a city who have allowed a claim and paid out money of the city in pursuance of any unauthorized, unlawful, or fraudulent contract, and against any person to whom or for whose benefit such money should have been paid to recover double the amount of money so misappropriated.

2. Limitation of Actions -- Municipal Corporations--Taxpayers' Action -- Accrual.

The right to institute such action does not accrue to such taxpayers until the performance of the conditions precedent prescribed by section 6778, and the statute of limitations against such action does not begin to run until the accrual thereof.

3. Appeal and Error--Order Sustaining Demurrer--Review--Grounds for Decision.

On appeal by a plaintiff from an order which sustained a demurrer to the petition on one of several grounds urged, this court will consider all the grounds assigned, and the ruling thereon will be sustained if any of such grounds are well taken.

4. Municipal Corporations--Officers--Surety on Bonds--Liability.

The sureties upon the official bonds of the city commissioners of Oklahoma City are not liable on said bonds for the penalty prescribed by sections 6777 and 6778, Rev. Laws 1910, for wrongfully allowing and paying out moneys of the city upon a claim growing out of an illegal, unlawful, and fraudulent contract.

Error from District Court, Oklahoma County; James R. Tolbert, Assigned Judge.

Action by the State of Oklahoma, on relation of H. C. Schilling, against the City of Oklahoma City and others. Demurrer to petition sustained, and cause dismissed, and relator brings error. Reversed and remanded, with instructions to reinstate the petition.

Charles H. Ruth, for plaintiff in error.

Everest & Campbell, for defendants in error.

HARDY, J.

¶1 Plaintiff in error, as plaintiff in the trial court, commenced this action against defendants to recover the sum of $ 40,624, alleged to be double the amount unlawfully paid out by certain defendants as officers of Oklahoma City, to defendant Shellenbarger upon an alleged unlawful, illegal, unauthorized, and void contract, for the purchase of certain property for park purposes. After setting out the facts upon which the alleged illegal contract was based and alleging the wrongful and unlawful payment of certain sums of money thereon, it is further alleged that relator, H. C. Schilling, and more than ten other resident taxpayers filed their demand in writing with the board of city commissioners, demanding that suit be instituted and diligently prosecuted by them for the recovery of the sum of $ 20,312 paid out upon said alleged illegal contract, and that upon their refusal to do so, this action was commenced on the 10th day of July, 1914. Defendants demurred to the petition upon the ground that: (1) There was a misjoinder of causes of action; and (2) that the petition did not state facts sufficient to constitute a cause of action. Upon the original hearing, it was stated by counsel for plaintiff and not denied, that in the trial court it was urged that plaintiff's right of action was barred by the statute of limitations, and that the demurrer was sustained upon this ground. Plaintiff declined to plead further, and the cause was dismissed, to which action exceptions were reserved, and this appeal prosecuted.

¶2 The only question argued in plaintiff's brief is whether the cause of action was barred at the time it was commenced, and this was the principal question discussed in the oral argument, although defendants insist that the petition was insufficient in other respects. This being an action to recover a statutory penalty, the proceeding must be commenced within one year after the cause of action accrued. Section 4657, Rev. Laws 1910; Territory ex rel. Johnston et al. v. Woolsey et al., 35 Okla. 545, 130 P. 934.

¶3 On the 22d of October, 1912, the board of city commissioners allowed and ordered paid to defendant Shellenbarger his claim in the sum of $ 20,312, and on the same day a warrant was issued in that amount upon which various sums were paid, the last payment being made July 10, 1913, in the sum of $ 1,440. Written demand by more than ten taxpayers that suit be brought to recover said sums so paid was made upon the board of city commissioners on February 19, 1914, and upon their refusal to do so, this action was commenced July 10, 1914. It is contended upon the part of defendants that a cause of action accrued to the city upon the allowance of the claim, or at least on the separate dates that each payment was made, and that the statute began to run against this action as of those dates, and that more than 12 months having expired from the date of such allowance and payments, the action was barred, while it is contended, upon the other hand, that the right to institute and maintain this action did not accrue until after the written demand was made upon the board of commissioners to institute suit for the recovery of said amounts and their refusal to do so, and that, having been commenced within a year of such demand and refusal, the action was instituted within time. Taking defendants' view of the law, that the statute runs from the date of each payment, the last payment was made July 10, 1913, and the petition filed herein July 10, 1914, and the action was therefore commenced within time as to the last payment, and the court committed error in holding that the action was barred even upon that theory. But we do not take this view of the law; the right to institute and maintain the action is given by sections 6777 and 6778, Rev. Laws 1910, which make every officer of every city or other municipal corporation therein enumerated liable to such city or other municipal corporation for double the amount of all moneys paid or property transferred in settlement of any claim known to such officers to be fraudulent or void or in pursuance of any unauthorized, unlawful, or fraudulent contract or agreement made or attempted to be made for such city or other municipal corporation, and also make liable in like manner every person having notice of the facts with whom such unauthorized, unlawful, or fraudulent contract shall have been made or to whom or for whose benefit such money shall be paid or property transferred, and also give a right of action against such persons upon such cause of action to any resident taxpayer. Section 6778 prescribes the procedure necessary before the right to institute the action accrues to a resident taxpayer, which is that upon the refusal or neglect of the proper officers of such city or other municipal corporation, after written demand by ten resident taxpayers to institute or diligently prosecute proper proceedings at law or in equity for the recovery of such money or for the penalty in double the amount thereof, any resident taxpayer of such city or other municipal corporation, after service of the notice aforesaid and after giving security for costs, may, in the name of the state of Oklahoma, as plaintiff, institute and maintain any proper action which the proper officers of such city might institute and maintain for the recovery of said property or penalty, and such municipality shall be made defendant in such action and one-half of the amount of money and one-half of the value of the property recovered shall be paid to the taxpayer instituting and maintaining said suit as a reward. Under this statute when does the right to institute an action by a taxpayer accrue? When the right of action accrues to the city or when the steps prescribed by section 6778 have been taken? The language of the act seems clear that the notice required by section 6778 is a condition precedent to the right to commence the action, and until a written demand has been made upon the proper officers to bring suit by ten resident taxpayers, and their failure, neglect, or refusal to do so, that a taxpayer would have no authority to commence proceedings. This question was discussed in Territory ex rel. Johnston et al. v. Woolsey et al., supra, and it was there said:

"An action cannot be instituted by a taxpayer or taxpayers until two things have occurred in addition to the unlawful act of the officers: First, the officer whose duty it is to prosecute an action for the recovery of the money misappropriated or the property wrongfully transferred and for the penalty must have failed to prosecute such action: and, second, such failure and refusal must have occurred after demand therefor by ten resident taxpayers of the city"

¶4 --and again in the same case, discussing the same proposition, the court said:

"Under the procedure prescribed, the right of action to a taxpayer does not accrue, unless the officers of the city whose duty

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