Town of Aurora v. Watkins

• Decision Date: 06 April 1925
• Docket Number: 11024.
• Parties: TOWN OF AURORA v. WATKINS.
• Court: Colorado Supreme Court

236 P. 556

77 Colo. 234

TOWN OF AURORA v. WATKINS.

No. 11024.

Supreme Court of Colorado, En Banc.

April 6, 1925

Rehearing Denied May 4, 1925.

Error to District Court, Arapahoe County; Samuel W. Johnson, Judge.

Action by Frank K. Watkins against the town of Aurora. Judgment for plaintiff, and defendant brings error.

Reversed with instructions.

Pershing Nye, Fry & Tallmadge and Lewis A. Dick, all of Denver, for plaintiff in error.

L. Ward Bannister and Samuel M. January, both of Denver, for defendant in error.

CAMPBELL, J.

The plaintiff, Watkins, brought this action to recover from the town of Aurora the amount of taxes (with interest) levied upon his real estate situate within the town, which he paid under protest. In 1891 this land was within the boundaries of the town of Fletcher, the name of which town in 1907 was changed to Aurora. During 1891 the town issued its water bonds in the principal sum of $150,000, under an ordinance--irrepealable until all the bonds and interest thereon are paid--which provided that the bonds and the interest shall be paid out of taxes to be levied upon the property within the municipality. For several years thereafter the town authorities levied and collected taxes to town authorities levied and to the year 1900 they did not levy any further taxes to pay either interest or principal. Beginning with the year 1902 the owners brought various actions on their bonds against the town, and recovered judgment. At divers times between 1908 and 1915, other judgments were obtained against the town on the bonds, all of which aggregated a sum in excess of $430,000. About the time of the beginning of the actions on which these judgments were rendered, several owners of land within the boundaries of the town began proceedings to have their lands disconnected from the town under and by virtue of the provisions of chapter 106, p. 386, S. L. of Colo. 1901, providing in section 4 as follows:

'The land so disconnected shall not thereby be exempt from the payment of any taxes lawfully assessed against it for the purpose of paying any indebtedness lawfully contracted by the corporate authorities of such city or town while such land was within the limits thereof and which remains unpaid, and for the payment of which said land could be lawfully taxed.

The plaintiff in this case was one of the property owners thus proceeding, and he succeeded in having his land disconnected. After these judgments against the town had been recovered, the judgment creditors obtained writs of mandamus compelling the town officials to levy taxes upon all taxable property within the town, including the disconnected lands to provide a fund for the payment of interest and principal of the judgments. Pursuant to some of these writs, taxes were levied, collected, and applied thereon. In 1916 a writ of mandamus was issued out of the United States District Court for the District of Colorado compelling the town authorities to levy a sufficient tax upon all of the taxable property in the town, including the disconnected land, sufficient in amount to pay a certain sum upon the particular judgment of the petitioner. Other judgments have been recovered against the town and are unpaid. Finally the municipal authorities after years of litigation, reached the conclusion that this water bond indebtedness and the judgments rendered thereon should be paid. Negotiations were therefore begun with the judgment creditors, with the result that the amount of the judgments were scaled down somewhat, so that the full amount of the debt is about $430,000, and it was agreed between the parties that this sum should be the basis of the debt for payment of which the town should issue funding bonds in lieu of the judgments, and then to issue refunding bonds in place of the funding bonds, since funding bonds could not be issued for a longer period than 15 years, while refunding bonds could be issued payable over a period of 25 years, and the longer period of time was desired by the city. The refunding bonds were ultimately issued and accepted by judgment creditors in lieu of the funding bonds. No interest was ever paid upon the funding bonds or taxes levied to pay the interest. Immediately thereafter the town authorities began levying taxes upon all the taxable property within the town, including the disconnected land of the plaintiff, to pay the interest and principal of the bonds. These taxes were levied for the years 1917 to 1921, both inclusive, and seasonably paid by the respective landowners, including the owners of disconnected lands. One or two persons did not pay the tax levied in the year 1921. The plaintiff paid his tax for that year under protest, and the pending action has for its object to recover the amount of the tax and interest thus paid under protest.

The contention of the taxpayer, Watkins, is that the judgment upon the original water bonds constituted a merger of the original bonded debt, and therefore the land of plaintiff should escape taxation to pay the same now represented by the refunding bonds, although it has not paid its proportionate share of the original debt. The position of the town is that the present outstanding refunding bonds represent or evidence not a new debt, but, in a new form, the same indebtedness that was created when the town of Fletcher issued its water bonds in 1891; that no new indebtedness of any kind or nature has subsequently been created or incurred; that the plaintiff's land was a part of the town of Fletcher when the original water bond indebtedness was contracted, and was, and still continues to be, subject to taxation for the interest and principal of the refunding bonds, and since the plaintiff has not paid his proportion of the tax due in 1921, which he paid under protest, he is still liable, and will continue to be liable, to pay his proportionate share of the municipal debt.

The foregoing statement of facts would seem to indicate that the land of the plaintiff, both in law and in equity, is subject to the payment of levies made for the purpose of paying this municipal debt. We think the best way to dispose of the case is to consider the four separate propositions upon which the taxpayer relies to escape payment.

1. He says that the refunding bonds are not the same indebtedness as that existing at the time of the disconnection of his land, and therefore the same cannot be taxed in payment thereof. It will be observed that section 4, supra, of the disconnecting, statute provides that the disconnected lands shall not thereby be exempt from the payment of taxes assessed against them for the purpose of paying any indebtedness lawfully contracted by corporate authorities while such lands are within the limits of the town, and which tax remains unpaid, and for the payment of which the lands could be lawfully taxed. That this land could be lawfully taxed had it not been disconnected is admitted. That the bonded indebtedness for supplying the town with water was lawfully contracted by the corporate authorities while the land was within the limits of the town is also undisputed. The plaintiff ingeniously argues, since a...