Town of Capitol Heights v. Steiner
Court | Supreme Court of Alabama |
Citation | 101 So. 451,211 Ala. 640 |
Docket Number | 3 Div. 673. |
Parties | TOWN OF CAPITOL HEIGHTS v. STEINER. |
Decision Date | 26 June 1924 |
Rehearing Denied Oct. 16, 1924.
Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.
Action for damages by L. Steiner against the Town of Capitol Heights. Judgment for plaintiff, and defendant appeals. Reversed and remanded.
Steiner Crum & Weil, of Montgomery, for appellant.
Sternfeld & Lobman and James J. Mayfield, all of Montgomery, for appellee.
The town of Capitol Heights issued certain paving assessment bonds bearing date July 1, 1913, payable July 1, 1923, with semiannual interest coupons attached, pursuant to the provisions of section 1411 of the Code. The plaintiff was the purchaser and holder of some of these bonds on which the interest was regularly paid; however, the assessments collected were insufficient to pay the principal in full at maturity. This was due to a failure of the then city officials to make an assessment sufficient in amount to pay the principal in full at maturity.
The plaintiff brought suit against the town, alleging the negligent failure of its officers to make a sufficient assessment with which to discharge the obligation. The demurrer to the several counts of the complaint having been overruled, defendant pleaded, in short, by consent the general issue, and any matter that might be specially pleaded. The trial was upon an agreed statement of facts, by the court without the intervention of a jury.
The question presented has never been decided in this state. The amendatory act of 1920 (Gen. & Loc. Acts Sp. Sess. p. 155) has no application to the contract, or to the alleged breach of duty as to such contract sought to be made the basis of the instant suit.
The bonds were issued pursuant to section 1411 of the Code of 1907, Capitol Heights being at the time of that issue within the class covered by the statute authorizing any city having a population of less than 6,000 to issue bonds for certain public improvements, and expressly stipulating that the same should be a lien or charge only against the property improved and against the fund collected from the assessment levied against the property improved, and should not be the general obligation of the city or town, nor should such city or town be in any way liable to the holders of such bonds in case of failure to collect the same. This section further provides that the bonds when issued shall convey and transfer to the owners thereof all right, title, and interest in and to the assessment, and the lien upon the respective lots or parcels of grounds therein provided for, which liens and assessments shall stand as security for such bonds and coupons until they are paid, with full power in the holder of such bonds or coupons to enforce the collection thereof by foreclosure in any court of competent jurisdiction.
The bonds recite that they are issued pursuant to the provisions of said statute and for the purpose of paving streets, and they were secured by a lien only against the property improved and against the funds collected from the assessments levied against the property improved, and that it was payable solely from the said assessments.
It is conceded that there is no liability upon the municipality on the bonds as such. The contention of appellee, however, is that in its corporate capacity the town of Capitol Heights is liable for the negligent failure of its board of aldermen or officers authorized and required to make and levy an assessment pursuant to the ordinance; the alleged negligent failure being to make a sufficient assessment with which to pay the bonds with interest at maturity. Appellant's counsel insist that in the light of the stringent provisions of section 1411 of the Code, it was the evident purpose of the Legislature to prevent a general liability against the town, directly or indirectly, and that a judgment against the town for the alleged negligent failure of the officers of the town to make an adequate assessment would indirectly carry a general obligation against the town upon or for the issuance of the bonds in question. The facts relating to the making of the levy and the assessment on the abutting properties and entering into the sufficiency or insufficiency of the assessment were matters of public record preliminary to and preceding the issuance of the bonds, and were as fully open to the inspection and investigation of the purchaser of the bonds as to the then officials of that municipality. Under the rules obtaining in the premises, as matter of law the purchasers were cognizant of these preliminary steps and of the extent of the failure of the levy of a sufficient assessment, before the bonds were purchased.
The discussion in Henderson v. City of Enterprise, 202 Ala. 277, 80 So. 115, is to this effect:
"As, under Code 1907, § 1411, bonds of a city of less than 6,000 inhabitants, issued for the payment of improvements, do not become the general obligations of the city, but are a lien only against the property benefited enforcement of an ordinance providing for paving in such a city will not be enjoined, on the ground the city was already indebted beyond the legal limits, and such bonds would increase the indebtedness; it being wholly speculative whether the city would attempt to pledge its credit for the paving."
It is not decisive of the instant question.
We may observe that no attempt is being made to enforce the payment by the municipality of the bonds in an action ex contractu: nor is it sought to hold the municipality responsible for a failure of its officials to collect the assessments and pay over the assessments collected. It is an action in case (ex delicto [Sloss-Sheffield S. & I. Co. v. Greek (Ala. Sup.) 99 So. 791]) for the failure of the former officials of the municipality to levy a sufficient assessment to pay principal and interest on the bonds.
Mr. Dillon, in his Municipal Corporations, vol. 2 (5th Ed.) pp. 1250-1253, § 827, collects the authorities to his text treating the liability of the city to a contractor, saying:
The case from the Supreme Court of the United States that is cited by the author is Memphis v. Brown, 20 Wall. 289, 22 L.Ed. 264, where the contract guaranteed to the contractor the "payment of said accounts as so assessed against the property owner." The same case is reported in 97 U.S. 300, 24 L.Ed. 924.
The Illinois court holds that the power to contract for a public improvement gives the city, by implication, power to stipulate in the contract that the contractor shall look only to the proceeds of an assessment for his compensation, and thereby protect its general fund. Village of Park Ridge v. Robinson, 198 Ill. 571, 65 N.E. 104, 92 Am. St. Rep. 276.
It has been held by the New York court that when the charter provides no other means of payment than a special assessment for the costs of the improvement, a person contracting with the city to do such improvement is chargeable with notice of such limitations or provisions and is held to have contracted with reference to the only source of payment provided by law. Baker v. City of Utica, 19 N.Y. 326, 328.
Mr. Dillon, in his Municipal Corporations, vol. 2 (5th Ed.) pp. 1388, 1390, § 893, in the chapter on "Improvement Bonds Payable from Assessment Only," says:
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Stovall v. City of Jasper, 6 Div. 50
...the property as a lien on the respective lots or parcels of land under the statute. The case of Town of Capitol Heights v. Steiner, 211 Ala. 640, 101 So. 451, 38 A.L.R. 1264, is not in point, as the question was not presented on the effort for a reassessment to meet shortage or shrinkage as......
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Henning v. City of Casper, 1905
...Wash. 315, 49 P. 542; Windfall v. Bank, 172 Ind. 679, 87 N.E. 984; 172 Ind. 691, 89 N.E. 311; perhaps Town of Capitol Heights v. Steiner, 211 Ala. 640, 101 So. 451, 38 A. L. R. 1265; (contra, Nolan v. Reading, 235 Pa. 367, 84 A. 390), and probably Broad v. City of Moscow, 15 Idaho 606, 99 P......
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Howard v. State, 8 Div. 464.
...the bondholder who does not participate in the exchange of like evidences of the city's indebtedness? Town of Capitol Heights v. Steiner, 211 Ala. 640, 101 So. 451, 38 A. L. R. 1264. Is he injured or benefited thereby in the sense that he is protected by the Constitution? It is insisted by ......
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Penton v. Brown-Crummer Inv. Co., 4 Div. 447.
...Coster's Ex'rs v. Bank of Georgia, 24 Ala. 37; Bell v. McLaughlin, 183 Ala. 548, 62 So. 798. In Town of Capitol Heights v. Steiner, 211 Ala. 640, 101 So. 451, 38 A. L. R. 1264, the assessment and the proceedings incident thereto were regular, and the question decided was that the town was n......