Versluis v. Town of Haskell, Okl.

• Decision Date: 25 March 1946
• Docket Number: 3198.,No. 3197,3197
• Citation: 154 F.2d 935
• Parties: VERSLUIS et al. v. TOWN OF HASKELL, OKL. SAME v. UNION GRADED SCHOOL DIST. NO. 2 OF MUSKOGEE COUNTY, OKL.
• Court: U.S. Court of Appeals — Tenth Circuit

154 F.2d 935 (1946)

VERSLUIS et al. v. TOWN OF HASKELL, OKL.

SAME v. UNION GRADED SCHOOL DIST. NO. 2 OF MUSKOGEE COUNTY, OKL.

Nos. 3197, 3198.

Circuit Court of Appeals, Tenth Circuit.

March 25, 1946.

L. W. Randolph, of Muskogee, Okl., for appellant Leonard Versluis.

W. R. Banker, of Muskogee, Okl., for appellant William E. Johnston and W. R. Johnston & Co.

Malcolm E. Rosser, of Muskogee, Okl., and N. E. Sharp, of Haskell, Okl., for appellee Town of Haskell, Okl.

Richard Martin, of Muskogee, Okl., for appellee Union Graded School Dist. No. 2.

Before PHILLIPS, BRATTON, and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

The sole question presented by this appeal is whether two class actions brought by Leonard Versluis to collect unpaid paving assessments levied against property owned by the town of Haskell, Oklahoma and Union Graded School District No. 2 of Muskogee County, Oklahoma, are barred by the general statute of limitations. The cases were submitted to the trial court on the pleadings and an agreed statement of facts, and since the issues involved are identical the two cases have been consolidated here on appeal. Jurisdiction is based solely upon diversity of citizenship and requisite amount in controversy, which according to the unchallenged finding of the trial court is present.

By appropriate statutory proceedings, Street Improvement District No. 1 of the town of Haskell, Oklahoma, was created for the purpose of paving and otherwise improving the streets located therein. Pursuant thereto, and on September 15, 1920, the town of Haskell issued its street improvement bonds in the aggregate amount of $262,000, consisting of 524 bonds in the principal sum of $500 each, bearing interest at the rate of 6% per annum from date until maturity on September 15, 1930, and 10% per annum thereafter. To provide a fund for the payment of the bonded indebtedness, assessments were levied against the lots in the paving district, to be paid in ten annual installments, with interest at the rate of 7% per annum on the unmatured portion and a penalty of 18% per annum after maturity.

At the time the bonds were issued, and at all times since, the town of Haskell and Union Graded School District No. 2, each owned, used and occupied in their governmental capacity certain lots in the paving district, against which assessments were levied. No part of the assessments against the town of Haskell has been paid and only the assessments due for the years 1921 and 1922, were paid by the School District.¹

Approximately fourteen years after the maturity date of the bonds plaintiff, as the holder of more than 100 bonds, brought these actions in the United States District Court for the Eastern District of Oklahoma, in his own behalf and in behalf of others similarly situated "for the amount of such unpaid assessments, together with interest, penalties and damages for failure to pay same when due". By leave of court, W. R. Johnston & Company and William E. Johnston, as owners of certain of the bonds, filed petitions of intervention in both cases, adopting the allegations and prayers of appellant, Leonard Versluis.

The town of Haskell answered admitting the issuance of the street improvement bonds, but denying the validity of the assessments against the property of the municipality, and pleading the statute of limitations. By its answer the School District set out the partial payment of the assessments levied against its property and also pleaded the statute of limitations.

Adopting the agreed statement of facts, the trial court held that the cases stated causes of action which entitled appellants to the relief sought, but applied the three year statute of limitations as a bar to the maintenance of the suits. In so doing, the court noted that the question of whether a municipality or school district could invoke the statute of limitations in a suit for a personal judgment for the amount of the special assessments levied against its property had not been directly decided by the Supreme Court of Oklahoma, but in arriving at its conclusions the court followed by analogy other decisions of the Oklahoma court where the defense of laches or limitations had been sustained in cases involving paving assessments under the same or substantially similar paving laws.

Appellants contend on appeal that since the special assessments created a statutory lien against the property coequal with the lien of other taxes, to continue until paid, and there being no expressed intention that the action should be barred by limitations, they do not apply. It is argued that the cases relied upon by the trial court as analogous are clearly distinguishable and not controlling. In any event, it is said that the statute did not begin to run until the asserted causes of action were maintainable and that they were not maintainable until less than three years from the date they were commenced.

As the learned trial court recognized, in cases of this type where the only basis of our jurisdiction rests upon diversity of citizenship, and Federal courts are made "another available forum", it is the duty of the Federal courts to ascertain and follow the state law as declared by the latest expression of the state courts. Huddleston v. Dwyer, 322 U.S. 232, 64 S.Ct. 1015, 88 L.Ed. 1246. Concededly, the Supreme Court of Oklahoma has not passed upon the precise point presented. It has, however, had much to say concerning cognate questions which tend to point the way, and from which we must fashion our conclusions. Where as here, our judgment is but a forecast of what we think the state courts would determine the law to be, it would of course be more efficient to relegate the parties to the state forum for the adjudication of the issues, but we cannot decline to exercise the jurisdiction squarely conferred simply because of the difficulties of ascertaining the governing state law. Meredith v. Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9.

When in 1920, the improvement bonds, involved here, were authorized and issued the 1910 Street Improvement Laws, (Article XII, c. 10, R.L.1910) were in force and pertinently provided that any property owned by the city or county, or any board of education or school district, should be treated and considered the same as the property of other owners, and the property of any city, school district or board of education within the district to be assessed should be liable and assessed for its proper share of the cost of such improvements. Sec. 618. And, the special assessments, authorized to be levied against the property, and each instalment with interest thereon were declared to be a lien against the lots and tracts so assessed, coequal with the lien of other taxes and prior and superior to all other liens against such lots or tracts, until fully paid. Sec. 634. Upon default of any installment and interest it became the statutory duty of the city clerk of the City or Town levying the assessments to promptly and on or before the 15th day of September of each year after the maturity date, to certify the delinquent installment and interest to the County Treasurer of the County in which the City or Town is located. Thereupon it became the statutory duty of the Treasurer to place the delinquent installment and interest upon the next delinquent tax list and to collect the same "as other delinquent taxes are collected" and to pay the proceeds to the City Treasurer for disbursement on account of the assessments levied. Secs. 642 and 643.

But, when these bonds were issued it was against the public policy of the State to allow property belonging to a public corporation and used for public purposes, such as property belonging to a city or school district, to be sold to satisfy delinquent special assessments. Instead, the owner of improvement bonds or securities was allowed to maintain an action for personal judgment against the sovereign owner of the benefited public property for the amount of the delinquent special assessments levied against such public property for the payment of the bonds or securities, plus interest thereon. City of Drumright v. McCormick, 118 Okl. 140, 247 P. 25. See also Clark v. City of Weatherford, 143 Okl. 165, 288 P. 278, and Blythe v. City of Tulsa, 172 Okl. 586, 46 P.2d 310, 313. Insofar as we can ascertain there is nothing in the statutes or prevailing rules of decision to indicate that such action for personal judgment was a special proceedings or that it was not subject to the same statute of limitations governing any other civil action.

Apparently relying upon the foregoing remedy certain holders of paving improvement bonds, in Independent School District v. Exchange National Company, 164 Okl. 176, 23 P.2d 210, 211, 95 A.L.R. 685, brought an action on December 19, 1930 (within three years from the date of maturity of the last bond on September 1, 1928) for a personal judgment against a school district to recover delinquent assessments against benefited property of the district which had been proportionately assessed to pay the improvement bonds. As in our case, the bonds were issued in pursuance of the 1910 Street Improvement Laws, supra. The trial court rendered judgment against the school district for the amount of the unpaid assessments, plus interest and penalties. The Supreme Court, however, reversed, holding that since the paving statute did not expressly authorize the recovery of a judgment against the school district for the delinquent installments, the asserted remedy was not available. The court pointed out that inasmuch as the board of education, as the owner of the benefited property within the district, was required as a ministerial duty to include an amount equal to each installment in the annual estimate for the purpose of paying the same "the remedy of mandamus was available to plaintiff and might be exercised for each and every year the governing boards failed to perform their respective...