Wasson v. Hogenson

• Decision Date: 21 August 1978
• Docket Number: No. 27713,27713
• Citation: 196 Colo. 183,583 P.2d 914
• Parties: Glenn WASSON, d/b/a Wasson Masonry, Plaintiff, v. John O. HOGENSON, Western Securities Company, a Nebraska Corporation, Realbank, Inc., a Nebraska Corporation, Julian L. Hutchinson, d/b/a AAA Sand & Gravel, Groussman-Bradley Construction Company, a partnership, Evelyn Barr Edmonson, Public Trustee of Arapahoe County, Colorado, Defendants, and Great-West Life Assurance Company, Defendant-Appellee, and Cherry Creek Valley Water and Sanitation District, a Quasi-Municipal Corporation, Intervenor-Appellant, and Pasterkamp Heating and Air Conditioning Company, a Colorado Corporation, and Ankmar Door Sales, Inc., a Colorado Corporation, Intervenors.
• Court: Colorado Supreme Court

Page 914

583 P.2d 914

196 Colo. 183

Glenn WASSON, d/b/a Wasson Masonry, Plaintiff, v. John O. HOGENSON, Western Securities Company, a Nebraska Corporation, Realbank, Inc., a Nebraska Corporation, Julian L. Hutchinson, d/b/a AAA Sand & Gravel, Groussman-Bradley Construction Company, a partnership, Evelyn Barr Edmonson Public Trustee of Arapahoe County, Colorado, Defendants and Great-West Life Assurance Company, Defendant-Appellee and Cherry Creek Valley Water and Sanitation District, a Quasi-Municipal Corporation, Intervenor-Appellant and Pasterkamp Heating and Air Conditioning Company, a Colorado Corporation, and Ankmar Door Sales, Inc., a Colorado Corporation, Intervenors.

No. 27713.

Supreme Court of Colorado, En Banc.

Aug. 21, 1978.

Grant, McHendrie, Haines & Crouse, Ronald C. Butz, John E. Burrus, Denver, for defendant-appellee.

Tallmadge, Tallmadge, Wallace & Hahn, David J. Hahn, Jo Ann Weinstein, Denver, for intervenor-appellant.

Calkins, Kraemer, Grimshaw & Harring, James S. Bailey, Denver, for amicus curiae, Special Dist. Ass'n of Colorado.

KELLEY, Justice.

This case presents for the first time in this court the question as to the relative priority between a deed of trust on real estate and a "perpetual lien" for installation charges incurred by a water and sanitation district in making sewer services available to the real estate where the recording of the trust deed predates the installation of the sewer service. The trial court held (1) that the prior recorded deed of trust was a first and paramount lien and (2) that the foreclosure decree extinguished the "perpetual lien" of the district. We reverse.

Factual Background

This is an appeal by the Cherry Creek Valley Water and Sanitation District (District) of a summary judgment in favor of Great-West Life Assurance Company (Great-West) in a mechanic's lien foreclosure action instituted by Glenn Wasson, d/b/a Wasson Masonry, against Hogenson, the owner; Great-West, the beneficiary of the deed of trust; and other mechanic's lien holders. The mechanic's liens having been paid, Wasson and the defendant mechanic's lien holders are not parties to this appeal.

The facts as they relate to the two remaining parties to the litigation were stipulated by the parties and, so far as material to the issues, are as follows:

On July 19, 1974, the owner of the property, John O. Hogenson, executed a deed of trust to the public trustee, with Western Securities Company as beneficiary, to secure a loan in the amount of $565,000 obtained to build twenty-two warehouses. The appellee, Great-West, the assignee of Western Securities Company, is the present owner. The deed of trust was recorded in Arapahoe County on July 24, 1974.

On December 2, 1974, Hogenson, in order to obtain sanitary sewer service to the property, entered into a contract with the District, appellant, to obtain twenty-two sewer taps for $315 each to serve the warehouses. He paid $770 to the District, which represented 10% Of the purchase price; the balance was to be paid at the time construction started on each warehouse unit. The balance of $6,930 was not paid. Sewer lines from the warehouse units were tapped into the District's main line on or about December 4, 1974.

Great-West commenced proceedings to foreclose its deed of trust through the public trustee on September 9, 1975. At the public trustee's sale, Great-West bid the property in for $575,763.09 and, there being no redemption, in due course received a public trustee's deed to the Hogenson property.

On September 11, 1975, the District recorded its lien in Arapahoe County. It also sought leave, which was granted, to intervene in the Wasson mechanic's lien foreclosure proceedings in the District Court of Arapahoe County. The District then filed a complaint alleging that the charges for the services it had provided Hogenson constituted a "perpetual lien" on the property under the terms of section 32-4-113(1)(L )(VI), C.R.S.1973, ¹ which was superior to all private contract liens on the property, including the earlier deed of trust of Great-West.

The trial court, in ruling against the district, made the following observations, among others:

"Now, I do have some concern about how this may affect water and sanitation districts. I think that I can't change the law the way I think the Legislature ought to have written the provision because it isn't written as a special assessment. The perpetual lien language does not contain the other language placing it on a parity of general tax liens, and I think that perpetual lien simply means that it's not a two-year lien, it's not a three-year lien it's not a five-year lien, it's like a mortgage. It's a lien until it's paid or cut off by the foreclosure of some prior lien, so I think it does no violation to the word 'perpetual' to indicate that foreclosure of a prior lien could cut it off."

At the outset, it should be noted that Great-West does not now contend that an interpretation contrary to that of the trial court would be unconstitutional as violative of the "contract" or the "due process" clauses of the federal and state constitutions. ² It does contend, however, (1) that the statute in question does not purport to establish priority of the District's lien over existing rights in the property; (2) that the District's lien is not entitled to the type of inherent priority commonly afforded special assessment tax liens; and (3) that no public policy of this state exists which mandates a construction of the statute that would make the District's lien superior to a previously recorded deed of trust.

In view of this, Great-West, in its brief, points out that the function of this court is to determine the intent of the legislature and to interpret the statute in accordance with that intent. It further suggests that in making that interpretation, considerations of public policy should not arise unless the statute is ambiguous, citing Sakrison v. Pierce, 66 Ariz. 162, 185 P.2d 528 (1947). In the situation before us, the declared public policy is an integral part of the statute and, therefore, must be considered in the interpretative process by which we reach our conclusion.

In order to construe section 32-4-113(1)(L )(VI) and determine the legislative intent, we must analyze part 1 of article 4 of title 32, which relates to the organization and powers of "Water and Sanitation Districts." We must determine the real and underlying objects and purposes of part 1, and the construction we place upon the perpetual lien section must harmonize with such objects and purposes. People v. Sanitation District, 128 Colo. 33, 261 P.2d 152 (1953).

Fundamental to our resolution of the issue is the declared public policy of the state which is found in the two following quotations:

"It is declared that the organization of water and sanitation districts, having the purposes and powers provided in this part 1, will serve a public use and will promote the health, safety, prosperity, security, and general welfare of the inhabitants of said districts." Section 32-4-101, C.R.S.1973.

"This part 1, being necessary to secure and preserve the public health, safety, convenience and welfare, shall be liberally construed to effect its purposes." Section 32-4-130, C.R.S.1973.

The organization of a water and sanitation district is initiated by filing a petition with the clerk of the district court signed by not less than ten percent or one hundred (whichever is the smaller) taxpaying electors of the district. The court fixes a hearing date, conducts a hearing and authorizes an election. If a majority of the votes cast favor the organization of the district, the court declares the district organized. "Thereupon the district shall be a governmental subdivision of the state of Colorado and a body corporate with all the powers of a public or quasi-municipal corporation." Section 32-4-107(7), C.R.S.1973.

The board of directors is given broad powers to accomplish its purposes, including the powers of eminent domain and dominant eminent domain for the condemnation of private property and the power to construct and maintain works and establish and maintain facilities across or along any public street or highway or over any vacant public lands. Section 32-4-113, C.R.S.1973. In addition to other means of providing revenue, the board is given the power to levy ad valorem taxes, to issue bonds, to fix fees, and to fix reasonable charges for making water and sewer facilities and services available.

Analysis

There are certain concepts in the law which are fundamental and must be considered in arriving at the answer to the problem posed by this appeal. A leading case in this area is the decision of the Supreme Court of Florida in Lybass v. Town of Ft. Myers, 56 Fla. 817, 47 So. 346 (1908). The reasoning in the Lybass case is sound. It has stood the test of time. Krumpelman v. Louisville, Etc., Sewer District, 314 S.W.2d 557, 75 A.L.R.2d 1110 (Ky.1958); Morrissey v. Shriver, 88 Okl. 269, 214 P. 702 (1923); Carstens & Earles Inc. v. Seattle, 84 Wash. 88, 146 P. 381 (1915); Annot., 75 A.L.R.2d 1121 (1961); Annot., 78 A.L.R. 513 (1931). The facts in Lybass are basically similar to those before us. ³

The first basic concept from Lybass is that:

"All private rights and interests in real property in a municipality are subject to the statutory powers of the municipality to levy assessments for local improvements pursuant to its governmental functions; and the Legislature may create liens upon private property in favor of a municipality for local improvements, and to make such liens superior to other liens acquired subsequent to the statute."

Another fundamental concept is set forth in the following paragraph:

"The intention of the lawmaking power to give priority to a municipal lien for local improvements over contract liens of individuals may be implied from the language of the law creating the lien and from the nature and purpose of the...