Western Amusement Co., Inc. v. City of Springfield

• Decision Date: 22 January 1976
• Citation: 274 Or. 37,545 P.2d 592
• Parties: WESTERN AMUSEMENT COMPANY, INC., a California Corporation, Petitioner, v. CITY OF SPRINGFIELD, a Municipal Corporation, Respondent.
• Court: Oregon Supreme Court

Page 592

545 P.2d 592

274 Or. 37

WESTERN AMUSEMENT COMPANY, INC., a California Corporation, Petitioner, v. CITY OF SPRINGFIELD, a Municipal Corporation, Respondent.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 4, 1975.

Decided Jan. 22, 1976.

Laurence E. Thorp, Springfield, argued the cause for petitioner. With him on the briefs were Sanders, Lively & Wiswall, Springfield.

Edward C. Harms, Jr., Springfield, argued the cause and filed briefs for respondent.

DENECKE, Justice.

This is a proceeding to review a special assessment levied by the city to pay for the construction of a street.

The petitioner, Western Amusement Company, filed a writ of review in the circuit court to reverse the city council's levy of assessment. The circuit court generally found the petitioner's property was not benefited by the street and 'annulled' the assessment. The city appealed to the Court of Appeals which reversed. Or.App., 533 P.2d 825 (1975). We accepted review.

The majority of the Court of Appeals held the circuit court erred because the city council did not act 'arbitrarily.' The writ of review statute, ORS 34.040, in effect when the petition for a writ of review was filed, provided that the writ should be granted if the tribunal acted 'arbitrarily.'

In 1965 the legislature amended the statute to provide the writ of review should be granted if the tribunal acted 'arbitrarily.' Oregon Laws 1965, ch. 292, p. 632. This amendment was made as the result of a recommendation by the Local Government Committee of the State Bar. The committee was of the opinion that this court had interpreted ORS 34.040 to provide that a finding of an administrative tribunal must be reversed by the court if not supported by substantial evidence. The proposed amendment inserted 'arbitrary' to codify that rule. The committee commented:

'* * * However, where the finding or decision is arbitrary, that is, where there is no substantial evidence to support it, the Oregon Supreme Court has held it subject to vacation on writ of review * * * (e.g., 25 Or. 301; 198 Or. 53; 211 Or. 296; 226 Or. 92.). While this cause for review repeatedly appears in case law, it is not so apparent in the statute, where errors of law, as such, do not constitute cause for review.' Oregon State Bar Committee Reports, 141 (1964).

In 1973 the legislature further clarified the scope of review by deleting 'arbitrary' and inserting as a substitute that the writ should be granted if the tribunal 'Made a finding or order not supported by reliable, probative and substantial evidence.' Oregon Laws 1973, ch. 561, p. 1262. From the legislative history it appears the amendment had two purposes: (1) To reiterate but state more clearly that the writ of review should be granted if a tribunal made an order or finding not supported by the evidence and (2) To make the language defining the scope of review on writ of review identical to the language used to state the scope of review in the Administrative Procedures Act. ORS 183.480(7)(d).

Because of this history we believe the scope of review has not been changed because of the 1973 amendment. If there was any doubt about the scope of review it has now been settled. As Chief Judge Schwab stated in his concurring opinion, the 1973 amendment is procedural, was in effect at the date of the circuit court hearing and should be applied. Smith v. Clackamas County, 252 Or. 230, 234, 448 P.2d 512 (1969).

As stated, the Administrative Procedures Act and the 1973 amendment have the phrase, 'reliable, probative and substantial' evidence. In the numerous appeals coming before it under the Administrative Procedures Act, the Court of Appeals has never discussed whether anything has been added by the addition of 'reliable and probative.' The Court of Appeals has consistently stated the administrative order must be supported by substantial evidence. For example, Joiner v. Public Emp. Relations Bd., 14 Or.App. 567, 571, 513 P.2d 523 (1973). Davis states the 'dominant tendency' in both state and federal courts is to apply the substantial evidence test. 4 Davis, Administrative Law, 114, § 29.01 (1958). Until and unless a future case reveals the need for a different interpretation, we will interpret 'reliable, probative and substantial' to mean 'substantial' evidence.

What substantial evidence is, however, when reviewing a city council's determination of what property should be specially assessed to pay for an improvement is a complex question.

We have reviewed special assessments in all sorts of proceedings,--writs of review suits for injunction, declaratory judgments, and suits to quiet title. Regardless of the nature of the review proceeding, we have consistently used the same approach:

'* * * We held that the city council's determination that property has been benefited by an improvement and the amount of the benefit is conclusive unless the court can say that the city council's action was palpably arbitrary and abusive. We said that the burden of persuading the court is a heavy one. * * *.' Gilbert v. City of Eugene, 255 Or. 289, 292, 465 P.2d 880, 882 (1970), summarizing Stanley v. City of Salem, 247 Or. 60, 427 P.2d 406 (1967).

In Boyle v. City of Bend, 234 Or. 91, 101--102, 380 P.2d 625, 630 (1963), we stated: 'It would be less confusing to say that the question of benefit is always a judicial question but that the scope of review is limited.' In the footnote to that statement we stated:

'The limited scope of review has been recognized in several of our cases. For example, Austin v. Tillamook City, 121 Or. 385, 254 P. 819 (1927) states that in the absence of fraud or mistake, the determination of the common council as to the amount of the benefit derived from such an improvement is conclusive (collecting cases). And see the quotations from Oregon cases in Killingsworth v. Portland, 93 Or. 525, 529, 184 P. 248 (1918).' 234 Or. at 101--102, 380 P.2d at 630.

Seventy-five years ago this court considered an attack on a special assessment in which the property owner contended the assessment violated the Fifth Amendment of the Federal Constitution because the assessment resulted in the taking of property without just compensation as the improvement provided no benefit to the property owner. Mr. Justice Wolverton wrote for the court:

'* * * (T)he assessment will be upheld wherever it is not patent and obvious from the nature and location of the property involved, the district prescribed, the condition and character of the improvement, the cost and relative value of the property to the assessment, that the plan or method adopted has resulted in imposing a burden in substantial excess of the benefits, or disproportionate within the district as between owners. * * *.' King v. Portland, 38 Or. 402, 429, 63 P. 2, 9, 55 LRA 812, affmd 184 U.S. 61, 22 S.Ct. 290, 46 L.Ed. 431 (1900).

The clear and consistent policy of our decisions has been to be very reluctant to interfere with the decisions of the local governments that certain property has been benefited and, therefore, should be assessed.

There are probably several reasons why the courts, including this court, have adopted this policy of restraint. While making special assessments is correctly classified as a quasijudicial function, analytically, it also has aspects of an exercise of the legislative function. Boyle v. City of Bend, supra, 234 Or. at 101, 380 P.2d 625. The local government imposes a tax when it specially assesses. The imposition of a tax is the exercise of a legislative function. The decision to tax is not subject to judicial review. Boyle v. City of Bend, supra, 234 Or. at 101, 380 P.2d 625.

We have stated that the distinction between judicial and nonjudicial functions should be made on practical considerations; that is, it should be classified as a judicial function if it is a function for 'which the judicial machinery is adaptable.' Boyle v. City of Bend, supra, 234 Or. at 102, 380 P.2d 625. We have stated courts are adaptable to deciding whether property has been benefited by a special improvement.

However, the problem of what property is specially benefited by an improvement is, on its fringes, difficult to solve. Courts have no more expertise in making this determination than city councils or county commissioners, aided by staffs with at least some expertise.

In Roseta v. County of Washington, 254 Or. 161, 166--168, 458 P.2d 405, 40 ALR3d 364 (1969), we observed that the judiciary entered into the zone change process because of the record of zone changes being granted because of special privilege or without regard to the effect of the zone change on the overall plan for land use. We are not aware of any record of substantial legislative deficiency in the area of special assessments.

Special assessments are a frequently used means to finance local improvements. This frequency, added to the perplexing problem of deciding when certain property is benefited and how much, would cause a substantial amount of litigation if the judiciary made an unrestrained entry into the arena.

These several considerations which probably caused this court and others to restrict their review of council determinations of special assessments continue to exist.

Regardless of our judicial reluctance to intervene, the state legislature has provided that the determination cannot be sustained unless supported by 'substantial evidence.' What is 'substantial evidence,' however, is a judicial issue. Davis states: 'Whatever impression a literalminded reader may get from the words in the statute book, the plain reality is that the substantial-evidence rule as the courts apply it is a variable.' 4 Davis, Administrative Law, 126, § 29.02 (1958).

We consider our authority to be that in determining whether the city council's action is supported by substantial evidence we can consider the long and wellfounded policy of judicial restraint in this area.

Against this backdrop we examine the...