Bechtell v. City of Salem

SLOAN, J.

Defendant city appeals from a decree which declared void special assessments against the property of plaintiffs for street and sidewalk improvements. The trial court found certain irregularities in the as*3sessment proceedings and declared the entire assessment void. The irregularities complained of relate to allocation of costs and accounting procedures. Plaintiffs insist that the decree be affirmed. We think the first and decisive question is the standing of plaintiffs to seek judicial restraint of the assessment. To reach decision on that question it is necessary to first consider the chronology of the events which led to the special assessments.

On June 3,1952, a petition was filed with defendant city which requested the improvement of a portion of Judson Street in Salem. The petition was signed by a sufficient number of persons to require the’ attention of the city council. No challenge is directed at the form or substance of the petition.

The city council did not act on this petition until March 23, 1953. The reason for the delay in passing upon the petition is not disclosed. The delay is not material except that it is important to notice that the petition was pending before the council for the several months indicated.

On March 23, 1953, the council adopted a resolution which declared the city’s intent to make the improvement petitioned for at the expense of the adjacent and abutting owners. The resolution provided for public notice to be given as required by the city charter. Notice was published. The notice informed all interested persons that plans and specifications for the proposed improvement were on file at the office of the city recorder; that the costs would be borne by adjacent and abutting property owners, and that written remonstrances could be filed with the city recorder within ten days from the date of final publication of the notice. The notice was published for two weeks. The plans and specifications filed included estimated *4costs: Consequently, and this, too, is important, there is and could be no question of the jurisdiction of the city council to make the improvement and to thereafter impose the challenged special assessments.

The improvement work was completed during the summer of 1953. After completion, the city engineer prepared a schedule of the costs of the improvement. The actual cost was about $4500 less than the estimated cost. The engineer also determined the apportionment of cost to the property benefited. This schedule of costs and the apportionment thereof was submitted to the city council by ordinance. The ordinance was considered by the council on first reading on October 29, 1953. It was presented for second reading and approved on November 9, 1953. Five plaintiffs paid the assessment in full, one of them by protest. The other plaintiffs made application to pay by installments. The decree required the city to repay these payments made by all plaintiffs with interest.

We have detailed the chronology leading to the approval of this assessment ordinance to emphasize the salient fact of this case: From the time the petition was first filed until after the special assessment ordinance was approved on November 9, 1953, no objection to the improvement or to the assessments was made to the council by anyone. By a letter dated November 19, 1953, one of the property owners who is now a plaintiff objected to some of the items of cost included in the assessments. He also paid the special assessment against his property in full, but under protest. This was the first objection made to the city, either as to the improvement or to the costs incurred.

Other correspondence between this particular plaintiff and the city officials followed. The city council caused some re-examination of the allocation of costs *5to the particular project to he made by the city engineer and the city attorney. The city council eventually declined to make any change in the special assessments and this declaratory proceeding followed.

In their complaint plaintiffs asked that the special assessments be declared void or, in the alternative, that some of the items charged to the improvement by the city be eliminated and the city required to reassess the property. The trial court declared the entire assessment to be void. We cannot sustain the trial court’s decree.

The city council acquired jurisdiction to act. The plaintiffs’ allegation of fraud is without any foundation of fact. The validity of the procedural requirements of the city charter and ordinance was not questioned. Only certain irregularities in the amount of and accounting for costs is charged. There was no “plain and indisputable” evidence that the council had exceeded its authority. Austin v. Tillamook City, 1921, 121 Or 385, 395, 254 P 819. Nor was there evidence of a similar character that the respective properties of the plaintiffs had not been benefited to the extent found by the council. Hughes v. City of Portland, 1909, 53 Or 370, 100 P 942.

The foundation of plaintiffs’ ease is an old ordinance of the city which required antiquated accounting methods to record costs of a special improvement. In short, the ordinance would have required separate records, bills and warrants for every sack of cement, keg of nails or load of asphalt delivered to this particular job. The city had not literally followed the letter of this ordinance for many years. Instead, it had adopted methods of large scale purchase and the allocation of costs thereof to its numerous projects on a basis of cost per unit or similar recognized means *6of cost accounting. The method used was obviously more efficient and less costly to the taxpayers. The same was true of other items of expense complained of. It was said that the cost for the use of equipment was not specially accounted for in separate detailed records. The city used the method commonly practiced by most large concerns using heavy equipment; an established cost per hour was charged. There is no reason to examine every one of the accounting practices complained of. The method of accounting and allocation of costs was the source of most of the debate in the trial court. Our disposition of the case makes it unnecessary to decide if the ordinance in question required strict compliance with its terms.

The above also appears to be the cause of the argument that the city’s accounting records of the cost of the improvement were so poor that even if a property owner had examined the records prior to the approval of the assessment ordinance on November 9, 1953, he could not have learned of the items of cost to be included in the assessment. As before mentioned, the city council first considered the assessment ordinance on October 29, 1953. From that date on, at least, the total cost records were available. There is nothing in the record to indicate that the accounting records have been changed, altered or expanded since that date. Any plaintiff could have been as fully informed as to the nature of the costs allocated to this improvement prior to November 9, 1953, as he could have been when the complaint herein was filed.

It must be conceded that it would have been preferable procedure if the Salem charter had required notice to be given that the city council would consider the assessments on a given date. It was not contended, however, that the failure of the charter to require a *7notice, other than the initial notice of an intent to make the improvement, would void the proceedings. The one notice was enough. Paulsen v. City of Portland, 1893, 149 US 30, 13 S Ct 750, 37 L Ed 637: Wilson v. City of Salem, 1893, 24 Or 505, 34 P 9, 691.

“* * * Having been notified of the inception of the assessment proceedings, and of the hearing before the bureau of compensation, the plaintiff became chargeable with notice of the entire proceedings from the time of the reference to the board of compensation for the purpose of ascertaining benefits and damages, to the time the report of the department of public works was finally accepted and ordered to be recorded. The entire matter was, in contemplation of law, one proceeding, of each step in which the plaintiff was not entitled to receive a new notice, in order to render the proceedings valid, unless such new notice was required by the provisions of the charter. Fair Haven & W. R. Co. v. New Haven, 75 Conn. 442, 454, 53 Atl. 960; Gilbert v. New Haven, 39 Conn. 467, 472.” Katsch v. New Haven, 1912, 86 Conn 326, 333-4, 85 Atl 523, 525-6.

In Heitkemper v. Schmeer et al, 1929, 130 Or 644, at p 659, 275 P 55, 281 P 169, this court quoted with approval. “ ‘Wilful ignorance is equivalent, in law, to actual knowledge. One who abstains from inquiry when inquiry ought to be made cannot be heard to say so, and to rely upon his ignorance.’” At page 665 the court also quoted with approval: “ ‘The general rule that pervades the whole doctrine of notice is that, whenever sufficient facts exist to put a person of common prudence upon inquiry, he is charged with constructive notice of everything to which that inquiry, if prosecuted with proper diligence, would have led.’ ”

In short, then, before the date any plaintiff either paid the assessment in full or signed an installment application, each of them was charged with legal *8knowledge of the cost items included in the assessment. Not one plaintiff testified that he had attempted to inquire and had been refused or unable to learn from the records. In fact, not one plaintiff testified that he had inquired at all. There is nothing in the record before us to justify the failure of plaintiffs to attempt to acquire knowledge by inquiry.

The fact of legal knowledge is important, therefore, as we turn to a consideration of the standing of plaintiffs to maintain this proceeding. In doing so it is necessary to consider first the standing of those plaintiffs who filed application to pay the assessment by installment payments. Second, the standing of those plaintiffs who paid in full. As indicated, one of the latter accompanied his payment with a letter of protest. It will later appear that the protest did not create any additional rights in that one plaintiff.

The statute, commonly referred to as the Bancroft Act, codified as ORS 223.205 et seq., provides that the owner of property subject to a special assessment may make application to pay the amount of the assessment in installments. ORS 223.215 provides that the “written application shall state that the applicant and property owner does thereby waive all irregularities or defects, jurisdictional or otherwise, in the proceedings to cause said improvement to be constructed or made for which the assessment is levied * * Subject to certain limitations not pertinent to this case, the city must accept and allow the application when it conforms to the statute just quoted. The applications made by plaintiffs in this proceeding contained that provision of waiver.

The court has held without qualification that such an application forms a contract between the city and the property owner and that the assessed property *9owner may not thereafter judicially challenge the assessment. Fehl et al v. City of Medford et al, 1923, 107 Or 478, 483, 215 P 180; Wagoner v. City of La Grande, 1918, 89 Or 192, 208, 173 P 305; Colby v. City of Medford, 1917, 85 Or 485, 526, 167 P 487; Parker v. Hood River, 1916, 81 Or 707, 710, 160 P 1158, and much more recently in Paget v. City of Pendleton, 1959, 219 Or 253, 346 P2d 1111.

It is said that there was no evidence that any of the plaintiffs had signed Bancroft applications. The answer filed by the city alleged the execution of the applications by certain of the plaintiffs and the pertinent provisions of such applications. Those allegations were not denied by plaintiffs’ reply.

It was also argued that the city’s position was not changed by accepting these applications and, therefore, no estoppel was involved. It was not a question of estoppel; the applications created a binding contract of waiver fortified by adequate consideration. Fehl et al v. City of Medford, supra. In Colby v. City of Medford, supra, 85 Or at p 523-4, the court said:

“Under the terms of the charter a property owner is notified that an assessment has been made against his property; and if he does not pay the assessment within ten days from the service of notice, the city can enforce the payment by a sale of the property. The Bancroft Bonding Act interposes, however, and offers to the property owner the privilege of paying the assessment in installments. The property owner cannot accept this offer unless he agrees to waive all irregularities or defects, jurisdictional or otherwise, in the proceedings relating to the improvement, the assessment, and the apportionment of the cost. The city agrees to permit the owner to pay his assessment in installments in consideration of the waiver; the owner agrees to waive irregularities and defects in con*10sideration of the privilege of paying in installments; each party gives and each receives a consideration ; and in the end the parties have made a contract. * * *”

In Paget v. City of Pendleton, supra, 219 Or at p 262, we held that “an agreement by the property owners waiving their right to protest the assessment is binding upon them and their successors in interest with notice. [Citing cases and other authority.]”

In respect to those plaintiffs who paid in full, one by protest, we are governed by a decision of this court in Johnson v. Crook County, 1909, 53 Or 329, 333, 100 P 294.

“We believe that reason supports the rule that when a tax has been paid without compulsion, but with comprehension of its invalidity, or with means of knowledge of its illegality, the liquidation is voluntary and prevents a recovery of the money disbursed, although the payment may have been made under protest. * * *”

Again, at pages 335-336:

“It will be remembered that the complaint herein avers that the sheriff of Crook County, obeying tiie command of the warrant attached to the roll, notified the plaintiff that his land was taxed to the extent of $364.57, informed him that the exaction was just and due, and that unless the sum was paid he would in due time’ collect it by a sale of the property. It is nowhere alleged that the sheriff was either in the act of selling the land, or that he threatened immediately to do so; or that plaintiff, believing that the menace would be instantly executed, was by the abrupt urgency insnared into meeting the payment, or that he had no other expedient of freeing his property from the lien which the levy of the tax created.”

*11Johnson v. Crook County has been cited and followed in First National Bank v. Benton County, 1944, 175 Or 485, 494, 154 P2d 841. We are not disposed to overrule Johnson v. Crook County.

There was one item of cost included in the assessment which requires different consideration. It was the cost of sidewalks within the street and alley intersections. The record is far from clear as to the extent that sidewalks were constructed within the intersections. The record does show that some intersection sidewalks were built and the cost apparently assessed against the abutting owners. The notice originally given which informed the property owners of the proposed improvement specified that the cost of street and alley intersections would be paid by the city and not charged against the abutting owners. It would have been proper from the notice given for the owners to expect that this cost included the sidewalks in the intersections. Because of this, the abutting owners would have been justified in assuming that they had not been assessed for the intersection sidewalks at the time payment was made or application filed. Therefore, to the extent that street and alley intersections were assessed against abutting property owners the assessment would have been invalid. The amounts so improperly assessed should be removed from the assessment and the amount thereof reimbursed or credited on the unpaid installments, as the case may be.

The decree is reversed with directions to remand the ease to the city council to proceed in conformity with this opinion. Costs to neither party.