City of Chickasha v. O'Brien

On Petition for Rehearing.

•On petition for rehearing it is urged that, because of the construction given to section 644, Rev. Laws 1910, whereby it is made applicable to actions instituted mure than 60 days after the passage of the assessment ordinance, where the cause of action is based upon the alleged fraud of the city officials and the contractor in the performance of the work occurring more than 60 days after the passage of said ordinance, the statute with this construction is unconstitutional and void in that it deprives them of their property without due process of law, and *61is also in conflict with the Constitution of the United States because it operates as an inpairment of the obligation of contracts, and deprives the defendants in error' of their property without due process of law.

For the defendants in error to succeed in their contention, it must appear that the statute deprives them of some right guaranteed to them by the Constitution of the United States or of this state. If this were a mere matter of contract right or liability, there might be some merit in the contention of counsel; but the liability of the defendants in error to pay the assessments complained of does not arise out of contract, and is not a debt, but, on the contrary, such liability is imposed by the municipality in the exercise of the taxing power which has been delegated to it by the state. Shultz v. Ritterbusch, 38 Okla. 478, 134 Pac. 961.

The assessments which are complained of are enforced proportional contributions imposed upon the class of persons affected thereby, who are interested in the local improvement for the páyment of which said assessments were levied, and who are assumed to be benefited by the construction of such improvements, to the extent of the assessments levied, which are imposed and collected as an equivalent for the benefit, actual or presumed, and to pay for the cost, of such improvements. Such assessments are justified upon the theory that the improvement enhances the value of abutting property and that it is reasonable and competent for the Legislature to require the costs thereof to be assessed against the property benefited thereby. Alley v. Muskogee et al., 53 Okla. 230, 156 Pac. 315. With this view of the nature of the burdens imposed by the assessments, there ought to be no great difficulty in the determination of the question here urged. *62That the statutes under which the assessments were levied constitute due process of law and do not infringe upon the Constitution of this state or of the United States is now too well settled to need further argument. Shultise v. Town of Taloga et al., 42 Okla. 65, 140 Pac. 1190; Alley v. Muskogee, supra; Mellon Co. v. McCaf-ferty et al., 38 Okla. 534, 135 Pac. 278; Davidson v. New Orleans, 96 U. S. 97, 24 L. Ed. 616; French v. Barber Asphalt Co., 181 U. S. 324, 21 Sup. Ct. 625, 45 L. Ed. 908.

The precise question under consideration is whether the construction placed upon section 644 offends against the Constitution in any of the respects mentioned. The ground upon which it is claimed said sectipn must fail is that it deprives the property owner, against whose property the assessment is levied, of the right to restrain the collection of said assessment because of the fraudulent failure of the contractor to perform the work and construct the improvements, according to the plans and specifications, where such default occurs more than 60 days after the passage of the final assessment ordinance. This is another way of saying that, because the anticipated benefits have not been realized, the levy of the assessments is illegal and can be restrained.

In Goodholm & Sparrow Inv. Co. v. Cleveland Trim. Pav. Co., 48 Okla. 38, 150 Pac. 109, plaintiff sought to enjoin certain special assessments, on the ground that they were void because made before the improvements were completed, and -interest on the amount of the assessment was imposed for the period between the date of the assessment and the time of the completion and acceptance of the work. The action was not commenced until more than 60 days after the passage of the ordinance making the final *63assessment, and thus there was squarely presented the question whether an assessment could be levied and made a lien against the property for the payment of the cost of a local improvement before the actual construction thereof; and the authority of the city to do so was sustained by the court, and the relief. sought was denied. In Shultz v. Ritterbusch, 38 Okla. 478, 134 Pac. 961, plaintiffs sought to enjoin certain special assessments, among other grounds, for the reason “that the work and material were of a defective quality and that the work was left in an incomplete condition.” The action was instituted more than 60 days after the passage of the assessing ordinance. Upon a consideration of the questions presented, it was there held in accordance with the previous decisions of this court that the plaintiff was confined to jurisdictional defects in assailing the proceedings sought to be enjoined.

The Supreme Court of the United States, in Davidson v. New Orleans, 96 U. S. 97, 24 L. Ed. 616, had under consideration the validity of an assessment levied by the city of New Orleans for swamp drainage which was resisted in the state courts on the ground that the proceedings deprived the plaintiff of his property without due process of law, one of the grounds of complaint being that the assessments were to be made before the work should be done. In disposing of this contention, the court said:

“Can it be necessary to say that, if the work was one which the state had authority to do, and to pay for it. by assessments on the property interested, on such questions of method and detail as these, the exercise of the power is not regulated or controlled by the Constitution of the United States? * * * As a question of wisdom — of judicious economy — it would seem better in this, as in other works which require the expenditure of large sums of money, to secure the means of payment before becoming *64involved in the enterprise; and, if this is not due process of law, it ought to be. * * * It is * * * said that part of the property of plaintiff * * * assessed is not benefited by the improvement. This is a matter of detail with wh:ch this court cannot interfere, if it were clearly so; but it is hard to fix the limit within these two parishes where property would not be benefited by the removal of the swamps and marshes which are within their bounds'.”

In Bauman v. Rose, 167 U. S. 584, 17 Sup. Ct. 966, 42 L. Ed. 270, it was contended that a statute, which authorized the deduction of anticipated benefits from damages sustained in the condemnation of land for public use, was invalid because such benefits might not be realized and there would, in such case, be a taking of the property for public use without just compensation. In denying this contention, the court said:

“Objection was made to that part of section 15 which provides that the assessment, when confirmed by the court, shall be a lien upon the land and be collected like other taxes, and be payable in five annual equal installments, with interest at the rate of 4 per cent, per annum from the date of the confirmation of the assessment by the court. But it is within the commonly exercised and un-d’sputable power of the Legislature to make taxes of any kind, assessed upon real estate, payable forthwith, and an immediate lien thereon. In the * * * case of Davidson v. New Orleans, the objection that the assessment was actually made before, instead of after, the work was done, was held to be untenable; and Mr. Justice Miller, speaking for this court, said: ‘As a question of wisdom — of judicious economy— it would seem better in this, as in other works which require the expenditure of large sums of money, to secure the means of payment before becoming involved in the enterprise.’ ”

The power of the Legislature to authorize the levy of assessments for local improvements, and to levy and collect *65same before beginning the work for which they are levied, has been considered and sustained in the following cases: English v. Wilmington, 2 Mary. (Del.) 90, 37 Atl. 158; Ralph v. Fargo, 7 N. D. 640, 76 N. W. 242, 42 L. R. A. 646; French v. Barber Asphalt Co., 181 U. S. 324, 21 Sup. Ct. 625, 45 L. Ed. 879; Kingman et al., Petitioner, 153 Mass. 566, 27 N. E. 778, 12 L. R. A. 417; Adams, Petitioner, 165 Mass. 497, 43 N. E. 682; Weber v. Schergens, 59 Mo. 389; City of Austin v. Nalle, 102 Tex. 536, 120 S. W. 996; Ross v. Board of Supervisors, 128 Iowa, 427, 104 N. W. 506, 1 L. R. A. (N. S.) 431. It being consistent -With due process of law to levy and collect such assessments before undertaking the construction of a public improvement, no reason can exist yvhy the Legislature may not authorize the levy of such assessment before the completion of the work, and, instead of exacting payment of the entire sum before commencing the contemplated improvement, may not make said assessment a lien upon the property to be benefited thereby,"and extend to the owner the option of paying the entire amount within 30 days after the passage of the assessing ordinance or in ten equal annual installments with interest thereon, as is done by the statute. When the power to levy and collect the total cost of such improvement in advance of the performance of the work is established, it follows, as a necessary corollary, that the right to levy and collect such assessment does not depend upon the performance of the work or upon the realization of the anticipated benefits, and therefore the property owner has no constitutional right to enjoin the collection of such assessment because the work was not done in a certain way, or because his property has not been benefited to the extent anticipated at the time the assessment was levied.

Having the power to levy and collect such assessment so as to provide the means of carrying out the proposed *66improvement before becoming involved therein, no constitutional obstacle exists in the way of securing such means by levying said assessments and issuing bonds payable therefrom, and to insure the value of such bonds, rendering them immune from attack after the expiration of 60 days, except upon jurisdictional grounds. In Pullan v. Kin-singer, 2 Abbott (U. S.) 94, Fed. Cas. No. 11463, the court held that section 19 of the Internal Revenue Act of July 13, 1866, c. 184, 14 Stat. 152, as amended March 2, 1867, c.169, 14 Stat. 475, which provided that no suit to restrain the assessment or collection of any tax authorized should be maintained in any court, was not unconstitutional and did not deprive the party of his property without due process of law. In Scudder v. Mayor et al., 146 N. Y. 245, 40 N. E. 734, the Court of Appeals of New York held that under Consolidation Act (Laws 1882, c. 410), sec. 897, providing that no suit should be commenced “for the vacation of any assessment under said statute or to remove a cloud ' upon title,” and prescribing remedies in such cases, the collection of an illegal assessment would not be enjoined. In the opinion it was said:

“By the plaintiffs’ demand for judgment, they ask in so many words that the assessment in question shall be declared void, unlawful, and uncollectible, which is but another way of asking that the assessment shall be vacated. That portion of the relief is clearly not to be granted in the face of the section of the Consolidation Act above referred to.”

In Loomis v. City of Little Falls, 176 N. Y. 31, 68 N. E. 105, the court had under consideration a provision of the city charter of the city of Little Falls, providing that no action should be maintained by any person to set aside an assessment for a local improvement, unless commenced within 30 days after the délivery of the assessment roll *67and warrant to the city treasurer, and notice by him in the official newspaper of the receipt thereof. The relief sought -was denied, and in the opinion it was said:

“It. is therefore settled by authority that it was within .the power of the Legislature to have provided by section 83 that no action should be brought to cancel, annul, or set aside any assessments made for land improvements. But it did not go so far, and, instead, limited the bringing of such an action to a period of 30 days after the delivery of the assessment roll and warrant to the city treasurer, and notice by him in the official newspapers of the city of receipt thereof, and conditioned, further, that within such 30 days he procure an in,j unction restraining the common council from issuing the assessment bonds. The reason for requiring the commencement of the action and the granting, of an injunction is apparent. The fact that no action has been brought when such a statute exists assures the would-be purchaser of the bonds that he is not in danger of being subjected to litigation in the event of purchase, and hence the bonds are likely to sell at a higher price than when there is some uncertainty about it. But whether the reasons be adequate or not, the power of the Legislature to absolutely prohibit the bringing of such an action — which, as we have seen, is established — necessarily includes the power to prohibit the commencement of such an action unless specified conditions be complied with.”

The power of the Legislature to provide that, after the expiration of a certain period, special assessments for the construction of local improvements shall not be enjoined or vacated is sustained by the following cases; In re Bridgford et al., 65 Hun, 227, 20 N. Y. Supp. 281; Mayer v. Mayor et al., 101 N. Y. 284, 4 N. E. 336; Lennon v. Mayor, etc., 55 N. Y. 361; McKone et al. v. City of Fargo, 24 N. D. 53, 138 N. W. 967; Quill v. Indianapolis, 124 Ind. 292, 23 N. E. 788, 7 L. R. A. 681. There is no right vested in the individual to reduce the amount of an *68assessment levied against his property because of failure of anticipated benefits by way of counterclaim or set-off. In Houck v. Little River Drainage Dist., 239 U. S. 254, 36 Sup. Ct. 58, 60 L. Ed. 266, the Supreme Court discusses the nature of taxes of this character, and the obligation of property owners, in the following language:

“A tax is an enforced contribution for the payment of public expenses. It is laid by some rule of apportionment ■ according to which the persons or property taxed share the public burden; and, whether taxation operates upon all within the state, or upon those of a given class or locality, its essential nature is the same. The power of segregation for taxing purposes has everyday illustration in the experiences of local communities, the members of which, by reason of their membership, or the owners of property within the bounds of the political subdivision, are compelled to bear th.e burdens both of the successes and of the failures of local administration. When local improvements may be deemed to result in special benefits, a further classification may be made and special assessments imposed accordingly; but even in such case there is no requirement of the federal Constitution that for every payment there must be an equal benefit.” (Italics are ours.)

And likewise the right to reduce an assessment by way of counterclaim has been denied in the following cases, wherein it has been held that, by reason of the origin, obligatory force, and nature of such special assessments, a property owner has no right to reduce the amount of his assessment because of the negligent performance of the work or for other cause, and that, if damages have been sustained by him, it is not a proper subject of set-off or counterclaim against the amount of his assessment, unless authorized by statute: Indianapolis, etc., R. R. Co. v. State, 105 Ind. 37, 4 N. E. 316; Laverty v. State, 190 Ind. 217, 9 N. E. 774; Lux, etc., Stone Co. v. Donaldson, 162 *69Ind. 48, 68 N. E. 1014; Dawson et al. v. Hipskind et al., 173 Ind. 216, 89 N. E. 863; Himmelmann v. Spanagel, 39 Cal. 389; Hornung v. McCarthy, 126 Cal. 17, 58 Pac. 303; Pittsburgh v. Harrison, 91 Pa. 206; Burlington v. Palmer, 67 Iowa, 681, 25 N. W. 877; Whiting et al. v. Mayor, 106 Mass. 89; Mack et al. v. Cincinnati, 7 Ohio Dec. (Reprint) 49. Here no such right is conferred by statute, but is expressly legislated against, and the authority of the Legis - lature so to do is clearly established by the authorities cited. By providing that no suit shall be maintained after the expiration of 60 days to set aside any such assessment, or to enjoin the making'of such improvements or levying or collecting any such assessment dr installment thereof, or interest or penalty thereon, or issuing such bonds or providing for their payment, or contesting the validity thereof on any account or for any reason other than for jurisdictional ¿natters, assurance is given would-be purchasers of such securities that an investment therein will be secure from litigation of the character enumerated after the time fixed by said section; and thereby the value of such bonds will be enhanced and protected in the hands of purchasers, and such provisions will permit the sale thereof in the markets of the country at a better price than otherwise could be made. The acts of the municipality in paving its streets is a work of a public character, and is the exercise of a governmental function, even though such work is- paid for by the benefited property owners (Norris v. City of Lawton, 47 Okla. 213, 148 Pac. 123) ; and the method by which the funds are to be secured to carry on such work is an exercise of the power of taxation delegated to the municipality, and the burdens imposed by it, in the exercise of such delegated power, are such as must be borne by the property owners affected thereby, who must take the risk of the faithful *70performance of their duties by those who are intrusted with the construction of such improvement, and who must share in the successes and failures of all such undertakings.

To admit the right urged by defendants in error would seriously hamper a municipality in the performance of its duty to the public, and would impair the value of the bonds outstanding in this case, whose present owners and holders are unknown and who were not parties to this litigation, and thereby accomplish the very thing of which defendants in error complain; -that is, deny said bondholders their day in court and deprive them of their property without due process of law. This would be the effect not only in the present case, but also as to every bond of this character outstanding, by taking away from said bonds the immunity from attack given thereto by said section 644. An addtional consequence to be avoided that would follow such a declaration, as pointed out in the original opinion, would be to render future issues of such bonds of uncertain value, for no argument is 'necessary to establish the proposition that, if the protection given by said section be taken away, it would be much more difficult to find a ready market for said securities.

The section does not undertake to deprive the property owner of any remedy he may have had to compel the performance of the work according to contract, or to prevent the misappropriation of such bonds, or of the funds derived from the sale thereof, but only to deprive him of such remedies as are expressly enumerated in the statute, leaving to him such other remedies as' he may have had, with the additional remedy upon the performance and maintenance bonds required by the statute.

The petition for rehearing is therefore denied.

All the Justices concur.