State Ex Rel. Truax v. Town of Lima , 121 Mont. 152 ( 1948 )

On Motion for Rehearing. Relators' petition for rehearing asserts that this court[6] overlooked the fact that it is alleged in the petition for writ of mandate and admitted in the answer that the improvement district in question was created after authorization by the vote of the taxpayers affected. Elsewhere in the petition for writ of mandate it appears that the vote of the taxpayers affected was the vote of the taxpayers in the district. This authorization by the voters of the district did not have the effect of making the water system a city project as distinguished from a project of the special improvement district.

Relators overlook the vital fact distinguishing this case from that of First Nat. Bank of Glendive v. Dawson County, 74 Mont. 439,240 P. 981; Edwards v. City of Helena, 58 Mont. 292,191 P. 387; State ex rel. Mueller v. Todd, 114 Mont. 35, 132 P.2d 154; First Nat. Bank of Glendive v. Sorenson, 65 Mont. 1,210 P. 900, which is that here we are dealing with a special improvement district project whereas in the cited cases the city as a whole undertook the project in question.

In relators' brief on motion for rehearing it is asserted: "What has caused the learned writer of the opinions in Hansen v. City of Havre, 112 Mont. 207, 114 P.2d 1053 [135 A.L.R. 1278], and in Edmunds v. City of Glasgow, 89 Mont, 596,300 P. 203 [86 A.L.R. 1052], and Clerihew v. [City of] Baker, 109 Mont. 317,96 P.2d 269, to change the doctrine of those cases between their respective dates and the writing of the opinion in the current case? He has neglected to point out the distinction."

The Hansen case involved proposed special improvement district bonds. But we fail to see where anything said in the opinion in that case in any way conflicts with the holding here. The principal contention in that case centered around the revolving fund authorized by section 5277.1 et seq., Revised Codes of Montana 1935, it being the contention that the bond issue would create a debt beyond the constitutional limit.

It was pointed out that sections 5277.1 et seq. did not make the revolving fund chargeable with the payment of the bonds but that those funds are loaned to the district fund and the revolving fund has a lien as security.

The court in the Hansen case as in this case pointed out that "the proposed bonds are not obligations of the city, but of the special improvement district only, and payable only from the district fund." In that case a revolving fund was established pursuant to section 5277.1. Here none was established nor could it be in view of the holding in Stanley v. Jeffries, 86 Mont. 114,284 P. 134, 70 A.L.R. 166.

The case of Edmunds v. City of Glasgow, supra, is inapplicable here. There the city and not a special improvement district was procuring the water plant. The court held that the municipality may be estopped from disputing recitals in the bonds as against bona fide holders of the bonds. No one is here questioning the validity of the bonds at least to the extent of $4,681.31. And no one is relying upon any infirmity contrary to the recitals in the bonds. They specifically recite that they are "payable from the collection of the special tax or assessment which is a lien against the real estate within said improvement district" and that they are "redeemable at the option of the town at any time there are funds to the credit of said improvement district fund for the redemption thereof." True the bonds also recite and certify, "that all things required to be done, precedent to the issuance of this warrant, have been properly done, happened, and been performed, in the manner prescribed by the laws of the State of Montana and the resolution and ordinances of the town of Lima, Montana, relating to the issuance thereof." But as above stated there is no attack here on the validity of the bonds up to the sum of $4,681.31 and whether they are valid beyond that amount is unimportant until such time as revenue is discovered that may be applied in their payment.

The third case relied on by relators in the above statement, that of Clerihew v. City of Baker, was one involving city bonds and the only holding that might have any remote application here is that the city is estopped as against bona fide holders from questioning the validity of the indebtedness for which the bonds were issued by recitals in the bonds. As above noted there is no attack made upon the indebtedness here up to the sum of $4,681.31.

The next point urged by relators is that this court overlooked the applicability of section 5252, Revised Codes of 1935, and that we should decide the point as to whether further assessments may be ordered to pay the bonds.

Section 5252 provides: "Whenever, by reason of any alleged non-conformity to any law or ordinance, or by reason of any omission or irregularity, any special tax or assessment is either invalid or its validity is questioned, the council may make all necessary orders and ordinances, and may take all necessary steps to correct the same and to reassess and relevy the same, including the ordering of work, with the same force and effect as if made at the time provided by law, ordinance, or resolution relating thereto; and may reassess and relevy the same with the same force and effect as an original levy; whenever any apportionment or assessment is made, and any property is assessed too little or too much, the same may be corrected and reassessed for such additional amount as may be proper, or the assessment may be reduced even to the extent of refunding the tax collected. Any special tax upon reassessment or relevy shall, so far as is practicable, be levied and collected as the same would have been if the first levy had been enforced; and any provisions of any law or ordinance specifying a time when, or order in which acts shall be done in a proceeding which may result in a special tax, shall be taken to be subject to the qualifications of this act. Any and every ordinance, or part thereof, of any council, heretofore passed in substantial conformity with this section, is hereby legalized."

This section does not authorize reassessments to make up for[7] delinquent assessments. School Dist. No. 1, Lewis and Clark County v. City of Helena, 87 Mont. 300, 287 P. 164; Deming v. Board of Supervisors, 237 Iowa 11, 21 N.W.2d 19, 162 A.L.R. 391; Municipal Investors Ass'n v. City of Birmingham,316 U.S. 153, 62 S.Ct. 975, 86 L.Ed. 1341. The question here is, may this section be resorted to where, as here, the original assessment was made to pay off $4,681.31 as recited in the resolution levying the tax and as shown by the evidence, whereas bonds in the principal sum of $5,000 were issued to relators' predecessor in interest?

It seems to us that if ever the assessment actually made could have been questioned, it is too late to do so now.

Relators' father, to whom the bonds were originally issued, was chargeable with knowledge of the circumstances as shown by the record relating to the assessment as made. He at one time was mayor of the town. Had he deemed the assessment insufficient, steps should have been taken long ago to have the assessment changed.

Relators did not buy the bonds but inherited them from their[8] father. They acquired no greater interest than their father had.

It is our view that relators' father was guilty of laches or[9] would now be estopped from contending for an additional assessment, and that relators cannot do so at this late date even though we assume without so deciding that it would have been proper so to do, had seasonable application been made.

The motion for rehearing is denied.

Mr. Chief Justice Adair and Associate Justices Choate, Gibson, Angstman and Metcalf concur.

Rehearing denied June 5, 1948.