102 F.2d 927 | 5th Cir. | 1939
The facts are in no substantial dispute. The City of El Paso and the property owners on certain of its streets wished to pave the streets. Bonds could have been issued by the City, or by a special improvement district, if authorized by an 'election therein, but under the Texas Constitution no debt could be created without having laid a tax to pay it. Vernon’s Ann.St.Tex. Const, art. 11, § 5. Instead of following any of these plans, by virtue of charter powers which were supposed to authorize it it was determined that the City should contract for the paving so that it should pay cash for the street intersections, and the cost of the other paving should be assessed on the front foot plan against the abutting property and its owners, being a personal charge on them and a lien on the property, and that the balance owing the contractor should be paid by delivering to him these assessments. Such assessments would be in various irregular amounts, and would be difficult of resale by the contractor. He suggested that a more favorable bid could he made if the City would pool these assessments and issue against them special certificates payable to bearer, for sums of $500 or $1,000 due serially, with interest coupons attached, and suggested a form of ordinance, which after some change was passed by the City. The ordinance provided that the City be empowered to receive, collect and enforce such assessments, that the Assessor-and-Collector of
One of the City’s defenses is limitation of two years. To test its applicability the cause of action asserted is important. The so-called intervention is not an intervention, but a parallel suit framed just like the original suit, and seeking identical relief, and making no reference to the original suit or any dependence on it. The allowance of it as an intervention amounts only to a consolidation for trial. Both suits are at law, praying only money damages. Neither appeals to equity to treat the City as the trustee of a fund and to hold it to an account of what it has or ought to have in hand. They are not suits for failure to provide the assessments promised. The Court held each to be “an action for recovery of damages in tort * * * for recovery of loss and damages occasioned by negligence * * * in failure to collect and take steps to.collect and enforce collection of assessments and liabilities against owners of real estate abutting on streets paved.” The briefs for both parties so interpret them. There are two counts. In the first the negligence alleged is allowing the assessments to become barred by limitation, and their lien lost by a sale of the lands for general taxes. In the second count it is alleged that $114,000 of the collections of principal had negligently been applied to pay interest coupons, that $110,-561 of the principal of assessments negligently remained uncollected. The suits are not upon the certificates as contracts, the promises in them being relied on only as raising the duty diligently to collect the assessments and apply the proceeds. Thus viewed it appears that the two year limitation of Revised Statutes of 1925, Art. 5526, applies. A suit against the State Treasurer for negligence in performing a duty was held not to be a suit on his bond, but barred in two years, in Hatcher et al. v. State, 125 Tex. 84, 81 S.W.2d 499, 98 A.L.R. 1213. The limitation begins to run on the accrual of the cause of action. If the City had money in the special fund
There was no proof and no finding of loss by property being allowed to be sold for general taxes, nor of any wrongful diversion of money from the fund. The use of collections of principal to pay interest coupons was no diversion if it occurred. The fund, whether composed of principal or interest collected on the assessments, was applicable to pay both principal and interest coupons of the certificates as they fell due. There was evidence of some losses by compromise of assessments, but that was not sued for, even if negligent, and if within the City’s authority.
The case is thus narrowed to a consideration of negligence in allowing the few assessments to become barred which became in default after June 30, 1930, in West’s suit and after June 18, 1931, in Hutchinson’s suit. There is no evidence specially concerning these assessments. If there was negligence as to them the damage to the plaintiffs could not have exceeded the real value of these assessments, prorated to the outstanding certificates. The judgment rendered is wrong, and this being a law case we are not in position to make a different one. A new trial must be had.
The most discussed defense of the City is that it had no power to make the assessments payable in instalments or to issue the certificates and undertake for ten years to administer the assessments to pay them. Because a part of the negligence sued for is unbarred, we must consider this defense. The City derives its powers from a special Charter granted by the Legislature in 1907, Sp.Acts Tex. 1907, c. 5, and from the Home Rule Amendment of the Constitution in 1912, Vernon’s Ann.St.Tex. Const, art. 11, § 5, followed by other legislation and by amendments made by the voters of the City under authority of the Constitution. We find ample specific authority to improve and pave the streets as was done, but the Charter provides that the assessments fall due on completion of the work and there is no special provision for allowing them to be extended in instalments, and no provision for the City to issue special certificates against them instead of assigning the original certificates of assessment to the contractor. ' In so far as these arrangements convenienced the property owners and the contractor and his assigns, they seem useful and if not permitted to create financial burdens on the City they are harmless. The Texas Legislature (Vernon’s Ann.Civ.St.Tex. art. 835d), sanctioned such a procedure by large cities, but the Act was held invalid because it required the City to make good, subj ect to reimbursement, any shortage in collections of assessments to meet maturing certificates and interest. City of Fort Worth v. Bobbitt, Atty. Gen., 121 Tex. 14, 36 S.W.2d 470, 41 S.W.2d 228. The El Paso plan, though not itself imposing on the City any duty of supplementing collections has in the judgment under review led to a general liability to pay the defaulted certificates. We are much impressed by what was said
The causes of action for negligence which were unbarred when suit was filed we direct to be retried, leaving open both the questions whether there was negligence and what if any damage was caused in each instance. The judgment is accordingly reversed and the cause remanded for further proceedings not inconsistent with this opinion.