159 S.W.2d 18 | Ky. Ct. App. | 1942
Affirming in part and reversing in part.
The appellant, Charles L. Hart, as the builder of certain streets in Central City in 1926, accepted in part payment improvement bonds secured by liens on property chargeable with the cost of construction and has continued to own them. In this suit against Central City, he seeks to recover certain sums representing the balance of the bonds he has not been able to collect by the enforcement of the liens. The case was decided upon the pleadings. The City confessed liability for $723.35 and judgment was rendered against it for that sum. The plaintiff appeals from the judgment denying him the entire prayer of his petition. We regret the City's confidence in its favorable judgment has led it not to file a brief although time for doing so was extended.
In 1929 the City without the knowledge of the bondholders brought suit to enforce the street assessment lien on the property of Paul Wilcox. The amount of his delinquency is not disclosed, but it is alleged that the City purchased the property at the judicial sale for a sum much less than the lien. Shortly thereafter, on *433 October 1, 1930, the City sold the property for $1,600 and placed the amount in its general fund. Out of the street improvement fund it paid on the bonds the equivalent of the assessments against the Wilcox property up to and including the year 1932. Eventually the City offered to pay the balance of the installments amounting to $723.35, but Hart declined to accept it in full satisfaction, claiming the right to ten percent penalty and interest, which Section 3575 of the Statutes provides shall be collectible upon default in payment of any installment. In this suit he asserts he is entitled to have the entire $1,600 placed in the street improvement fund, which would make it available for payment of all the bonds. The court held, as we have indicated, that he was not entitled to that relief.
Formerly the statute made a city of the fourth class the agent of the bondholders not only to collect the assessments on the property as a tax and place the same in the street improvement fund, out of which the particular bonds were payable, but also to bring suit and enforce the liens, including the recovery of ten percent penalty. Under the statute the city was liable to the bondholders if it failed to perform its duty in that respect. City of Catlettsburg v. Citizens' National Bank,
It appears that the bondholder had proceeded against other property — according to the pleadings had been diligent in doing so — and yet there remained a deficit in the improvement fund of $1,966. It is claimed in this suit that the City must make up that deficiency out of its general fund. In the main the appellant's argument rests upon the fairness and wisdom of such a conclusion and upon the proposition that the amendment of Section 3575 of the Statutes, giving bondholders the right to enforce their liens in their own name, did not relieve the city of liability for failing to act. It is contended that the bondholder as the beneficiary of a trust could always have maintained the suit under Section 21 of the Civil Code of Practice.
The opinion that a city was liable for dereliction in duty in respect to the enforcement of the liens on the property rested in part upon the construction of the word "may" in the former statute, which provided that "the assessment may be collected like other taxes," as meaning "shall." Kentucky Statutes 1915, Section 3575. City of Covington v. Patterson,
Inasmuch as the statute uses the word "shall" in relation to the city's liability in other particulars, and expressly provides that there shall be no liability for a failure to collect any assessment — the right being expressly given the bondholder to enforce the liens — we cannot say that "may" in the provision imports mandatory action. We think "may" was used in this relation in its ordinary sense of permission or of vesting discretion. The City in its discretion could make up the deficit in the fund which had been established for the satisfaction of the bonds, but it cannot be compelled to do so. The court correctly ruled there was no legal liability of the City to pay the deficiency.
The judgment is reversed to the extent that it refused to make the City liable for the proceeds of the Wilcox property and is affirmed in other respects.