Morris v. City of Sheridan

Mr. Justice Harris delivered the opinion of the court. 1. The findings made by the trial judge do not appear in the record. However, the abstract informs us that the findings are omitted “for the reason that they follow almost verbatim, the allegations of plaintiff’s complaint and for the purposes of this appeal reference can be had to the complaint for matters concerning the said findings’” The respondent states in his brief that: “The trial court found in favorr'of the respondent and against the appellant on all the material issues. Its findings are embodied in formal findings of fact, — 232 — which, substantially follow the allegations of the complaint and, for that reason, are omitted from the appellant’s abstract.” The findings should have been made a part of the record; and, yet, while we disclaim any intention of approving the practice followed in the instant case, we shall proceed to examine the questions presented by the litigants. Our inquiry will be made, however, in the light of the explanation of the parties that the findings follow the allegations of the complaint. The complaint charges that the city was negligent because: (1) It did not use reasonable diligence in supplying special funds for the payment of the warrants; and (2) such moneys as were in the special funds were wrongfully applied in payment of the Warren Construction Company warrants. The defendant denies the accusation of negligence and claims that: (1) It was damaged because Morris failed to perform his duty as engineer; (2) the commencement of the first action operated as an election of remedies and forever precluded Morris from availing himself of any other remedy; (3) the indebtedness limitation prescribed by the charter bars the prosecution of the action; and (4) since the bank held all the warrants, no injury could have resulted by paying one warrant in preference to another. 2. But little notice need be given to the counterclaim pleaded by the city. If the trial court made a finding concerning the counterclaim the finding was presumably against the city. If, however, no finding was made about the counterclaim, then it is sufficient to say that the record shows that Morris performed his full duty as engineer and there is no evidence to justify the city’s claim for damages. — 233 — 3. The contention that the commencement of “the first action was an election of remedies and that therefore the plaintiff is estopped from prosecuting the instant action cannot be sustained. The city defended the first action by arguing that Morris was not entitled to the remedy at all. Apparently Morris concurred in the view taken by the city and obtained a judgment of non-suit; and, therefore, the city cannot now well claim that its position was erroneous: Rehfield v. Winters, 62 Or. 299, 306 (125 Pac. 289). The first action yas fruitless because of the contention of the city that the remedy selected by Morris was not available to him. If Morris attempted to make use of only a fancied remedy, then that barren attempt does not preclude him from afterwards pursuing a remedy to which he is actually entitled: Zimmerman v. Robinson & Co., 128 Iowa, 72 (102 N. W. 814, 5 Ann. Cas. 960); Powell v. Dayton S. & G. R. R. Co., 16 Or. 33, 43 (16 Pac. 863, 8 Am. St. Rep. 251). 4. The indebtedness limitation fixed by the charter cannot of itself and standing alone defeat a recovery in this action if the services rendered by Morris were to be paid for with moneys from special funds created by the levy of special assessments on abutting property. The ruling in Little v. Portland, 26 Or. 235, 246 (37 Pac. 911), is decisive here. Presumably the trial court followed the allegations in the complaint and found that the parties agreed that Morris should look only to special funds to be created by assessing the cost to abutting property. Moreover, every act done by the defendant harmonizes with the claim made by Morris. The city included the cost of Morris’ services in the amount which was assessed against the abutting property as the cost of the improvement; the city created a special fund for every street improvement and each — 234 — warrant which the city drew for Morris’ services was drawn on a special fund. When Morris contracted with the city and, at all times since, the indebtedness of the city exceeded the limitation fixed by the charter; and, hence, the city contends and Morris concedes that the contract was unlawful if it contemplated payment out of the general fund. 'Payment out of the general fund was unlawful while payment out of the special fund was lawful. In view of all the evidence the city cannot well claim that it contracted to do an unlawful rather than a lawful act. 5. The charter invests Sheridan with the power of ordering a local improvement and affords the means for raising funds to pay for the improvement by assessing the cost to the adjoining lots. When the city orders a local improvement the duty devolves upon it to put the necessary machinery in motion to raise the funds to pay for it by assessment upon the property benefited ; and a failure to perform this duty creates a general liability and gives rise to a right of action ex delicto against.the municipality for damages: Commercial National Bank v. Portland, 24 Or. 188 (33 Pac. 532, 41 Am. St. Rep. 854); Little v. Portland, 26 Or. 235 (37 Pac. 911); Jones v. Portland, 35 Or. 512 (58 Pac. 657); O’Neil v. Portland, 59 Or. 84 (113 Pac. 655); Dennis v. Willamina, 80 Or. 486 (157 Pac. 799). The record conclusively shows that the city exercised all its chartered powers for the creation of appropriate special funds. Assessments were levied; some property owners paid their assessments; some owners availed themselves of the privilege of paying in installments as permitted by the Bancroft Bonding Act, and the city then exercised its right and sold bonds equal in amount to the assessments brought within the Bancroft Bonding Act and thus raised funds equal in — 235 — amount to the assessments brought within the protection of the Bancroft Bonding Act; and assessments which became delinquent were reduced to money by selling the delinquent property for as much as the property was worth. 6. The plaintiff argues, however, that Section 86 of the charter makes it the duty of the city to supply the deficit in a special fund by taking the money out of the general fund. Section 86, so far as it is material here, reads thus: “Whenever any lot or part thereof sold under the provisions of this charter shall bring less than the assessment thereon, the common council shall supply the deficiency out of the general fund, if in the opinion of the council such improvement is necessary. ’ ’ It is not. necessary to determine whether Section 86 contemplates that the council can transfer moneys from the general fund to a special fund when the indebtedness exceeds the limit fixed by the charter; nor need we ascertain whether the words “shall supply the deficiency” mean “may supply the deficiency”; but it is sufficient to say that the charter does not compel the council to ascertain-whether the paving was necessary; and since the council has not expressed the opinion that the paving was necessary it follows that, even though it be assumed that the charter permits it, there is no obligation to supply the deficiency out of the general fund. 7. The deficits in the special funds resulted from the sale of delinquent property for less than the amount of the assessments charged against such property. The contention made by the plaintiff that the city is liable because it sold delinquent property for less than the amount of the assessment levied upon such property cannot be sustained. In every instance the — 236 — property was sold for as much as it was worth; the city obtained all that it could obtain for the property and therefore it is not liable; Creighton v. Toledo, 18 Ohio St. 447; New Albany v. Sweeney, 13 Ind. 245; 28 Cyc. 1060. The city employed every means afforded to it by its charter to raise the special funds contemplated by the parties; it left nothing undone; and, indeed, in the language used by the plaintiff in his initial pleading “tiie defendant has wholly exhausted all means provided by the charter of said defendant City of Sheridan for the collection of said special assessments against the abutting property for the creation of said special fund.” Neither the charter nor any ordinance prohibited the municipality from selling delinquent property for less than the amount of an assessment. The defendant was not negligent in the creation of the special funds. 8, 9. If the city is liable at all it is only because it exhausted all the special funds by paying the Warren Construction Company warrants. The warrants issued by the city are non-negotiable promissory notes and even in the hands of bona fide holders are open to all defenses available against the original party. The warrants were assignable subject to any defense existing in favor of the municipality against the original holder at the time of the assignment: Goldsmith v. Baker City, 31 Or. 249, 252 (49 Pac. 973); Frankl v. Bailey, 31 Or. 285, 291 (50 Pac. 186); Clatskanie State Bank v. Rainier, 72 Or. 243, 246 (143 Pac. 909); Morrison v. Austin State Bank, 213 Ill. 472 (72 N. E. 1109, 104 Am. St. Rep. 225, 233); 11 Cyc. 538; 1 Daniel on Neg. Inst. (6 ed.), §427; 5 McQuillin on Mun. Corp., § 2256. If, therefore, the United States — 237 — National Bank owned all the warrants which had been issued for the street improvements, and if those warrants could only have been paid with moneys in the special funds, no injury Would have been caused if the bank presented and received payment on warrant No. 20, even though such payment exhausted the fund and rendered the city unable to pay warrant No. 1. If, however, Morris owned the warrants which had been issued for his services and if the Warren Construction Company owned the warrants which had been issued for the work performed by it and the city had notice of such ownership, then the municipality was bound to pay the warrants in the order of their priority. The warrants which had been issued for the work done by the Warren Construction Company were presented to the city by the treasurer of the Warren Construction Company to whom the city paid the full amount of the warrants. The complaint contains an allegation that the city “negligently paid warrants subsequent in date and order to the aforesaid warrants of the plaintiff, well knowing that said warrants so paid ahead of the warrants of the plaintiff were the property of persons other than the plaintiff”; and it is to be presumed that the court made a finding in accordance with the allegations of the complaint as stated by the parties. There was evidence to support such a finding, and, hence, it will not be necessary to make further inquiry into the question of fact. By paying the Warren Construction Company warrants the city exhausted every one of the eight special funds with the result that the company received payment on all its warrants, while Morris only received part payment for work done on four streets and no payment at all for work done on the remaining four streets. — 238 — It is true that neither the charter nor any ordinance directs the order in which the warrants shall be paid, bnt it is also true that the absence of legislation did not authorize the city to pay the Warren Construction Company warrants, which were subsequent in order, to the injury of Morris who held warrants which were prior in order to those paid. By paying- the Warren Construction Company warrants ahead of the Morris warrants the city was guilty of negligence and it is liable to Morris for the loss sustained by him: Northampton First Nat. Bk. v. Arthur, 10 Colo. App. 283 (50 Pac. 738); 12 Colo. App. 90 (54 Pac. 1107); Northwestern Lumber Co. v. Aberdeen, 22 Wash. 404 (60 Pac. 1115); La France Fire-Engine Co. v. Davis, 9 Wash. 600 (38 Pac. 154); Red River Valley Nat. Bk. v. Fargo, 14 N. D. 88 (103 N. W. 390); 28 Cyc. 1572; 5 McQuillin on Mun. Corp., § 2254. We do not undertake to say whether a court of equity could have prorated the special funds among, the outstanding warrants before any payments were made. We merely hold that the act of the city injured Morris and the city must respond in damages. 10. The assignment of the warrants carried the right tq prosecute this action: Ramsey v. Johnson, 8 Wyo. 476 (58 Pac. 755, 80 Am. St. Rep. 948); 2 Am. & Eng. Ency. Law (2 ed.), 1084; 2 R. C. L., p. 633. And see: Little v. Portland, 26 Or. 235 (37 Pac. 911). Other questions are discussed in the briefs but it is sufficient to say that we have examined them and conclude that the judgment should be affirmed, and it is so ordered. Affirmed. Rehearing Denied. Mr. Chief Justice McBride, Mr. Justice Bean and Mr. Justice Benson concur.