City of Catlettsburg v. Self

— 675 — Opinion of ihe court bi' JUDGE O'REAR Reversing. Appellant city belongs to the fourth class. Thirty years or more ago certain of its streets had been graded and macadamized, at whose cost is not shown. The improvement-was quite deficient. The city council in 1900 determined to improve these ways by building them of fire-clay street paving brick, and to make the cost of the construction a charge against the abutting property. The proceedings were taken under section 3572, Ky. St., which allows: “The original construction of any street, road, alley, market’ space, lane, public square or grounds, wharves, levees, or avenue, may also be made at the exclusive cost of the owners of the lots and parts of lots.or land fronting or abutting or bordering upon the grounds so improved, to be equally apportioned by the board of council according to the number of front feet owned by them respectively.” The ordinance requiring the improvement to be made under the-section quoted was regularly adopted. The contract was let to the lowest bidder, and as required by statute. The contract price of the whole work undertaken was about $25,000. The work has been completed as required by the specifications of the contract, and has been accepted by the city authorities. Under section 3574, Ky. St., the city issued bonds for the payment of the work. That section required the mayor of the city, when the work was undertaken under section 3572, to within 30 days after the signing of the contract issue the bonds of the city in such amount as the council might order, not exceeding the contract price of the work and the expenses of issuing the bonds, which bonds were made redeemable at any time within 10 years. Section 3575, Ky. St., provides an elaborate plan for the payment of the bonds and interest, the substance of which is: The funds arising from a sale of the — 676 — bonds shall be kept separately and exclusively, and be known as the “Street Improvement Fund,” and be applied only to the purpose for which the bonds were by ordinance directed to be issued. As soon as the improvement should be completed, it should, with its accruing interest, be prorated against the abutting property by the front foot. The apportionment so made thereby became an assessment upon the abutting properties, collectible therefrom as other taxes, and secured by a lien on 'the property. It was collectible in annual installments, so that when collected it would liquidate the bonds. The bonds as provided for in the section last referred to were issued to the amount of $25,-000, “payable semi-annually from the date of same, and payable and redeemable not on the faith and credit of said city, but out of and secured by a lien on the assessments to be made and equally apportioned against said lots and parts of lots or lands,” etc. Thereafter the city undertook 4 to refund those bonds by substituting its unconditional obligation to pay the holders that much money in any event, pledging all the revenue and property of the city therefor. This suit was brought by appellees, on their own behalf, as well as on behalf of all others similarly situated, who it was alleged were too numerous to be joined, but whose interest was one in common with appellees, obtaining an injunction against the collection of the assessments made by the city against the abutting property to pay the bonds in question. Appellees are owners of some of the property affected by the assessment. Two grounds were relied on to defeat the city’s right to require appellees’ property, by any sort of tax, to pay for this improvement: First, it is 'claimed that the work was not original construction, but was reconstruction, which is by statute (section 3565) to be borne by the city, and not by the abutting property; and, — 677 — second, that, viewing it as a debt of the city, it was in excess of the income and revenues provided for that year, and, not having been authorized by a two-thirds vote of the taxpayers at an election held for that purpose, was therefore contracted in violation of sections 157 and 158 of the Constitution, and was by the terms of that instrument forever void. The learned circuit court sustained appellees’ attack upon the assesment, but upon which of the two grounds asserted we are not advised. Paving the streets with fire-clay paving brick was a radical improvement. For aught the record shows, the old macadamized roadway was an incomplete and insufficient provision for accommodating the public travel. It was probably more in the nature of a temporary makeshift till such time as the growth, affairs and importance of the municipality would justify its making a more permanent and expensive roadway. In McHenry v. Selvage, 99 Ky., 232, 18 R., 473, 35 S. W., 645, a macadamized road had been taken into the city by an extension of its boundary. Upon the city’s directing it to be paved in accordance with a general plan of the street improvements, it was held that this was original, and not reconstruction, within the meaning of the statute. This was followed in Mackin v. Wilson (20 R., 218), 45 S. W., 663. This view of the law seems to have been founded upon the idea that, as the abutting property is most benefited by a radical and permanent improvement, it should bear the cost of it; but, where it has once done that, reconstructions in their nature resembling repairs should be borne by the entire municipality. Until the abutting property has once been compelled to bear this burden, it has not constructed originally the street, which, in justice to all other property within the city, and upon an equal basis under the statute, it should do. We are of opinion — 678 — that the improvement in this case comes within the term “original construction,” as used in the statute. We have not overlooked City of Louisville v. Tyler, 111 Ky., 588, 23 R., 827, 64 S. W., 415. Even if the principle of that case is not opposed to MeETenry v. Selvage, the facts are variant enough to distinguish it from this case. If these bonds, or the cost of this improvement, be deemed a debt or liability of the city, it is admittedly in excess of the revenues and income of the city for the year-1900 (when incurred), and would be void, because, not having been authorized by two-thirds of the voters of the city voting on that subject at an election held for that purpose, it would be in violation of section 157 of the Constitution. It is a-rgued for appellees that the fact that the city has assumed by its bonds to pay for this work makes the liability that of the municipality; that it is not material, as affecting the nature of the liability, whence the city derives its means of discharging it. The construction and maintenance of proper, roadways within its jurisdiction is one of the first duties of a municipality. In. the matter of selecting the time and manner of making such improvements, the town acts legislatively. So it does, too, in providing the manner of the payment for the improvement. It derives this legislative authority, including the power of taxation to that end, by its delegation from the State Legislature, in which is vested all the power of taxation in the State. That such improvements may be made, if. deemed advisable by the proper legislative body, at the exclusive cost of the property primarily and directly benefited thereby, within the limits of such benefit, is a doctrine too long and too often applied in this State, and generally everywhere, to now admit of question or need citation of authorities. When the city directs, as it may, that such improve — 679 — ment be made at the exclusive cost of the abutting property, and the statute requires it to be borne in such event exclusively by the abutting property, the liability for the cost of the improvement is in no sense a personal one upon the city. The contractor must look aloné to the prdperty designated by the ordinance directing the improvement for pay for his work and materials. Gosnell v. City of Louisville, 104 Ky., 201, 20 R., 519, 46 S. W., 722; Becker v. City of Henderson, 100 Ky., 450, 18 R., 881, 38 S. W., 857. The city in this matter acts for the State in exercising the legislative discretion as to when, where and how such roadway improvements shall be made. The imposition of the cost, in the nature of a tax, is generally involuntary, so far as the person to bear it is concerned. The city council must and does act for him, in making the contract with the contractor, as to terms, price, etc. The statute has undertaken to break the payments of such improvements into installments, of such duration and amounts as will likely bear least oppressively upon the taxpayer. The council, by virtue of its statutory authority to contract for the taxpaying lot owner, executes the city’s bonds for the contract price. These bonds, by the terms of the ordinance under which they are issued, and of the statute upon which their validity is dependent, are payable only out of the “Street Improvement Fund,” which is to be collected from the property benefited by the improvement and charged with it. A statute very similar to the one here involved, and under a like constitutional provision, was before the Indiana Supreme Court in Quill v. City of Indianapolis, 23 N. E., 788, 7 L. R. A., 681. The conclusions of that court appear to us to fairly state the nature and effect of the obligations. It said: “It is enough to say the remedy of the holders of the bonds or certificates is confined exclusively to the spe — 680 — dal fund provided for, and to the collection of assessments by enforcing the lien upon the lots or parcels of ground assessed with' the cost of the improvement. The city is in no way liable for the payment of the bonds, except out of the special fund to be accumulated from assessments made against the property benefited. According to the scheme promulgated in the statute, in case the assessments are paid without delinquency, it is impossible for a single bond or certificate to mature in advance of the accumulation of a special fund devoted exclusively to its payment. If the assessments become delinquent, the remedy of the holders of the bonds or certificates is confined to the property. There is no liability against the city. The special fund provided for and the property are the sources from which the holders of the bonds and certificates must receive their pay, the city authorities acting merely as an agency for making and collecting the assessments, and as the custodian of the fund when the assessments are collected. In this they do not act as the agents of the city, but as special agents to accomplish a public end.” We are of opinion that the bonds first issued in settlement of this work were valid, and not in conflict with section 157 of the Constitution. Whether the second issue of bonds — the refunding bonds referred to — wherein the credit and property of the city are pledged to the payment of the cost of the improvement, as a valid one, may be doubted. City of Covington v. Nadaud, 103 Ky., 455, 20 R., 151, 45 S. W., 498. But we are unable to see wherein appellees are prejudiced by that fact, for, if these are not valid, then they owe the others which were exchanged for them. There does not appear to be any question between the city and the holders of the bonds as to their validity, and if appellees and others liable therefor pay to the city the money owing — 681 — for the improvement as required by the ordinance and the statute, and the money is applied to discharging the liens upon their property, it does not appear to us that the matter of the form of the indebtedness, as executed by the city, is of vital materiality to appellees. It is admitted that the benefits were more than double the cost of the improvement, and that the work has,been done in every respect according to the contract. The judgment of the circuit court is reversed, and cause remanded, with directions to dismiss appellees' petition and to discharge the injunction. Petition for rehearing by appellee overruled.