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(1921) 101 Or. 478, 193 Pac. 824, it was held that since the city improperly delegated to prospective bidders its imperative duty of prescribing a plan and specifications, the proceeding, which contemplated an improvement at the expense of adjacent property, was void, and, being void, the contract furnished no control over the action of the parties, the breach of which would result in damages, and hence no recovery could be had against the municipality as for a breach of the so-called contract. And this view was sustained on rehearing in (1921) 101 Or. 492, 199 Pac. 605. The court observed at the close of the rehearing opinion that it had never held that a city is liable under its general powers for its failure and neglect to enforce a void contract which was made by its council under its special powers.
So, the fact that by an erroneous decision, from which no appeal was taken, an assessment was held void upon the ground that the charter failed to provide for notice to the lot owners, does not render the city responsible, where the certificates provided that the holder should have no claim against the city in any event, except from the special assessments. Roter v. Superior (1902) 115 Wis. 243, 91 N. W. 651.
d. Where municipal authorities neglect or refuse to perfect or enforce assessments.
There is considerable apparent, and some real, conflict of authority upon the question of general municipal liability where the municipal authorities had power to make the improvement at the cost, in whole or in part, of the property benefited, and there were no original defects which invalidated the proceedings taken to that end, but those proceedings were not carried to the point necessary to charge the property benefited and provide the contemplated fund for the payment of the cost of the improvement. In this connection, however, it will be noted that in some jurisdictions a distinction is explicitly made-and is doubtless implicit in others-between the
mere neglect of the municipal authorities to perfect assessments against the property, in which situation mandamus is held by some of the cases to be the proper remedy, and the situation where the municipal authorities, by neglect or affirmative acts, have disabled themselves from charging the property as contemplated by the statute or ordinance under which the improvement was made, and the contract for the same, thus creating a condition not remediable by mandamus. The diversity of results is also, to some extent, due to differences in the provisions of statutes, ordinances, or contracts, bearing on the question of general municipal liability in the event of failure or inability to impose the cost upon the property benefited as contemplated.
In District of Columbia v. Lyon (1896) 161 U. S. 200, 40 L. ed. 670, 16 Sup. Ct. Rep. 450, affirming (1892) 9 Mackey (D. C.) 484, the municipality was held liable, where it had delayed making the assessment until it was too late to do so.
So, in Denny v. Spokane (1897) 25 C. C. A. 164, 48 U. S. App. 282, 79 Fed. 719, the municipality was held liable, where the original assessment was invalid, and by the time the reassessment was made the claims against some of the property had outlawed.
If a municipal corporation which has power to make a contract for street improvements contracts for them, and stipulates in the contract that the agreed price shall be paid to the contractor out of funds to be realized by assessment upon abutting property, and the city has power to make the assessment, but fails to do so, or fails to make a valid assessment, and thereby to provide the funds out of which the contractor may receive the price of his labor and materials, the city is primarily and absolutely liable to pay the contract price itself. Barber Asphalt Paving Co. v. Denver (1896) 19 C. C. A. 139, 36 U. S. App. 499, 72 Fed. 336.
In Oklahoma City v. Orthwein (1919) 169 C. C. A. 258, 258 Fed: 190, where a municipality had refused written requests to exercise its power
to cause new assessments to be made on account of certain illegal assessments, it was held liable to the holder of the improvement bonds, notwithstanding the provision of the statute that the city itself should, in no case, be liable on the improvement bonds. The court said that the statutory provision did not exclude a remedy based upon negligence and wilful refusal to perform the municipality's duty.
In Gray v. Joliet (1919) 287 III. 280, 122 N. E. 550 (reversing (1918) 210 Ill. App. 449), the court, while conceding that a city of less than one hundred thousand, may by ordinance, under the proviso to § 94 of the "Act Concerning Local Improvements," provide for the payment of the expense of levying an assessment from the fund produced by levying it, it cannot relieve itself from liability to pay the reasonable expenses, in this case, services rendered in making and spreading the assessment roll,-by voluntarily abandoning and dismissing the proceeding before judgment of confirmation, notwithstanding the provision of the ordinance that such expense shall be paid for by special assessment. The court observed that in the earlier Illinois cases supporting the general proposition that a city cannot be made generally liable to a contractor by mere evasion or neglect to collect an assessment, the assessment was actually levied, and in some of them was actually collected.
In South Bend v. Reynolds (1900) 155 Ind. 70, 49 L.R.A. 797, 57 N. E. 706, the court, in upholding the constitutionality of a statute in relation to public improvements, declared, arguendo, that if accruing special benefits are inadequate to pay the expenses of the improvement, which cannot be determined until the improvement has been completed and the contractor entitled to his pay, the deficit must be provided from the general revenues of the city or town; but the statute in this case expressly provided that the city or town should be liable to the contractor for the contract price of the improvement.
Where a city accepts work upon its streets, and by affirmative action re
scinds or discontinues the work under contract, and in this way prevents the possibility of levying and collecting assessments upon the property benefited, it cannot avoid liability for such a breach of contract. Dunkirk v. Wallace (1898) 19 Ind. App. 298, 49 N. E. 463.
In Morgan v. Dubuque (1870) 28 Iowa, 575, it was held that the failure of the city to collect the assessments within a reasonable time rendered it liable to pay the contract price, and that the burden of proof of diligence rested upon the city.
A city is liable for interest lost on account of negligent delay in levying assessments. J. W. Turner Improv. Co. v. Des Moines (1912) 155 Iowa, 592, 136 N. W. 656.
It was also held in Leavenworth v. Mills (1870) 6 Kan. 288, and Atchison v. Leu (1892) 48 Kan. 138, 29 Pac. 467, that the municipality was liable where it failed to provide the means of collecting from the lot owners. But these cases proceed on the theory that the municipality is primarily liable, and that the assessment is merely a means of reimbursing it.
Where the city fails to provide any means for the collection of the special tax, it is liable generally, notwithstanding an agreement that the contractor should look exclusively to such special tax, if the city levied a new tax therefor. Leavenworth v. Stille (1874) 13 Kan. 539.
In Atchison v. Byrnes (1879) 22 Kan. 65, where a city made a contract for macadamizing certain streets, and, to pay for the same, agreed to levy legal assessments upon the abutting owners by a certain date, and certify the same to the county clerk as required by law, and, on the completion of the work, to issue to the contractor assessment bonds, the court said: "When the city of Atchison failed to levy a sufficient tax to pay for the work done, and refused to issue all the special assessment bonds to which the contractor was entitled, or otherwise provided any means for paying the balance due him, he had no other alternative except bringing suit; and as the city
was liable to him for the balance unpaid, his action was rightfully brought and prosecuted in the court below against that corporation."
In Heller v. Garden City (1897) 58 Kan. 263, 48 Pac. 841, the court said that if the city officers had issued warrants for the amount due the contractor, and levied assessments against the improved property to meet the warrants, no general liability would have attached; but, under the authorities, their failure and refusal to take these steps and their final repudiation of the contract subjected the city to a general liability, notwithstanding the provision of an improvement ordinance that no liability should be incurred by the city to pay for the improvement except out of a fund raised upon assessment and levy of taxes against the abutting property.
In Guthrie v. Louisville (1846) 6 B. Mon. (Ky.) 575, the court said that it was the duty of the city to show the necessary orders to sustain the lien "which she has guaranteed," and upon her failure to do so she should be made liable for the price of the labor performed under the contract. It is not entirely clear whether or not the guaranty referred to was express or by implication of law.
In Louisville v. Meyer (1895) 17 Ky. L. Rep. 666, 32 S. W. 290, it was held that a city which, without any reason, refused to apportion the cost of an improvement against the property as it agreed to do, was liable, the contract having been made after the repeal of the statute, which provided that in no event should the city be liable for the improvement without the right to enforce it against the property receiving the benefit.
In Cole v. Shreveport (1889) 41 La. Ann. 839, 6 So. 688, it was declared generally that a contract, duly authorized by law, made by an incorporated town or city, for useful improvements, and duly executed by the contractor, will be enforced against the city as a debt for which it is liable, if the means of payment provided in the contract should fail through sub
sequent events, not due to the laches. or fault of the contractor.
The city was held liable in Steffen v. St. Louis (1896) 135 Mo. 44, 36 S. W. 31, where, without just cause, it prohibited the contractor from completing the work and prevented the issuing of special tax bills as contemplated by the contract.
Where the city fails to pay the damages sustained by some of the property owners, or have them assessed, as it might do under the statute, and the contractor is, in consequence, enjoined from proceeding with the work, the city is liable for the resulting damage in the absence of an express exemption of such liability by the charter or contract, notwithstanding that it is contemplated that the contractor shall look to the funds collected by the city on special tax bills. Ash v. Independence (1899) 79 Mo. App. 70.
And in Oster v. Jefferson (1894) 57 Mo. App. 485, where the statute provided that money to pay for macadamizing streets should be raised by assessments against abutting property, it was held that if, in such case, the city fails or declines so to assess and collect the money within a reasonable time, it is liable to the contractor, and that an agreement by the contractor to take special tax bills in payment is immaterial if they are worthless. Keating v. Kansas City (1884) 84 Mo. 415, was distinguished on the ground that the charter in that case exempted the city from liability.
A municipality having power to contract for an improvement is liable notwithstanding the contract provided that the contractor should receive, in full satisfaction, warrants to be drawn against a special fund created by assessment, where it neglected to exercise its power to make a reassessment or relevy, after the first one has proved invalid. Rogers v. Omaha (1908) 82 Neb. 118, 117 N. W. 119.
And the liability of the municipality where it is guilty of a want of diligence in collecting the fund is upheld in Oregon, notwithstanding an agreement that the contractor shall look to the assessments, and that it shall
not, by any legal process or otherwise, be required to pay the contract price out of any other fund. North Pacific Lumbering & Mfg. Co. v. East Portland (1886) 14 Or. 3, 12 Pac. 4; Commercial Nat. Bank v. Portland (1893) 24 Or. 188, 41 Am. St. Rep. 854, 33 Pac. 532; Little v. Portland (1894) 26 Or. 235, 37 Pac. 911; Jones v. Portland (1899) 35 Or. 512, 58 Pac. 657; O'Neil v. Portland (1911) 59 Or. 84, 113 Pac. 655.
In Commercial Nat. Bank v. Portland (1893) 24 Or. 188, 41 Am. St. Rep. 854, 33 Pac. 532, the court, after quoting with approval from Reilly v. Albany (1889) 112 N. Y. 42, 19 N. E. 508, said: "This doctrine, we think, is applicable to the case at bar. There is nothing in the stipulation of the contract absolving the city from the duty of making the assessment and enforcing its collection; hence, the obligation rests upon it to make the necessary assessments, collect the same, and pay the contractor. The contractor can exert no control over its acts, nor has he any claim or lien against the property benefited by the improvement. There is no privity between the property owners on the line of the work and the contractor. The city alone can make the assessments and enforce their payment, so as to realize a fund out of which to pay the warrants in question; and it is the failure of the city to perform its duty in this regard upon which the general liability is predicated."
The fact that no action was taken on the reports of the city engineer certifying to the completion of the work, for nearly seven months after they were filed, displays such a degree of negligence and disregard of the rights of the contractors and of the owners of the abutting property as to render the city liable for the contract price. Dennis v. Willamina (1916) 80 Or. 486, 157 Pac. 799.
In Dime Deposit & Discount Bank v. Scranton (1904) 208 Pa. 383, 57 Atl. 770, it is held, where from want of ordinary professional knowledge in filing assessment liens, or from neglect to issue scire facias upon them, the city has failed to perform its duty,
it becomes liable to the holders of the improvement bonds, notwithstanding the stipulation therein that the "city is only to be liable for the amount collected and as fast as collected (from assessments) and as often as there are sufficient funds in the hands of the city treasurer from said assessments, he shall call in said bonds for payment." The court observed that while, by the acceptance of the bonds, the creditor agrees that he will look, primarily, to the fund raised by the assessments for payment, he agrees to do so on the condition that the city makes lawful assessments, files lawful liens, and preserves them by lawful proceedings.
To the same effect is O'Hara v. Scranton (1903) 205 Pa. 142, 54 Atl. 713, where the contract provided that the "contract price is to be derived from assessments upon the city and abutting owners, according to benefits, and, as to assessments upon abutting properties, the city is liable to the contractor only for the amounts actually collected."
In Dale v. Scranton (1911) 231 Pa. 604, 80 Atl. 1110, holding the city liable generally for negligence in collecting assessments, notwithstanding the provision of the contract that the fund for the payment of the contract price was to be derived from assessments on the property benefited, and that the contractor was liable only for the amounts actually collected from such assessments, as the same were collected, the court, in reply to the contention that in the present case liens were filed and writs of scire facias issued within the time prescribed by law, said that such an adherence to the letter would destroy the spirit of the rule established by Dime Deposit & Discount Bank v. Scranton (Pa.) supra, Gable v. Altoona (1901) 200 Pa. 15, 49 Atl. 367, and O'Hara v. Scranton (Pa.) supra. The court further said: "The primary duty rested upon the city to file the liens and collect the assessments, and the contracting parties covenanted upon this basis. The contractor who in good faith completed the work had a right to insist that the city be dili
gent in collecting the assessments, which means collection within a reasonable time. If the city had neglected to file the claims within the statutory period, or had failed to issue writs of scire facias within the time prescribed by law, it would have been liable under the authorities cited. So, too, if the liens were not pressed to collection within a reasonable time, the city failed in the performance of a duty resting upon it as the basis of the contractual relation existing between the parties, and the contractor under such circumstances may sue for the balance due upon the contract. It would be most unconscionable to permit the city to stand idly by for a period of four years and more, either refusing or neglecting to do its duty in the collection of the assessments, and then to say to the contractor, 'You have no redress except to await the pleasure of the municipal authorities who in their own good time may or may not press the claims to collection.' While the contract provided that the city was only liable to the extent of the assessments as they were collected, the positive duty, from which nothing but performance will absolve it, rested upon the city to file the claims and make the collections. The city, and not the contractor, had this power. It must be held to the utmost good faith in dealing with such a situation. Failure to collect for four, five, or six years, without reasonable excuse, does not show such diligence or good faith as the law requires, and was in violation of its duty to collect within a reasonable time. Under these circumstances the city must be held to have waived its right to withhold payment until the assessments are collected, and became liable to pay upon demand by the contractor. When payment was refused, suit was properly brought."
The city was held liable in Nolan v. Reading (1912)) 235 Pa. 367, 84 Atl. 390, where, owing to the negligence of the city engineer's office, the total assessments were less than the bonds issued against the same, notwithstanding that the bonds expressly
stipulated that the city was only to be liable for the amount collected on the assessments, and as fast as collected, The court said that the city, by undertaking to pay a certain sum to be first collected by it from the owners of the property to be assessed, impliedly assumed to make the assessment and to collect it, and must be understood to have contemplated an assessment as adequate for the purpose, and its collection accomplished as promptly as, with due diligence, they could be so made. The court in this case also observed that the city had expressly stipulated in the bond that the requirements of the ordinance had been fully complied with, and that one of those requirements was the assessment of the "exact cost and expense." The court observed that there is now no means of retrieving the error by an additional assessment covering the deficiency, and added: "In equity, and the action of assumpsit partakes of the nature of a bill in equity,- ... it is plain that the city ought to be held to make him (the holder of an improvement bond) whole."
So, in Dunbar v. Williamsport (1891) 9 Pa. Co. Ct. 451, where the statute providing the method of assessment was declared unconstitutional and another statute passed authorizing reassessment, it was held that the latter statute was mandatory, and the city must proceed under it to levy assessment, or it would be liable.
In Eilert v. Oshkosh (1861) 14 Wis. 586, where the city was held in fact not negligent, the court expressed the opinion that, if the city by negligence loses the power to collect the assessments, it should be held liable.
As previously suggested, the general liability of a municipality for failure to perfect and collect assessments, where it was not beyond its power to do so, has been denied upon the ground that the proper remedy was by mandamus.
Thus, in Peake v. New Orleans (1891) 139 U. S. 342, 35 L. ed. 131, 11 Sup. Ct. Rep. 541, denying the liabil ity of the city of New Orleans for the failure to collect assessments for a