Court Opinion

ID: 9720657
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:38:23.261474+00
Date Added: 2024-06-11T18:24:20.255622
License: Public Domain

UHLENHOPP, Justice
(concurring in divisions I and II, dissenting from divisions III, IV and V).
The problem arose in this way. Supervisors are required to keep agricultural drains in repair. Code, 1962, § 455.135. At the time of the events in question, supervisors could proceed with repairs on their own initiative and assess the cost in accordance with the original apportionment of benefits in the district, when the estimated cost of repair did not exceed 50% of the original cost of “the district.” § 455.135. If the estimated cost exceeded such 50%, notice had to be given and hearing held before repairs could be undertaken. The supervisors involved in this case thought the words “the district” mean the whole district, here, District 3-11. The estimated cost of the cleanout of Lateral 9 was $3,610, far less than 50% of the original cost of District 3-11. The supervisors undertook the cleanout of Lateral 9 without notice and hearing. During the clean-out, the supervisors discovered that the engineer’s cost estimate was substantially erroneous. But the cost of the completed cleanout would still not approach 50% of the original cost of District 3-11. With the ditch cleaned out about halfway, still unaware that “the district” may mean something other than the whole district, and after consulting the engineer, the supervisors completed the cleanout on their own initiative. That was in 1964.
In 1969, this court decided Thompson v. Joint Drainage Dist. 3-11, 259 Iowa 462, 143 N.W.2d 326. The court held that “the district” in the statute means “the subdis-trict” when only a lateral is involved. The original cost of Lateral 9 was $15,054.40. The estimated cost of $3,610 for the clean-out was thus considerably less than 50% of the original cost of Lateral 9. When the supervisors discovered the error in the estimate, however, they had expended around *396$7,500 on the cleanout or about 50% of the original cost of Lateral 9. The completed cost of the cleanout, with incidental expense, was $20,500 — in excess of the entire original cost of Lateral 9 but less of course than half of the original cost of the whole district. No one knows whether the supervisors would have given notice and held hearing at the time they discovered the mistake in the estimate, had they realized that “the district” means the subdis-trict in the case of a lateral.
Will equity declare assessments void as to the portion of the cost of repair necessary to complete a project when the repair was properly commenced under a cost estimate requiring no notice and hearing; when, midway, the cost estimate was found to contain an error which if known at the outset would have required notice and hearing to undertake the repair; and when the supervisors proceeded in good faith but were under a misconception of law as to the necessity for notice and hearing in any event ?
Several threshold circumstances are important. First, the suit in equity is a collateral attack on the assessments, not a direct appeal under chapter 455, Code, 1962. The statute provides that “The remedy by appeal provided for in this chapter shall be exclusive of all other remedies.” § 455.-106. In view of that statute, equity will not intervene in a collateral attack to invalidate assessments unless the supervisors’ proceedings are more than irregular; they must be void. Maasdam v. Kirkpatrick, 214 Iowa 1388, 243 N.W. 145. Second, the attack here came after the project was completed and the workman was paid. When an error in a cost estimate is discovered before the work is undertaken, equity is more prone to intervene. Much less disruption of the parties’ rights will result from an injunction at the outset. Compare Koich v. Helena, 132 Mont. 194, 315 P.2d 811, with Lumbermen’s Trust Co. v. Ryegate, 61 F.2d 14 (9th Cir.). See also Vincent v. South Bend, 83 Wash. 314, 145 P. 452. Third, the supervisors’ action here was not ultra vires. Drain repair is within the general powers of supervisors. Indeed, the statute requires supervisors to keep drains in repair, and their power under the statute has been declared to be “broad and comprehensive.” Nelson v. Graham, 198 Iowa 267, 269, 197 N.W. 905, 906. The challenge is rather to the manner in which these supervisors exercised their power. Fourth, this is a suit in equity, not an action at law. Regarding the attendant equities no one suggests that the repair to the ditch was not needed, that the repair was not properly or completely made, that the workman’s charges were not reasonable, that fraud or collusion existed, or that the landowners were charged for what they did not get. Much earth and debris had to be removed, and the cost was correspondingly substantial.
Under these circumstances the problem of whether equity will intervene to declare the assessments void or partially void may be -approached from two standpoints: the language of § 455.135(1) and the intent of that statute.
■ I. Language of Statute. Section 455.135 refers to the engineer’s report and provides that if the “estimated cost” of repair exceeds 50% of original cost, notice and hearing are required. The statute nowhere mentions the situation in which “actual cost” during performance exceeds “estimated cost” at the outset.
Examination of the decisions discloses that an excess of actual over estimated cost not infrequently occurs. All sorts of unanticipated difficulties and mistakes are encountered: rock, hardpan, or quicksand in the right-of-way, unrealized federal assistance, errors in estimates, faulty specifications, strikes, and whatnot.
Statutes in this area are of two main kinds. One kind anticipates the possibility of a discrepancy between actual and estimated costs and expressly prohibits assessments to be levied if actual cost exceeds estimated cost or invalidates assessments to the extent they are in excess of estimated *397cost. Such statutes are enforced in accordance with their terms. Gainesville v. McCreary, 66 Fla. 507, 63 So. 914; Gilmore v. Hentig, 33 Kan. 156, 5 P. 781; Pope v. Rich, 316 Mo. 1206, 293 S.W. 373; Daehler v. Portsmouth, 45 Ohio App. 15, 185 N.E. 52 (assessments invalid to extent in excess of estimate); Rose Bros. v. Alva, 356 P.2d 1083 (Okl.); Johnson v. Utah-Idaho Concrete Pipe Co., 118 Utah 552, 223 P.2d 418. The second kind of statute does not deal with the problem of actual cost in excess of estimated cost but merely requires an estimate of cost at the outset; the procedure to be employed for the project is determined by that estimate. These statutes do not provide additional procedures in the event the estimate proves faulty. Nor do they restrict levy of assessments to the amount of the estimate. Under such statutes, although actual cost during construction exceeds the estimate the assessments are valid provided the public authorities proceeded in good faith and no fraud appears. Hoerth v. Sturgis, 221 Ky. 835, 299 S.W. 1074; Board of Councilmen of City of Frankfort v. Jillson, 225 Ky. 61, 7 S.W.2d 859; Campbell v. Plymouth, 293 Mich. 84, 291 N.W. 231; Kelley v. Morton, 179 Mo.App. 296, 166 S.W. 840; State v. Guttenberg, 38 N.J.Law 419; Bowdich v. Albuquerque, 76 N.M. 511, 416 P.2d 523; Aloha Sanitary Dist. v. Wilkens, 245 Or. 40, 420 P.2d 74; Miller v. Portland, 78 Or. 165, 151 P. 728; Borough of Conchohocken v. Tracy, 60 Montg. 350, 36 Mun.L.R. 104 (Pa.Com.Pl.); Branting v. Salt Lake City, 47 Utah 296, 153 P. 995; La Follette v. Fairmont, 138 W.Va. 517, 76 S.E.2d 572. This is true although the discrepancy in estimates and actual costs is large. Vincent v. South Bend, 83 Wash. 314, 145 P. 452.
The Iowa statute is of the second kind. First it imposes a general duty on supervisors to keep drains in repair. Then it provides that if the estimated cost exceeds 50% of original cost, notice and hearing are necessary. Thus notice and hearing expressly hinge on the estimate. Nowhere does the statute state that if, during performance, the supervisors learn that actual cost will exceed estimated cost additional proceedings must be taken. To impose that requirement would engraft words on the statute which are not there: “provided, if during performance it appears actual cost will exceed estimated cost, the work shall be halted and proceedings shall be taken based on actual cost.” Moreover, the Iowa statute nowhere limits levy of assessments to estimated cost or to any fixed amount. To impose that restriction would transform the statute from the second kind, which it is, into substantially the first kind, which it is not, and would add further words which are not there: “but no assessments shall be levied in excess of 50% of original cost.”
II. Intent of Statute. Three situations can arise. First, the estimated and actual costs may both be less than 50% of original cost. In that case the statute does not require notice and hearing. Second, the estimated and actual costs may both exceed 50% of original cost. Then the statute expressly requires notice and hearing. Third, the estimated cost may be less than, and the actual cost more than, 50% of original cost. The statute does not deal with that situation except as it expressly hinges notice and hearing on estimated cost. In this third situation should equity take upon itself the partial voiding of assessments when no legislative authorization exists to do so, when the supervisors acted in good faith, and when the subdistrict received the benefit of the work? The answer should be in the negative for several reasons.
First, traditional broad application of drainage law is against imputing an intention to the legislature that assessments shall be wholly or partially voided under circumstances such as exist here. The whole development of Iowa drainage law, including the powers of supervisors, has been one of liberality. This approach has been a substantial factor in making practical and possible the transformation of *398large swamp areas of Iowa into productive agricultural land. The Iowa Constitution grants broad authority to the legislature as to drainage. Iowa Const.Amend. 1908. Under the constitution, the legislature has enacted a comprehensive drainage statute and has expressly provided that the statute “shall be liberally construed.” § 455.182. Under that statute, this court has been opposed from the beginning to a narrow interpretation of the drainage law and of the powers of supervisors who proceed in good faith. Thorson v. Board of Supervisors, 249 Iowa 1088, 90 N.W.2d 730. This is true regarding the power to repair, specifically. Johnson v. Monona-Harrison Drainage Dist., 246 Iowa 537, 68 N.W.2d 517. To void assessments partially where supervisors are confronted with an unanticipated problem during a project and in good faith work out the problem with no actual loss to the district would go against the historical position of the legislature and the court in this area of law.
Second, precedent is against a claim of legislative intent to void the assessments in whole .or in part. The decisions do not hold that the law intends new proceedings shall be taken midway under circumstances such as these.
The leading case is Simpson v. Board of Supervisors, 186 Iowa 1034, 171 N.W. 259. Three substantial changes during performance occurred there. The plan contained an error as to the lower portion of the ditch, necessitating a widening of the right-of-way from 85 feet to 130 feet. This obstacle to performance also led to changes in the plan to run the main ditch differently toward the outlet and also to straighten a horseshoe bend in the river constituting the outlet. The plaintiff claimed these substantial changes required additional proceedings. This court held to the contrary, saying, “[I]t would disclose a very grave defect in the law, if the proceedings for the removal of this obstacle were necessarily to be treated as an original proceeding for the establishment of an individual drainage district.” 186 Iowa at 1040, 171 N.W. at 261. Other courts have held similarly where various mistakes and problems were encountered during performance, rendering the estimate of cost erroneous. Davies v. Los Angeles, 86 Cal. 37, 24 P. 771; Auditor General v. Chase, 132 Mich. 630, 94 N.W. 178 (estimate $40,000, actual $70,000); Nash v. St. Paul, 23 Minn. 132. This was said in the drainage case of Sheridan v. Fleming, 93 Mo. 321, 324-325, 5 S.W. 813, 814: “There is nothing in the act which limits the amount to the estimate first made by the commissioners. The law does not contemplate that they must in the first instance report the exact amount of work. It would be impossible for them to do this * * *.” The court said in State v. Guttenberg, 38 N.J.L. 419, 20: “[I]ts error arose chiefly from the fact that more rock was found at the grade than was anticipated. * * * Under these circumstances, and in the absence of any evidence of fraud, the municipality ought not to be estopped by such estimate, and precluded from imposing on those whose property was benefited, the real cost of the work, to the extent of their constitutional liability.” (Italics added.) In Moran v. Jersey City, 58 N.J.L. 144, 148, 35 A. 950, 951: “The preliminary assessment * * * was only an estimate made upon what was perceived on the surface of things, to give the property owners a general knowledge of the approximate expenses of the improvement; but the cost of the work was increased by unforeseen and unavoidable difficulties in progress. The work proved to be of a somewhat different character from that anticipated. The preliminary estimate of expense cannot be allowed to absolutely control the commissioners in their final assessment.” In McDonald v. Hornberger, 21 Ohio N.P. (n.s.) 209, 214: “Without a statute expressly limiting the cost to the estimate, it cannot fairly be said that the construction to be placed upon the estimate should serve the purpose guaranteeing to the property owner that the actual cost would not exceed the amount of sttch estimate.” In Branting v. Salt Lake City, 47 Utah 296, *399306, 153 P. 995, 999: “[Appellant was clothed with full power and authority to make the improvement and to assess the levy and the tax in question, and the mere fact that the estimate was too low, in the absence of express statutory provision to the contrary, cannot take away that power or authority.” (Italics added.) See also Hill v. Swingley, 159 Mo. 45, 60 S.W. 114; Probert v. Garth, 155 Mo.App. 387, 390, 137 S.W. 320, 321 (“This goes to show that the estimate was a poor one; but we do not see how it can affect the validity of the tax bills.”); Kelley v. Morton, 179 Mo.App. 296, 298, 166 S.W. 840, 841 (“that the actual exceeds the estimated cost will not invalidate the tax”).
A mistake of large proportions was involved in Vincent v. South Bend, 83 Wash. 314, 318, 145 P. 452, 453. There the public authorities commenced the project under the mistaken assumption that the federal government would assist substantially. During performance the assumption turned out to be untrue. The court held that the authorities, once into the project, could in good faith complete it, though the cost to the local government rose from $9,500 to $89,199.92. The court said:
The amount of the excess is large in this case, but there is no showing that the excess amount does not represent the actual bona fide cost of the improvement. In fact, there is no attempt to make such a showing; it being conceded, so far as the record goes, that the ultimate cost was the bona fide actual cost. The excess is readily accounted for when it is understood that, instead of being made at a nominal cost, as was first contemplated under the arrangement with the government engineers, it was necessary to make arrangements with private contractors to complete the work that should have been undertaken and completed under the contract with the government engineers, thus largely increasing the cost of the improvement, but not increasing the assessment beyond the actual bona fide cost of the improvement. Such an assessment is valid.
Cf. McGuire v. Voight, 242 Iowa 1106, 49 N.W.2d 472 (estimate of number of trees to be removed from ditch more than 50% wrong); Miller v. Glenwood, 188 Iowa 514, 527, 176 N.W. 373, 378 {“In the absence of fraud or collusion or something of that sort, the fact that the completed work exceeds the amount of the estimate does not leave the city without jurisdiction to assess abutting property its proportionate share, measured by the rules governing the special assessment.” Italics added.)
Third, practicalities militate against legislative intent to void the assessments wholly or partially. The situation should be viewed as it appeared to the supervisors at the time, not with the hindsight we possess. The supervisors discover they have an erroneous estimate. The ditch is dug out about halfway. The ditch as then repaired would afford no relief to the upper landowners who were not yet reached. Yet it would be larger than the lower landowners alone would need, as it was being dug out to a depth and width to handle the water in the entire length of the subdis-trict. If the project were stopped halfway because of the unanticipated additional cost, how would the supervisors assess the benefits for the costs already incurred? The unreached upper landowners could not be assessed; they would receive no benefit. Yet the lower landowners could not be assessed for the full cost of a larger cleanout than their lands alone needed.
Then what defense would the supervisors have if some upper landowner brought mandamus against them to complete the cleanout? Supervisors can be compelled by mandamus to clean out ditches. Morrow v. Harrison County, 245 Iowa 725, 64 N.W.2d 52.
With the benefit of hindsight, we can say the supervisors might have done differently. But the supervisors, as practical men confronted with a practical problem, *400proceeded as the supervisors did in Simpson v. Board of Supervisors, supra. They completed the project as best they could so that the subdistrict would have a functioning drain throughout. No one suggests that the cleanout could have been completed at less cost if further proceedings had been taken by the supervisors. Plaintiffs’ claim must be that such further proceedings would necessarily have resulted in discontinuance of the project. Can we ascribe an intention to the legislature that a project such as this one is to be abandoned half completed? This was stated in the Simpson case (186 Iowa at 1043-1044, 171 N.W. at 262) :
It is no unusual thing for the estimates of the cost of a public work to prove inadequate, but, generally speaking, this does not justify an adandonment of the work and the subsequent waste and loss of investment already made. (Italics added.)
Finally, what should ultimately govern the result in a suit in equity of this kind? The equities. Since the statute does not provide for additional proceedings if a mistake is discovered during performance or limit assessments to any fixed amount, plaintiffs seek the intervention of the district court in chancery to relieve them from paying for the cleanout.
Little equity can be found in plaintiffs’ claim. Even partial invalidation of the assessments would result in a windfall to plaintiffs — a full cleanout at half price.
As to the equities on the other side, if the supervisors had acted in bad faith we would have a different case. If they and the workman had connived, if the workman had charged an excessive amount, if he had not properly dug out the dirt and debris, if the landowners had not received the benefit of the cleanout, in short, if there had been “fraud or collusion or something of that sort,” equitable grounds for intervention would appear. Miller v. Glenwood, 188 Iowa 514, 527, 176 N.W. 373, 378. But all of those equitable considerations are the other way.
The trial judge as chancellor weighed the equities and concluded that he should not invalidate the assessments, and his decree should be affirmed.
MOORE, C. J., joins in this dissent.