Court Opinion

ID: 9866493
Source: CourtListenerOpinion
Date Created: 2023-09-26 13:08:11.37188+00
Date Added: 2024-06-11T07:40:56.735186
License: Public Domain

On Motion for Rehearing. In its motion for rehearing and in the argument thereon the appellee urges that the treasurer and not the town is the trustee, and calls our attention to the following statement in State ex rel. Ackerman v. City of Carlsbad, 39 N.M. 352, 47 P.2d 865, 869: “The city treasurer is the trustee, if this be a trust. His is the discretion if there is any.” A reading of the opinion impresses one that the court was not drawing a distinction between the city and its ministerial officer as the trustee. It is said elsewhere in the opinion: “While the city assumes no general liability for the payment of these bonds, it does obligate itself to create such paving fund, to collect and enforce the special assessments, to place the proceeds in the fund, and to pay ‘this bond out of such receipts in the manner provided by the ordinance under which this bond is issued.’ Such a bond issue is an optional part of our statutory scheme for financing municipal improvements.” This court directly held the city was the trustee in Hodges v. City of Roswell, 31 N.M. 384, 247 P. 310, and State ex rel. Lynch v. District Court, 41 N.M. 658, 73 P.2d 333, 113 A.L.R. 746, and did not dis-affirm it in the Munro case [Munro v. City of Albuquerque], 48 N.M. 306, 150 P.2d 733. It has also been so held by the Circuit Court of Appeals for the 10th Circuit in Gray v. City of Santa Fe, 89 F.2d 406, and in the same case in 10 Cir., 135 F.2d 374. The same holdings are made in City of New Orleans v. Warner, 175 U.S. 120, 20 S.Ct. 44, 44 L.Ed. 96; Wangnild v. Town of Haxtun, 106 Colo. 180, 103 P.2d 474, Id., 109 Colo. 518, 127 P.2d 328, and Blackford v. City of Libby, 103 Mont. 272, 62 P.2d 216, 107 A.L.R. 1348. We reaffirm our previous holding that the town and not the treasurer is the trustee. The town also urges that if there be a trust it is an implied or resulting trust, and that therefore the statute of limitations began running at the time of the commission of the wrongful acts, and that the action is barred. In addition to the case of Wangnild v. Town of Haxtun, cited in the original opinion, we call attention to the case of City of New Orleans v. Warner, supra, where the city had voluntarily undertaken the collection and disbursements of drainage assessments under authority of .permissive legislation but had failed to discharge its duties. In a suit by a warrant holder against the city it was claimed by the defendant that his only recourse was to the fund and that the statute of limitations barred the action. In answering this contention, Mr. Justice Brown stated [175 U.S. 120, 20 S.Ct. 48]: “Having thus voluntarily assumed the obligations of a trustee with respect to this fund, it cannot now set up the statute of limitations against an obligation, which, as such trustee, it had undertaken and failed to perform. The rule is well settled that in actions by cestuis que trust against an express trustee, the statute of limitations has no applications, and no length of time is as bar. While that relation continues, and until a distinct repudiation of the trust by the trustee, the possession of one is the possession of the other, and there is no adverse relation between them.” Blackford v. City of Libby, supra, was an action by the holder of a warrant payable out of a special improvement fund where a deficit was caused by the treasurer paying one warrant two times, of which the plaintiff had notice at the time of the second payment. The city pleaded limitations; that in making the payment of the second warrant, the city treasurer was acting as agent for the warrant holders, and not for the city and the payment was from a special fund, and not the funds of the city; that the duties of the city.treasurer in that regard were defined hy statute and the council had no control over him, and that in making the payment the treasurer was performing a governmental function. The court held against these contentions, and among other things said [103 Mont. 272, 62 P.2d 218] : “When it so received that money, it became a trustee. Now it is being sued for negligence on account of its violation of that trust. The city must answer for its negligence in handling the trust funds.” The case quotes approvingly from State ex rel. Clark v. Bailey, 99 Mont. 484, 44 P. 2d 740, 744, on the status of the city treasurer: “The office of city treasurer is a continuing one, regardless of the person who may occupy it at any particular time, and the contention that the defendant in this action was not the person who held the-office when the funds embezzled were received is not material. The city must answer for the illegal acts of its servants. * * * The city, and not the treasurer, is liable to the bondholder here.” And further quoting: “A fund that is derived from a special levy or one created for a specific purpose is in the hands of municipal officials in trust. The municipality is merely a custodian, and its duties relative to such funds are purely ministerial. It may not use or divert them.” And again: “As we have already indicated, the fund as it was accumulated was held by the city as a trust fund for the warrant holders. While it was not in the strict sense of the word an express trust, the rule, we think, with respect to the running of the statute of limitations in such cases has a reasonable and practical application. It has been very generally held that, as between the trustee and the beneficiary of an express and continuing trust, the statute of limitations does not run until the trust has been clearly and unequivocally repudiated, and until notice of such repudiation has been received by the beneficiary.” (Citing cases.) In its brief and argument on rehearing the town for the first time calls attention to Sec. 27-117, 1941 N.M.S.A., of our limitation statutes which read: “None of the provisions of this chapter shall run against causes of actions originating in or arising out of trusts, when the defendant has fraudulently concealed the cause of action, or the existence thereof from the party entitled or having the right thereto.” It states as there was no allegation or proof of concealment that this statute and case of Patterson v. Hewitt, 11 N.M. 1, 66 P. 552, 55 L.R.A. 658, affirmed in 195 U.S. 309, 25 S.Ct. 35, 49 L.Ed. 214, are an absolute bar to the plaintiff’s action. In answer to this claim we cite Chap. 181, Laws of 1941, the first section of which appears as Sec. 27-122, 1941 N.M.S.A., as follows: “No suit, action or proceeding at law or equity, for the recovery of judgment upon, or the enforcement or collection of any sum of money claimed due from any city, town or village in this state, or from any officer as such of any such city, town or village in this state, arising out of or founded upon any ordinance, trust relation, or contract written or unwritten, or any appropriation of or conversion of any real or personal property, shall be commenced except within three (3) years next after the date of the act of omission or commission giving rise to the cause of action, suit or proceeding; and no suit, action or proceeding to recover damages for personal injury or death resulting from the negligence of any city, town or village, or any officer thereof, shall be commenced except within one (1) year next after the date of such injury. All such suits, proceedings or actions not so commenced shall be forever barred, provided, however, that as to all such actions heretofore accrued, suit to recover thereon may be instituted at any time on or before December 31, 1941, but not otherwise.”  We call attention to the fact that this action was filed Dec. 29, 1941, and that under the law as established in Orman v. Van Arsdell, 12 N.M. 344, 78 P. 48, 67 L.R.A. 438, the statute operated retrospectively and had the effect of reviving an action theretofore barred, provided it was filed on or before Dec. 31, 1941. This case has never been overruled and we find it cited in Re Goldsworthy’s Estate, 45 N. M. 406, 115 P.2d 627, 148 A.L.R. 722, as well as in Bunton v. Abernathy et al., 41 N.M. 684, 73 P.2d 810. In fact, this 1941 Act and the case of Orman v. Van Arsdell, supra, provide an effective bar against escape on the part of the town even if we held with it in its contention that at most there was only an implied or resulting trust. The town will have to reimburse the plaintiff for the loss sustained by him on account of its wrongful acts. Our opinion in this case must not be understood as overruling the Munro case holding that a municipality is not liable to the bondholder for losses incurred because of its failure to institute foreclosure proceedings before the liens became barred by limitations under our decision in Altman v. Kilburn, 45 N.M. 453, 116 P.2d 812, 136 A.L.R. 554. The motion for a rehearing is denied. BRICE, C. J., and LUJAN and SADLER, JJ., concur. COMPTON, J., not participating.