
    Comstock et al. v. The Incorporated Village of Nelsonville, et al.
    
      Restrictions as to contracts, appropriations and expenditures — ■ By municipalities — Burns law — Section 2yo2 Revised Statutes.
    
    1. Unless a valid exception is made by some provision of statute, section 2702, Revised Statutes, is applicable to so much of the cost and expense of a street improvement as is to be paid by the municipality out of funds arising from a levy on the general tax list.
    2. Said section is not applicable to so much of the cost and expense of a street improvement as is to be paid by an assessment on the ' property bounding and abutting on such improvement or adjacent thereto.
    3. Whether the certificate required by said section 2702 has been filed and recorded or not, must be ascertained by each contractor for himself at his peril. In the absence of such certificate, when required, no liability arises against the municipality, even though the contractor has fully performed his contract.
    (Decided December 19, 1899.)
    
      Error to the Circuit Court of Athens County.
    A petition in proper form, and signed by more than two-thirds of the owners by the front foot of the property abutting on Chestnut street in the incorporated village of Nelsonville, between the east side of Fourth street and the west side of Grosvenor street, was presented to the council of the village praying for the improvement of that part of the street by grading, draining, constructing a curb on each side of the roadway, and paving the roadway with brick or block, with the necessary foundations and gutters, and asking that the cost and expense of the brick or block and curbing be levied and assessed upon the bounding and abutting property, and that all other expense of the improvement be paid by the village.
    The council, by a vote of two-thirds of its members, passed a resolution in proper form on the 7th day of June, 1898, in which it resolved that the council deemed it necessary to improve said part of Chestnut street by excavating, grading, preparing foundations, constructing a curb on each side, and paving with brick or block in accordance with plans, profiles and specifications on file in the office of the village clerk; and that the cost and expense of the brick or block and of the curbing be assessed by the front foot upon the lots and lands bounding and abutting upon the improvement, and that all other costs and expenses of the improvement be levied on the general tax list of the village, and that bonds be issued in anticipation of the collection of the assessments.
    On July 13, 1898, the council passed an ordinance in which it ordained that the improvement of said part of Chestnut street be proceeded with in accordance with the above resolution, and that the cost and expense of the improvement, less the labor and less such further portion as the said council might levy on the general tax list, be assessed by the foot front upon the lots and lands bounding and abutting upon said improvement.
    The council published notice for bids and awarded the contract for making said improvement to John F. Welch and Abner Juniper, who proceeded with the improvement under their contract.
    After the contractors had partly completed the improvement, the plaintiffs in error, tax-payers in said village, commenced an action against the village, its mayor, clerk and councilmen, and against said contractors, setting out in their petition the foregoing facts, and in addition thereto averring that said village had no solicitor, and then continued in their amended petition as follows:
    “Said village has not appropriated or otherwise acquired any lots or lands for the purpose of laying off, opening, extending, straightening or widening said part of said Chestnut street, and said village is not possessed of any property which it desires to improve by the improvement of said part of said street.
    At the time of the passage of the resolution by the council, to-wit: On June 7,1898, there was not in the treasury of said village and never has been, money to pay for said improvement of said street or any part thereof. And the clerk of said village never at any time certified to said council that the money or any part thereof, required to pay for said improvement of said street, was in the treasury to the credit of the fund from which it is to be drawn and not appropriated for any other purpose.
    The said mayor and clerk have signed on behalf of said corporation negotiable notes and certificates of indebtedness and the same have been delivered in payment of a large proportion of the costs and expenses of said improvement, and said council intends to issue bonds of said village in payment of said costs and expenses or a large portion thereof.
    And said council has not made any assessment of any kind upon the lots and lands abutting and abounding on said part of said street, and has made no assessment of any kind or character whatever to pay the costs and expenses of said street.
    No levy of any kind has been made on the general tax list for the proportionate share contemplated by said resolution to be paid by said village.
    The said council on the first day of November, 1898, directed the clerk of said village to draw an order on the general street fund of said village for the payment of the costs of the improvement of said part of said Chestnut street, and the said clerk has drawn said order, and there has been paid out of said general street fund over one thousand dollars, and the said council will, if not enjoined by this court, expend all the money in said general street fund for said improvement.
    Said council will, if not enjoined by this court, take from said general street fund whatever money is collected there hereafter by taxation and appropriate and use the same for the payment of the costs and expenses of said Chestnut street improvement. The money in said general street fund was not collected by taxation for the purpose of improving said part of said Chestnut street, and was not collected or appropriated for the improvement of any street in said village under the street assessment laws of Ohio.
    Said council will, if not enjoined by this court, make a levy and place an assesment upon the general tax list of said village, to pay a great part of the costs and expenses of said Chestnut street improvement.
    The defendants are misapplying the funds of said corporation and if not restrained by this court, will abuse the corporate powers of said corporation as above set forth.
    Wherefore plaintiffs pray that they may have a temporary restrainig order, and upon the final hearing of this cause, a perpetual injunction, enjoining said council, said mayor and said clerk, and said village of Nelsonville, Ohio.
    First. From levying and assessing upon the real and personal property of said village of Nelsonville, Ohio, returned on the grand levy, an assessment and levy for the payment of the costs and expenses of said Chestnut street improvement or any part thereof.
    Second. From paying the negotiable bonds, notes and certificates of indebtedness of said village of Nelsonville, Ohio, heretofore issued to pay the costs and expenses of said Chestnut street improvement.
    Third. From drawing orders upon and taking out of the general street fund of said village of Nelson-ville, Ohio, money with which to pay the costs and expenses of said Chestnut street improvement or any part thereof. And for all other relief to which they may be entitled.”
    ' To this amended petition the defendants filed the following demurrer:
    “Now come the defendants and severally and jointly demur to the amended petition of the plaintiffs for the reasons:
    First. That there is a defect of parties defendant;
    Second. That several causes of action are improperly joined.
    Third. That the petition of the plaintiffs does not state facts sufficient to constitute a cause of action.”
    
      The court of common pleas overruled this demurrer, and the defendants below not desiring to plead further, judgment was rendered against them; to all of which they duly excepted. No ruling was made as to the right of the council to make an assessment upon, the abutting property to pay the cost and expense of the improvement, and that question is not here.
    Upon petition in error the circuit court held that the common pleas erred in overruling the third paragraph of the demurrer to the amended petition, and upon that ground alone reversed the judgment, and remanded the cause to the court of common pleas for further proceedings according to law; to all of which exceptions were taken.
    Thereupon the plaintiffs below filed their petition in error in this court, seeking to reverse the judgment of the circuit court, and asking that the judgment of the court of common pleas be affirmed.
    
      Lewis & Sayre, for plaintiffs in error.
    
      Grosvenor, Jones & Worstell, for defendants in error.
   Burket, J.

The judgment of the circuit court is, that the amended petition does not state facts sufficient to constitute a cause of action, and that there is no other error in the record. We think that the circuit court was right in finding no other error in the record, and will therefore consider only the question as to whether the petition states facts sufficient to constitute a cause of action.

If Section 2702, Revised Statutes, known as the Burns law, is applicable to the case, the petition states a good cause of action, and the other questions, so ably argued by counsel, become of little importance.

The proceedings of the council show that the costs and expenses of the brick or block and curbing were to be assessed upon the bounding and abutting property by the foot front, and all the other costs and expenses of the improvement were to be levied upon the generar tax list of the village. The “other costs and expenses” included all except the cost of brick, block and curb; and the materials and labor included in these other costs and expenses formed a part of the contract for the whole improvement awarded to said John F. Welch and Abner Juniper; and by that contract the village agred to pay them a certain sum of money for the whole improvement, including these other costs and expenses. This agreement to pay the contractors for all of the improvement not included in the brick, block and curb, out of a levy on the general tax list of the village, involved an expenditure of money which could only be raised by such a levy, and the same was therefore included in those agreements which are prohibited by said Section 2702.

The section is general in its terms, but the object of the general assembly evidently was to compel municipalities to have the money in the treasury before appropriating or spending it. This can only apply to money raised, or to be raised, by a levy on the general tax list of the municipality. If the money is to be provided, in the first instance, by taxation, it must be collected and in the treasury before it can be appropriated or expended either by ordinance, resolution, order, contract, agreement or other obligation. If bonds are issued and sold, and the money provided in that manner, the bonds to be paid by a levy on the general tax list, money arising from the sale of such bonds must be in the treasury before it can be expended, the same as if it had been raised by taxation in the first instance.

In all such cases said Section 2702 is applicable, unless there is an exception by some other provision of the statute; and when that section is applicable to any particular case, no liability can arise as against the municipality, unless the certificate required by the section shall be first filed and recorded; and whether the same has been so filed and recorded must be ascertained by all contractors for themselves at their peril. Lancaster v. Miller, 58 Ohio St., 558; McCloud and Geigle v. Columbus, 54 Ohio St., 439; Buchanan Bridge Co. v. Campbell et al., 60 Ohio St., 406. A municipality is not estopped from availing itself of the provisions of this section to defeat a claim brought against it, when the section has been violated, even though the contractor has performed his work. In such cases the contract as well as what is done thereunder, is void as against the municipality.

In cases of street improvements the course of procedure is usually about as follows: A resolution is passed by the council to the effect that it deems it necessary that a certain named street should be improved in a certain manner, the cost and expense to be assessed' in whole or in part upon the property bounding and abutting thereon, or adjacent thereto. After notice and other proceedings, an ordinance is passed to the effect that the improvement be made as provided in the resolution, plans, specifications, etc. The improvement is then advertised, bids received, and a contract made for the completion of the improvement. This bid, and the contract made thereunder, for the first time enables the council to ascertain the cost and expense of the improvement. With the cost and expense thus fixed, the council at the proper time makes an assessment of the amount to be paid by the property holders upon their property, and pays the balance out of money in the treasury raised by taxation, or by sale of its bonds, the bonds to be paid by a levy on the general tax list. Some of the property owners pay their whole assessment at once, and that money is paid over to the contractor. Others fail to pay, and for the amounts of their assessments with the interst thereon, the municipality issues and sells its bonds and pays the money to the contractor, and pays the bonds out of the assessments when collected.

In such a transaction the only money which the municipality pays out of its treasury of money raised by levy on the general tax list, is so much of the cost and expense of the improvement as is not assessed against the property holders, and as to that part said Section 2702 is applicable, and must be complied with in order to make the municpality liable for such part of the cost and expense.

As to the part of the cost and expense to be assessed against the bounding, abutting or adjacent property, said section does not apply, and in the nature of the case cannot apply, because it is impossible for the council to ascertain the amount of money required, until after it knows who has paid and who has failed to pay his assessment, and by that time a large part, if not all, of the cost and expense will have been incurred.

It does not apply for the further reason, that by necessary implication said section has reference to money of the municipality, that is, money raised, or ultimately to be raised, by a levy on the general tax list, and does not cover or refer to money of individuals, that is, money to be raised by an assessment upon the property along tbfe improvement. The municipality is limited and restrained by this section, as to the expenditure of its own money, but not as to the money of others. As to such assessments, it is competent for the contractor to agree to take the assessments in payment for his labor and materials, and collect the same as provided by law; and if he does so, the money never goes into the treasury, and no certificate can be filed as to the same.

It is therefore clear, that as to the expenditure of money to be raised by such assessments, Section 2702 is not applicable;

This holding protects the treasury and the general taxpayer, and at the same time enables needed local improvements to be made without detriment to the municipality, and is in accordance with the intention of the general assembly in passing the Burns law.

The case of Cincinnati v. Holmes, 56 Ohio St., 104, known as the Avondale case, is in line with this holding. It was not held in that case as argued by counsel for the defendant in error, that the Burns law does not apply to any part of the cost' and expense of street improvements; but the holding was that the special acts under which the improvements were made in that case, and which had been previously held constitutional by this court, were to be read as an exception to the Burns law, and that for that reason alone the statute did not apply in that case. The Burns laAV being one of a general nature it is doubtful whether exceptions of a local nature can be constitutionally made thereto.

Judgment of the circuit court reversed and that of common pleas affirmed.  