The opinion
Disney, /., dissenting: I have read the statutes of Kansas dealing with the issuance of the special tax bills involved in this proceeding. See secs. 13-1079 to 13-1087, General Statutes of Kansas, 1935. The statutes, in material part, provide that the city by ordinance levies and apportions the special assessment, and ascertains the amount against each piece of property improved under the statute; that as soon as the amount chargeable against each piece of property is ascertained by ordinance and at least 30 days before issuance and delivery of the special tax bills to the contractor, the city clerk shall notify the property owner, or his agent, by a notice stating the date when tax bills will be issued and delivered to the contractor, if the amount is not earlier paid, and such owner may, before such issuance and delivery to the contractor, redeem hie property by paying to the city treasurer, “who shall receipt therefor, and all sums so paid shall be applied solely to the payment of the contractors for the work;” that if the assessment is not so paid, the city clerk certifies same annually by installments to the county clerk; that the tax bill is issued to the contractor, and if assigned to bearer, becomes a negotiable instrument; that the amount so certified to the county clerk shall be collected as óther taxes by the county treasurer and paid to the city treasurer, and by him paid to the owner of the tax bill; that if any installment is unpaid after June 20 following certification to the county treasurer, the holder of the tax bill may institute an action to foreclose in any court of Kansas of competent jurisdiction and may secure judgment and a decree of sale of the property; that after the holder of the tax bill elects to bring such action, the city clerk shall not certify any further installments “and the comity treasmer shall not accept payment of any installment theretofore certified” (italics supplied), but payments due on the tax bill on which suit has been brought may be made to the clerk of the court; that any person filing such action shall notify the city clerk and county treasurer.
In my opinion, the whole tenor of the above epitomized statutes indicates nothing more than an administrative duty upon the city. Unless prior to the issuance of the special tax bills the assessment has been paid to the city treasurer, who receipts and holds same for the contractor, the city merely certifies to the county clerk and the county treasurer, who collects. If so, he remits to the city treasurer, who pays ,to the holder of the special tax bill. Dereliction on the part of the county treasurer in collection would involve no obligation on the city. If the amount is not voluntarily paid to the county treasurer, the holder of the special tax bill takes matters into his own hands, files foreclosure, and the matter is no longer within the control of either county treasurer or city. The county treasurer may not collect. The city clerk may not further certify to him. Only the clerk of the court may accept payment.
I think that the exemption of interest from taxation, here in question, must be limited to a financial obligation of the city. Interest entails indebtedness, in money or at least in property. Under the Kansas statute, I find none. Only after receiving the moneys from the treasurer could the city be liable, and then not upon an indebtedness, but for money had and received. It has no power to institute proceedings to collect, as seems the case under Missouri statutes. It is no party to a foreclosure by the tax bill holder. An action by the city to collect the tax bills would be clearly demurrable under the statute. If the county treasurer failed to remit the interest to the city treasurer, remitting only the principal of the installment, obviously the city could not be held for the interest. I find the instant situation different from that in Michael Pontarelli, 35 B. T. A. 872; affd., 97 Fed. (2d) 793, where the city’s liability was limited to payment of bonds issued from the amount collected under the assessment levy and collection to be made by the city with all reasonable diligence; also to be distinguished frota. Carey-Reed Co., 36 B. T. A. 36; affd., 101 Fed. (2d) 602, where, though the statute states that the city shall not be liable for failure to collect the total tax, nevertheless bonds were issued, a tax levied, payment of which was to be made to the city treasurer, the lien could be enforced by action brought in the name of the city or the contractor, the tax bills might be sold and collection enforced “in the manner provided by law for the collection of municipal taxes,” and if the fund accumulated for any particular improvements is more than sufficient to pay principal and interest on the bonds, the city council might reduce the property owners’ assessments, and if there was a deficit “the council may provide for payment of same out of the general fund”; and the city could, in anticipation of collection of the taxes, issue bonds and pledge such taxes and the liens on the property.
Unable to discover, under the Kansas law, liability of the city for the interest, or any inherently municipal connection with it, I do not believe that exemption of such interest is reasonably within the intendment of the Federal statute providing exemption. I therefore respectfully dissent.
Van Foss AN, J., agrees this with dissent.